There are needs and there are aspirations. We go mad fulfiling both no matter what. This mad rush of instant gratification does help us achieve needs and aspirations but makes a serious dent to our financial lives. The debt trap piles up day after day, month after month and year after year, making us worried every second.
And then the job loss happens, the misery piles on further. The loss of a job means loss of loan or credit card payments to the lender, inviting official visits to your home regarding debt recovery. Banks can even raise a legal notice against your name should you fail to pay the dues on unsecured credits such as personal loans or credit cards.
If you are dealing with a debt trap-like situation, start following the remedies before it becomes irreparable.
Here are Ways by Which You Can Get Rid of Debt Trap
Getting rid of the debt trap requires making the right financial calls and being tight on spending. We’ve discussed some smart strategies to come out of the debt trap. Let’s check out!
Implement Debt Consolidation
Debt consolidation is about merging several debts into one. So, if your credit card debt has piled on at an astonishing 30–40% interest rate per year, consider taking a personal loan at lower rates of say 12–15% per annum. This will help you clear your credit card debt instantly and pay the personal loan EMIs at lower interest rates.
Be Tight on Spending to Overcome Debt Trap
A lot of us don’t revisit our spending and go on to make unnecessary expenses. It feels more painful when the debt enlarges, leaving us with virtually nothing in hand. In case any unforeseen incident happens and requires you to spend on that, how will you be able to do it with no savings on hand? A thing to ponder and act upon every day so that you have a handy sum all the time to deal with unexpected expenses and debt payments.
Think About Debt Settlement
If your debt has reached the level, you can’t pay entirely, consider opting for debt settlement. It is a process by which you agree to pay the debt amount, which is lower than the actual amount, to the lender. With that, the lender marks ‘Debt Settled’ against your name. You are free from the debt trap. But since you may require loans later, the ‘Debt Settled’ status may not make lenders confident of your repayment capabilities.
So, do one thing. After initiating the debt settlement exercise, keep saving to accumulate the amount you could not pay to the lender while reaching a debt settlement agreement. After accumulating the required amount, pay it to the lender and get your status changed to ‘Debt Paid Fully’ by the lender. This will open up possibilities for new loans.
Look to Increase Your Income
Savings are important and so is your income. Keep raising your income by way of salary and investments in fruitful means such as top-performing mutual funds that can appreciate your capital exponentially over time. Not only will it allow you to repay your debt smoothly but also lay a foundation for your financial harmony.
Wrapping Up
Being in a debt trap is becoming increasingly common in today’s era of instant gratification. As a user, ensure that the gratification does not come at the expense of financial miseries. Check the pros and cons before initiating a purchase via debt. Sometimes unforeseen circumstances can lead you to a debt trap. And that’s okay! We all go through that, but you can overcome it by sticking to a strong financial discipline as discussed above. With that, we end our session today! Keep visiting zarooribaathai.in for insightful updates.
