"The rich rules over the poor, and the borrower is servant to the lender" (Proverbs 22:7)
Taking loans are essential in to-days world and there is nothing wrong in it. However, being encaged in a debt trap is really debilitating experience, both mentally as well as financially. Planning your debt commitments is necessary. Despite this some people always find them in a bind and contract debts more than their capacities. Naturally, they make their life difficult and become victims of their bad decisions and perhaps unfortunate circumstances. If a person lands him/her in this situation, cool thinking and planning is required, and Plan your way out of debt is for them, as also for all those who would like to avoid such an unpleasant situation.
Certain specific ways to Plan your way out of debt may be summarized under the following captions:
Don’t over commitEdit
Ultimately all debts are required to be paid. However, certain types of debts are really important and avoiding them may land one in real trouble. As such, it is always a good idea to write down all your debts and prioritize them for repayment. An indicative list is given below though it shall depend on individual circumstances.
- High Priority debts
- Mortgage Repayment
- Rent & Taxes
- Utility Bills
- Hire Purchase Repayments
- Other Priority Debts
- Local Taxes
- Maintenance Payments
- Court Fines
- Other Debts
- Credit Card Repayments
- Bank Overdrafts and Bank Loans
- Borrowings from from friends &r family
- Non-essential goods bought on hire purchase
- See also
Getting out of the debt trapEdit
The modern life style has increased the dependence of people on debts. There are many other reasons too which have contributed to the indebtedness of the people across the world - for instance, manufacturing units move from high cost regions of the world to the relatively low cost countries; technological innovations have made many work obsolete; many persons suffer appear to be gainfully employed but not fully. Many a number of similar factors have increased the indebtedness of persons and many find themselves in the vicious cycle of debt trap - they are unable to get out of the debts and servicing the debts by way of payment of interests and installments have become the largest outgo from their earnings. When people find themselves in such a bind of debt trap, getting out of the debt trap assumes an important aspect of financial planning of such persons.
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