Debt has become a way of life worldwide. Why save and scuffle so much for something you want when you can easily swipe your credit card for it? You’ll have to worry later to pay for it, right?
Well, as easy as it may sound, it’s a really dangerous game and if you find it hard to manage your expenses on regular basis, then you can definitely dig a hole called “The Debt Trap.”
All of this starts with your first payday loan, this leads to another one and now things quickly spiral out of control. It’s just a cycle that majority of us fall into. Falling into debts is not desirable for any of us, so the best way to avoid falling into it is by taking preventive measures. The key is to stop using your credit cards and start your emergency mode on. Get yourself aligned with a repayment plan, pour in every extra penny that you can towards clearing off your debt. If you’re stuck, but aren’t sure from where to get out, see if any of these warning signs help you out –
Making minimal payments
Credit cards are definitely a good option to use, they’re convenient and just acceptable everywhere. But they’re pleasant only if you’re regular with your payments. As soon as you start carrying a balance from month to another, you’re definitely on the losing side of the equation. Paying a minimum amount is exactly what the credit card companies want from you, so that you end up paying finance charges which might take you forever to clear it off completely.
Delay in debt payments
One of the worst signs is when you’re in debt and you miss the payments or delay in making the payments. When you fall behind with timelines, your credit card companies hit you with heft penalties and charges. This might even lead to an increase in the interest rate which means you’ll pay even more in future than the past.
Your finances go out of control
If you find it hard to manage your regular finances, you’re stuck in a bad debt trap. One debt trap leads to another one, and before you even know, your monthly payments are already unmanageable. With unmanageable monthly expenses, things are bound to go out of hand which is a terrible feeling.
Rampant loans
In consumption driven economy, to get a loan or financer to fund your purchases is easily accessible. However, logically if the loans are serving a purpose and creating a value for you in terms of an increase in asset, it still seems fine – for e.g. a home loan, car loan or a business loan.
On the other hand, a vacation cannot be funded with the help of a loan, later a person might find it difficult to repay that kind of loan. Hence, t has to be funded by disposable income.
Zero savings
Every payment that you make towards clearing off your debt, it is one penny less from your savings which you could have utilized towards something else. Not saving in your present certainly means you’ll have save more as you get older and that doesn’t seem easy.
Remember, the bank has nothing to lose on its end, but you do have everything to lose if you keep borrowing unnecessarily.
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