Major Causes of Individual Debt Problems

Keep track of your pennies, and you'll know where the dollars go.
i Jupiterimages/Comstock/Getty Images

Say you and your hubby are doing just fine financially — no major credit problems, you live within your means, and you've started an investment program. However, just because life is rocking and rolling now, doesn't mean you shouldn't keep an eye on the future, as debt problems can creep up slowly but surely.

Medical Expense

Over 62 percent of bankruptcies in the United States were caused by medical fees, according to a study funded by the Robert Wood Johnson Foundation. You shouldn't avoid the doctor, but you can avoid staggering health costs with good health habits.

While health insurance doesn't eliminate medical expenses, it does help reduce the costs. A hospital stay of $10,000 with an insurance deductible of $2,500 and 20-percent copay means you'll pay $4,000 out of pocket rather than the full $10,000. If you've already reached the annual deductible limit you'll be in even better shape.

Going to the doctor for an annual physical can run over a thousand dollars after all the testing, poking and prodding, if you don't have health insurance. But that's peanuts compared to what it costs if you have to have surgery or treatment of a serious disease. Similarly, complicated pregnancy results in a bundle of joy and bills.

Loss of Job

There's a reason why money gurus insist that you should have an emergency fund with three to six months of living expenses socked away — and job loss is that reason. If you don’t have the savings, you'll have to sell some of your belongings or tap into credit cards. After several months you could find yourself with maxed-out cards and hefty payments each month. Consider the option of living on one salary and banking the other salary.


It's understandable if you don't want to even think about divorce, but it happens to more than half of married couples. When the marriage dissolves, so does financial solvency. Two people together do live more cheaply than apart. Each of you should have your own separate accounts. Set a limit on expenditures for joint accounts. In most states — community property states being the exception — you're each responsible for your own debt.

Money Management

Money matters and how you manage money, matters more. It's tempting to charge those to-die-for designer shoes or go on that vacation to Bali. Poor financial management is a major cause of debt problems. Sit down with your honey and go over what you spend and what you bring in. Then develop a budget you both agree on that keeps you living within your income.

Underwater Real Estate

If you've bought a house, you might find yourself with more mortgage than equity. That's not a problem if you stay put and don't sell the house until the market picks up. The problem is when you must move, say for a new job in another state. You could find yourself still owing your mortgage company major money after you've sold the home. Consider renting the house until you've built up enough equity to sell it without a loss.

the nest