2023 year in review: 7 tell-tale signs of the debt trap you have entangled yourself in this year

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credit card debt. Recognizing the perils of irresponsible borrowing and the pitfalls of debt becomes crucial. Though debt is a common reality for many, particularly those with a fixed income, prudent management is essential to prevent succumbing to a detrimental cycle.

As the year concludes, it’s essential to be mindful of indicators that highlight your current situation, reminiscent of the potential to fall into a debt trap. Some of these signs include: Alluring marketing strategies such as “easy EMIs", “discounts", and “sales" can be highly tempting, particularly when combined with the innate desire for immediate gratification. Nevertheless, yielding to their appeal without thoughtful deliberation can undoubtedly steer one onto a perilous journey of debt and financial stress.

This is how these strategies can deceive our perceptions: Your monthly EMIs constitute only a part of the larger fixed obligation puzzle, emphasizing the importance of examining the broader financial landscape to evaluate your fiscal well-being. Rent, society maintenance charges, school fees, and other routine expenditures collectively contribute to your fixed obligations-to-income ratio (FOIR), rendering it a crucial gauge of your debt burden. Ensuring a favourable FOIR, preferably below 50%, is undeniably essential for financial stability.

While this might prove challenging for everyone, particularly those with lower incomes or unavoidable high fixed costs, it remains crucial to aim for a workable ratio. Exceeding the 70% limit, as you rightly emphasize, is a notable warning sign. It indicates that a substantial part of your income is already allocated to fixed obligations, limiting flexibility and leaving little space for unexpected expenses or