Most people in New Mexico have credit cards, and there are many reasons why this type of debt accumulates. When you think about the amount of debt that people carry, you may assume that it’s because of medical emergencies or other unexpected costs they could not pay for out of pocket. In reality, credit card debt is often the result of discretionary spending.
If you have a credit card, it’s possible that you spend more than you realize. Sometimes, people can find themselves in financial trouble due to overspending on simple things and unnecessary purchases. If you have a significant amount of credit card debt and you cannot manage your payments, you may want to take a look at where your money is going each month. It might surprise you to see that it doesn’t take a huge one-time purchase or unexpected cost to lead to a personal financial crisis.
Understanding the problem
Many people have credit cards, and many of these people are able to pay off their balances every month. For those who are not able to pay off their balances, they may end up paying astronomical amounts of interest as well. This interest accumulates, and even a few months of making minimum payments can lead to huge balances. Studies show that people who have credit cards tend to spend more than those who are debt free.
With this in mind, it’s easy to come to the conclusion that the people who already have debt are more likely to continue to accumulate debt. Much of this debt comes from discretionary spending such as:
- Premium coffee purchases
- Dining out and take-out orders
- Clothing purchases
- Fitness and gym memberships
- Subscription services
These are all purchases that pertain to lifestyle, not life necessities. These types of purchases can lead to something often referred to as “lifestyle creep.” This is one of the most common reasons for an accumulation of credit card debt.
What can you do?
If you can no longer manage your credit card debt on your own, there are options available to you. Through filing for bankruptcy, you may be able to regain your financial standing and deal with certain types of debt once and for all. An assessment of your case can help you understand if this is the right option for your unique situation. There is no shame in filing for bankruptcy – it could be a way out of your personal financial crisis.