Five Ways to Prevent Debt trap as an Entrepreneur
Debts can easily make one fall from any level of financial freedom into poverty. No matter the salary you receive, the investors you have and how established your business is, loans can make you pay all your profit as interest to someone. Here are five ways that could help you escape the debt trap and make it into financial freedom.
Don’t promise people higher interests on monies you take from them for a business. No matter how sure and confident you have in a business idea, don’t promise investors and people higher interests on monies they invest into your idea. In order to make people invest into our businesses instead of others’, we try to make them feel that there is no way things could go wrong, thereby promising them higher interest rates based on their income. Established investment companies have sometimes changed their minds from giving a fixed percentage of investors or depositors’ money as interest. Always look for people who are willing to invest in your business for the long term. Their interest could be a percentage of the profit you make instead of a percentage of the money they deposit or invest.
Don’t take a loan to give to someone to work with. Sometimes we hear of peoples’ business ideas and we feel like “wow, this is the real deal!” Before you push in any money, make sure its money you can do away with. It shouldn’t be a loan you have gone for! Anything at all could go wrong and you will might suffer the consequences. If you cannot live without your money, don’t put it into someone’s pocket. From a personal experience I had, I will say, it isn’t the best choice. You could end up losing that friend or partner.
Don’t buy or do things just to please people. People go for loans to organize expensive weddings and parties. Some even do same to rent houses in neighborhoods that will make other people think highly of them. You can deceive people that everything is okay, but very soon when reality strikes in, you will be forced to know your true ‘level’. Spend according to your means.
Always save. The reason why many people go for loans is because they do not have the money they need to do what they want to do. Developing the habit of saving could save you from going for loans when you are in need of money.
Do you have anything to add to the above? You can write them in the comments section below.