Top 10 Overlooked Causes of DebtOver the past decade, more and more people have found themselves deep in financial debt. While there may be some obvious reasons why some people have gotten into debt, there are also many other overlooked factors that could have led to their accumulation of debt.  I have spent a good amount of my adult life in debt. I know how it feels.  There is nothing fun about it, but that doesn’t mean it has to define you.  Remember that you are the one in control of your money, so don’t let it take control of you.  We all make mistakes and debt should be one that you only make once.  I don’t plan on making the debt mistake again, so I hope you do the same.


The first cause of debt is overspending. Most people who are in debt have gotten into financial trouble because they have spent too much money. While this might be very obvious to some, it is often overlooked by many. This is normally due to not setting up a budget or sticking to it.  If you are spending more than you earn, then you first need to figure out how to cut your expenses.  You can check out the Simple Saving Sunday series for great tips.  Once you cut expenses, then it is time to figure out how to make more money.  In order to stop overspending, then you need to make more than you spend.

Medical Costs

The second overlooked cause of debt could be medical costs and expenses. If someone has to go through a major medical procedure, there is a good chance that their insurance will not cover everything, or they may not be insured at all. If this is the case, then they could easily accumulate tens of thousands of dollars of debt.  It is hard to fight the massive cost of procedures, but the best thing you can do is shop around.  You don’t have to go to a specific hospital, unless you have insurance and it forces you to go there.  It still doesn’t hurt to check pricing.


The third overlooked cause of debt is inflation. Many people do not realize how much the cost of living goes up each year. Between housing, food, gas, and other expenses, most people will not receive an annual raise to offset their increases. If they are not able to cut back on spending, this will lead to more debt.  If you are leaving your money in a regular savings account, then your savings will be stripped because of inflation.  While most savings accounts don’t give a good return, one of my favorites is the American Express personal savings.

High Interest Charges

The fourth overlooked cause of personal debt is high interest rates. Many credit card accounts today have interest rates in excess of twenty percent. These can make it impossible to repay all of the money that they owe.  Credit card debt is a big problem in our society.  It requires discipline to get rid of and stay away from.  I used to be in credit card debt, but now I understand how to use them wisely.

Lack of Insurance

Not having insurance is the fifth overlooked cause of debt. This applies to both individuals and businesses.  Without adequate insurance, especially health insurance, many people struggle to stay afloat when an emergency happens.  The same goes for small businesses.  For example, if a small business owner foregoes taking out general liability insurance or another form of insurance, they could be facing a significant financial loss if they are sued or an accident occurs.  Business insurance is extremely important for any business just for basic protection.

Identity Theft

The sixth cause of debt is identity theft. Identity theft occurs when someone illegally opens up an account in another person’s name and then runs up a significant amount of debt. The victim could then be left with a lot of debt that they are required to repay.  Identity theft is on the rise around here.  Just remember what has happened to Target and other large retailers.  If you are scared of identify theft, then check out the services from LifeLock!

Lack of Financial Knowledge

The seventh overlooked cause of personal debt is lack of financial knowledge. Many people simply do not have the financial education or experience necessary to make good financial decisions. These people may end up relying on credit cards or taking out high interest loans because they do not know better.  This is the main reason why Debt Roundup and the many other great personal finance blogs exist.  I am here to not only share my story, but to provide access to helpful information about money.

Expanding Families

Expanding families is the eighth overlooked cause of personal debt accumulation. Many single and married people may feel that they have plenty of extra money, but once they have kids that can easily change. In some cases, families may have to forego one income altogether, which can make staying on top of their finances tough.  If you don’t have kids, then you might not  understand that daycare also costs a lot. We spend a good amount of money every month on daycare.  Yes, there are cheaper services out there, but it shows why that is so.  You will be asking yourself “where did all the money go?”


The ninth overlooked reason why people accumulated debt are taxes. While federal taxes for most people have been flat for over a decade, state, local, and produce taxes have continued to increase. This has led to the average person having less spending money, which has led to an accumulation of debt.  Since it is close to tax time, I certainly know this is true.  We get taxed here, there, and everywhere.  If we make more money, we get taxed more.  It is a losing battle.

[box type=”note” ]As you know, the tax deadline is approaching. If you haven’t started your taxes yet, then I recommend TurboTax. I have been using it for years and have never had any issues.[/box]

Poor Investments

The 10th reason people can accumulate debt are poor investments. Some people may look to invest in their own business or invest their money otherwise. While they may have had good intentions, if an investment goes bad a person could lose their money and have to take out a lot of debt.  Investing can be complicated, but it doesn’t have to be.  Don’t fall for anyone telling you that you will beat the market by X.  This is probably going to end up costing you a lot of money.  I keep my investments simple and to the point.  I like using Scottrade as my investment platform, while easily investing in ETFs.

In conclusion, the amount of personal debt has continued to increase over the past few years. While there are some obvious reasons why people have accumulated debt, there are also ten commonly overlooked causes of personal debt accumulation.

I am sure that I missed quite a few, so let me hear what you would add to this list?  I have more in my head, but this is a top 10 list.