Debt That Leads To Financial Death

Debt, Liabilities, Loans whatever you may call it. There are two types of it – One that cares for you another that can scare you.

If you are running with debts that cost you more than the earnings you make on your assets then such debts will lead to financial death. This is a very major concern and you must work on it to avoid it in your financial life.

In the space of Personal Finance column this topic is a need of the hour as I see people are being trapped in high interest-paying debts and still are investing their money into bank deposits, mutual funds, shares, etc. 

By doing so these investors feel that they are protecting themselves from uncertainties. They also satisfy themselves with the fact that they are investors and they also invest in stocks or mutual funds in order to maintain an aura among their social circle.

Is this the Right Way?

Obviously No! Debt can lead to financial death if it’s costing more than the earnings that your asset generates.

You must pay off all the debts that are costing you anything more than 10%. Only once you have paid them off then you should consider any investments in stocks, mutual funds, or bank deposits. 

Because it makes no sense by earning 6% in bank deposits and paying off interest more than 10% and calling yourself an investor.

This is very harsh but the only way that will lead you to financial abundance.

Key Steps to Ultimate Financial Abundance

1. Start Paying off Debts.
2. Start Building an Emergency Fund.
3. Transfer all Risks with Insurance Covers.
4. Learn more Skills & Increase Your Income.
5. Start Investing to achieve your Financial Goals.

P.S.: I have also written a detailed strategy on this in my upcoming book 7 Simple Strategies to Create Wealth From SIP, subscribe to the below newsletter to stay updated about it, and a lot more.