3 Common Events That Drive People into Debt — And How to Avoid Them

Life is full of emergencies, sudden needs, and expensive fixes. It can seem like there’s no end to spending money when issues and events unexpectedly arise. Unfortunately, debt is a very common part of the American life, from student loans to excess credit card debt. It’s important to recognize that some life events can drive people into debt and leave them without a safety net. Here are three life events that can drive you into debt, and tips on how to avoid them.

1. Divorce

Divorce is never easy, and it’s a traumatic event that often leads to painful and complicated grieving. Even if costs are split evenly down the middle, the cost of lawyers, litigators, or court fees can quickly add up and drive people into further debt. Sometimes a divorce can also affect your credit score, particularly if you shared finances with your former spouse and they had a better credit rating or score than yours. Having a buffer, such as a larger savings account, is certainly a luxury for many people, but it can really help as you navigate this difficult life event.

2. Death of a Loved One

Funerals and services can be an unexpectedly expensive process. The death of a loved one can place a financial strain on a family, particularly if the loss was not anticipated, or if the loved one did not have a life insurance policy or a will wherein instructions on how to manage their funeral and estate were clearly laid out. It’s difficult to make decisions while grieving a loss, and this can lead to hasty decisions. When a loved one passes away, the family must go through their papers, financial documents, and settle the estate of their loved one. To hopefully reduce some of the strain of the process, it’s recommended to try to have difficult conversations with your loved ones about keeping a detailed and notarized Will. A saving account can also be a helpful way to cover the thousands of dollars of funeral or burial costs.

3. Major car or home repair

Cars and homes are two key elements of our daily lives; we often depend on them to live comfortably and get where we need to go. However, an expected breakdown of your car, or an expensive fix can catapult you into debt if you’re not prepared. Setting aside a little money aside each month for car repairs and servicing can help you manage the cost of car upkeep. Repairs on the home can also be really expensive; for example, putting a new roof on a house, or a major repair on pipes or heating/cooling units. One tip for homeowners and car owners is to ask around, never taking the first deal or figure you find on a particular product or service. Knowing the market and value of labor, parts, and repairs can save a lot of money in the long run.

Cain & Daniels, Inc.

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Cain & Daniels, Inc. specializes in the settlements of commercial business debts such as lawsuits, judgments and past dues. Located in Tampa, Florida.

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