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Problems with maintaining financial liquidity are common, sometimes it turns out that the additional loan did not help us overcome the financial turmoil, but only deepened it, and then there is a serious threat in the form of a spiral of debt.

Managing your home budget is not easy at all. Especially when there are sudden expenses with which we are unable to cope alone. Then in our head the idea of ​​borrowing is born, which are currently at your fingertips. Everything would be good if it was not for the fact that some of us can not lend responsibly.

The concept of debt spiral

The concept of debt spiral

The debt spiral phenomenon occurs when the number of financial arrears that we do not repay on time increases. In such a situation, the basic mistake is to incur further installment loans , which allegedly help in repaying at least part of the debt. Very often, customers use this method until further companies refuse to borrow cash.

In the spiral of debt, you can be found extremely fast – especially if you have a free attitude to money. At first, we may think that incurring one commitment to pay off the previous one is a good idea, but before we look back, we will take the eighth loan to settle the seventh. It’s a vicious circle. When we finally realize that the financial loop has absorbed the rest, it will be too late to leave, because we will not avoid the consequences of unpaid loans .

How not to fall into the spiral of debt?

How not to fall into the spiral of debt?

Although the spiral of debt is a real threat, it can be avoided. First of all, if we have problems with repayment of debt , we must act. Problems with settling liabilities must not be underestimated. Contact with a loan company that decided to grant us financial support is very important. If we are not satisfied with the amount of installments or the repayment date, it is worth discussing with the lender and renegotiating the terms. Nobody cares for us to fall into a financial trap.

If we find ourselves in a difficult situation, and the pile of calls for payment will grow, let us not panic. The sober assessment of our position is important. One should realistically approach our needs and reduce expenses as much as possible. A good way is to make a list of fixed fees, which will tell us what our budget looks like and what free amount we have. In a difficult financial period, we should give up pleasure and focus on regulating debts.

We should always assume that the future can not be foreseen and that caution is never enough. Even the most responsible borrower can quickly get into financial trouble, because often small debt turns into a big problem .

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