In the current era, we see one thing everywhere, and that is Loan and EMI. Today, almost every person has a loan. Be it for buying a house, buying a car, buying a mobile or buying any electronic item. Almost everything is taken on this loan. Banks or NBFCs reach out to people with their attractive schemes through various advertisements and encourage people to withdraw money easily. But behind this easy money or loan, there is a very big reality. People get so caught up in the EMI trap of banks by taking large loans that they even lose the freedom to quit their jobs.
Through this blog, we are going to shed light on the topic of Generation Trapped in the EMI Trap – Financial Reality and Way Out. So let’s continue.
Relationship between job and EMI
Every employed person, whether in a private job or a government job, must have taken one or all of the following types of loans.
1. Home Loan – A home loan is a loan taken for at least 15 to 25 years and the monthly repayment of which takes a large portion of the salary from the salary.
2. Car Loan – In today’s modern lifestyle, a car, which is considered very necessary for the young generation, is actually becoming a financial burden.
3. Credit Card Debt – While buying small items, purchases are being made on credit cards. The young generation is in a hurry to buy items, the attraction and then the pressure of interest rates on credit cards.
4. Small and large personal loans – Loans taken for marriage, education or unexpected expenses come under personal loans. Since their tenure is short, the EMI on them is large.
All these types of loans are taken by the working class in large quantities. However, after that, EMIs also have to be paid in large amounts and due to these reasons, even if the person is not satisfied with the job, it is almost impossible to dare to choose another path other than the job.
Mental and Financial Impact
Financial Stress: Almost half of the monthly salary or budget of the employee goes towards paying the loan installments, and the rest of the salary has to be used for household expenses and other expenses. Due to which there is no room for saving.
Loss of Freedom: A person leaves his job and starts a business he loves, takes a break for higher education or pursues a career in his favorite field. All these things have to be forgotten.
Impact on Mental Health: Constant EMI worries, stress, and not giving time to himself, and the interference that results from it, all these things have an adverse effect on mental health.
A young man named Amol was working in the IT sector. At the age of 25, he took a home loan of Rs 50 lakh, bought a car on loan and started living a luxurious lifestyle using credit cards. Initially, the salary seemed sufficient. But as the EMIs increased, he found the job boring. He wanted to start his own startup, but the monthly EMIs of ₹70,000 were holding him back. Also, he was faced with the question of how he would pay the loan installments if he quit his job. Even when he did not feel like working, he had to do it with all his heart.
- Sometimes he regretted that if he had controlled his expenses earlier and not taken unnecessary loans, he would have been able to quit his job and start his own business, but now time had passed.
- Amol’s situation has become a large part of the youth, the working class. Amol’s story is a reflection of the lives of millions of people – passions and dreams get trapped in the clutches of EMIs.
Financial discipline is the only solution
1. Borrow only when necessary: Borrowing for status symbol becomes the biggest burden. Therefore, borrow as much or less as you need.
2. Emergency Fund: Save a little money from your salary and save at least 1 year’s expenses. You can use it in emergency situations so that you do not need to take a loan.
3. Smart Investment: Invest at least 20% of your salary regularly in Mutual Funds, SIPs, Fixed Deposits or other safe instruments.
4. The right method of paying off debt:
- Snowball Method: When paying off debt, first make a list of your debts and pay off the smallest debt first, and then gradually start paying off the larger debt.
- Avalanche Method: Pay off the debt on which the interest rate is higher first.
5. Multiple Income Streams: Currently, social media, online work from home, content writing, posting videos on YouTube, freelancing, side business, rental income, etc. Learn things over time and create additional sources of income through them, which will increase your income and help you pay off your debt as soon as possible.
The reality of today’s generation is that a job is not a career but a “means to pay EMIs”. To achieve financial freedom, people should avoid unnecessary debt, make proper investments and make disciplined financial planning.
Finally – money is a means of living, but if the obsession with money and debt interferes with your decision-making, then that is real freedom.