With declining real incomes and rising costs of essentials, many people, especially the most vulnerable ones are falling deeper into a debt trap. It not only adversely affects the people, but also costs to the nation. It is, therefore, vital for the people to know if they are falling in a debt trap. Here are some tips that can help them to keep a check on their debt levels:
Credit card bills
Credit card is one of the quickest ways to borrow. The users can buy the products even when they don't have funds in hand. They can make the payment with a credit card and can pay off the amount after a month. However, the problem arises when the people forget to keep a check on their credit card bills. They spend more than required following which they fail to pay the due amount on time. As a result, they have to bear high-interest cost that goes on increasing every month. The buyers should always try to limit their credit card purchases to the amount they can pay easily in a month. The credit card purchases should be considered as a short-term borrowing facility.
Loan can be an asset for one person and liability for the other person. It should only be borrowed when it is essential. People should carefully evaluate if taking loan for a particular need is a right decision. They are borrowing money that has to be paid back at some time in the future.
Live within your means
The monthly expenses should be equal to or less than the amount of take-home salary. With loans and credit cards, people tend to purchase more products than their income would allow. However, that kind of shopping behavior is not sustainable. At some point in the future, the reckless spending behavior will create debt mess. The access to credit, as well as savings, will run out. It will ultimately result in financial distress. For this reason, it is better to limit the spending so that it fits well in earned income.