How to Get Out of Debt? - Part I

It is easy to get into debt but needs an effort to get out of it. In this part of How to Get Out of Debt? course, you will get some insights into the reasons that may get you into debt, control over debt, some ways to tackle debt and types of debt.

How to Get Out of Debt?

Life and Debt

Life and Debt

Debt can wreck a person’s personal and professional life.

If you take prudent personal finance steps, however, you can live a life free from financial worries.



The Debt Trap

Main Reasons to Getting Caught in a Debt Trap

1. Spending more than the income

2. Health Issues

3. Unexpected Expenses

4. Loss of Job


The Debt Trap - What can you Control?

Main Reasons to Getting Caught in a Debt Trap

1. Spending more than the income

2. Health Issues

3. Unexpected expenses

4. Loss of Job

Which of the Debt Reasons can you Control?

1. Spending more than the income - Fully under your control

2. Health issues - You have some control

3. Unexpected expenses - You have some control

4. Loss of job - You have some control

Tackling Debt - Quick Overview

Main Reasons to Getting Caught in a Debt Trap

1. Spending more than the income

2. Health Issues

3. Unexpected expenses

4. Loss of Job


Some Solutions to tackling Debt

1. Do not spend more than what you earn

2. If you have a health insurance and or an emergency fund, you may be able to handle health issues

3. If you have an emergency fund, you may be able to tame some unexpected expenses

4. If you have an emergency fund, you may be able to tackle the financial crisis, which arose because you lost your job, at least for some time

Types of Debts

Secured Debt

A car loan, for example, is called as a secured debt, because the lender can repossess your car if you do not pay the amount you owe.

Unsecured Debt

The credit card debt, for example, is known as an unsecured debt, because it is not linked to any of your assets.

Secured or unsecured debt, make the payments regularly and on time so the debt does not take control of you

Match and Win Over Debt!

Drag the item from the right to the matching item on the left
  • Your washing machine, which was working fine, broke while you were doing laundry and needs a major part replacement.
    Be sure to set up an emergency fund when you have money and use the fund to tackle expenses you did not expect.
  • The doctor looks at the test results, which he ordered for a health issue, say of your kid, and orders further tests.
    Use your health insurance, if you have one. Or, buy health insurance as soon as you can to handle health issues. Emergency fund, too, could be of help in this scenario.
  • You are the bread-winner of your family, but you suddenly lost your job.
    Tap into the emergency fund and begin soon to find a job.
  • Your passion for buying the latest smartphones is pushing you deeper into debt.
    Do not spend on wants, until you have the money to pay for it.