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Two strategies to avoid a debt trap during job loss and dwindling income

The avalanche will save you money, but the snowball approach is easier to stick to

Topics
Personal Finance  | Guide to Personal Finance | debt trap

Bindisha Sarang  |  Mumbai 

The pandemic and the consequent loss of jobs and reduction in business incomes have led to an increase in household debt. According to a March 19 release from the Reserve Bank of India (RBI), the household debt-to-GDP ratio rose from 35.4 per cent in the first quarter of 2020-21 (Q1FY21) to 37.1 per cent in Q2.

Add to that the easy availability of loans via apps, and the chances of falling into a debt trap are perhaps higher today than at any time in the past. If you are caught in such a situation, adopt one of the two strategies described below. Debt avalanche This is the strategy ...

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First Published: Tue, March 30 2021. 16:44 IST
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