11 Dumb Ways to get in Debt

There are many reasons why people fall in debt, such as medical issues, school, starting a business and purchasing a home. Some situation you do not have much of choice and the debt is for a good reason, for example if you get in debt due to school it’s fine because in the long run you will be able to make up for it. However there are some bad reasons why many fall in debt, the list below illustrates the top 11 …well not so good reasons to fall in debt.

1.       Leasing a Car – You are basically paying several hundred dollars per month in leasing only to return the car after a few years. After spending tens of thousands of dollars what do you have to show for it?

2.       Purse and Shoes obsessions (or any other obsession for that matter) – Unless you are purchasing collectible items that increase in value, this is a pretty dumb way to get yourself in debt.

3.       Financing a Car – If you can not afford that $50,000 car why do you think you can afford to finance it? A car loses about 25% of its value as soon as it is driven off the lot. You will be stuck making payments for the next 5 years or longer on something that is losing its value faster …than Wall Street came down.

4.       Using Credit Cards – So you want something you can’t afford, you put it on the credit card only to pay 19.99% interest on the item. Now the $150 purchase ends up costing you over $300 in a year. Smart!

5.       Financing latest gadgets – If you can not afford the newest Apple Macbooks and other electronic gadgets, not a problem, Best Buy will finance it for you! Now you can enjoy the latest gadgets for the next year and pay for it for the next five years. Three times what it was worth, GREAT DEAL!

6.       Having expensive hobbies – Hobbies tend to become money traps. We can’t afford to blow money on all of our hobbies, so we usually pick our favorite one (at the time) and waste all of our money on that. (Collecting comic books, DVDs etc)

7. Spiraling debt – You decided to take the great Best Buy financing offer for the newest LCD HD 52” TV, since you are at it why not get the newest Blue ray player with that….oh and do not forget the home theatre system……oh and the DVDs….etc…and the debt keeps growing …the spiraling debt!

8.       Giving family and friends a loan or co-signing for a loan – Want to ruin your relationship with a family member or friend? Just give them a loan or even better co-signing for a loan, not only will you get rid of them but you will be left with a nice chunk of debt as a thank you.

9. Upgrading stuff. Why don’t you just upsize your fries and drink for 58 cents? What’s another $2/month to get the VIP gym membership? If you are already going to spend $200 on a cell phone, what’s another $100 to upgrade to a better one? And another $5/month to get 100 more minutes on your cell phone plan? Little things add up!

10.  Playing the lottery or gambling – You are more likely to get hit by a lightening than winning the lottery…and that’s all I have to say for this.

11.  Rent-to-own furniture and appliances – You can’t afford a brand new leather couch? Just Rent-to-own it! You don’t have $1000 in cash but you can do $100/month for the next 3 years. What a great deal!

Need more dumb ways to get in debt? Thoughts of my twitter followers:

  • Overspending for the significant other. If they really love you, trinkets & trivial gifts won’t matter.  @Matt_SF [Steadfast Finances]
  • Stupid ways to get into debt? –> Buying stuff just b/c someone else has it & you don’t want to feel left out. @Matt_SF [Steadfast Finances]
  • Research has shown that credit card debt has adverse affect on your health – hope that helps cheers, @upsideofmoney
  • Bad Reason to get into debt: I’m borrowing money on my house to invest in the stock market. @fiscalgeek [Fiscal Geek]
  • Stupid way into debt #1: that flipping overdraft credit line. You won’t even know what you owe on. Thousands of $ for me. @fiscalgeek [Fiscal Geek]
  • Stupidest way into debt? To fall into it, over time, by keeping your eyes closed to overspending @moneygal
  • Here’s a BIG one… lack of discipline and personal responsibility. Falling in line with the “everybody’s doing it” financial mentality. I think a lot of us fell for that. I think using $ U don’t have is stupid @MattJabs [Debt Free Adventure]
  • How about letting the oil run dry in your car engine? Or doing Vegas? Or taking that round-the-world vacation after getting laid off? @amabie [SEO Writer]
  • Splurging on something (putting it on your credit card) because “what the heck, you know you’ll be paid in two days anyway.” @moneyenergy [Money Energy]


  • debt = buying stuff you don’t need on terms you won’t meet because of advertising you don’t believe @riscario
  • Aside from the typical credit card and major loans – gambling, day trading, and errmm a girlfriend? @prosperoustool [Realm of Prosperity]


Buy That Fun Stuff Without Going Into Debt

Spending Less Than You Earn. Sound Advice At Any Income

Quit Your Costly Habits & Invest Your Proceeds – DFA Tip of the Week – 5/4/2009

Get Out of Debt: Give Up Your Favorites

Anymore ideas? What are some bad reasons to get in debt?

38 Responses to 11 Dumb Ways to get in Debt

  1. Great list here… many of these I attribute to my #1 dumb way people get into debt – by not paying attention.

    By not choosing to handle our finances deliberately it is almost guaranteed that we will fall into the role of “average modern consumer” and fall head over heals into debt using all the reasons you listed above!

  2. Great list of dumb ways to get into debt – I’m sure the list could be as long as we want it to be as us humans have any number of ways to get into debt. Good reminder that we need to be conscious about our finances, and actually pay attention to how we’re spending – not just what we’re spending on.

  3. Playing the lottery can be dumb but maybe not always (of course, if you do not have money to spare, this is really dumb).

    Winning a lottery is of course a very low probability event. However, a lottery can be viewed as a call option on the payout. At sufficiently high payouts, this call option can have some value despite the low odds. I haven’t tried using the black-scholes to value the option so I cannot really say at what level of payout is your 1 dollar ticket (call option) worth more than a dollar. An exercise for some other time, perhaps.

  4. How about being 18, stupid, and in love with your boyfriend so much you’re willing to give him doubles to all your credit cards, and access to your bank account.

    8 years, breakup, and after having unknowingly financed his move across the united states to get away from you, by giving him access to cash out all your credit cards and overdraw your bank acoount, later…still paying for it.

  5. Good list. I agree with Bible Money Matters that this could be a really long list.

    I think a dumb way way to get in debt is by trying to keep up a certain lifestyle that you just simply can’t afford! Or by keeping up that lifestyle to impress others.

  6. Seems to me that all the above listed reasons for getting into debt are associated with trying to keep up with and please other people (excluding 6 and 10). Don’t let other people and peer pressure get you into debt.

  7. Hey! I like gambling and playing the lottery 😉 But yes, I will agree it’s not the smartest thing someone could do with their money….unless they are WINNING!

  8. Upgrading is a killer. It’s easy to say a few dollars here and there but it adds up quickly. If you can afford the lease, leasing is great cause you get a new car every few years. Hobbies can add up but I think you should enjoy them cause they are part of life. So if you love movies like me, stop buying DVDs and get a netflix subscription instead.

  9. I love these dumb ways to incur debt. It is funny why people do them because they are just giving away their money so I am glad you have this out in the open. Hopefully some will take notice and stop being dumb about taking care of their money.

  10. Good list. No 4. Using Credit Cards is true. Finnaly cleared one card, another 2 more to go. Now can breathe easily.
    5. Financing latest gadgets is also very true. Electronicgadgets gets better and more advance fast. A few years ago was DVD, now is BluRay. Imagine buying a good laptop and paying for two years. After one year of use, a better one comes out.

    I don’t believe in luck of gambling. I have always felt that if God wanted to give me money he will drop a bag infront of me. So it means he wants me to work hard and control my spending.

  11. Buying something on a credit card because it is on sale and a deal you can’t pass up. Then not being able to pay the credit card off immediately, and you end up paying more interest on the item then the price you could have bought it for with cash if it hadn’t been on sale.

  12. Buying things for your children that you can’t afford just so that they can keep up with the Jones. How about teaching them the value of money instead.

  13. Agree with poster abobe re 19.99% interest–you must have calculated it monthly or some other way. 20% on a credit card is annual rate and therefore, 20% of 150 is $30 which when added to the original $150 equals $180 and not $300 as you calculated.

    Still not a good deal however.

  14. Keept the comments coming!!

    @ Mitchell & @ Root Hoi…..I appreciate your comments, but I am not doing an exact calculation on this, just exaggeration things…total cost for that over a year paying the minimum (3%) would be $24.05 in interest :)….point is if you have to pay with credit card you cant afford it so dnt get it 🙂

    keep them coming!

  15. Financing the rent, groceries, drugs, doctor bills, and gas are really horrible ways to get into debt. Unfortunately, it is a reality for many people.

  16. Good list. My fiancee recently refurbished her bedroom with rent-to-own furniture; I tried to talk her out of it, but alas, she was insistent… When we are married, I will have to be much more forceful with my insistence about these types of things.

  17. I’m not trying to harp on a previous poster.. but a he brings up an important point.
    #1 way to go into debt. Be married to a overzealous spender/shapaholic. (Or give your credit card to your shopaholic fiancee/boyfriend/girlfriend) It’s now all on you! It doesn’t matter how financially responsible you are if your spouse can’t control him/herself.

  18. By spending your money in garbage while renting a $1,500 apartment while houses prices go up (like most white Americans), when you could have rented a $500 basement and save the money to own your own house, and then spending in all the garbage you did not buy before .

  19. Buying the biggest house you can afford just cuz the lender is willing to lend you that much.
    Seriously, who needs 3000sqft house to raise 2 kids?
    When my neighbors are moving away becasue they are having 2nd child and claimed the house they currently have is too small, I was like, “What’s wrong with a 1700 sqft home that costs half of what you are about to pay for just for one more kid?”
    I don’t get it…

    • I never understood that logic either. I have friends who were mostly raised in high-rise apartments, no more than 1000 sq ft. in big cities from Baltimore to Atlanta to Miami, and they turned out just fine. They used local parks as their backyards. This notion that young children need a suburban lifestyle with lawns (that more and more families can’t even afford to upkeep) and backyards to play in order to be properly socially adjusted is complete nonsense and is just marketing schemes that developers continue to use on the public.

  20. Good list! but debt can also be good, such as buying a property as an investment (cash flow from rental income)…id like to read a list of good debt.

  21. Hey Ray! Thanks for this list. Debt is such a big issue in today’s society. I am one that agrees with your point about how gambling can put someone deep into debt. It is a sure fire way to make someone suffer financially. And it is a addiction too–the worst! This only spirals down into more debt into the future. It is really nasty situation.

    Anyway, I really believe that someone should adopt a disciplined budgeting habit. This would help with debt in the long run. But that is just my opinion….

    Keep on writing great info!

  22. One of the most common ways to spend money and get into debt, believe it or not is stopping for coffee each morning. It may not seem like a lot but each morning, whether you stop at an expensive place or a drive thru all that money adds up. For one month take the extra time to make coffee at home, or lunch at home and put the money you would have spent per day in a jar. You will be amazed at how it adds up!

    • I know, right? But how about another legal evil: Booze. A weekend of drinking can put one back 100’s, and that bottle or case a day for an alcoholic has got to REALLY add up in a month!

  23. Here is another way: Do not use a tool like Out Of the Dark (OOTD) Budgeting, stay in the dark without budgeting as you spend yourself into a growing debt.

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