Do you know the main causes of debt? If you don’t, it’s worth looking into because if you understand the causes, you might just be able to avoid them. Most people end up in debt simply because they are not prepared for the issues that cause it. One of the main causes of debt would certainly be the loss of a job. If you are made redundant, you might face a period where you don’t have a permanent fixed income. During this time, it can be very difficult for people to stay afloat.
To avoid running into debt due to redundancy, there are a few things you should do. First, you should make sure that you are not living carelessly. This means that you should be saving a certain amount of your paycheck each month. About 25 percent should be enough to make sure you have a lot of cash to rely on in your account. You can then use this on a rainy day if you ever are made redundant. You should always have some cash in savings to fall back on.
Second, make sure that you are asking about terms of redundancy when you take the job. You need to know what your severance package would be and how much you could be entitled too. Finally, you should look for other job opportunities while you are already employed by another company. That way, you’ll already know what’s out there, and the type of opportunities open to you when unemployment hits.
Here are a couple of other causes of debt and ways to deal with them.
Injuries And Accidents
If you suddenly need to be treated for a serious medical incident or illness, you might find that the hospital bills are incredibly expensive. In the USA, they can range in the hundreds of thousands. Financially, there is no way to prepare for this, but there is a possibility on how to handle it. You should look at personal injury lawyers and the type of damages they can get for their clients when an injury wasn’t their fault. For instance, you might have hurt yourself at work. In cases, like this, the employer is almost always legally liable.
Remember, it’s not just physical injuries where there might be a legal liability. More and more cases are being brought forward where people sue due to the cause of an illness or medical condition. For instance, if you have a mesothelioma this could be due to the asbestos in your home’s walls. If that’s the case, you could sue the building company and win.
Lastly, you must be careful of borrowing because if you’re not, you could end borrowing your way into a debt trap. There are a lot of companies that are still charging insane levels of interest. If possible, you must avoid taking out these short term loans. If you save like we advised you’ll never have to rely on borrowed money to keep your finances in the green.