There is a big debate happening now whether people or companies are the ones responsible for the recent economic crisis. Some experts suggest that banks have gone so wild by giving unrealistic loans with high interest rates to people who will not be able to afford payment even with very minor hardships. Others emphasize that our culture and living style is the one that got us into this crisis. People are borrowing and spending money more than what their salaries can handle. I definitely believe that if we want our economy to recover, then we must change our spending habits into something healthier and more realistic. While there are probably hundreds or reasons why most of us are in debt today, here are the most common three of them:

We’ve lost our common sense thinking

I’m not actually a psychology expert, but I can obviously see that we’re having a big spending problem. In my entire life, I haven’t met a person who doesn’t want to live like Hollywood stars. While we all have the right to dream, our dreams must be realistic and proportional to our income. I can see people these days buying unnecessary stuff and then throwing them into the garage after using them only once. Many of them also have 3 or more different cell phones where they only need one. In a nutshell, we should learn to differentiate between what we need and what we want.

Job loss

I hear people always complain about the fact that it’s not their fault that they got into debt, and it’s actually their boss’s mistake when they fired them. I can tell you my friend that nothing is constant, and nothing will last forever. We, humans, have very little control over our surroundings. The smart way of doing this is by not getting loans unless you have a solid job foundation (and even that might not work). If you’re not sure that you’re in a stable job, then don’t take risks by getting huge mortgages or loans that you’ll never be able to afford if something goes wrong.

We don’t track

I, myself, don’t track my spending sometimes especially if they’re minor. My advice to you is to track every dollar you spend. If you do your math correctly, then you’ll be able to set priorities and probably get rid of your unnecessary spending. Your only way out of debt will be lowering your spending every month until you hit that sweet spot of spending less without affecting your needs.