Are you losing sleep at night, thinking, how will you repay your equated monthly installment? Are you taking a loan to repay another loan and then falling into the cycle of taking another loan? If you are splurging all your earnings by paying multiple loans? For a healthy state of mind and being, you need to be stress-free. And financial stress is the worst. Not only it gets difficult to manage your monthly expenses, but the pressure from the collection team and loan sharks is also often very challenging to deal with. The constant pressure to pay what you owe others can drive you to depression, lack of sleep, deteriorating mental health, and risk of losing social and financial credibility.
Debts often increase debts over time. And you end up paying EMI for your entire life. It keeps on compounding until you crumble under pressure. The consequences can be loss of property and even life. Many succumb to these and end up taking drastic measures.
Therefore, if you want to live a life full of peace and financial stability, leading a debt-free life becomes vital.
Why does a debt-free life matter?
Well, you will be happier and feel much lighter from within. Without those burdens of repayments weighing heavy on your shoulder, you will not be answerable to most of them. You know that feeling of dependency when you owe someone something! It is a horrible feeling to live with. Especially when you know you won’t be able to repay soon or, in some cases, never.
Debt-free life means a self-sufficient life. You don’t owe anyone financially anything. You are a person who has repaid every favor done to you. Unlike Lannisters, who always pay their debts because of their immeasurable wealth, you and me, and most of us commoners, do not have the bounty! Neither will we win a lottery soon or stumble upon El Dorado. When you borrow a loan from a bank or a third-party lending partner, you pay more than you borrowed. And then you fall into the loan cycle, piling up bad debts.
Furthermore, people often fail to pay back their debts and engage in illegal activities like gambling or stealing. In the promise to recover the losses, they look for easy money, which often turns out to be scams and frauds, causing further financial crunch. Because there are all sorts of emergencies lurking in the shadows, better monthly budgeting might help you get started on solving them.
Debt-free life allows you to prioritize taking loans (if at all) for better opportunities: like investment in a business, medical emergency, education, or home loan. But, even so, one should avoid taking loans of any sort.
By leading a debt-free life, you manage to salvage your social life while securing your financial future. It means securing your future and creating a safety net on which to fall back when things go south. You don’t live in fear of losing your car or home. You get a sense of freedom in spending where it is required, where it is needed. By leading a debt-free life, you can compound your savings, giving you the option for early retirement. And because every loan you opt for needs a guarantor, you do not pass your baggage to someone else in the event of failed repayment.
The total global debt as of 2022 is $226 trillion. There are 8 billion people on the planet. That is an average debt of $28,250 per person. It is more than the average income generation for the entire continent of Africa, East Asia, and the Pacific, which amounts to $8,800. The increasing trend of debts also saw a parallel rise in depression and severe mental issues.
But why are we falling prey to debt traps, and how do we avoid them?
Advertising and marketing have given consumerism a whole new meaning. “We are buying stuff we don’t need with the money we don’t have.” The shopping mall culture replaced our evening walk in the park. Advertisers are finding it easier to raise the insecurities of consumers. Social pressures are changing the meaning of lifestyle. Today, it’s not about how well you lived your life in principle but what you can show for it!
Unlike the economic depressions and crises humankind experienced in the past, since the age of mass production and consumerism, we have more production than demand for the first time. There is no shortage of goods and commodities today. Consumers are spoiled for choices. Take, for example, breakfast cereals. Americans have over 4,000 different choices of cereal for breakfast alone. Apple Cinnamon, Berry Burst, Maple Cheerios, Banana Crème Frosted Flakes, Frooty Loops, Quaker, and whatnot. Each is advertised to slow-brainwash consumers into a false sense of acceptance.
Did it ever happen where you thought this was the best thing you have ever wanted at the time of buying, but months later, that thing is lying somewhere in the corner of the room? And then you will have people complaining my needs aren’t met! Well, drop some of your needs. Buy only what you need.
Also, maintaining multiple credit cards should be strictly avoided. Pay your credit card bills in one go. And try not to depend on these. Like any other credit; you end up paying more than the retailer’s price. Cash should be the preferred method of payment. Go for secondhand cars and stop splurging on fancy products. Alternatively, you can avail yourself of public transport, which is cost-effective. If you want to live a debt-free life, look for cost-effective options. Make a monthly budget and stick to it. Keep looking for freelance jobs if your work permits. Add to your source of income. Cover all your bases. Invest wisely. Above all, choose quality in ideals and not materials.
Each hack will only work for some. Every individual needs to assess these on their terms. Based on their income, monthly expenses, emergencies, and goals for life. But what remains constant is the peace you get from leading a debt-free life.
