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The Accountants for Growth

How do we get into debt?

How do we get into debt?

This week we held a Business Builder Forum on the subject of debt which many of us face in our business and personal lives. The Forum was enjoyed by all the delegates who gave us great feedback and I now share some of the most significant points in the blog.


How or why do we incur debt in the first place?

We identified three reasons why people get tangled up with debt:

  • Not enough income
  • Ignorance
  • Stupidity

Let’s take each of those in turn:

Not enough income is rarely a justifiable reason for getting into debt – more often than not we incur debt because we are unable to delay gratification. In other words we have to have things now and cannot wait until we have saved up for what we need or want. We like to keep up with our neighbours and have the latest gadgets while we experience some ‘retail therapy’. We incur debt to buy things we don’t really need, at that precise moment in time, and not because they are essential.

Ignorance – we don’t understand the implications of debt. We tend not to appreciate that by incurring debt we are working for our creditors, that the interest we end up paying often far outweighs the benefits of the goods or services which we purchased on credit. We fail to take account of the interest we will end up paying when we take out a mortgage or car loan.

Stupidity – the fact that often we buy stuff that we simply do not need or really want. We end up buying on impulse and this often results in us running up credit card or store card debt which is a very expensive form of borrowing and adds a significant cost to the products or services which we are buying.

In our next Business Builder Forum, on 27th May we will explore ways in which you can get out of debt in 5 to seven years. If you are interested in attending this session register online:


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The information provided in all of our blogs reflects only a narrative of some elements to consider on the topic. The blogs do not contain considered legal or accounting advice and should not be relied upon as advice. Please see our website's terms and conditions for full details of our disclaimer. If you are interested in obtaining advice, please contact us and one of our accountants will be happy and able to advise you on your own particular circumstances.

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