We must acknowledge that in this era, the risk of falling into debt for us working individuals is quite high. This is due to the numerous external stimuli and the high cost of living, especially in urban areas. As a result, sometimes the income we earn is insufficient for our needs, leading to debt accumulation.
Additionally, many people spend using credit cards without planning, allowing emotions to dictate their spending, which results in debt. While it is true that credit cards provide convenience in spending, ultimately it depends on us, the cardholders, to use them wisely or to fall into debt.
For this reason, MoneyGuru.co.th will guide you through the things to avoid if you don't want to be overwhelmed by debt, so we can be cautious and stay away from debt that could obscure our financial future.
Spending money to buy things we desire or to relieve stress from hard work is not inherently wrong, but we should plan our spending carefully to avoid overspending, which could lead to financial troubles.

2 Things to Avoid If You Don't Want to Be Burdened by Debt

1. Paying more than 40% of your monthly income towards debt repayment

Knowing how to repay the debts we have is a good practice, as it helps us gradually eliminate our debts and restore our financial health. However, if we have to pay too much each month, it can lead to financial strain in other areas, potentially causing us to incur more debt due to insufficient funds.
Having to pay a large amount of debt each month indicates that we have significant liabilities. This situation may cause us to miss out on valuable opportunities in life, as most of our income goes towards debt repayment, leaving little to invest for growth. Sometimes, we may only realize how dire our financial situation is when it's too late. Therefore, we have a method to check if our monthly debt repayments exceed 40% of our income.
How to Check if Your Monthly Debt Repayment Exceeds 40%
  • Start by adding up all your monthly debt repayments, such as car loans, personal loans, credit card debts, computer installment payments, and other debts. This will give you your total monthly debt repayment.
  • Next, divide your total monthly debt repayment by your monthly income and multiply by 100.
  • Check the final percentage. If it is below 40%, you are still in a safe zone. However, if it exceeds 40%, this is concerning, and you need to address the issue promptly, such as by finding additional income sources. Otherwise, you may face financial difficulties.
Example Calculation
– Your monthly debt repayments are as follows:
  • Computer installment debt: 2,000 THB
  • Mobile phone installment debt: 2,000 THB
  • Game console installment debt: 2,000 THB
  • Car loan: 7,000 THB
– The total monthly debt repayment is 2,000 + 2,000 + 2,000 + 7,000 = 13,000 THB.
– Your monthly income is 25,000 THB.
– The percentage of your monthly debt repayment relative to your income is 13,000 ÷ 25,000 × 100 = 52%.
This is quite concerning as it exceeds 40% significantly. It would be wise to find additional income and reduce various expenses to avoid being overwhelmed by debt.

2. Forgetting the total amount of debt you have

This should be avoided at all costs. If we forget how much debt we have, we may neglect to make some repayments, allowing interest to accumulate over time. Eventually, this could lead to significant problems due to the growing interest. It is advisable to regularly check how much debt we have to plan for repayment and to reduce expenses to minimize the risk of incurring new debts.
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It is best to stay as far away from debt as possible, especially debt incurred from emotional spending. Sometimes, a fleeting desire can lead us to accumulate significant debt.

Thank you for the information from www.moneyguru.co.th