1. Divorce: When individuals divorce, assets have to be split and there is less income to pay the bills.  Being forced to support a family with one income can be very difficult and thus many individuals have to rely on debt to make ends meet.

2. Decreased Income: This can happen for a variety of reasons.  One spouse or partner may lose their job or may become sick and unable to work. The same expenses remain, but there is less money to cover them.  When this happens, it is very easy to become mired in debt.

3. Not Properly Managing One’s Money: Many people attempt to get by without a budget. While an individual may be able to skate by without keeping track of their finances, eventually this type of lifestyle will catch up with them. 

   Most individuals will find that if they look carefully at the amount of money that they spend, that much of it is wasted and includes purchases that one doesn’t need or that they don’t even remember. Many people will be surprised at how much easier it is to meet all of their obligations, plus have money left over for little bit of fun when they budget. If they refuse to budget, they will often times have to go into debt to cover emergencies and unexpected expenses.

4. Being Underemployed: Millions of Americans work full-time jobs, and even take on second job and still aren’t able to make enough money to support their family. This is due to minimum-wage or low paying jobs that don’t provide enough money to feed, clothe and transport an individual or a family. 

5. Being Underinsured: Medical expenses are one of the leading reasons for bankruptcies and money woes. Often times when people are underemployed they are also underinsured.  If a medical emergency arises and there is either no insurance or not enough insurance, these individuals are forced to pay those medical bill and there is no way that they can afford to do so.  The amount could be hundreds of thousands of dollars.  Even having to pay a few thousand dollars or a few hundred dollars at one time, can put a strain on an individual or a family’s budget, subsequently, forcing them to use credit cards to make these payments.  If an individual is only able to make the minimum payment, they could end up having this debt for decades and still not be able to fully pay it off.  If the individual has to use credit to make purchases in the future, one could see how it could be very easy to get into so much debt, that it is impossible to get out of it. 

It can start out as a late fee here or there, or a credit card balance over the limit, but before you know it you could find yourself drowning in debt with millions of Americans. How does this happen? For some it can come in stages, for others it seems to come all at once and quickly get out of control.

It can seem endless and appear to have no hope in sight for so many struggling with the stress of managing debt. For whatever reason you find yourself in this position, how you decide to take steps to get out of debt is crucial for the management and future of your credit.  The biggest step you can take to start your debt management process is acknowledge that you are in debt, and how much in debt you are in.

Once you realize that you need help in organizing and putting a debt management plan together, there are some basic steps that can help you move on to a brighter financial future. Firstly, to get a good idea of how bad your debt situation is, you need to record all of your loans and credit card information. Make a list of all of your outstanding debts and be sure to include the following basic classifications: Balance, minimum monthly payment, interest rate, mailing address, phone numbers, email address, website and contact name.

One suggestion is to create a simple spreadsheet with all of these fields to ensure you have what you need. It will take some time to be thorough and accurate, but in the long run this step alone makes most people start out on a new path. For some, this is the first time they realize how far in debt they really are. Many people tend to underestimate the amount they actually owe and don’t have an accurate picture of their financial situation.

Once you have created this list, you should organize it by highest interest rate to lowest. Some make the mistake of assuming it is most beneficial to start with the lesser amount owed and work your way up, but in many cases it is better to start paying off the highest interest rate amounts first. This is sensible, any high interest rates you are paying is money you are throwing away and wasting valuable earnings trying to pay. Getting the high-interest debts out of the way first, puts more money in your pocket and less you have to spend.

After you analyze your situation, it can be very useful to take it to a debt management professional to help you put together a plan to conquer it once and for all. It can be a lengthy and tedious job, but gradually you will begin to see the light out of the dark clouds of debt.