9 Reasons You're Still in Debt

Andrea Woroch


If you're saddled with debt, you're not alone -- in 2018, the average personal debt exceeded $38,000, according to a 2018 Planning & Progress Study from Northwestern Mutual. The same study found that Americans are twice as likely to have accumulated $5,000 to $25,000 in debt rather than personal savings, and two in 10 consumers allocate 50 to 100 percent of their income toward debt repayment.

When you're struggling to get out of debt, you may feel hopeless. But it doesn't mean you're stuck in this financial position forever. "Debt is never just about overspending," says Paula Onysko, money and business coach at paulaonysko.com, where she helps entrepreneurs build profitable businesses. When you address the underlying patterns that caused you to get into debt in the first place, you can establish a better relationship with money and improve your situation, she says.

Here are nine reasons you're still in debt -- and steps for eliminating debt for good.

-- You live beyond your means.

-- You don't have a budget.

-- You spend before you save.

-- You make spending decisions on impulse.

-- You only pay the minimum balance due.

-- You make emotional spending decisions.

-- You have no emergency savings.

-- You lack a realistic repayment plan.

-- You strive to keep up with the Joneses -- no matter the price.

[Read: What Is My Debt-to-Income Ratio?]

Read on for a closer look at the habits keeping you in debt and expert tips for preventing poor spending and saving patterns from wreaking havoc on your financial health.

You Live Beyond Your Means

No matter how much you make, if you spend more that you earn, you will get into debt, says Sharon Marchisello, author of "Live Well, Grow Wealth: A Commonsense Guide to Shrinking Your Financial Footprint."

Living beyond your means can happen quickly if you don't scrutinize your spending, especially once you begin changing your lifestyle with every new job, promotion or raise you receive. To break this cycle and set yourself up for long-term success, aim to maintain a low cost of living.

You Don't Have a Budget

It's easy to lose control of your finances when you're not monitoring your budget. "You'd be surprised how much frivolous spending you do if you're not keeping track of where the money goes," says Michael Cetera, senior credit analyst for FitSmallBusiness.com, a small-business-focused website. "That could lead to more credit card spending -- and more debt."

Cetera suggests taking a month to track all of your spending; then, see how you can budget for the next month to reduce costs and pay down debt. Creating a budget doesn't have to be complicated. Write down your income and expenses on a piece of paper or input details into a spreadsheet. Otherwise, free apps like YNAB make it easy to track your spending right from your phone. Once you get a snapshot of where you spend your money, you can determine how to cut back.

You Spend Before You Save

Saving what you have left after you pay bills and other expenses never works, and this holds true for debt repayment too, says Dustyn Ferguson, founder of the personal finance blog DimeWillTell.com. You could be overlooking ways in which you are wasting money on things you don't need.

Paying down debt off the top forces you to make do with what you have, Ferguson says. Simplify this strategy by setting up automatic transfers from your checking account to your credit card account on payment dates.

You Make Spending Decisions on an Impulse

If you're constantly giving into the urge to buy items you don't need without considering cost, you may be taking on more debt than you realize. In fact, a 2018 survey conducted by Slickdeals, a deal-sharing platform, found that respondents spend an average of $450 every month on impulse purchases, or $5,400 each year.

Making impulsive purchases a habit will add up over time and add a considerable amount to your debt load. Curb impulse purchases by creating barriers. For instance, delete payment information stored on favorite retail sites and turn off push notifications from retail apps that may send you deal alerts that tempt you to make an unplanned purchase.


[Read: What Is Debt?]

You Only Pay the Minimum Balance Due

Carrying a balance across your credit cards adds a surcharge to every purchase you make. "Once you're carrying a balance, there's no grace period; even new purchases accumulate interest as soon as they are posted," Marchisello says.

As interest fees accumulate, they become harder to manage. And, if you're only making minimum payments, chances are you're only paying off the interest fees that have applied to your account. To avoid letting your balance spiral out of control, make it a point to pay off your card in full every month or pay off purchases as you make them.

You Make Emotional Spending Decisions

Letting your emotions dictate how and when you spend money is a quick way to rack up debt. You must address the underlying patterns that got you into debt; otherwise, you'll continue to repeat the same mistakes, Onysko says.

"For example, if you shop excessively to deal with sadness, to keep up with your friends or to buy love, you'll continue those patterns regardless of any debt repayment plan you build," Onysko says. Look deeper at what's triggering you to spend and come up with a plan to deal with those emotions in different ways, such as going to an exercise class instead of shopping or calling a friend to vent.

You Have No Emergency Savings

Consumer debt is often associated with frivolous spending, but it's not the only cause. Even budget-conscious consumers can find themselves in debt if they don't plan for unexpected life moments like a car accident or serious illness. In fact, the Federal Reserve's "Report on the Economic Well-Being of U.S. Households in 2017" found that approximately 40 percent of adults said they would not be able to cover a $400 unexpected expense with cash.

"An emergency fund assures that you do not rush for a credit card when an unexpected expense arises," says Sean Fox, co-president of Freedom Debt Relief based in San Mateo, California. "Conventional wisdom holds that individuals need to save at least six to nine months of living expenses in an emergency fund, but the key is to start small and work up."

You Lack a Realistic Repayment Plan

The key to effective goal-setting, especially when it comes to paying down debt, is being logical and methodical about what you can accomplish. This will help you stay motivated and keep frustration at bay.

To set a reasonable repayment plan, determine how much money you can comfortably put toward your debt each month. Keep in mind, you'll get out of debt sooner by cutting out expenses you can live without. Turn to apps like Debt Payoff Planner, which is compatible on both Android and iOS, to manage your debt repayment goal and track your progress.


[Read: Secured vs. Unsecured Debt.]

You Strive to Keep Up With the Joneses -- No Matter the Price

When you're constantly comparing yourself to others and trying to keep up with a certain image, it's easy to go overboard with spending. And this can lead to a pattern of accumulating debt. "You and your friends don't all earn the same salary, but you may feel pressure to spend like the person in your group who earns the most money," Cetera says. "That person may be able to afford expensive clothing or frequent restaurant visits, but you can't." You can avoid this scenario by skipping out on social gatherings that you can't afford or suggest cheaper alternatives, like game night at your house or apartment, Cetera says.