Debt & Fear

Posted on 14th May, 2019 | Category: Business | 2 min read

Say this to yourself – ‘Am in debt’.

Chances are that it could make you feel uncomfortable and burdened. Unfortunately, debt is a neutral word that has come to have a negative connotation emotionally for some of us. Let us examine this feeling by understanding what debt really is.

“A sum of money that is owed or due”.
-Oxford dictionary

By this definition, debt is an arrangement that gives the borrowing party permission to borrow money under the condition that it is to be paid back at a later date, usually with interest.

Debt can be in the form of loans, bonds, credit cards, mortgages, each with a different repayment structure and interest rates.

Broadly, we can classify debts into two categories. Firstly for personal needs and secondly for expanding your business.

Corporate Debts:

For your business, debt is one of the cheapest sources of finance. With market fluctuations being a factor, debt facilitates flexibility in your company’s financial structure. It also ensures that your controlling position as the owner is not disturbed. You get income tax benefits on the interest component paid to the lender and compare it with dividends you pay to equity holders. They are not tax deductible.

There are two sides to the coin. A company that has a large amount of debt may not be able to make its interest payments if sales drop. Conversely, a company that uses no debt may result in fewer expansion opportunities.

Personal Debts:

As humans, we have needs for which we require to borrow money. As long as you are not trying to live beyond your means, a loan makes it possible for you to achieve your dreams and goals. You could borrow from a friend, relative, bank, money lenders, etc. Before you decide whom to borrow from, you need to know your repayment structure. There are many types of loans you can borrow depending on the need. Any form of loan does give you a feeling of going away from your comfort zone. But ask yourself if being in the comfort zone is giving you access to all that you dream for you and your loved ones.

Borrowing is a healthy and effective way to make your dreams come true and retire like a boss. Shop around for a professional loan facilitator who gives you the best possible deal, is customer friendly in the real sense of the word and you start feeling that taking a loan isn’t uncomfortable after all.

Know your loan options

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