Have you ever wondered how dearly a toxic debt can affect you? An investment that is beneficial for you today can become a toxic debt for you in the days to come, if you are not able to pay your debts back in time.
So it always advised that you should never take your debts lightly.
Small debts can become big ones for you in no time.
You must be wondering what actually a toxic debt is? Any debt which can be potentially harmful for your financial status and property can be classified as a toxic debt.
Even a bank loan or a mortgage that you consider for buying an asset of your own, can turn into a bad debt if you are not able to pay the installments in time.
This can lead you in serious circumstances like losing your property or investments.
Here is a list of situations when a debt can become a toxic debt: oThe default interest rate issued by your bank or company is high.
This substantially increases the time for your repayment and thus the time you remain in debt is increased.
oOften it is seen that the company that issued you the loan, changes its terms or rate of interest with little or no information provided to you.
And thus you land in deeper debt without your consent.
o In today's market, the economy is going down and defaults are rising every day.
This increases the stakes of the company.
So in order to reduce their own risk they take any measures, without considering your finances involved with them.
Thus you end up getting screwed up.
How to get rid of Toxic Debt? Here are a few tips you should consider for saving yourself from toxic debt; oDo not go for small down-payment options.
This might look profitable and easy for you at that moment, but eventually it increases the amount of your loan and the interest issued on it.
o Issue credit cards which offer you the lowest rate of interest on your card limit.
oMaintain a budget list and stick to it, in order to keep track of your transactions and not spend more than you can afford.
oMaintain a list of your debts including the balances you owe, the interest on each of them, the credit limit of each of your cards and so on.