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111. Is Debt a Modern Day Slavery - How to Avoid Debt and Lead Happy Life - Ways and Means...!!

Updated: Jul 6, 2021

What is Debt and Why Debt is a Modern Day Slavery ?

Debt is something, usually money, owed by one party to another. Most debts—such as credit cards, home loans, and auto loans—are categorized as secured, unsecured, revolving, or mortgaged. Debt can be used to fund needed projects, fulfill the dream of homeownership, or pay for higher education.

Debt is a drag. Not only on your credit score, but also on your psyche. It's a dark cloud that lurks over many corners of life, casting a shadow over your confidence, ambitions and relationships.

Debt is quickly becoming a new form of modern day slavery in any country. With people becoming increasingly more willing to spend on consumer items and lifestyle enhancements before they actually earn the money, debt is increasingly common.

To be clear, there is both good and bad debt.

The stress that comes from debt "may even completely eliminate all the happiness that you can get from spending your money," says Ryan Howell, associate professor of psychology at San Francisco State University and co-founder of Beyond the Purchase, a website that examines the psychological link between money and happiness.

Good debt is the use of leverage to invest in a business or acquire new skills that can increase one’s earning capacity well beyond the cost of borrowing.

Bad debt is using borrowed money to fund current expenses and lifestyle choices like vacations, clothing, and nights out on the town, and declining assets like cars and home appliances.

Since the Great Recession, many Americans should have been forced to cut back on their lifestyle spending because they were earning less income. But instead of tightening their belts, all too many people have chosen instead to finance lifestyle with debt.

That debt, in the form of credit cards and home equity loans, often comes at an exceedingly high price. Even borrowing for educational purposes has become a victim of lifestyle extravagance.

Student loan debt eclipsed all other forms of debt except for mortgage debt for the first time in 2018. According to Bloomberg, student loans surpassed home equity revolving debt, car loans, and even credit card debt in the aftermath of the Great Recession.

The reasons for this are myriad, but can mostly be attributed to the fact that other traditional forms of debt have become highly regulated, whereas student loan debt, most of it in the form of government subsidized and/or guaranteed loans, has become the new credit card.

As of last year, “Overall consumer debt reached a record $13.5 trillion in USA,” Bloomberg reports. While student loan debt ballooned to a record $1 trillion. This begs the question: Did the students who borrowed over $1 trillion receive educational benefits that enable them to repay that amount?

The data suggests that the answer is no.

According to an article published by CNBC, the average millennial (classified as ages 18 to 34) “had about $36,000 in personal debt, excluding home mortgages, last year.”

Furthermore, more than half of all millennials (classified as ages 18 to 37) “don’t know when, or if, they’ll ever be able to pay off what they owe.” Almost 20% of those expect to die with some form of debt.

For them, debt has become a death sentence. But it doesn’t have to be this way.

Debt, in one sense, assumes that you know today what you will earn tomorrow and can therefore afford to spend it today. It also assumes that you can afford to save tomorrow in order to pay off the debt you incurred yesterday.

I. What is the Impact of Debt on Family Finances and Families ?

Most of us know what it feels like to be behind on paying bills and concerned about having enough money in our accounts to cover them all. We may also know people who managed to become “debt free” and wonder how they did it. It sounds fantastic but is it realistic?

Before we look at how to achieve “debt free” status, let’s look at how debt impacts our lives. We’ll start with an example of John, who has a lot of debt. He has maxed out his credit cards, has household bills due and isn’t getting paid for another week. He lives paycheck to paycheck, and thinks he can balance the bills and still afford a few groceries – even if he has to live like a college student on Ramen noodles for a few days. One day, John gets up to a very cold house. His furnace has gone out and he has to call for repair. John has no emergency fund, has maxed out his credit cards and now can’t pay his household bills or buy groceries. What does he do?

The natural response would be to open another credit card account. At this point, John is stressed out. Feelings of hopelessness, depression and fear have set in. How can he keep himself out of trouble like this in the future? John needs to find ways to start putting money aside each month no matter the amount. Having that emergency fund that is never touched for regular bills can take away some of the stress when the unexpected happens.

Being in debt can affect your goals. When you are living paycheck to paycheck, that trip you wanted to take to visit friends or the house you want to buy are just too far out of reach. It’s time to analyze your spending. Are you stopping for a specialty coffee every day on your way to work? Are you grabbing a sandwich each day from the local sub shop? Are you and friends socializing at a local restaurant on a regular basis? If you really look at where you are spending money every day, there is a high likelihood that there is $5-$10 every day that you could save and those dollars add up.

Are you paying high interest on your credit cards? Look for a low interest credit card and consolidate all of that debt to that card. This could add up to thousands of dollars every year. Be sure to cut up your other credit cards. You don’t want to end up in that same situation. Keep your eye on the prize and that long-term goal can be yours.

Being in debt can negatively affect your credit score. It is a vicious cycle. High debt can drive a low credit score. A low credit score impacts your ability to get a low rate on loans. Paying higher interest on loans impacts your available cash flow. Having bad credit can also affect your ability to get a job or your ability to rent an apartment or home. It’s common for people to think it’s ok to let a few payments slide when they are in debt. The impact to paying late leads to more challenges and more debt.

Being in debt can also affect your personal relationships. It can cause marital problems, arguments with children and lost friendships. When a person feels deprived, he or she may look for someone to blame.

According to the American Psychological Association, excess debt can affect your health. You may gain weight from being depressed and feeling out of control. You might ignore health issues due to a concern about finances. Remember that putting off a doctor visit or skipping preventative health care can cause an even larger financial burden down the road.

These assumptions about future earnings are almost always wrong. We never really know today if we will be able to pay off debt tomorrow; we don’t know what challenges tomorrow may bring—whether it is some unforeseen medical expense, a death in family, being laid off from a job, or some other catastrophic occurrence. The future is simply unpredictable.

II. Whats Good Debt and Its Implications

Even good debt—debt incurred to purchase a home, invest in a business, or purchase additional education and earnings—should be questioned.

It appears that during the Great Recession, many Americans tried to ride out the downturn by borrowing to enroll in expensive educational courses—in programs that not only enabled them to purchase the skills, but also paid for their lifestyles, living expenses, clothing, and housing etc.

That’s why, despite the increase in salaries that millennials earn from advanced education, they are still finding it difficult, and in many cases impossible, to get out of debt.

III. Whats Bad Debt and Landing in Debt Cycle

Playing Status Games lead to Debt. If Someone is having Latest Automobile, if One also go for the same, Anyone will virually land in Debt Cycle.

If you take loan and go for International Vacation, buying unwanted clothing, Jwellery and advanced Electronic Gadgets etc and these all will lead to additional Debt Cycle.

Thus, Whaterver income comes additionally sometimes, people will end up in funding their lifestyle rather than paying down their previous debt. As a result, many end up in a vicious cycle of debt with no relief in sight.

IV. How to Come Out of Debt - Ways and Means

Step 1 - Financial Discipline and Budgetting

Not only is there a way out, but there is also a way forward for those who truly want to live debt-free. It starts with aggressively disciplining one’s spending in the short term.

This is not rocket science. You can generally pay down higher interest rate debt, such as student loan debt and credit card debt, by having less lower interest debt, such as mortgage debt.

It requires forgoing consumer purchases, such as a new automobile, vacations, clothing, and expensive electronics, in the short term. It also requires a bit of belt-tightening in the short term that in the long term leads to freedom from debt and to prosperity.

Although we all fall down from time to time, that doesn’t mean we have to die and be buried under a mountain of debt. With a little discipline and hard work, we can reap a bountiful harvest of wealth and prosperity.

We can even create a legacy to pass down to our next generation—not only a monetary legacy, but also a legacy of discipline and achievement.

Step 2 - Avoid Non-Essential Spending

If your family is in debt, remember you are all in it together and working together to find solutions to cutting non-essential spending and pay down debt is important. You can even make a game out of it and find a way to reward each other when cost cutting ideas are put into place.

How do you get out of this continuous debt building cycle? The most important thing is a complete and honest look at every penny you spend. If you put money into a vending machine to buy a soft drink, you need to track it. If you buy a couple of birthday cards and a gift, you need to track it. Once you have a complete look at the non-essential items you can start thinking about where you can make cuts. Instead of buying from a vending machine, consider buying in bulk and take one to work with you. Instead of buying a birthday card, look at free e-cards available online. While these all seem like small differences, they add up. If you identified $30 a week you could “stop spending,” that adds up to over $1,500 a year.I

Step 3 - Always take Loan with Low Interest Rates

Are you paying high interest on your credit cards? Look for a low interest credit card and consolidate all of that debt to that card. This could add up to thousands of dollars every year. Be sure to cut up your other credit cards. You don’t want to end up in that same situation. Keep your eye on the prize and that long-term goal can be yours.

Step 4-Think twice before going for New Version of Gadgets and any Other Lifestyle Items

With every purchase you are considering, ask yourself is this is a true need or simply a want.

A want you can put off for another day. Do you really need a new car this year or can you spend just a little bit of money on maintenance and make it last until you have it paid off? Do you really need to upgrade your cell phone just because you are eligible or can you forgo being the first on the block to have the newest version ?

Step 5 - If Possible , Avoid Credit Cards or Take One with Low Interest Rates

Look for ways to consolidate debt from high interest credit cards and loans into a single card or loan that has a significantly reduced interest rate. The savings alone from that excess interest can add up quickly. For example, the difference between a 23.38% APR (an average from some of America’s largest retailers on and a card with 10.24% APR with a $2,000 balance can save you $260 a year.

If you can manage your Family Finances with Discipline and Proper Budgetting, Just Avoid Credit Cards Once for All....!!

Step 6 - Pay for what you use and don't go for bulk packages

Cutting back on special package deals can also help reduce your spend. Bundled deals sound great – and sometimes they are – but often they include things you don’t really need. Look at your typical cell phone usage to determine how much data you “really” need. Review your cable bill – are there ways to eliminate unnecessary services (like premium channels)?

Cutting back here may save you even more dollars.

Step 7 - Always use Any Incentives or Bonuses or Whatever Additional Income for Debt Repayment and Early Closure of Loans.

The next time you get a pay increase, have that money deposited directly into a separate savings account. If you have been living on a certain salary for a year, you can likely do it another year. If you get a tax refund in the spring, immediately put that money to use by building an emergency fund and paying down debt. It’s easy to see that as “free money” to use for buying new clothes you want or taking a trip you have been dreaming of.

But keep those dreams in check until you have a manageable plan for getting out of debt.

V. Leading Debt Free and Happy Life

Life is not about acquisition of stuff. One of the basic to building wealth is living on less than you earn. Just because you can afford to buy something doesn’t mean you should. If you have trouble living on less than you make, practice separating your needs from your wants and greed. Before you make a big purchase, ask yourself, “Do I need this, or do I just want it?” This will give you time to pause and really think about how you’re handling your money. Let your wants inspire you to be a better version of you, inspire you to work hard and not push you towards a pile of debts.

Always think before you spend....!!

You can save money and enjoy life at the same time. Achieving financial freedom doesn’t mean you have to deny yourself to the point where you’re miserable. You can have an excellent quality of life while saving cash for a rainy day. You can have a good quality of life if you know when and where not to spend and balance your spending, giving and saving.

Important note: never forget to balance and give back..

One can travel, live well, give back, spread cheer wherever you go out and most importantly you can be ‘happy' . That’s because you should move out of the rat race and debt free .

“The trouble with rat race is that even if you win, you are still a rat’. And actually, it is a whirlpool that you get stuck in you actually never win. It is further corroborated by Wikipedia, which define ‘rate race’ as “an endless, self-defeating, or pointless pursuit. It conjures up the image of the futile efforts of a lab rat trying to escape while running around a maze or in a wheel.”


The key to getting your finances in order is to control spending and funnel that money into paying of your debt in an orderly fashion. Make sure that your debt is not growing, but shrinking a little every month. As your debt disappears (and it will, if you keep after it!), plan to put the money you have been putting toward debt reduction into a savings plan.

That money will start earning you money rather than paying off growing interest payments. That will be a happy day....!!

If We can manage our Family Finances with Discipline and Proper Budgetting, Living below Means, Spending Less and Investing regularly to a point, wherein our Money will earn More Money while we sleep and Repaying Debt well in advance will lead to Happy Days in anyone's Life ...!!

MM Rao


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