Extinguishment of debt

How can you be financially independent with a list of creditors waiting for repayment?

At Simplus, we believe that extinguishment of debt is a fundamental step in managing your finances. It’s about not getting into debt in the first place and if unavoidable, to close the debt at the earliest.

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What you need to know about debt:

  • Distinguish between acceptable and unacceptable debt, productive and unproductive debt. Any debt designed to automatically end itself is better than debt which remains open indefinitely.
A housing loan or vehicle loan is debt which is repaid in installments and extinguishes itself over the loan period. On the other hand, personal loans, personal overdrafts and credit card loans are examples of debt which remain open.
  • Credit card debt can be a drain on your resources. In India, the rates of interest on this type of debt presently vary between 24% and 48% per annum.
  • It’s easy to fall into a debt trap, but difficult to get out of it. If you do not have a house and the resources to buy one, consider a housing loan. Provided that you can repay the installments comfortably. Extinguish all other types of undesirable loans before you start making investments.

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