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Five Reasons You’ll Never Get Out of Debt

by Chris Poindexter

It was not at all surprising to me to find out that 61% of Americans are financially illiterate. Some states are worse than others and it should come as little surprise that Nevada, the home of Las Vegas, crosses the finish line in last place.

Those numbers should come as no surprise in a country where only five states require some understanding of personal finance to graduate from high school. Young people head into their college years with little understanding of how student loans and credit works, how to balance a checkbook or the basics of investing. The lack of financial education shows in the dismal shape of most family budgets, with a majority of Americans having less than a $1,000 in savings. The lack of education and no emergency fund are two of the many reasons the majority of you will never get out of debt.

You Don’t Know Your Numbers

The first step to getting out of debt doesn’t cost anything but a little time. You need to know how much you owe and how much you spend, down to the penny. The inability to tackle this seemingly simple task is one reason that most Americans will never get out of debt. You have to know your numbers before you can set up a budget.

Too Much House

Every process in the real estate industry is geared toward getting you to buy more house than you really need. From the builders, to the incentive for the agents, to the mortgage company, everyone in the process makes more money if you spend more money. Consequently, all the advice you get through the entire process is aimed at convincing you to spend more. Since most people only buy a home once every five to ten years, it’s not like we spend a lot of time on housing education. The most common mistake I see in real estate are people that would be perfectly happy in a smaller home stretching to buy the big house in the suburbs. That pile of timber on a slab becomes an anchor on their finances that keeps them in debt.

Student Loans

The cost of a college education in the U.S. is a disgrace and the easy availability of student loans simply emboldens state governments to cut financial support to colleges and universities resulting in an ever upward spiral in tuition costs. Our students, who we’ve already established lack any kind of financial education, are entering college at the very time in their lives when they’re least able to gauge the impact of student loan debt on their future finances. Instead of studying and learning, they’re constantly stressed about money and rack up unbelievable amounts of debt in pursuit of college careers that don’t pay that well.

No Emergency Fund

As mentioned above, if you don’t have between $1,000 and $3,000 in an emergency fund then you’re likely using a credit card for emergencies. A relatively minor emergency can eat up $3,000 today and if it’s a major medical expense, like cancer, then that safety net will disappear in a flurry of copays and deductibles, even if you have good insurance.


This is the hardest truth to broach with people who are struggling financially and the one most likely to be unequally applied from household to household. A sense of entitlement takes many forms but can usually be spotted in phrases like, “I work hard, I deserve _____.” Another place entitlement raises its ugly head is with children. Couples who can’t say no to their kids, who indulge optional expenses that cripple family finances are extending their own sense of entitlement to their offspring. This is not the occasional reward for reaching a personal or professional milestone; these are indulgences like eating out regularly and buying things on credit because your friends have them. Not surprisingly, this is the toughest obstacle for people to conquer because it means admitting a problem with their own behavior.

I’m sorry if some of this seems harsh, but the finances of the average American household demand tough talk.

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