9 steps that can quickly get out of Debt trap
We are living in the edge where Society thinks debt is normal, that’s the reason companies selling personal loans, credit cards, EMIs etc. are on boom. Consumer debt is the one which used for fulfilling your desire which is actually an expense you can’t afford. Once you get into spiral of consumer debt it keeps increasing and you don’t realise when you get into Debt trap. Even celebrities like Amitabh Bachchan and Shahrukh Khan became the victim of Debt trap in past, fortunately they get out of it. Debt trap is one of the biggest traps where one only go down but good thing is that if you take following steps you will surely get out of this trap:
- Accepting the reality of Debt trap: The first and foremost step you have to take is to accept you are in Debt trap. Many emotional and hard hitting questions would go in your mind like Why you? Why God and your destiny so hard on you? And many more. At this time it is usual that you are broke and it is hard to face this reality. But running away from reality will worsen the situation. Be brave and accept that you are in Debt trap and commit you will get out of it. Once you accept the reality you are half way done meaning this 1st step is 50% of solution and following 8 steps are together 50%. Osho quote “We have to cut the roots of worrying and the best way is to accept whatsoever happens in that moment that is REALITY”
- Renunciate mindset of maintaining status quo: Now once you have accepted the reality; don’t try to maintain status quo, you have to change your spending habits and your current lifestyle. Don’t allow your ego, your image, and your status to decide your spending habits for too long. You may think: – I deserve this status… – I deserve this lifestyle… No. You have now accepted the reality, so if used to travel in cars in past but now situation is different; if required you have to travel in public transport, don’t hesitate. If you are hesitating in changing your spending habits you have NOT accepted the reality, go back to step no. 1.
- Avoid desperation and Create a realistic plan: It is natural that you want to get out of this trap as soon as possible and that creates desperation in you. When you are desperate you are prone to take wrong decisions and you will search for quick solutions. Such situations attract you towards very risky affairs like Ponzi schemes, betting, high risk stock trading etc. and then again you will get into increasing debt spiral. Research has shown that those who are already in huge debt are the 90% buyers of Ponzi schemes. You have to reduce your problem not to increase it. Avoid desperation, yes it is not easy to be calm in such situation but you have to. Also avoid to get into affairs which you think it can give you quick money like Real estate brokerage, stock trading etc. just because others are making money from it. You have to make one realistic plan, start working on the projects in which you are really good at and make mindset of growing slowly but consistently.
- Work on increasing your income: Once you start working in which you are good you will start earning from it. Initially that earning may be small and you may think that it is too little in front of your huge debt. But you need to keep going, think positively to increase your income, work on that and 24X7 search upon new opportunities to increase your income. Use your past intangible assets like your goodwill, your network, your experience etc. Keep working and keep searching for new opportunities for growing your income. Over the time you will see that your income and confidence is gradually increasing.
- Upgrade yourself and create side hustles: When you start gaining confidence now you have to start thinking for side hustles. At this stage you can invest some money and time to upgrade your skills and make side hustle. Making multiple income streams will boost your confidence and from this point you will start visualising yourself that you can really get out of Debt trap. This will give enthusiasm to work more and to increase income streams.
- Cut down your expenses: This is very important step you have to follow. In this time just fulfil your needs and don’t even think of your wants. If you spend money on your wants all your efforts will go in vain. Cut down your expenses. It means drill it down only to Roti, Kapda, makaan. Thats all. Yes, it is hard but it is temporary.
- Keep track of your every penny: Keep one notepad or excel with you, fill all data of your earnings, spending, savings, current debt etc. You should know from where money is coming and most important where money is going. There is a saying “What isn’t measured isn’t well managed”. If you have a goal, you must track the variables impacting that goal. You have to track your debt balances, you spending, and your overall net worth. This will bring clarity in your mind of your current situation and help in making plan for future.
- Make a plan to repay your debt (don’t rush): You have to repay your debt but not from everything you earn. Don’t rush to pay your debt from all your earnings. If you repay your debt from whatever you are earning, you may stuck in future if that earning stops for time being. You keep a part of it with yourself for your necessities and keep a part of it to invest in yourself to upgrade or invest in your business to grow and then repay your debts from rest. This may sound tricky but if you pay everything you earn you become too harsh on yourself. It is important to give yourself a second chance to grow and once you grow you can repay a larger chunk of your debt. Debt repayment is more of psychological than financial, focus on that psychology.
- Learn the lesson and Forgive yourself: Everyone makes mistake in one or the other way. Nobody in this World is perfect, you are also not. It is OK if you have made mistakes and get into Debt trap. Once you repay the debt or on the path of repaying it, learn your lessons to never repeat such mistakes. Forgive yourself and most important forgive others who have cheated or harassed you in this time. Start afresh, see the rising sun and build the energy and achieve your goals. After every dark night there is again a beautiful morning.
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