Reasons Debt Management Doesn't Always Work

Few people go into debt with the intention of getting in over their heads. Most of us borrow to get the things we need and want, with every intention of paying back every penny. But sometimes things do not work that way.

In some cases, debt problems can be attributed to poor financial management. But sometimes even the best money managers end up in too much debt. Here are some reasons that debt management may not work:

1. People lose their jobs. Job security is not what it once was, and an increasing number of people are becoming victims of downsizing or outsourcing. An unexpected job loss can be a source of financial hardship, making it difficult to pay bills for necessities, and leaving little or nothing to pay debts.

2. Health problems cause money troubles. Accidents can render people unable to work, as can a variety of illnesses. Between the lack of income and the medical bills, people whose health has taken a turn for the worse often find themselves unable to repay their debts on schedule.

3. Unexpected expenses arise. Sometimes people have expenses creep up on them that they haven't budgeted for, causing them to be unable to pay their usual bills. Expensive car repairs are a common expense that we may not be aware of until it becomes a necessity. Weather could cause property damage that is not covered by our insurance, or appliances that are not under warranty could suddenly quit working. All of these things can put a damper on our financial plans.

4. We don't keep adequate savings. Many financial problems can be avoided, or at least made less burdensome, if we have some savings to fall back on. This is one area of the budget that many people either don't think about or do not take seriously. Making room in the budget to put some money into savings each month is an asset to any debt management plan.

The same problems that often cause us to get into too much debt in the first place can also derail us when we're already in too much debt and trying to get out. When these things occur, it may become necessary to seek outside help. Consolidating our debts may make things easier, but sometimes even that is not enough. When all other options are exhausted, some debtors end up filing for bankruptcy.

The best way to manage debt is to keep it under control in the first place. Putting money into savings can help for when unexpected things occur. And if all else fails, we may need help in reorganizing our finances. Getting our finances back under control may be difficult, but the peace of mind we gain from doing so makes it all worthwhile.