Debt trap, how to avoid it?Hard to say but it is evident that debt has been a snare for people who rely on it.
But, the heaviest burden is not to repay the debt, but the embarrassment one gets when forced to apply for a debt. It is not uncommon to see someone commit suicide just because they couldn’t repay back the debt. Hence, debt does not solve any financial problem. Instead, it results in a psychological burden for the debtors.
But, in every cloud there has to be a silver lining. Therefore, anticipating the deadly debt trap with its lofty interest, here are four solution:
1. Pay the debt installment,
2. Seek for a side job to pay the installment if the main job doesn’t suffice,
3. Sell some of the assets to pay the installment,
4. And, (if the condition really forces you to) borrow from Peter to pay Paul.
But the last solution is not recommended because it only adds more load to the debtors. And, if the debtors are forced to do such, never borrow money from the loan sharks. While they quickly lend the money, the interest is inhumane.
It is advisable to borrow from family or from the companies the debtors work for. While borrowing from family has a little to no interest, companies might cut your salary as compensation for the debt.
But, the best advice is to not borrow money from any instances. Should one have to borrow, set the installment ratio to at least 30 percent from income, not 70 percent.