People fall into the debt trap primarily due to a lack of knowledge, and poor budgeting. In this thread, I will outline some of the behaviors that can lead to debt and present some ideas on how to avoid falling into a debt trap

• Save up before purchasing anything, rather than buying on credit. The common misconception is that "if the EMI is low, can afford it can lead many people into a debt trap. This is because it causes individuals to spend more than they can afford. To prevent this, it is important to remember the rule of only buying items on credit once one has built up savings. Furthermore, it is essential to learn more about how to manage and stop overspending.
• People have come to recognize the importance of loan prepayment in recent years They now prioritize paying off their debt over investing their money elsewhere. Always use savings to reduce debt burden before investing in anything else. Many individuals do not have an expense budget, but this does not automatically mean that they are prone to overspending. Fewer individuals will go over their budget, and those who do are less likely to fall into a cycle of debt. 
• Creating an expense budget before you spend your next paycheck is a great way to ensure you are staying on track with your finances You may want to consider the 50-30- 20 rule of budgeting, which suggests that 50% of your income should go toward needs, 30% toward wants and 20% toward savings/debt payments.
• The majority of people trapped in debt are victims of credit card nonpayment, which can result in an annual interest rate of up to 35-40% It is essential to recognize the consequences of not settling one's credit card bill on time Do not let your credit card balance roll over past the end of the grace period. 

People who find themselves in the debt trap typically display similar psychology:

They tend to spend more money than they have and, as a consequence, are likely to take on excessive loans, resulting in a high level of debt. To avoid this situation is essential to set a budget and stick to it as well as to pay off debts and loans as soon as possible Additionally, it is important to be aware of the risks associated with credit cards and to pay the balance off in full each month to avoid high-interest rates By following these simple steps, people can bid falling into a debt trap.

Thank you for reading. 

Utkarsh Chhapchhade

yourinvestmentadvisorutkarsh@gmail.com