Many times, we see others as well as ourselves getting into the debt trap very easily. A deadly debt trap never allows the savings to remain with you. However hard you try to save money, you ultimately spend them on paying huge interests on your accumulated debts. So what all, does it take to save money and lead a care-free life without debts? To crack this puzzle, you need not think hard.
While we can see various reasons trigger one deep down into the word of debts, we can broadly classify these so-called reasons as personal, economic and social. Personal situations may include reasons like loss of job, cut in the pay, accumulation of existing debts, treatment of illness, family crisis and so on. Personal situations are never predictable and so one should always be prepared for any such crisis contingencies, which can cause a major blow to the income. It is always advisable to set aside some portion of your income in a different bank account, so that it can be effectively used during such contingencies.
Coming to the economic triggers, one can get blown away with a sudden loss in business, tumbling sales, bad debts, inflation, economy slowdown etc. Currently, we are indeed witnessing the recession in the economy with the cost of living doubled and the means of income reduced.
While personal and economic reasons may be unpredictable, social triggers definitely are self- sponsored and can be truly avoided by adopting certain means. Don’t you think you will be in a posh car showroom tomorrow, if today you see your junior colleague getting that swanky car to the office? Yes, I am talking about status anxiety. As you put a step ahead each time in your career and status, you always tend to get anxious about maintaining the same. As a result, you do not even hesitate for a single moment and delve deep down in the debt-pool.
When we go out for shopping with our friends, we do tend to splurge more than what we actually should. Many things are purchased just because “My friend also bought it”. And to make things simpler, we always carry the very famous “plastic money” with us. Credit cards had come as a convenience, but now we use it to satiate our status hunger. Although, it may sound a little strange, but it’s always wise to ask yourself a small question “Do I need to buy this?” before you actually swipe your card for the purchase.
And what happens next is the rather unending sequence of debt repayments. If you have bought an exotic product on debt, just check out the interest rate you are paying on the actual or principal amount and then you would come to know the real worth and utility of the product.
You get into debts largely because of two reasons – Improper planning and tendency to spend more. Always remember that debts should be availed ONLY if necessary and ONLY to the extent of what you can repay without much encumbrances. Budgeting, planning and control are three simple, yet magical keys to have a debt free life.