Although the resources are limited, the needs and wants are never ending. Improved lifestyle, social competition, higher aspirations leads to increased spending even if the required cash is missing. By the solutions like credit card and availability of easy loans.
People are leveraging current income and resources beyond their capacity by taking loans and using credit cards.
Doing this is resulting in reduced savings. By the time, they realize the impact, they are into neck deep debt.
After that, They can’t afford any further debt for long term goals like purchase of house.
Therefore Debt Management Is Important these days to help people avoid use of easy cash (available through loans).
Debt should be only availed for following reason:
- Funding Children education & marriage
- Funding a new business
- Meeting requirement for increased working capital requirement of an ongoing business.
Debt should not be availed for upgrading lifestyle or just spending on unnecessary requirements.
A High Neck Debt can lead a person to bankruptcy so avoid debt as much as you can. And do Debt Management properly.
Learn About Other Financial Terminologies:
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- why is debt management important