Bearing the burden of a debt trap is one of the most depressing things ever. It makes you feel like you’re stuck in quicksand.
Well, this is true. A debt trap pulls you in more and more until you finally lose all that you own. All that you worked for. How does a debt trap happen?
A debt trap happens when you borrow a loan with interests. You know, you repay the loan with the interest. But when you are unable to meet up with the loan payment, you end up paying more and more interests until the interest accrues into great debt too.
Although, there are good loans we recommend: like the Polaris Bank Salary Advance and First Bank Salary Advance. You can as well try the $2 billion loans by AfDB, African Guarantee for women entrepreneurs.
Sometimes, the interest ends up exceeding the loan. This is a very difficult situation to recover from. But we are here to help you. We’ll do this by sharing four practical steps that will help you out of a debt trap.
Sell Assets Or Liquidate Investments:
A lot of people find this very difficult to do. But experts always say it is better to sell your assets to recover from a debt than keep the assets while wallowing in the debt.
You’d agree with me that it is easier to work towards regaining assets than paying debts. Whenever you find yourself on the brink of getting submerged in a debt trap, settle it as fast as possible by selling off an asset or liquidating an investment.
Settle The Expensive Loans First:
One thing you must know is that it’s very difficult to attend to a lot of loans at once. To get out of a debt trap, do not try to fight the losing battle of offsetting all of your loans at once.
Instead, focus on one or a few expensive loans. This way, you’ll be quick to regain a financial balance.
Do Your Best To Avoid Economic Shocks:
Economic Shocks can happen to any individual or business. You know, it is that period when you totally lose control of your finances.
This occurs especially with a sudden loss of job. It is even worse for people who have no assets or other means of income.
Taking up side hustles or saving and investing your money will go a long way in helping you prevent economic shocks. The more money you have, the less economic shock you are likely to experience.
Consolidate Your Loans:
This simply means making your loans into one. It is cumbersome to get out of a debt trap when repaying up to five loans. Even three.
Making all loans into one large loan helps you repay easily, not only does it do this, but it also keeps you well organised and aware of your loans.
These practical steps are not the ultimate messiah to getting out of a debt trap, but we assure you that it will go a long way in helping you settle your loans and as well help you get back to your feet financially.
This post first appeared on Latest Hiring