We can find that few people are constantly under the pressure of heavy debt. However high might be their income, they will always stay as borrowers. They do few mistakes without realizing that these mistakes make them as permanent borrowers. Read on to know more:
- Debt becomes Necessity: For constant borrowers, debt is a regular necessity. It is something like bread and butter for them. It is this attitude that makes it tough for them to get out of debts. To lead a debt-free life more financial discipline is needed. One has to budget expenses and ensure that they stay within the budget.
- No reserves: For people who do not bother to maintain sufficient financial reserves, debt is permanent. They never save money and set them aside for meeting emergencies. They spend without planning and take thoughtless loans. They never save a portion of income and invest them in crypto trading using bitcoin loophole. They never bother to save. They neither learn and bother to get a full report on investment options with huge returns.
- The excitement of borrowing: Just like people are thrilled by freebies, few are excited at the thought of getting loan money. They take loans without proper purpose just for the sake of enjoying lumpsum money. As a result, they spend the loan monies on purposes which do not create asset or income. Hence they end up spending a major portion of their income for loan repayment.
- Irregular repayment: Some people do not repay their loans schematically. They repay only that bare minimum so that the loan does not turn out to a bad As a result, the interest and the principal get accumulated. At one point it will be very tough to get out of loan burden.
- Irrational expenses: When income rises, the constant borrowers never care to tap the excess and save it or repay existing loans. Instead, they adopt a lifestyle with increased expenses. They think that increased income is for spending more. These people rarely get a debt-free
- Loan for repaying another loan: A loan should be repaid out of income. But when people take another loan to repay existing one, this leads to a never-ending chain of borrowings. It is a bad financial ethics to repay a loan using another. It is wise to use that option only when the new loan charges a low rate of interest than the existing debt.
So, avoid all the above mistakes to come out of debts.