How to Spot a Debt Trap
Guide to Detecting a Debt Trap in Your Financial Life
Debt is a trap that feeds on itself. The cycle of debt traps people and they can’t get out of it.
The term debt trap is used for a couple of different financial concepts:
1) A person’s inability to repay their debts from the money they have coming in from their incomes, and
2) With personal incomes increasing, but debt also accumulating, debt traps are difficult to escape. This is because repayments on existing loans are taken from incoming incomes, thus creating a never-ending cycle that only worsens over time.
What Role Does Self-Sabotage Play in Finances?
The topic of this section is Self-Sabotage in Finance. It can be defined as making decisions that are against your best interests, deliberately sabotaging the work you need to do, or having a mindset that’s not conducive to success.
There are many possible reasons behind why one would sabotage their finances. For example, some people may have an addiction and they want to continue getting their fix so they take actions that put them in debt.
Some people may be living paycheque to paycheque and feel guilty about spending money on things they want so instead of going out and buying themselves something nice, they deprive themselves by starving themselves or not going out with friends. Some people may have anger issues and when they get angry or anxious about something, they channel that energy into spending money.
Self-sabotage is the act of consciously or unconsciously interfering with one’s success. With that being said, there are many reasons why people self-sabotage themselves, which starts to get difficult to pinpoint.
How to Spot and Prevent Debt Traps
Debt traps are inevitable in today’s society. Credit card companies, auto lenders, and other lenders are eager to give you the money you need. But they don’t want to give you the money for free of course – they want to get paid back plus interest. And for most people that is a frightening thought.
Ways to Spot Debt Traps:
- Create a budget for groceries but then buy an expensive item instead
- You eat out more than buy food at the grocery store
- You have set aside money each month but still can’t pay off your credit card balance
The key to avoiding debt traps is simple: spend less than you earn. It’s often ignored by many people. If you spend less than you earn, then you will have no debt and will be able to live comfortably.
The sooner you start using Joola, the sooner you’ll be able to build up your own personal fortune – and have fun doing it too! Join a group of people who want to save together and earn rewards by reaching milestones together as well as lending each other money when needed. There’s never been an easier way to save before this one! Learn about how to get started here.
Download the app from App Store and Play Store now and start saving with friends!