Jehan Divecha - What is Debt Trap How Can I Avoid It
                     
Debt can be a useful tool for achieving 
financial goals, such as buying a home or 
starting a business. However, it can also 
become a trap that leads to financial 
instability and stress. A debt trap occurs 
when someone is unable to pay off their 
debts, leading to more debt and financial 
hardship. In this blog post, Jehan Divecha, 
will explain what a debt trap is, how it 
happens, and what you can do to avoid it. 
What is a Debt Trap?
Jehan Divecha says, A debt trap is a cycle of borrowing money to 
pay off previous debts, leading to a growing pile of debt that 
becomes increasingly difficult to manage. When someone finds 
themselves in a debt trap, they often struggle to make minimum 
payments on their debts and may resort to borrowing more 
money to cover their expenses. This can lead to a cycle of 
increasing debt and interest payments that can quickly spiral out 
of control. 
 
Debt traps can happen for a variety of reasons. Some people may 
take on too much debt all at once, while others may face 
unexpected expenses or a loss of income that makes it difficult to 
keep up with their payments. In some cases, predatory lenders 
may target vulnerable individuals with high-interest loans, 
making it difficult for them to pay off their debts. 
How Can I Avoid a Debt Trap? 
According to Jehan Divecha, Avoiding a debt trap requires careful 
planning and budgeting. Here are some steps you can take to avoid 
falling into a debt trap: 
 
Create a budget and stick to it 
The first step to avoiding a debt trap is to create a budget that includes 
all of your expenses and income. This will help you understand how 
much money you have coming in and going out each month, and 
identify areas where you may be overspending.  
Build an emergency fund 
Jehan Divecha says, Having an emergency fund can help you avoid 
going into debt when unexpected expenses arise, such as a car 
repair or medical bill. Aim to save three to six months' worth of 
living expenses in an emergency fund, and only use it for true 
emergencies. 
 
Pay off high-interest debts first 
If you have several debts, focus on paying off the ones with the 
highest interest rates first. This will save you money in interest 
payments over time and help you pay off your debts faster. 
 
Avoid taking on new debt 
To avoid falling into a debt trap, it's important to avoid taking on 
new debt whenever possible. This may mean cutting back on 
expenses or finding ways to increase your income to cover your 
expenses without resorting to borrowing. 
Consider debt consolidation 
If you have multiple debts with high interest rates, 
consolidating them into a single loan with a lower interest 
rate may help you save money on interest and make it 
easier to manage your payments. However, be sure to read 
the terms and conditions carefully before taking out a 
consolidation loan to avoid getting into even more debt. 
 
Seek help if you need it 
Don't be reluctant to ask for assistance if you're finding it 
difficult to pay your debts off. There are many resources 
available, such as credit counseling and debt management 
programs, that can help you get back on track and avoid 
falling into a debt trap. 
According to Jehan Divecha, debt trap can be a 
difficult and stressful situation to be in, but it is 
possible to avoid it with careful planning and 
budgeting. By creating a budget, building an 
emergency fund, paying off high-interest debts 
first, avoiding new debt, considering debt 
consolidation, and seeking help if needed, you 
can take control of avoiding falling into the debt 
trap with your finances. Remember, the key is 
to be proactive and take steps to manage your 
debts before they become unmanageable.