In my first article, The Journey Begins, I had explained why we are not able to solve our financial problem even after getting a good job.

 In this article I am delighted to explain about the condition of debt and how it starts enhancing as we start compromising with the job, which we are not passionate about.

In financial terms, when your liability becomes higher than the asset, it is the condition of debt. Surprisingly, identification of the asset and liability is quite interesting, about which, I will explain in detail in some other article. For now, keep in mind anything which adds to your income is asset and anything which adds to your expense is liability. So in simple terms, when expense is higher than income, it is the condition of debt.

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Now the question is, how the job which we don’t passionate can lead us to the condition of debt? In order to find out the answer of this question, we need to explore how a person lands up in a non-passionate job. I remembered the advice which was told to me in childhood that study hard and get a good job. The greatest myth along with this advice was that a good job would buy you a luxurious, safe and secure life. You can buy your own big house and comfortable vehicle. This fantasy of luxury leads you to work as hard as possible, killing all your passion, to crack the most difficult exam to get the highest paying job. They think higher salary will buy them their fantasy of luxury, which is a complete myth. I am calling it a myth because this fantasy is going to buy a huge liability and it is going to pull into the debt trap. Confused? You might be wondering what rubbish I am talking about. Please go ahead, you will be able to understand this in my subsequent paragraphs as you go through it.

Only cracking the exam is not going to provide the job to you. You have to pay a heavy fee to complete the course after the exam.  More the exposure of the course towards higher paying job, higher will be the fee. Banks also eagerly provide education loan for these courses which has potential to provide the higher paying job as it is going to provide them good return. This very first major investment for most of the people, which is really a life changing. Keep in mind, each investment is going to buy you either an asset or a liability. Also keep in mind, same investment can buy an asset for one while liability for others. That’s why I have told earlier that identification of the asset and liability is quite interesting.

Now the first investment is made, what is going to be next? Well, there are two types of investors, one who is passionate about the course and other whose main target is to score well and get a high paying job. First one is going to enjoy the course and will be able to utilise the knowledge in more productive manner rather than merely racing for the score and hoping for the highest paying job. Finally both will get a good job. Why not? After all both of them had worked hard and had paid for it. Now it’s time to utilise the salary. Finally, the first salary will be like a rain in desert and all the fantasy of luxury inside is going to blossom. Mind may also not hear the ding-dong sound, coming from the bank which is asking to pay their money back, else be ready to pay more interest. But the fantasy will always try to overcome the bell notice and will force you to meet it soon. In order to meet the fantasy very soon, house loan, car loan and personal loan seem to be easy paths, as loan had already made the education easy and you might be habituated of it. No issue. Go for it. After all you are getting, a good salary. It will pay back slowly. What’s the hurry?

Till this stage, loans and personal daily expense are liabilities, and the salary is only source of income, which is your asset. Now the financial battle started between assets and liabilities. The person who is passionate about job is going to utilize their knowledge to be an expert in that particular field. Using their expertise in the subject, they may be able to build more wealth, if luckily they had or able to grasp knowledge of financial intelligence somehow. Passionate people have more chances to grasp the financial intelligence, as they are internally satisfied and motivated. While persons who are not passionate are going to be frustrated with the kind of job and might also not interested putting any effort to getting expertise in it. They will start losing confidence and motivation from inside. This may also prevent from developing financial intelligence. Now their liabilities will start growing and a fear of debt will start daunting from inside. But the fear of debt will force them to compromise and stick to the job. The dissatisfaction may lead to the mental distress and bad health. This may further lead to the medical debt. You might have heard the quote “Health is Wealth.” Eventually this will force them to the financial trap of debt. That’s why I believe that greatest debt is not to lose a job but to compromise with a job which you are not passionate about. 

Fantasy with Loans
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Household debt is growing with significant rate especially in developed countries. However, developing countries are doing better when it comes to burdening their families with huge loans. Nearly three quarters of the population of USA are struggling with it. Of those in debt, 45 percent spend half of their monthly income on debt payments and 14 percent except to be in debt forever, according to a recent Northwestern Mutual study. A research report by the Economic Search Department of the State Bank of India (SBI), states that it is true that India’s Gross Domestic Saving Rate climbed to historic high level of 36.8% in FY08, and thereafter declined gradually to 30.0% in FY17. However, household debt rate of India is low and stagnant over last few years, hovering in the range of 9-10% of GDP. In USA and Japan, household debt to GDP ratio is 80%, while in most of the Asian countries, household debt to GDP ratio is less than 20%.  

The purpose of the article was not to state that investing over education and buying luxury are not good options. Also, it was not the motive to state that loans are bad, and it will always lead you to the debt. Instead, I believe investment in knowledge, and education is one of the best investments and its return is incomparable to any other investment. But it should be done according to ones passion not in the crowd to avoid falling in debt trap. You should buy luxury only when you afford it and loan should be handled in financially intelligent ways. In my coming articles I will tell you about the right time for buying luxury and financial strategies for handling loans.

The main purpose of the article is to drag the attention toward simple philosophy of investment that “The investment which is good for one is not necessarily good for you.” It is always recommended to invest in your niche, your passion. Find it, go inside yourself. Ask yourself, what do you wants from life?

Hey! I am not only going to tell you the story about a bad investment that may leads you to the debt trap, but also going to tell in my coming articles, how to bounce back from the debt trap and come out of it to live your life on your own terms.

But before publishing bounce back tactics, financial strategic way of handling loan and right time to afford luxury, I am delighted to provide one more article on falling in deadly debt trap. I will be back soon with my next article “Marriage without mental and financial planning is like committing suicide.” Stay tuned and enjoy the valley of debt!

Please don’t forget to share your feedback about the article in the below comment box. The love and response from readers of my first article have charged up me with more energy. I would love to hear more reasons for falling in debt trap, which comes to your mind. Please drop it into the comment box. Also, please don’t forget to like, share and follow my blog.

Published by Rajesh Kumar

Hello! I am Rajesh Kumar. I am an engineer by choice and a writer by passion. I love to analyse different financial situations and express my views on them.

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