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The Main Reason People Can’t Get Out of Debt


Have you every stopped to consider why people are struggling with more and more debt these days? With the many number of ways to earn money, how can it be that so many people still live under this bondage? As someone who is able to think about early retirement because I don’t have any debt (none at all), I am often surprised by the excuses that people give for living in debt. While I would like to think that anyone can get out of debt, there is one cause of debt that will make it almost impossible for them to get out.

The Typical Excuses People Give for Living in Debt

People give excuses for bad habits all the time. When it comes to staying in debt, this is no exception. Have you ever heard one of these?

“I am taking out loans to get through college. I will have a higher paying job that will allow me to pay it off.” While many people are forced to graduate from college with the financial challenge of paying back school loans, it doesn’t make it okay. In fact, going to college does not guarantee a higher paying job. The bad economy is forcing many college graduates (and some of my friends) to work at Starbucks for over a year while they look for a job.

“I am trying to leverage my money for my investments.” While taking a loan out for more secure investments like real estate may be a great idea, it is still a risk. There are other individuals who borrow money to invest in the stock market, hoping that their stock will increase and they will make it big. The only problem is that they are not only gambling their money, but the bank’s money as well. Guess who is responsible for that money if the stock falls? I’ll give you a hint – it’s not the bank.

“I need a reliable car to get to work. I don’t have the money to pay cash for it and I would rather take out a loan so that I don’t have to worry about breaking down.” I also have a lot of friends that believe that a brand new car is necessary and look at the cost of the car only by the monthly payments. They fail to consider what would happen if they try to sell the car when owing more than it is worth.

By making excuses for living in debt, individuals or families not only add more stress to their lives, but dig a deeper hole of debt. With high interest rates, it can become close to impossible to get out of the red. Yet, I would venture to say that while these excuses are bad, it doesn’t compare to the number one reason why people can’t get out of debt.

Why People Can’t Get Out of Debt

The best way to illustrate the main cause for being stuck in debt is to introduce you to friends of mine. They currently own a house with two mortgages. They took out a second mortgage to pay off some credit card debt before the housing market crashed. Now, they owe more than the house is worth and to make matters worse, they had a variable interest rate mortgage. Their mortgage payments went high in the
worst of the recession around the same time that the husband’s employer was laying off employees. The company ended up just cutting his hours for a few months and they were able to just survive, but not without racking up huge amounts of credit card debt again.

While up to this point, someone could certainly understand why they are having trouble. There are a couple of unpredictable contributors to their bad financial situation. Sometimes things just happen and there is only so much that you can do, right?

Here’s the icing on the cake, though. The primary reason that they were unable to make their payments without going further into debt is that they have a spending problem. They have a hard time determining what is absolutely necessary, even in the worst of situations.

  • Example #1: It was just a couple months ago that I talked to the husband and he informed me that they were just breaking even. They were starting to pay off some debt with the little positive cash flow. Everything sounds great until two days later and I see a facebook status about buying a new IPAD. Necessary item? I think not! To make matters worse, I found out that not only could they not afford to pay for the IPAD upfront, but they are financing that purchase.
  • Example #2: A few months after this, when I thought they were finally learning their lesson and getting back on track to paying off their debt, I come to find out that they are buying a new Apple Macbook. Their computer has been on its last leg for some time now and they “need” a new one even though their IPAD is still functional.

It’s in situations like these that I am reminded that the number one reason for debt is over-spending and having difficulty distinguishing what is a necessary purchase and what isn’t. Unfortunately, consumerism tends to trump any sort of financial responsibility and throws everything off course.

What do you think is the main reason people stay living in debt?

This post was written by Corey, a staff writer from 20’s Finances and Passive Income to Retire. He writes about his financial goals (like retiring by the age of 27) so that his readers can make smart choices and achieve financial security early in life.

Get Out of Debt Money


My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.


  1. I have to agree with you 100%. There are usually less expensive alternatives to almost every decision we make. Instead we choose what is important to us. Until it really begins to hurt, your friends won’t change. I know, since I have been there and am just realizing it myself.

    • Thanks for the advice CFM. I hope they realize their ways sooner rather than later, for their sake.

  2. The worst excuse I’ve heard was “I’ve worked very hard my whole life and it’s time that I get to live the way I want”

    • haha – that’s a good excuse too. On one hand, it is understandable why people would say these things, but I would hope people can see through their excuses. Maybe that is just being optimistic.

  3. That is the key. Knowing what you absolutely need and what you just really want. I have a few people who come to mind when I speak of this but I don’t want to call them out in case they read this. 🙂

    • That’s probably a good idea Jai. That’s part of the reason I kept it general (and as a staff post, not on my blog) because I am sure that they read my blog.

  4. Lack of any type of plan is probably one of the main reasons people can’t get out of debt. And I’m, not just talking about a “debt relief” plan, but an overall plan for managing money, saving, buying only what you can afford. Those people who don’t want to look carefully at their finances are more likely to end up in trouble.

    • Thanks Kris – I am also a fan of setting up a complete plan – but it has to be one that people will hold to as well.

  5. I have a friend exactly like that. I met his parents once and I understood where he gets his spending behavior from and now I see it being passed along to his kids. I did all I could to steer him in a better direction but that is a thin line to walk without offending someone. I hope your friend wakes up soon and comes know the incredible feeling of being 100% debt free….it’s worth the wait.

    • It’s incredibly difficult to do without offending them. If you figure out a way to do it, let me know. 🙂

  6. I think we live in a society where we place entertainment above everything else which causes a huge flux in overspending as many feel entitled to all the good things luxury and entertainment bring. This is demonstrated in the demands of over paid baseball and football players and really anyone in the entertainment business. This seems to flow down to many american households feeling they work for their money so they are entitled to splurge for entertainment above anything else. Since when did Cable Tv become seen as a NEED? Census shows this is how it is viewed now and no longer a luxury of want! When priority is entertainment… will always choose debt over financial freedom. Sad but true…..

    • It IS very sad, but everyone has to make their own decisions, I guess.

  7. I think the main reason people live in debt is because we live in an instant gratification society. It’s a lot easier to put $499 on your credit card and pay $50 per month for an iPad than it is to simply save $50 per month until you have $499. This is because in the first example, you actually have the product. You can show it off to your friends and family. They get excited to see it and you do too showing it off. No one gets excited when you say “I saved $50 today and will have an iPad in ‘x’ number of months.” Most will just tell you to go buy it now on your credit card!

    • That’s a very good point – it is all about now, now, now!

  8. What I’ve seen is that people might commit to reducing debt but they don’t commit to avoiding it. They’ll work their butts off to pay off a loan, then immediately go out and buy something that requires a new loan. Hearing stuff like that drives me up a wall.

    • That’s a great way to describe it. It is certainly hard to understand.

    • Great point – I’ve gone through that in my younger days…pay it off, rack it up, pay it off again. We’ve been able to stay out of what I would call “dumb debt” for quite a few years now – we’ve got a portion of a low-rate car loan remaining, along with student loans and a mortgage. We budget for periodic/large expenses and don’t use credit cards to pay for things we can’t afford anymore…I leverage CCs for cashflow (I get paid only once a month, EEP) and to get points/cashback. Using our main CC to pay for normal monthly expenses, we made about a grand last year on our points rewards – WOOT!

  9. I think some people literally just don’t understand how to get out of debt. They know that they have no money, bu they fail to see that the way out is to stop spending money on things like iPads and Macbooks. They essentially create a cycle of never-ending debt for themselves.

    • I agree and that they don’t realize the psychological problem.

  10. Here’s the 55 yr “old-lady” version. Way too many people buy what they THINK they need. Why all excitement about the Ipad, Iphone,Kindle and Nook Reader? I have researched them considerably and even thought about buying some of the above for myself (and again, I would pay CASH or put in on my CC to earn chrome dollars and pay the bill in full) I love to read and watch movies. If I bought any of the above, I would only be purchasing more “things” or Apps to put on my gizmos. I can get lots of books AND movies from the library FREE! I put my name on lists when new books come out and eventually get to read them…I can certainly wait before spending money on a downloaded book I will only read once! I don’t need a GPS. Before going somewhere I Mapquest and print the page(on my older lap-top computer). I also have Atlases in both cars, the motorcycle and the motorhome. My phone is old and I only talk and text…It’s not a “smart” phone but I wonder how many people who own them are “smart”? When my phone broke this past fall, I was able to get if fixed while waiting for 1 hr at the Sprint store for $35…didn’t HAVE to buy a new one.

    • That sounds like a great example of being resourceful Marcia. I too haven’t made the plunge to a smart phone, but have been considering it now that I am online more than before.

      • It’s nice to know that I’m not the only one with a “dumb phone.” My husband was itching to get an iPhone, but when we visited an Apple store with some family members over the holidays, he was floooooored by the monthly plan costs. Until work pays for my plan, or until those plan costs come down dramatically, I’ll have a hard time diverting money away from bills & investments. The costs for two pay-as-you-go dumb phones cost for two months are less than one month for one smart phone!

  11. Great post. There is always more than one way to do things- the hard or the easy. Most people like the easy which often times is more expensive. DIY, saving, being patient all take effort and some like to avoid effort at all costs. To me the effort is worth it in the long run.

    • I agree that it is worth the effort. It isn’t always easy, but completely worth it.

  12. There is a lot of psychology in why we do what we do. I think there are a lot of people who feel better because they just bought something. They go to the mall and shop to make themselves feel better. I do not understand how adding to your debt can make you feel better. In essence, there is more to this then we realize.

  13. So true, Derek. These are the same people who when they get a windfall will blow it on things totally not necessary rather than putting it towards debt or necessities. Then they complain that they just can’t get ahead.

  14. I think many people like to take the ostrich approach, put their head in the sand and try to hide from the problem. Also, some people think that they’ll be saved and their ship will come in someday. Newsflash to those folks: there is no ship coming in! Rather, it’s your own hard work, good decision making, and discipline that will get you out of debt and thriving.

    • I couldn’t agree more Squirrelers. 🙂

  15. Technically, you are correct. One ‘technical reason’ can be spending problem. Another may be ‘earning problem’. Lack of imagination and inventiveness, may be. We can’t assume that all people who are in debt ‘shop till they drop’.

    Whatever the reason is, it shouldn’t be assumed that it is a ‘normal part’ of life. Once this realisation comes anyone can get out of debt – I have a friend whose business went belly up; she was left with $15,000 debt to pay on social security. Guess what? She organised her life so that she paid it all off in two years, is back to work (building a business) and is planning to pay her mortgage off in three years.

    • That’s a great point. Not all people have spent their way into debt, but I would imagine that most people who are in debt are there because they fail to control their spending.

      That sounds like a great story – worthy of a post, if you ask me. 🙂

  16. I know people who do this too; they justify their purchases because they can’t distinguish a want from a need. (And some of it has to do with entitlement) It’s just easier to sink back into old habits and repeat the debt cycle. To truly break out of the habit, you need motivation, gumption, and some brains to sit down and work out a budget. It doesn’t all magically fall into place even after you do these three things, but it begins to make sense and gets you closer to being debt free. Having worked my way out of (most) of my debt, I know there’s light at the end of the tunnel. 🙂

  17. That’s unfortunate that your friends couldn’t learn from their mistakes. I would hope that the situation they’ve been through would help them get on track financially. Hopefully they figure it out someday.

  18. Too many temptations and little self control! What others have, one also want. One can always come up with ‘reasonable’ excuses to buy more (and further into debt or less out of debt, however you want to put it). I know an individual like that at work.

  19. I’m learning not to do this. It’s hard when something gets in your head and becomes a mantra (I need that iPad, I need that iPad), but if you can pull yourself away from it and ask yourself why you are spending money you don’t have, the mantra becomes a little less powerful, and the next time, a little less..until you can finally laugh at those little temptations. Great post, I can always use the reminder. I was about to go get an expensive haircut, now I’ll just wait (and wait). 🙂

  20. I totally agree! That said, it might depend on the person’s job industry. An iPad isn’t a reasonable substitute for a laptop, if you use it for much more than surfing the internet and jotting down a few notes. I’m a writer, and while I have a perfectly good iPad (definitely a want, not a need! But I paid for it with cash, of course), if my laptop suddenly died, I would literally *need* to go out and buy another one immediately. Definitely not a want. (Though I do have money set aside for this, when it happens, since my current MacBook is almost six years old. But if I didn’t, I wouldn’t hesitate to put it on a credit card.)

  21. SOOOO I just bought a new MacBook and then an Ipad (my work covered most of the cost). I like to think of it as an investment, although I made sure to pay for it in full. 🙂

  22. SOOOO I just bought a new MacBook and then an Ipad (my work covered most of the cost). I like to think of it as an investment, although I made sure to pay for it in full. 🙂

    • It can be an investment in your work, but if you don’t pay it in full, it’s a money-pit. When you start paying interest on a depreciating asset, things can go downhill fast.

  23. You are an idiot. I am in my 50s, been in debt most of my life
    I’ve bought and sold four homes over the years, each time starting over at a 30 year mortgage.
    Ive lived life..bought 4 motorcycles , a boat. Jetskis, I always had the
    Latest and greatest gadgets. So what that I have debt. I’ve been around the world,
    Had many memories. Should I have waited to live my life because I couldn’t actually
    Pay for any of these things at the time? Hell no. Being diagnosed with stage 4 cancer six months ago just proves my point. Perhaps of I saved my money and lived off of soup and grilled cheese like you morons I’d end up dead with money in the bank. I have no children, no heirs. We all go around once in life- make te best of it. Stop saving your precious pennies and being stingy Live life. Who how a rats ass if you owe money. They can’t get it from you when you’re dead.

    • Lol. You’re not real tender hearted are you? Yes, we obviously have a different perspective. I see your side of things: you’ve experienced life and had a bunch of stuff on someone else’s dime and now you’ll probably never need to pay off the debts you owe. However, what if you still ended up living till you were 100 years old? What would your life look like? More than likely, you wouldn’t be able to work past 75 and you’d be living in the streets without anything to show for your life but rusted toys and a few memories. I’d rather live life, not by possessions, but through experiences and helping others. It’s not really about how much money you can acquire, but rather, it could be about fulfilling the hopes and dreams of others with your money. It’s all a matter of perspective.

  24. Look… is not a coincidence that millions of people are in debt for the same reasons. THE WORLD IS SET UP TO PUT PEOPLE IN DEBT. It’s simply a source of legal power over others. Markets have exploited human nature for centuries, and they’re getting better at it.

    • Sounds like you’re at war with…. the World. That’s quite a battle. I think I’m going to help one individual at a time instead.

  25. SOOOO I just bought a new MacBook and then an Ipad (my work covered most of the cost). I like to think of it as an investment, although I made sure to pay for it in full. 🙂

    • As long as your work covered most of the cost and you actually needed them then I’m okay with it. If you just went out and bought them because you thought they’d be cool to have, then I might have a problem with those purchases.

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