4 Things to avoid if you are in Debt Burden

In Today’s lifestyle credit cards and loans have become a new norm. The fact is that these financial instruments provide great relief in times of emergencies. They provide money solutions when we want and a facility to repay after a month or installments that we can choose to repay over a period of time. 

There can be times where you use too much credit on the card or take a loan and face difficulty in repaying the amount. You may find yourself in debt burden by skipping a couple of payments and debt continues to pile up month on month which may put you in complete pressure as your financial position becomes worse.

Continuous calls from credit card issuers, emails with outstanding debts, legal notices asking to repay outstanding debts and many such instances will put you under pressure and you may take decisions that can cost you a fortune in the future. Hence, it is better to avoid taking certain decisions when you are in the debt burden. 

  1. Home Mortgage
  2. Borrowings
  3. One time settlements
  4. Retirements savings

1. Home Mortgage

Do not mortgage your home to pay off your outstanding debt. Your home is a place where you live. 

New debt on the home is created and there is a huge risk of repaying your mortgage. Your house is at stake and even a small mistake can make you homeless. 

The demand for houses will always be higher. If you lose your mortgaged house property. Not only just losing your house is a burden but also paying rent for livelihood and living is a difficult task.

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2. Borrowings 

It is a great feeling that our family and friends are in support of the need of the hour. But to settle an outstanding debt it is not advised to borrow money from family and friends. However, it should be the last option when all the doors are closed. 

Borrowing money from family or friends is both advantageous and also disadvantageous. If you borrow money from family or friends they may or may not charge interest. Your family or friends may just ask you to repay the principle amount on time. 

If you do not pay money on time, friction in your relations may erupt and you may lose your precious relationships just for the sake of money.

Never put yourself in such situations as you will lose your relations and also you have to pay the debt amount to them.

Click here to know about How to achieve financial freedom?

3. One Time Settlement

A credit score is a financial resume, it will track all your dealings including credit card payments, loan payments and any defaults related to them. 

Financial institutions have an option of the loan settlement for loan defaulters who are having difficulty in repaying debts.

They extract the most from the defaulters using this option. It is not a great option for the loan defaulters as One Time Settlement of loan or credit cards will be reported in the credit report which will have a negative image.

Once you get a loan settlement it will drop down the credit score in the credit report. It will have a huge impact on a credit report, the transactions will remain on the credit report for a long time.

It will become difficult to get another loan no matter in what circumstances you are.

Related- Tips to manage your Debt

4. Retirement Savings

Retirement savings will come to rescue after you retire from your job. Do not think that retirement life is far and there is enough time to look at that life and use your retirement money to pay off your outstanding debt. Because the number of years in compounding interest on your retirement savings will be lost.

The possible interest income that you could earn will be lost as the years passed will not come back.

The future is uncertain and you will not have the energy to earn in your old age.  

If you are planning to pay all your debts using retirement money then it is not a good idea. 


The burden of debt grows over a period of time and there is a lot of pressure, fear, and anxiety if you are under debt burden. Do not worry because the things which go wrong will take time to settle down and become good. All you need to do is discipline your spending habits, spend what you can afford to pay, budgeted lifestyle, make the best use of offers and deals, earn more money and buy only necessities, not luxuries. Follow good spending habits, debt will take care of itself and you will get the confidence of overcoming your debts.

Meet the author
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Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It’s a commercial mortgage banking company. He has a “Doctoral Degree in Commerce” and two master’s degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.



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