1. DEBT SOLUTIONS

3 Reasons People Stay In Debt

3 Reasons People Stay In Debt
BY Tammi Huang
Jan 13, 2017
 - Updated 
Nov 30, 2024
Key Takeaways:
  • People stay in debt when they sacrifice their future for the present.
  • Overspending, taking on too much debt and refusing to save causes hardship in the future.
  • You can protect your future by paying off debt, learning to budget and establishing a saving habit.

People go into debt for various reasons, some of which are largely beyond their control. But while some people are able to pay off their debts and avoid it going forward, others can’t seem to escape it, despite very real efforts. The following are 3 common reasons people stay in debt and what they can do to help break the debt cycle.

1. The need to have it all — right now

Who wouldn’t want to drive a fancy car or live in their dream home? Most of us do, but the question is whether or not we have the resources to attain them. While there’s nothing wrong with having wants and goals, we have to be realistic about what we can currently afford.

One of the reasons people stay in debt is because they feel the need to have everything right away. It may be for appearances’ sake, to “keep up with the Joneses,” or a whole host of other reasons. This very common problem–dubbed by psychologists as “present bias“– simply means that many of us have a tendency to prioritize our current wants and needs over our future ones.

But, going into debt in the name of instant gratification can be very damaging in the long-run, both financially and emotionally. The good news is that to break this habit, you may not need to deprive yourself of everything. But you will need to adjust your lifestyle to one your finances can comfortably support.

2. Spending instead of saving

There’s no question that life can be unpredictable. So, the more we prepare today, the better off we’ll be in the future, especially when life throws us those curve balls. There are countless stories of people racking up debt because they fell on hard times. In fact, the top 3 sudden life events that cause people to file for bankruptcy are:

  • Medical expenses

  • Job loss

  • Divorce or separation

Having an emergency fund and saving for retirement are crucial for dealing with the expenses associated with these types of events and avoiding debt. No matter how tempting it can be to spend now, your future self will thank you for delaying instant gratification in support of your long-term financial security.

3. Refusing to budget

The first step to improving your finances is to be honest about where you currently stand. Some people in debt feel uncomfortable talking about money and would rather take the “ignorance is bliss” approach. But this is one of the main reasons people stay in debt. Knowing the state of your finances and setting realistic goals is crucial to getting and staying out of debt. You have to know exactly how much you owe, where your money is going, and find areas where you can improve.

Once you know what you can realistically spend each month, sort your expenses into two categories: needs and wants. Next, try redirecting some of the money that you’ve been spending on wants towards debt repayment. When you have a manageable system in place and get into the habit of following a budget, paying down debt will get easier.

In the end, if you really want to stay out of debt, you need to be willing to make changes and sacrifices. Otherwise, the cycle will repeat itself. Change may not be easy, but living with the consequences of debt is much more difficult.

Get help breaking the debt cycle

If you’re ready to join the ranks of people who don’t stay in debt, there is help available. Freedom Debt Relief is here to help you understand your options for dealing with your debt, including our debt relief program. Our Certified Debt Consultants can help you find a solution that will put you on the path to a better financial future. Find out if you qualify right now.


We looked at a sample of data from Freedom Debt Relief of people seeking debt relief during October 2024. The data uncovers various trends and statistics about people seeking debt help.

Debt relief seekers: A quick look at credit cards and FICO scores

Credit card usage varies significantly across different age groups, reflecting diverse financial needs and habits.

In October 2024, the average FICO score for people seeking debt relief programs was 582.

Here's a snapshot by age group among debt relief seekers:

Age groupAverage FICO 9 credit scoreAverage Credit Utilization
18-2557290%
26-3557685%
35-5057583%
51-6558379%
Over 6560173%
All58281%

Use this data to evaluate your own credit habits, set financial goals, and ensure a balanced approach to managing credit throughout your life.

Home-secured debt – average debt by selected states

According to the 2023 Federal Reserve Survey of Consumer Finances (SCF) (using 2022 data) the average home-secured debt for those with a balance was $212,498. The percentage of families with mortgage debt was 42%.

In October 2024, 25% of the debt relief seekers had a mortgage. The average mortgage debt was $236504, and the average monthly payment was $1882.

Here is a quick look at the top five states by average mortgage balance.

State% with a mortgage balanceAverage mortgage balanceAverage monthly payment
California20$391,113$2,710
District of Columbia17$339,911$2,330
Utah31$316,936$2,094
Nevada25$306,258$2,082
Massachusetts28$297,524$2,290

The statistics are based on all debt relief seekers with a mortgage loan balance over $0.

Housing is an important part of a household's expenses. Remember to consider all your debts when looking for a way to get debt relief.

Tackle Financial Challenges

Don’t let debt overwhelm you. Learn more about debt relief options. They can help you tackle your financial challenges. This is true whether you have high credit card balances or many tradelines. Start your path to recovery with the first step.

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