Debt can be in any form such as mortgages, credit cards bill, personal loan, etc. In earlier days, the loan was given to those who were eligible to pay the same within the stipulated period. These days loans are sanctioned within minutes without much understanding the repaying capacity of the borrower.
Many individuals will not realize the issue until they are trapped by debt and when it gets too difficult.
Here are some warning signs that you are falling into debt trap.
You have no more savings in your account as you have withdrawn all of them to buy something or to make payments. When individuals are offered loan for everything, many of them are hardly bothered to save to buy anything.
No emergency fund
You have wiped out your emergency or contingency fund for one or the other reason. In the case of any medical emergency, you will be left with nothing other than borrowing funds.
Calling off important work
When you have plans put off certain essential task such as regular health check up, or any maintenance work due to the cost involved with it.
Minimum payment on credit card
If you are making only minimum balance payment on the credit card bill on a continuous basis is an indication that you are not able to handle credit debt well.
You have started borrowing funds or taking loans to pay your credit card bills and for your day to day expenses.
You have started to utilize the cash advance facility on your credit card to meet your regular demands.
Individuals may have different EMIs hitting their account. Make sure it should not be more than 45 per cent of your income. As rest can be used to meet demands, savings and investments.