Low-income-earners: Debt Tricks, Syndrome and key Tips


Wednesday, September 24, 2014 5:14 PM / Research


It is a natural practice among the low-income earners to embark on borrowing from families, friends and their respective offices, particularly when take-home allowance seems exhausted before the month ends or the monthly salary delayed beyond expectation.


Borrowing is not actually a bad idea if considered necessary, but growing debts is what may kill you and your dreams financially. It is obvious that you are heading towards serious problem, if you are spending more than what you earn monthly-


The earlier you avoid this danger, the better and healthier for you financially. but it is worthy of note that the number one rule to stop growing debt is spend less than you earn. Some of the key benefits of this rule are eliminating your debts and opportunity to grow savings.


This doesn't suggests you should avoid debt totally But you should know how to manage it properly and keep it under control. And for the purpose of this article, we shall explain what debt is and also throw more lights on how to avoid growing debt and falling into debt traps.


It is easy to get into debt trap that could derail your finances and prevent you from accomplishing your dreams. Here is a look at some of the most dangerous "debt traps" and how to avoid them:


The "New Car" Syndrome  

Rather than buying a brand new car and take up the huge debt that goes with it, ignore this and look for a good deal on a fairly-used vehicle. Most times, cars that are 3 to 7 years old can still be quite good and reliable. And they cost far less. Use the money you've saved to balance your budget, start funding your dreams projects, retirement account, or save up for building a house around IBAFOR/IMOWE or low cost areas like AKUTE and SANGO OTTA.


But if you have a well-planned living style, whereby your income can still accommodate the monthly repayment plan without growing debt, you may engage StanbicIBTC for a reasonable car/consumer loan.


The 'Fine/Big Apartment' Syndrome 

A decent and affordable apartment is what you should always consider, particularly in low cost but decent areas. This approach would save you 40% on accommodation cost annually. You may put this saved amount into savings towards acquiring/building a modest apartment in a better area you desired.


The "Looking Good" Syndrome 

There is high tendency to spend lots of money on clothing and other fashionable items to good. Though, we consider it very important to have clothes that fit well and make you feel good- but this must not be taken too far. Most ladies and fashionable guys believed it is important to wear the latest trends and they have grown debts on new shirts, jeans, shoes, and coats.


To avoid this trap, make a budget that includes a specific amount for clothing and other apparel. Then hold yourself accountable and be contended once you've reached your limit for the month.


With a strict planning you can keep yourself out of debt. Just remember to avoid the debt traps above, and if you start thinking about making a purchase that will result in debt ask yourself what you can do instead. This may save you your dreams and future outlook look brighter financially.


Below are the key summarized tips against debt trap

         Know where you stand financially
         Go through every monthly required bill
         Keep diligent track of your spending/expenses
         Revisit and review your routines
         Use a better bank with a less of hidden charges
         Priorities your debts with the highest interest rates are on the top
         Spend less and save more

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