debtDebt is a two-faced monster. On one hand, it helps you to acquire a lot of things in life such as a house, a car, an education, medical care and useful gadgets. But on the other hand, it slaughters you by making you work hard and worry about paying off all the accumulated bills.

So, what motivates people to accumulate debts? Let’s go through the points below and see whether any of them applies to you or not.

Instant gratification
We have all experienced a buzz or an emotional high when we buy something that we want and finally we have it in our hands. Well, some people do not mind going into debt to acquire what they want (not what they need) by choosing to pay in installments over a certain period of time. As long as they get what they want, long term debt is acceptable to them. Forget about saving money gradually to buy what they want, life is too short to wait.

Life is about acquiring things
Living the good life, that’s what some people seek constantly. Acquiring things help these people to forget about their daily problems. Have a work problem, go shopping. Have a relationship problem, go on a vacation to forget all about it. There’s nothing wrong with having a good life if you have the money to sustain it. But for some people, their belief is “do not wait to enjoy life and anyway the debts can be repaid later.”

The Joneses have what?
Your best friend has the latest iPhone, so you have to get one for yourself as well. Your neighbor bought a new car and suddenly you gotta have it too. Meanwhile, your son is bugging you to buy the cool toy exactly like the one his friend is playing with. Same goes for your daughter. Keeping up with the Joneses can be an expensive pursuit that can lead anyone into indebtedness.

Indulgent parents
Parents nowadays do not mind parting with their money to get their children the “best” of everything like the best education, food, clothing, gadgets, etc. There are parents who willingly sacrificed their own needs (e.g. retirement savings) to fulfill their children’s needs and wants.

Snowballing debt
Paying the minimum only on credit card debts means the debts won’t ever get settle so soon (if ever). Add in new debts and there you have it, a life of indebtedness.

I gave five different reasons above but I’m sure you can come up with a few other reasons why people go into a state of indebtedness. Some of you may say it is due to immaturity or the lack of discipline. Whatever the reason(s) may be, it is one problem that will never go away or disappear.

Jacquelyn is the co-author of the books “Teaching Your Kids About Money” and “Top 93 Personal Finance FAQs in Malaysia” with KC Lau. Jacquelyn is the pseudonym used by Amy Sipagal.

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