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?



Ray is an ex-financial adviser and the founder of Financial Highway. Currently working in the financial industry and working towards completing his Chartered Financial Analyst, CFA, designation.