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The 2 Real Reasons for Your Debt Problems and How to Fix Them

By Joshua Caucutt

money bandageDo you try to cure the common cold by using the best nose tissues money can buy? Of course not. Though tissues help with symptoms, to avoid a cold, you have to go after the root cause: exposure to the flu virus.

In the same way, when dealing with problems related to money, the root cause is more important than the symptoms of financial dysfunction. However, the biggest issue with a root cause is that while it may sound simple and basic, addressing it can be very difficult.

If you’re looking to get things going in a positive direction again, consider these two main reasons why you’re in debt and the following suggestions to help you dig yourself out of trouble.

Not Enough Income

I know, I know…doesn’t it seem like personal finance bloggers constantly preach that you should spend less? Well, cutting spending isn’t always the cure. Often, the reason for surmounting debt is low cash flow - simply not making enough money. If you’re in danger of defaulting on a loan or not being able to put food on the table, you and your family may be increasing debt each month just to meet basic needs: home, food, gas, and minimum credit card payments.

Your solution, as challenging as it sounds, is to increase income. Read these strategies for success, and a few cautions to look out for too.

1. Ask for a Raise
Many times, the best solution is the simplest solution. If you’re looking for more cash, the first place to look is your current job. Assuming that you work hard for a company in a growing industry, get up the nerve to talk with your supervisor and ask for a raise. You might not think you have a great chance of getting approved, but if you’re serious about increasing your cash flow, you can’t afford to leave any stone unturned.

As long as you present a good case for getting a raise, you might hear some surprisingly good news. This is especially true if you’re a valuable member of the team and your boss is nervous that you may seek greener pastures. Most companies would rather increase a good current employee’s salary than begin the search for a new hire (which can be very expensive and time consuming). And for you, even a small increase in your paycheck can quickly alleviate a lot of budget pressure.

However, if you admit to not working hard at your job, I recommend keeping your mouth shut. You’ll need some different strategies to make more money which we’ll get into next.

2. Look for Overtime Opportunities
The thought of working outside the traditional 40-hour work week may horrify you, or you may already realize that it’s a fact of life. Remember that working overtime at you current job is typically much more lucrative than getting a second job at a different company. You’ll make more money and you’ll boost your reputation.

If you are in debt, you can’t afford to pass up opportunities for overtime pay. Be the first to volunteer to come in early, stay late, or work on the weekends. If you haven’t yet requested a raise, taking on extra work will support your case when you do. And once you have gotten the raise, the overtime work will pay off even more.

Some companies even have lesser-known ways to make extra cash. They’ll pay to have an employee arrive early to make sure that the heat and lights are on, to stay late and lock up, or to shovel snow on winter mornings.

3. Get a Part-Time Job
This option might be tough to embrace if you’ve been “working for the weekend,” but if you are sinking deeper and deeper in debt, you can’t just wait to win the lottery. You must take action.

The best part-time job options are the ones that are close to home. Keep costs low by looking for a job you can walk to, or at least get to without using a lot of gas or spending on public transit. You can even try and ride your bike to work. If you’re lucky, you’ll find that finding a second part-time job has some perks like employee discounts and maybe even some free food on site.

An added benefit of a second job is that you may stumble into another potentially more lucrative and more enjoyable career. If you’re competent and hardworking, and are just working at the fast food restaurant or gas station for extra cash, you can quickly find yourself with an offer for a management position and a chance to show off your more advanced job skills.

4. Make Money with Your Hobby
What do you love to do with your free time? Is there a way to use your hobby to develop a revenue stream? Thousands of people have figured out ways to capitalize on their hobbies. If you’re an artist or crafter, for example, a marketplace like Etsy can help you find more income. If you to hike, hunt, or fish, you might be able to make a little extra money as a guide. Hundreds of hobbies have revenue potential: gardening, wood working, painting, sewing, automobile repair – the list goes on and on.

5. Get Some More Training
You might need to get some additional training or learn a new skill. I sometimes call myself a “jack of all trades, master of none,” which has both hurt and helped me at various times in my career. However, most companies seem to be looking for experts and specialists these days. I would have been better off focusing on becoming a “master” or an expert in one area.

You don’t necessarily need to go back to school and invest in a full-time program and another degree with money you don’t have. Instead, take some night or weekend classes to keep costs low. For example, becoming an expert in one or two programs in the Microsoft Office suite will not cost much but can make you a much more attractive employee. A small investment might help you get that big raise and make you more marketable in the job market.

6. Don’t Overdo It
Don’t take on unnecessary coursework or – worse yet – accept a part-time job that costs you more than you make. I once knew someone who took on a part-time job as a county park security officer, probably because he wanted to ride around in a truck. I eventually learned that he was making approximately $7 an hour, but had spent more than $500 on his required equipment and uniform, and had to drive 20 minutes from his house to get to work. Add in meal costs and it was probably more than six months before he really made any extra money at that job.

If your part-time opportunity forces you to purchase a second vehicle, requires buying new clothes, or will distract you from the priorities of your full-time job, you’ll be doing more harm than good. Avoid these traps by seeking a different part-time job.

Not Enough Discipline

Income deficiency can be the real reason for debt in some cases, but I’m still a personal finance blogger, so I can’t ignore the fact that debt is more likely caused by too much spending. It is incredibly tempting and relatively easy for all of us to want to live beyond our means regardless of income level. I once counseled a couple that was facing bankruptcy despite the fact that their combined annual income exceeded $250,000! If more cash was always the answer, we wouldn’t hear stories of lottery winners whose lives are made worse by winning a huge amount of cash. There’s a big difference between income vs. wealth.

How does a lack of self control get us into debt? It manifests itself in several ways. Be on guard against the following:

1. Discontent
If you already have an item you need, but find a new model or updated version, you might find it tough to resist the urge to spend. Try to remember the “buyer’s remorse” that you experienced the last time that you made a purchase based on discontent. Think of all the stuff you’ve bought over the years that’s currently sitting in the garage or collecting dust in the basement. Ask yourself: Does this purchase truly meet a need in your life, or are you searching for happiness through shopping? If it’s the latter, put your money away.

2. Covetousness
Believe it or not, envy is very different from discontent. While discontent stems from dissatisfaction with your own possessions, covetousness focuses on the possessions of another person. The concept of “keeping up with the Joneses” drives people into debt far too often.

So many unnecessary purchases have started out as a germ of an idea after seeing your neighbor’s appliances, pictures from your friend’s vacation, or your sister’s new backyard swimming pool. This germ then morphs into a financial obsession that consumes you until that SUV is sitting in your driveway- even though you live only two miles away from work.

3. Imbalance
You need a healthy perspective on  the difference between needs and wants. Do you need to go out to eat tonight? Do you really need a Wii or an Evo? Do you need a house or apartment with two bathrooms, or can you get by with one? It’s easy to declare that you never spend on “wants,” but if your definition of “need” is too weak, you’re not cutting back enough.

There are certain purchases that we must make in order to live our lives. Other items, though we might be accustomed to them, are optional luxuries. It’s OK to indulge, but only when you’re in a budget surplus. Don’t dig yourself a debt hole by buying a “want” on credit. Wait until you have the extra cash, and reward yourself with small splurges for successful budgeting.

4. Laziness
It sounds harsh, but financial laziness can play a huge role in your debt debacle. Financial laziness manifests itself in many ways: late penalties and bank overdraft fees are the most common. I have friends who regularly write checks and use their debit card for purchases that cost more than the amount in their bank account. In my mind there are no worse, more avoidable expenses.

Sometimes laziness leads to avoiding due diligence when making a major purchase. Are you sure that you are getting the best price and value for your dollar? Do you use coupons and discounts for smaller items? Do you look for sales, or do you just buy what you want, when you want it?

Financial laziness also contributes to debt when you don’t know your tax laws. Do you know that a portion of your home office expenses can be deducted? That college tuition and expenses can reduce your tax bill? That job relocation expenses are tax deductible? Financial laziness can be very, very expensive.

Final Word

There is a third reason why you might be in debt – one that has nothing to do with your paycheck or self control. Perhaps you have faced a disruptive life event, or are dealing with medical bills or a tragedy outside of your control. These situations make it tougher to make adjustments and quickly get out of debt. However, you need to keep fighting, keep moving forward, and keep employing all of the various solutions to help yourself conquer debt.

Let me also encourage you to seek help from your friends, relatives, and religious community – they’re available to support you. Use every asset at your disposal, and you will experience positive results.

Many people are in debt – in fact our whole country is in debt. Our culture is accustomed to so much debt that many of us make the mistake of thinking it’s a normal part of life. If this is you, figuring out the root cause is the first step toward financial freedom.

(photo credit: Shutterstock)

Joshua Caucutt
Joshua Caucutt has a BS in Mathematics and a Master's degree in Nouthetic Counseling. He has published or written for several blogs and websites over the past decade. He is a long-term market follower, financial educator and especially interested in looking at money from a biblical point of view. Formerly known as "Stew" at Gather Little by Little, Josh writes under his own name at Money Crashers.

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  • Carla

    I guess MY two real reasons are medical bills and living on disability (limited income). I think one day Ill write about how to deal with those two problems which is more common than I once thought, until I was in that situation.

  • Joshua Caucutt

    Carla, those two challenges can make things rough.

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