Sep 5

Top Tips to Lower Burden of Debts for New Generation

According to the financial experts the high rate of interest payable on unsecured loans, credit cards and other debts are the major sources of burden for the young generation. Hence, getting rid of them or clearing gradually should be the priority of every individual.

We are in the age of digitalisation. Everything is available on virtual platforms. There are obvious advantages of such developments but on the other side, it is pushing people in absolute and unnecessary consumerism. It might provide a boost to the industry but it has distorted the budget in most of the households.

In earlier days, shopping was not a festival and spending was only on required objects. In the currents times, the virtual vendors, the online shopping sites and megastores decide the amount and time one spends on shopping because either it is ‘end of season’ or maybe a ‘big billion sale’.

The frequent onslaught of SALE has literally spoilt the financial planning of individuals. Individuals face financial crunch and resulting stress as they end up losing their salary on repaying the credit card bills and paying the ever increasing EMIs.

    The most lucrative feature of the market is that now you can buy things even if the same does not fit your pocket, through credit cards and easy EMIs.  

    Money is spent in such a way that we don’t realise that it is spent. It leaves one person without any cash reserves for the uncertain future. The loans that we take for personal shopping start to pinch us from the very next day itself.

    Here are a few tips to keep unnecessary spending in control:

    1. Restricting the use of cards: The plastic money or the credit cards let you spend even if you don’t have the money. People swipe the cards without realising that in 45 days you have to REPAY the whole amount. And in case you pay a fraction and roll over the balance, the interest charge is crippling.

    It adds to your existing burden of managing your everyday expenses and paying necessary bills like electricity, water, etc. Don’t use the cards without planning and realising your actual need for shopping. Keeping strict check on your avoidable spending and credit control is absolutely necessary for a stress-free life.

    • Removing the non-essential shopping: People in metropolitan cities like Delhi, Mumbai, Bangalore etc. have habits of quite a few unnecessary expenses. While it is OK to spend on some aspirational objects, it is all the more essential to remain within a limit. However, the worrisome trend is the growing habit of overspending on avoidable consumption items. It may include ordering food online or frequently going to specific places just to eat. For an instance if you spend Rs. 300 on average on one order and place 10-15 orders in a month then you end up spending around Rs. 3000-4500, which not only affects you financially but also affects your health. Finally, you end up with unnecessary credit card dues on your pocket, payable from your salary.
    • Reworking with the current debt: It is better to consider your financial situation before making a purchases. If you are already paying EMI for vehicle or house then it is bad to burden yourself with more credit. You pay the highest interest on the shopping done on the cards (if the monthly dues are not paid in full). Try to restrict your avoidable expenses and save for the future.
    • Using the extra time on work: If you require extra money then you work extra. If you work for two extra hours after office then you can easily manage some extra bucks for yourself and utilize the free time in productive work. Why not go for more earning, more saving and thus lower your burden of unnecessary debts.
    • Avoiding the temptation: Sellers will always put the best marketing strategy to lure customers but you need to decide whether you require something or not. An useful method is not to take instant purchase decisions for aspirational items even if the same is available at a lower price. Before carrying out a large spending take some time off to think about the funds available and whether you can defer the purchase. List your priorities and plan wisely. Remember everyday groceries and bills are necessary expenses which one can’t avoid but buying clothes or gadgets on every sale is absolutely illogical. Let market sell but you buy only when you actually need it.

    Try to clear your debts paid in the form of EMIs as soon as possible. Strive to keep yourself away from purchases on credit. Do not make hasty decision when it comes to buying. Remember, you may decide to buy a house eventually and would need to pay a large part of your income as EMI on the house for a fairly long time. It is better to prepare early for the same. Like you may save a fixed sum from your monthly income in order to create a corpus for the down-payment required for purchase of a house.

    Thus, by following the tips described above and keeping in mind the shared information, the new generation can lower burden of debts. It will help you enjoy happy and debt-free living in the society.

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