Lending or borrowing system started way back 3000 years ago in ancient Greece and Rome. Borrowing has been a way of life for many individuals. Borrowing was meant to solve a short term problem, like for emergency purposes, unexpected payments or for an investment that would surely bring a hefty sum return of investment, but if you take a loan which is more than your financial capacity that can become a serious problem in the future. In reality, people take out loans for a number of different reasons.

Being in debt is not that bad as long as you are able to manage your debt and finances but stay away from making it a habit ending into a debt cycle. A debt cycle is when you continue borrowing at a higher cost or interest leading into increased debt. It is when you borrow more than you can afford and spend more than you what you earn. Others even take a loan to pay other existing loans or take a loan just to keep up your current consumption that will become an endless debt cycle.

Endless debt cycle is a serious problem for some people who find themselves in a position where they have existing debts which they are struggling to make repayments and takes out loans in order to consolidate existing loans. This can be either personal meaning a bad habit or administered and enforced. When we say personal level which means a bad habit, this is when a person or an individual is spending too much, too many outgoings even if they know how much income is coming in that could led to an endless debt cycle. While administered or enforced that means when a lender provided you a loan which is more than what you can financially handle, they did not do a proper affordability check or did not do a financial background then let you borrow again and roll over a loan many times increasing the cash loan amount together with the interest charge. The outcome is always an endless debt cycle.