As we grow older our financial problems can get more difficult and complex to handle. Every other person in under some kind of serious debt unless they are extremely lucky to escape this. It can be quite difficult to manage your finances if you are under a lot of debt.
One of the most important things to keep in your mind is that over spending as well as unnecessary spending can always lead to accumulation of debt which can soon get out of control. It is very important to stay in limits as well as to spend wisely in order to avoid debt traps. In this article below, we are mentioning a few tips for you to avoid debt traps.
Although credit cards are of great benefit specially if you are short of cash and want to purchase anything, want to buy something immediately and salary will come later or are not used to paying with cash. Credit cards can be used all over the world anywhere and at any moment. But there is a very bad side to the credit card and the majority of the people who are used to spending with credit cards end up being in debt.
Since credit cards have a lot of limit, people spend carelessly and when the time comes to pay the amount they are already under a lot of debt. So, avoiding credit cards is the best option if you want to avoid debt trap.
These are car related loans and the lender will be the one who will decide the amount of loan of your cars and the time period in which you have to finish off the loan. However, the annual interest on these loans can be as high as 264 percentage and if you fail to pay even a single day late you can lose your car.
It is quite normal for people to wish to purchase a brand new and good home. However, in order to proceed smoothly a buyer should be smart enough. Some buyers do not deal wisely and proceed to get a very large loan. A large loan will be enough to get you a new home, but the payment will be huge and that can make you fall in the debt trap.
If the terms and conditions of the payment of loan are not discussed properly, the buyer might also have to repay back the home loan with a huge amount of interest which can add up to the debt traps as well.
This kind of loan is a temporary and short-term loan for those people who are in some kind of financial crisis. These loans are just for a few months like 3 to 4 and they are secured by any kind of property of yours. The only payment that you will get will be half of the resale value of your item.
The interest can be as low as 2 percent to as high as 25 percentage and the loan can be extended till 2 months as well. If you miss the deadline and do not pay up till that date, your entire property will be sold out and that is when you will be under a big debt trap out of which you will not be able to get out.
This means that there are a few companies that lend out their furniture as well as appliances for a week and give on rent. However, if the weekly payments add up you will have to pay an amount larger than the market value of those items. Apart from that, if you do not do the payment on the given date, the company will take your furniture or appliance without keeping in mind that you have given a certain amount!
Some final thoughts
In order to avoid debt traps for good, there needs to be proper maintenance as well as proper evaluation of your cash outflows. A person who falls under debt traps will find it extremely hard to get out of it specially if the amount is huge. So, it is always better to deal with money sensibly rather than to face problems later!
