A financial advisor shared about a professional who accumulated ₹15 lakh in debt without making a single ‘reckless financial decision’.
The financial advisor whose LinkedIn post has gone viral.
(LinkedIn/Vivek)“A 36-year-old operations manager from Pune earning ₹90,000 a month is now ₹15 lakh in debt, though he never made a reckless financial decision.
One loan adds an EMI, which shrinks your cash flow, which forces the next loan,” the advisor continued.
“Then list every balance and interest rate you owe and start clearing the highest-interest debt first.”
People often think a debt trap happens because of lifestyle creep or overspending. However, a LinkedIn post shows how the reality is much scarier. A financial advisor shared about a professional who accumulated ₹15 lakh in debt without making a single ‘reckless financial decision’. The financial advisor whose LinkedIn post has gone viral. (LinkedIn/Vivek)
“A 36-year-old operations manager from Pune earning ₹90,000 a month is now ₹15 lakh in debt, though he never made a reckless financial decision. 3 years ago, he was earning ₹90,000 and spending ₹82,000 on essentials. Tight, but workable,” investment advisor Vivek wrote on LinkedIn.
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Explaining how the man ended up with a huge debt, the advisor continued, “Then his father needed urgent surgery costing ₹5 lakh. He took a personal loan at 14%, with an EMI of ₹13,663 a month. That single decision quietly broke his budget. His monthly outgo went from ₹82,000 to nearly ₹96,000, against the same ₹90,000 income. He was now short every month.”
To manage, the man started using his credit card for groceries and fuel. “Within a year, that balance hit ₹4 lakh, with a ₹20,000 minimum payment at 40% interest. So he took a second loan of ₹6 lakh to consolidate the mess, but because his credit score had already dropped, this one came at 18%, and the EMI was ₹17,625.”
He became entangled in the debt trap even more in the next two years, and the total amount crossed ₹15 lakh, with him spending “57% of his take-home salary”, around ₹51,000, on debt. “Every new loan was paying off the old ones.”
“This is how a debt spiral works. One loan adds an EMI, which shrinks your cash flow, which forces the next loan,” the advisor continued. Vivek added what pushes someone deeper into the debt trap.
“If your monthly EMIs are already above 40% of your take-home, treat it as a warning.” He continued that the if someone is in such a situation the first thing they should do is stop taking new loans. “Then list every balance and interest rate you owe and start clearing the highest-interest debt first.”
