BankRate’s Top 10 causes of debt.

The folks at BankRate.com have come up with their list of the top 10 causes of debt, based on reader emails.

1. Reduced income/same expenses.
2. Divorce.
3. Poor money management.
4. Underemployment.
5. Gambling.
6. Medical expenses.
7. Saving too little or not at all.
8. No money communication skills.
9. Banking on a windfall.
10. Financial illiteracy

I don’t know about you, but I think this list could be trimmed down to 7 because Financial illiteracy encompasses #’s 3,7 and 8 in my mind.

Control what you can and accept what you can’t

One of the most powerful realizations that can come from a list like this is seeing what you can control, and accepting the things that you cannot control.

You alone have the power over your life to control 3, 7, 8, 9 and 10! Begin with becoming financially literate, and the rest will fall into place.

While you cannot always control your state of employment or whether a spouse is going to seek a divorce, you can plan for such event, and mitigate their effects. For example, maintaining an emergency fund in a high yield savings account will provide you a cushion between your lifestyle and sinking into debt should your income vanish. Likewise, you could work to get extra sources of income on the side, so you will still have some money coming in if your primary source of income is lost.

Medical expenses and Gambling are the sort that you mostly have to accept, at least in the sense that you cannot entirely prevent such things from plunging you into debt. Still, there are coping techniques and other actions that can mitigate their effect.

In the end, I think most people end up in debt because of a lack of planning and generally not paying attention to their finances. It’s a shame, but it’s also preventable.

This is what happened to me. And I eventually woke up, took control of my financial life and got out of debt – and you can too!

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