- Taking a new loan to pay off an old loan
- Spending a large portion of income on EMI payments
- Relying only on minimum payments
Debt burden is increasing rapidly these days. people EMIIt has become a common thing to buy things and use credit cards not only for necessities but also for hobbies. Sometimes, purchases are made without thinking, which leads to monthly EMIs.
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Even after your bank balance is depleted, costs from loans and installments continue. The real problem is when you don’t realize it. By then it is too late and you are already in debt trap. It is important to recognize the signs that you are heading towards a debt trap in time. Know exactly what the signs are…
1. Taking a new loan to pay off an old loan
The borrower is forced to take another loan to repay it. This is a sign that they are trapped in debt. This creates a huge gap between monthly income and expenses, which leads to problems.
2. Spending a large portion of income on EMI payments
Borrowers spend most of their income on loans and EMI payments. If you experience these symptoms, you must be careful. Most EMI payments prevent savings. It hinders financial planning, indicating that a person is trapped in debt.
3. Relying only on minimum payments
of debt Another sign of falling into a trap is when a person starts making only minimum payments on a credit card or loan instead of paying it off in full. This avoids the immediate penalty, but does not reduce the actual amount, resulting in a constant increase in interest.
4. Lack of savings even after working for many years
Having no savings after years of employment can be a sign of being stuck in a debt trap. The person has neglected saving and investing or is trapped in debt.
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