Family indebtedness is a serious problem in Brazil. Currently, most Brazilian homes have at least one debt. Because of this, many people live with anxiety and stress.

In addition to suffering a lot from the situation, people are also a little further from their financial goals. After all, having the negative name makes it more difficult to achieve dreams of consumption.

But what are the most common causes of this indebtedness? If we find out, can we avoid this situation?

Let's look at the answer to these following questions!

Panorama of the indebtedness level of families in Brazil

If you have debts at the moment, you don't have to be ashamed. Currently, this is a very common situation in Brazil, you know? According to data from CNC (National Confederation of Trade in Goods, Services and Tourism), about 67.4% of Brazilian families declared themselves as indebted in July 2020. This is the largest level recorded since 2010.

The survey also indicated that 15.5% of families declared themselves as “very indebted”, an increase of 2.2 percentage points compared to the same period last year. In terms of duration, the survey indicated that for more than one third of the indebtedness the commitment lasts for more than a year.

Main causes of indebtedness

It is true that the level of debt of families is high in Brazil. After all, almost 7 out of 10 Brazilian homes have debt.

But why does this happen?

There are some more common reasons for explaining families' indebtedness. It doesn't mean they cover all cases, of course. After all, each family has its own particular history. However, understanding the most common reasons can help us avoid them.

Unemployment

The main reason for indebtedness is quite obvious when we think about it: unemployment. If people are not employed, they do not receive salary. If you don't have money, you can't afford the bills, right?

Currently, the unemployment rate in Brazil is 11.9%. This means that almost 13 million people are unemployed.

Debt usually appears in these cases, when the person is taken by surprise by dismissal soon after committed to a installment purchase, for example.

To complicate everything, even those who got a replacement in the market suffers from indebtedness. This is because the new salary is usually smaller than the old one. Thus, you can't afford the same expenses as before.

Lack of financial education

One reason that increases the chances of indebtedness is the lack of financial education of the population. After all, the economic mechanisms of the market can be a bit complicated to dominate. An error when dealing with credit card rotary, for example, can turn into a difficult debt to deal with.

The less financial education, the easier it is to make this type of error and the greater the chances of accumulating debt because of it.

Inappropriate use of overdraft or revolving credit

Rotary credit or overdraft are tools for emergency situations. However, if poorly used, they can become villains of financial life.

The reason for this is quite simple: they have the largest interest on the market.

Thus, a small debt in it can quickly turn into a huge debt. This is why you need to be very careful when using overdraft or revolving credit.

Excessive consumption

Enjoying a promotion can be a great way to finally buy that product we had been dating for some time. However, it can also be a way of straightening.

This is because impulse purchases are a fertile source of debt. The reason for this is easy to understand: If we buy without planning, we can exceed the spending limit. If we could not pay that month, the debt falls on the revolving card (or overdraft) and starts counting interest.

This is a typical scenario for the effect of the ball of new to create a huge debt.

Tips to avoid indebtedness

Understanding the causes for family indebtedness is the first step to avoid it. However, it is not enough just to know what causes debts, is it? You also need to know how to act not to have problems with them.

So check out some good deeds that can decrease the chances of you get into debt.

Invest in Financial Education

Remember that one of the reasons for family indebtedness was the low level of financial education in Brazil? Therefore, you can decrease the risk of getting into debt if you learn more about these tools.

We know that financial education can be a bit intimidating. After all, the “economies” is a language that scares us. However, it is not difficult to learn the basic mechanisms of your financial life. With a little dedication (and good teachers) you can learn what you need to know.

An easy way to learn more about it is to keep up with our blog and our social networks. Here, we talk about various essentials for your financial life, teaching how to deal with money and prevent debt. All in an accessible and uncomplicated way.

Note all spending

One way to control spending to avoid getting into debt is to write down all the purchases you make. If you do not like to use paper and pen, you can use a financial organization application.

That way you control it better how much you can spend at every moment of the month. Did you give the 15th and went a little of the goal for the period? No problem. You can correct the second half of the month.

Avoid impulse purchases

Purchasing on impulse is the gateway to excessive consumerism. The consequence of this posture is indebtedness, as there is a limit of how much we can pay every month.

Therefore, the ideal is to avoid making impulse shopping. Of course, it's easier to talk than to do, but there are some techniques that can help with it. See below:

• Do not have quick access to your money and/or card;
• Use the “rule of time”. When you want to buy something, make yourself wait a few hours or days to see if you really want to buy or it was just boost;
• Avoid entering promotions or sales websites;
• Make sure you no longer have the item (or any other similar) at home.

Family indebtedness, as seen, is a serious problem in Brazil. However, it is a situation that can often be corrected with financial education, personal control and organization.

If you want to take a step further in your financial education and become more independent in this area, how about starting negotiating your debts with discounts and installments that fit your pocket?

To do this, just access the Uncomplicated Finance website!