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Debt is the slavery of the free! – Publilius Syrus
Debt is defined as ‘A sum of money that is owed or due’ [Oxford Dictionaries]. It is created by the difference between income and expense.  There are two types of debt; good debt and bad debt.
Good debt is an investment that will grow in value or generate long-term income. They include; mortgage, student or study loan, business loan etc.
Bad debt is debt incurred to purchase things that quickly lose their value and do not generate long-term income. These consumables include; clothing account, car loan, furniture, appliances, luxury items, flashy lifestyle, store credit cards, credit cards, holiday loan, restaurant meals etc.
Whether it is good debt or bad debt, debt must be managed. People get into extreme debt as a result of many reasons. Some of them are avoidable and others unavoidable. Here is a list of some of the explanations.
Avoidable Debt
Avoidable is preventable and unnecessary. It is created by choice and mostly because of lack of discipline, pride, lack of financial wisdom, poor judgement and poor decision making. This type of debt can be prevented by getting the knowledge and ability to make better decisions.

• Keeping up appearance. Many have fallen into the debt trap trying to “Keep Up” with an image. This is prevalent amongst recent graduates and younger families.
• Poor investment decisions. When you borrow money to invest, be prepared to lose it, therefore seek good solid advice before engaging in any business activity.
• Poor financial management by failing to plan and control personal finance well. Inability to resist impulse purchases and lack of knowledge on how to buy goods and services effectively. Disciple is needed.
• Gambling, alcoholism, drugs and other addictive habits cause financial ruin.
• Little savings and lack of or absence of reserve funds for emergency. You need to build a reserve to use when disasters like accidents, death or sickness strikes.
• Unmonitored credit card and over draft usage. Note that financial institutions are not friends. They are businesses. Their aim is not to protect you, but to protect themselves at your expense.
• Short-term loans or payday loans. They will say to you ‘You can take it. Just pay me when you get paid.’ First check your budget to see if you can afford it, if not, let it pass. Many people buy unnecessary things just because they were told ‘pay when you get paid.’

Unavoidable Debt
This type of debt is caused by crisis beyond our control. However when disaster strikes, it calls for us to make the best financial decisions so that lose is minimised.

• Medical Expenses and ill health. Sickness, especially chronic illness, can attack anyone at any time. When not covered by a medical aid, it can drain all the finances and leave people in debt struggling to make ends meet.
• Underemployment and lose of employment causes a sudden cute of income. This can be mitigated by a corresponding reduction in expenditure. In general aim to create 3 months cash reserve.
• Divorce or separation also causes sudden loss of income and huge legal fees. During family conflicts difference of opinions normally spill into financial discipline.
• Reduced Income. Distressed companies can cut salaries to stay afloat during hard economic times.
• Inflation and interest rate increase. Mortgages and loans are at the mercy of fluctuating interest rates. This causes increase in repayment rates amounts. On the other hand inflation causes increase in prices of goods and services.

How is your debt situation? If not good seek help. For some trick to get out of debt see my articles Stop Debt 1 and Stop Debt 2.
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