Five Obstacles That Are Keeping You In Debt

Why You Can't Get Out of DebtEveryone says “Get out of debt”, as though it’s a simple mechanical effort, and the only thing stopping anyone from doing it is stubbornness. If only that were true! Before you can get out of debt, you first have to identify the reasons why you are in debt. I’ve been able to identify at least five obstacles that are keeping you in debt.

It’s commonly believed that irresponsibility is the root cause of debt. But after spending more than 15 years working in the credit industry, I think that point can be disputed in many, many instances. There are usually very specific reasons why you are in debt, some of which are within your control and others that aren’t.

If you can identify with one or more of these five obstacles, you stand a better chance of getting out of debt than simply throwing more money at your monthly loan payments.

1. You’ve Had One of Those Unfortunate Life’s Episodes

Many people are in debt because they went through a very bad time in life. Some examples include:

  • A prolonged period of unemployment
  • A job loss that resulted in you taking a much lower paying position
  • A medical catastrophe
  • A period of high expenses, such as putting children through college
  • The sudden and unexpected need to care for an ailing family member
  • A business failure

Going through such a time is not exactly unusual, but the episode can be so severe that it casts a shadow over your finances for many years.

It may not be so much that you are mismanaging your money right now, but rather that you are trying to put out financial fires from that bad time in your life. Trying to meet those obligations is actually a noble effort, but it can also be the reason why you can’t seem to get out of debt.

Unfortunately, bankruptcy may be the only option if you’ve been attempting to pay down the debts for years but they don’t seem to be going away. If bankruptcy is not an option, there’s little choice but to keep plugging away as you always have. But don’t blame yourself – and don’t allow others to blame you for the obstacle you’re facing. In most cases, this situation is not your fault and completely beyond your control.

2. You Don’t Have That Delayed Gratification Thing Working In Your Life

At the opposite end of the spectrum, there are people who live in a world of I want it now. What ever they want, they give it to themselves, finances be damned.

You can know that this is your situation if you are surrounded by nice things and have lived a life of wonderful experiences, but you have a paper trail of debt to show where it all came from.

If you’re afflicted with this syndrome, the only way to get out of it is to require yourself to do nothing extra in your life until you have saved up the funds ahead of time. It’s called delayed gratification – not buying anything nice until you have the funds to pay for it in advance.

Until you master this change in financial philosophy, your chances of ever getting out of debt are about as close to zero as you can possibly get.

3. Your Income and Lifestyle are Fundamentally Unbalanced

People who have trouble with delayed gratification are usually driven by impulsivity. But there’s a different form of overspending that’s more basic in nature. That’s living beyond your means.

People who live beyond their means have a life that includes basic living expenses – housing, car payments, use of basic services and the like – that cannot be sustained on the income they earn.

It’s often the result of locking your self into a certain lifestyle, whether you can afford it or not. If you are unable to pay for that lifestyle out of your income, you’re almost certainly making up the difference with debt.

Many people play this game for years. They use credit cards to make up the income shortfalls, consolidate those into home equity lines of credit, and ultimately refinance their homes into a new first mortgages that will incorporate all of the consumer debt.

Eventually however, your ability to borrow against your home tops out. When that happens, bankruptcy and/or foreclosure are common outcomes.

This is sometimes referred to as using credit as an extension of the paycheck, and it’s a lifestyle that’s destined  to not end well.

If you are in this situation, you cannot get out of debt until you face the reality that you cannot afford the lifestyle you are living. You then need to trade down to a lifestyle that you actually can afford on the money that you earn. Once you get back in balance – and only when you do – you can start thinking seriously about getting out of debt.

4. You Are Not and Never Have Been a Saver

This is one of the most basic reasons why people get into debt and cannot get out. Generally speaking, people who are our savers tend to have very little debt. And conversely, people who are not savers tend to be awash in debt.

The reason is simple – savers have no great need for credit, and non-savers use credit in lieu of savings.

You cannot get out of debt if you need to borrow any time you need extra money. The only way to break that cycle, is to live beneath your means and become a committed saver. Once you have enough money saved, you will no longer need credit. And when that day comes, you will be in a solid position to get out of debt for good.

5. You’ve Never Taken Money Management Seriously

You know how there are people out there who are not good at math? Or others who are not good in sports? And still more who have trouble spelling? There are also people who are not very good at money management. It could be an aptitude-related issue, but more likely it’s that they just don’t take it seriously.

This is probably more of a psychological problem than anything else. People tend to take seriously that which is important to them. If you don’t take money management seriously, it’s probably just not that important in your world.

It needs to be.

You don’t need to become a fanatic about money management, but you do need to be responsible with it. Being a serial borrower is not responsible money management. Money issues will never go away in your life, so it’s important to take it seriously. If you are perpetually in debt, and always sinking deeper, there’s a real possibility that you’re simply running away from dealing with it.

The solution to this is to consider the implications of continuing on this course. Not taking money management seriously condemns you to a lifetime of money troubles.

Think long and hard about what the specific obstacles are that are keeping you in debt. Only when you know what those are, can you begin working on improving them. And once you do, you may finally be able to begin to get out of debt on a permanent basis.

Join our newsletter

If you like Critical Financial, subscribe and get our latest content via email.

Powered by Seva

Share this post:

Related Posts


  1. Kathy says:

    Other than prolonged unemployment,or sustained employment at a low wage job, I suspect your reason #1 is actually the least true reason for people being in debt.

  2. Hi Kathy – No, I’d say medical disasters are up there too. Between co-pays, co-insurance, deductibles and “we’re not going to pay that”, even people with decent health insurance can be thousands, tens of thousands or more in debt. I think business failures and caring for a sick relative are up there as well. I actually think it’s about 50/50 between the spendthrifts and the people with legitimate reasons for being in debt.

    The problem is that when you’re in a financial storm, the bills come flooding in, while income only trickles in. This is a bigger problem than most of us realize. Recovering from that can take years.

Leave a Comment


May the 4th Be with You: Star Wars Swag on Amazon

May the 4th Be With You: Star Wars Day Swag

It began as the punniest holiday ever but quickly grew into an earnest (if somewhat random) celebration of the long-running (and still... more →
People count the money to buy a house in future success.

Avoiding Mortgage Scams: Don’t Fall for Unreasonable Promises

If it sounds too good to be true, it probably is. That’s sound advice for almost all aspects of life, including the search for... more →
Eat for free for a whole month via the meal kit companies discounts for new customers.

How To Get a Month of Free Food: 9 Meal Kit Companies Offering Discounts to New Customers

Play your cards right and you might be able to line up a month’s worth of free meals if you were to try out all nine of the meal... more →
Generate extra cashflow -- here are 97 ways.

96 Awesome Ways to Generate Extra Cashflow

Who doesn’t want more money nowadays? We’ve got you covered on that front. Here comes a long list of different ideas on... more →
Valentine's Day gifts that won't destroy your budget

Valentine’s Day Crafts Are Romantic Rescue from Crazy Inflation

Fall for the hype this week and you’re out an average of $143.56 for Valentine’s Day. Crafts and other do-it-yourself tactics... more →

Ultimate Guide to Bitcoin — FREE Ebook!

Have we got something for you: a free ebook about bitcoin! more →
Get a flu vaccine.

Why You Need To Get a Flu Vaccine Right Now

Flu vaccines aren’t just for the elderly  anymore. Here are 25 reasons you should go get vaccinated. more →
Financially successful

Acquire the Trait All Financially Successful People Have

Financially successful people tend to all have a lot of self-discipline. Improving your discipline in one area of your life often spills... more →

What’s the Best Free Recipe App?

The Apple Store and Google Play together offer more digital cookbooks than you probably have room for on your mobile device. So which... more →
New tax law might slow down housing market.

What Will the New Tax Law Do to the Housing Market?

The new tax law will have a profound impact on the housing market, although in ways that go beyond the deductibility of mortgage interest... more →

4 in 5 Households Will Get a Tax Cut in 2018

Four out of five U.S. households will get a tax cut as a result of the legislation that President Donald Trump signed into law today. more →
Will bitcoin reach $100,000?

When Will Bitcoin Reach $100,000?

Bitcoin has accelerated its pace of appreciation in recent months, and if the current levels between $15,000 and $19,000 make you itch... more →
The Dow Jones topped 24,000 -- now what?

The Dow Jones Crossed the 24,000 Threshold. Now What?

Stocks appear to be increasing in volatility, yet the markets closed on Monday, December 4 with the Dow Jones Industrial Average is... more →
Peer mortgage

Should You Get a Peer-to-Peer Mortgage?

If you can’t get approved for a home loan from a bank, you might want to look into applying for a peer-to-peer mortgage. more →
Investment gifting is awesome.

4 Things To Know Before You Donate an Investment

While donations of any kind are appreciated, gifting investments benefits both the giver and the receiver. Here are four key things... more →
Are you wondering: What's the Relationship Between the Stock Market and Federal Debt?

What’s the Relationship Between the Stock Market and Federal Debt?

Wouldn’t it be wonderful if gains in the stock market could actually reduce U.S. government indebtedness? If that were true,... more →
Gresham's Law

With A Downturn In The Business Cycle, Gresham’s Law Proves More Emphasis on Quality

Sir Thomas Gresham advised the English royalty on economic matters in the 16th Century and helped the crown to stabilize the value... more →