Trapped in debt

Sajjad Bazaz

We are living in a century where millennial are enveloped in worsening economic situation and are continuously engaged in changing their priorities to live an economically convenient life. Today, when young individuals are first starting their lives, either as students or employees, debt looks like the best solution to them to boost their income. However, it has proved only a temporary fix that later sets in to drag them into a debt trap. This 21st generation is totally apart from the past generations as they are struggling under the weight of heavy loans.

In other words, youth falling into debt trap is a common phenomenon. Most surprising aspect is that they hardly take a moment to think about the reasons of falling into the trap. Even as they are trapped in debt, they never try to scrutinize the reason behind their debt crisis. They even turn a blind eye to the fact that debt can lead them to a disastrous future, can consume their assets, hurt their relationships and even bring them acute mental stress.

Many youths find themselves in debt because they delay in taking care of their lives with a lower income and thus they begin to take route of bank loans. Living within their means is not mostly observed.

One of the major reasons young people are in debt is poor money management. In most situations, poor budgeting and planning lead to debt. Otherwise, with the right budget, one can easily track expenditure to make sure expenses are always less than income. Here the norm is to write down all expenses for a whole month to see exactly where income goes. This simple exercise will go a long way to avoid debt.

Today millennial also fall into debt because they don’t give attention to save a few bucks. Saving money for future is never a bad idea. No one has ever regretted saving money for emergencies.

Overspending is another norm among millennial. In this era of credit cards, most of the young ones are tempted to spend money they do not have. Before laying hand on a credit card, it’s imperative to think about the ways and means of repaying that money, which is nothing but purely a loan. The interest on money used through such cards is backbone breaking.

Over a period of time, availability of easy loan for education has lured youth to pursue higher studies. Taking a loan for pursuing higher education is not bad at all, but the way it’s obtained makes it bad. Going to universities or college without a clear plan of how to pay for it has pushed most of the student borrowers into a debt trap.

Precisely, borrowing irresponsibly only land them in trouble. For example, It’s very dangerous to take a loan to repay another. Here debt trap is inevitable. Taking a loan to meet certain requirements is not a bad thing. But one needs to plan it properly, so that one doesn’t get into a debt trap. Sudden events like sudden reduction in income, loss of job, a medical emergency, etc. are necessarily to be factored while planning for a loan.

When we look at the scenario at the moment in J&K State, we find our millennial inclined to borrow more and more. The number of borrowers has increased over the past few decades and even the amount of loans too has shot up. Our young ones have developed a habit of taking different kinds of bank loans to finance their lifestyle. They are fast becoming habitual of ruthlessly swiping their credit cards. These loans may enhance their lifestyle, but the darker side is that the more they borrow, the more they fall deep into a debt trap.

Here I am not conflating debt traps with easy access to loan schemes. Actually, such debt traps owe their origin to poor financial planning and haphazard money management practices. It happens when one takes a loan beyond his means - borrowing more than what one can repay. It’s also a rampant practice among the young ones that they want quick and easy access to loans. It’s here that they forget to give attention to the right loan product suitable for their need. For example, taking route of cash loan for the purpose of education or housing is not a wise step. Housing and education loans are cheaper than cash loan.

In succinct, don’t spend money that you will earn tomorrow. It will lead only to financial disaster and can leave huge adverse impact on your social life too.

(The views are of the author & not the institution he works for)