There are many people in this world who are suffering from diseases like Hypertension, High Blood Pressure, Depression only because of the pressure of debt. And due to this they don't have barrier free thinking which is declining then day by day.
See there are two kinds of debt GOOD DEBT and BAD DEBT.
Good debt help you to improve yourself and also in increasing your income. This may be your educational loan, EMI for a seminar or anything that helps you to improve your skill. On the other hand Bad Debt is used mainly for the personal satisfaction such as car loan, purchasing a phone on EMI or other loans for personal satisfaction.
Infact Debt is Debt and you have to pay them back whether it is Good or Bad.
There are two steps to handle your Debt:-
a) How to save yourself from taking anykind of Debt.
How to save yourself from taking anykind of Debt?
i) Blessings Of Making a Budget:
Those Who Don't Manage Their Money
Will Always Work For Those Who Do!The first step to save yourself from anykind of debt is to make a budget. This habit will surely help you to manage your money. Have you ever gone through the situation of having no money at the month-end, it is just because you are not having a budget. You should have to do Data Driven Spendings instead of Emotional Spendings.
You can follow the above chart to divide your money allotment. Be sure that you are Data Driven while doing this allotment. After the allotment of all your money in different categories you can follow the Budget table to make your own Budget Table.
If you don't want to do all these you should at least make a list of all your expenses, it will also help you a lot.
ii) Have an Emergency Savings Fund:-
" If you lend your money to any relative then you will either have to forget that MONEY or the RELATIONSHIP "
The above saying not only applies on you but on your relative too from whom you are going to borrow the money in emergency. So, it is better to have an emergency savings fund which will be another great blessing for you. And you will need very less effort to achieve this blessing.
" If Money enters into a Relationship than that Relationship is Over. "
How much emergency savings fund should I have?
You must have Emergency Savings Fund for at least six months. This will help you a lot in difficult situations. Another important thing is that all the fund should be in liquid condition so that it can be withdrawn at any time you need
iii) Having Health Insurance:-
As the Medical science is improving day by day, we are also getting surrounded by the risk of different dangerous diseases. The treatment of these diseases is possible today but these are very expensive. To Overcome this expense many people become financially unstable, having a lot of debt to payoff.
In these conditions health insurance can be life saving. I believe each and every person should have their health insurance. You may think that you are paying continuously for your health insurance, having no profit at all. But these are long term profit giving investment. Infact not only health insurance but all the different kinds of insurance have it's own benefit.
iv) Investment:-
Imagine a condition that you were having Rs. 10000 in the year 2009 and you invested it in a fixed deposit account for the next 10 years. Now in 2019 you will get Rs. 22,080.40 when bank had paid you interest at rate of 8% per annum and compounded quarterly. But due to inflation the value of that Rs. 10000 in year 2009 became Rs. 32620.39 in the year 2019. So, overall your purchasing power has been decreased in these 10 years.
You should have to know that the average rate of interest on Fixed Deposit accounts is less than 8% per annum and the inflation rate is 12% per annum. That is even if you are putting your money in Fixed Deposit Account ( account which gives you maximum interest rate without any risk ) then also your purchasing power is decreasing day by day. You should also keep this in mind that you cannot put all your money in Fixed Deposit Account as you also need money for daily uses. So you will put it in a Savings Account which gives you interest rate as low as 3.5%.
So what should I do now?
I believe you should invest in Mutual Funds and FOREX Marketing, which will give you high return as compared to the Banks. But one thing you should always keep in mind that you may lose all your money or a part of money that you have invested. So, investment in Mutual Funds or in FOREX Marketing is to be done very carefully. You should start with less amount and with time you will gain experience and you can invest more easily.
v) Generation of Different Source of Income:-
If you are in 9 to 5 job then you are one among those who can generate several sources of income. You can be a OLA or UBER cab driver, a tution teacher, Multi-Level Marketing agent, Insurance agent and many more. But ensure that you are either saving or investing the money you got from these extra work.
You can also generate passive income sources. I believe that Passive Income is the best way of earning in which you will not have to work continously but you will be earning continously. I will suerly give an article on Passive Income in few days so stay tuned.
That's all for today from my side and you will get to see part 2 that is How to Payoff your Debt in the next post.
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