Borrow Smart™ | Loans, Leverage & Borrowing
Here is a simple test.
Someone borrows ₹15 lakh.
Ask:
“What will remain after the money is spent?”
If the answer is:
“An asset, business capacity or income-producing capability,”
we have something to examine.
If the answer is:
“A holiday, wedding, car upgrade or lifestyle experience,”
we have a completely different financial situation.
Productive debt leaves something behind
Productive debt may create:
- an asset
- additional income
- business capacity
- professional capability
- cash flow
Consumption debt generally leaves:
- a bill
- an EMI
- and a memory
There is nothing wrong with enjoying life.
The problem begins when tomorrow’s income is used to pay for yesterday’s consumption.
The ₹10 lakh test
Suppose you have access to ₹10 lakh.
Option A:
Buy a depreciating luxury item.
Option B:
Use the capital to improve an existing income-generating activity.
Option C:
Don’t deploy the money until a productive opportunity appears.
The smartest answer depends on circumstances.
But one thing is clear:
Not all ₹10 lakh decisions have the same economic outcome.
A practical classification
Before borrowing, classify the purpose:
CREATE
Does it create an asset?
GROW
Does it increase earning capacity?
PROTECT
Does it solve a genuine financial risk?
CONSUME
Does it mainly provide lifestyle satisfaction?
There is nothing inherently wrong with the fourth category.
But consumption should ideally be funded by income or accumulated savings, rather than continuously borrowing against future income.
The dangerous cycle
Consumption debt often creates this chain:
Lifestyle purchase
↓
EMI
↓
Less disposable income
↓
Another loan / credit card
↓
More EMI
↓
Less savings
↓
More vulnerability
The problem isn’t the first purchase.
It is the cycle.
The lesson
You don’t need to become anti-debt.
You need to become purpose-conscious about debt.
Before taking a loan, ask:
“Will this money leave me with an asset—or only an EMI?”
That one question can change the quality of your financial decisions.
— Joydeep Bagchi
Borrow Smart™ | Income Beyond Salary
