6 Reasons Why It’s So Hard To Get Out of Debt

6 Reasons Why It’s So Hard To Get Out of Debt

Cynthia Measom   June 30, 2021

Getting out of debt isn't easy. It requires a lifestyle shift. Sometimes, you have to make a small change in the way you handle your finances -- and sometimes a big one.

If your New Year's resolution for 2021 was focused on getting out of debt, you may not have made much headway. This past year has been financially devastating for many families; and despite some assistance from the federal government, the Democrat-Republican congressional divide has slowed up stimulus for individuals and businesses alike.

To get some additional insight on why you haven't gotten out of debt by now, take a look at these reasons why it's so difficult. Plus, learn what you can do to start conquering your debt once and for all.

1. You Don't Have a Budget

Not having a budget is a sure way to keep yourself in debt. It's important to assign each dollar you earn to a specific category, including debt, and then account for every dollar you spend.

Many different budget plans exist, including the 50/30/20 rule. When using this budget, you put 50% of your income toward your necessities, such as rent, car payments, insurance, utilities and food. Next, 30% goes toward things you want, such as eating out, streaming services and new shoes. The remaining 20% goes into savings and paying off debt.

If you're determined to pay off your debt as soon as possible, you may want to play with the percentages a bit. For instance, consider putting 30% or 40% toward your savings and debt and leaving only 10% for things you want but don't need.

2. You Only Make Minimum Payments

While creditors only require that cardholders make the minimum payment each month by the due date, doing so can keep you in debt for years.

By only paying the minimum each month, you could draw your payments out over a decade and end up paying more in interest charges than what you originally charged.

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