The first step when looking at the causes of debt is to analyze where things went wrong. This is absolutely critical. If you are not able to identify the original causes of debt, you will not be able to change those habits and replace them with healthier spending habits. For most people, there could be a few different reasons that have led to their current debt situation:

• Overspending through the use of credit cards-this is actually very common

• You do not understand how to budget your income or you just do not use a budget and consequently you spend more than you make

• You have recently become unemployed or have experienced a reduction in your income; a situation which can be difficult for most people, especially if you were previously accustomed to a particular lifestyle

• You are a shop-a-holic, shopping for comfort rather than only when you need things

• You just simply do not appreciate the importance of maintaining a good credit rating

• You have experienced a serious issue in your personal life such as a divorce, death in the family or medical problem that has led to financial difficulties

Clearly, these are all problems that can be quite common and many of us have experienced at least one of these issues at one point or another. Life has a tendency to throw a number of curve balls our way and there is just no way to escape all of them. While you are certainly not alone in your problem, it is important to recognize that these are serious issues. Identifying your personal causes of debt will allow you to then take corrective action.