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Change your habits to avoid debt trap

Change your habits to avoid debt trap

I T is just the beginning of the third week for the month and John is almost broke, which he realized after peeping into his purse, as there is hardly any money left into it to spend. John usually gets his monthly salary on the last day of the month and there are still 9 more days to go before he can expect any money into his bank a/c.

This is not the first time that John has landed into such a precarious situation as nowadays it is quite a routine affair for him. The only way out which John can contemplate is to borrow money from some of his office colleagues at an exorbitant interest. But it is no more an easy option for John as he had borrowed from the majority of his colleagues in office on one or the other occasions.

The moment he gets the monthly salary he is supposed to repay the borrowed money [with interest] to his colleagues and often there are instances when John had failed in his commitment to repay in time, as promised.

So among his colleagues, John is no more a creditworthy person and this makes further borrowing difficult for him to come. It is a universal fact that when a person gets a lower score on his creditworthiness, the first causality is the applicable ‘cost of borrowing’ which slowly escalates to an unbearable level.

This is the case for any ordinary borrower whether the corresponding borrower happens to be an individual, company or even a country, as this is quite common in the financial world.

As a result, John is in a complete debt trap wherein he is required to borrow money to service the existing debt.

This is a very dangerous situation for any human being and immediate concerted efforts are required to break this shackle. So, is there a ray of hope for John?

On the face of it this appears difficult, however, let us try hard to analyse the situation and suggest some workable solutions.

To start with it is important to study and analyse the daily routine of John’s lifestyle to ascertain the possible leakages of his money on a day-in and day-out basis.

While on the subject, it is also important to highlight certain lifestyle practices following by some of John’s colleagues. 1st observation: John travels to his office in a car and never uses the public transport system, which luckily is quite efficient in the city where he resides.

The level at which John is working falls in the lower management cadre and a person of his stature can’t afford to travel across the month to his office in a car. Many of his colleagues use their respective cars to travel to the office once in a while only i.e. once a week or say 4 to 5 times a month and rest of the days they prefer to travel by the usual public transport.

2nd observation: Due to late rising in the morning, on most occasions, John misses to take breakfast at his home, which he supplements by ordering some eatables from the office canteen.

This for sure comes at a cost, which again is far higher than what it would cost him if he had prepared the breakfast at his home.

The matter does not stop here but John even visits a nearby restaurant to take his daily intake of lunch during break hours. Conversely, most of his colleagues follow a different lifestyle as they prefer to take their breakfast as well as lunch at their home instead of hotels. 3rd Observation: John is not only a chain smoker but also a regular drinker.

This alone constitutes at least 25% of his day’s total expenses on average. In other words, we can say that a quarter of his monthly income is spent on smoking and drinking alone.

This on one side is a costly habit to maintain, while on other hand it is equally damaging to his health. 4th Observation: John believes in buying the majority of foodstuff items, fruits and vegetables in bulk to avoid visiting supermarkets now and then.

However, there is one important point which John is missing, which is about perish-ability of some of these items.

At the end of each month, around 15% of the goods bought by John turn bad and thus not suitable for human consumption. As a result, these items have to be thrown in the garbage, but mind it John had already paid for all these items when they were initially bought as fresh.

On similar lines, many observations are leading to leakages of John’s money on day-to-day basis. And remember there is no other way to improve John’s financial condition without controlling such petty leakages of money. It is also important to extend this corollary to many more people whose lifestyle is quite similar to that of John.

It happens to the best of us: mysteriously falling short on cash when we could’ve sworn we’d just hit the ATM. Where did all that money go? On any given day, there are several ways we leak money - knowingly or unknowingly.

Therefore, the need of the hour is to stop such leakages of money whether it is the case of John or any other human being. I can’t see any reprieve from such leakages if one is not serious about tackling them head-on.

The mirror is right in front of us; let us see how many of us will learn the right lesson.

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Author: Jagjit Singh

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