Likelihood of a debt trap.. again?
I was pretty content to have done away with all debt in my life, till recently though. But I feel like falling for it again secretly. Secretly, since I am yet to openly acknowledge to my family that I am ready to fall into the debt trap again.
As per the formal accounting conventions, no asset can be created without debt or cash. So for all practical purposes, it is still economical to borrow to acquire an asset and then repay the debt in equated monthly installments.
The inherent assumption in equated monthly installment rationale is certainty of future cash flows and hence, an implied ability to repay.
So the culprit for all practical purposes is “certainty of future cash flows”.