The Thar Desert, which straddles India and Pakistan, is one of the hottest and driest places on earth. Temperatures can soar to 50°C in the peak summer months. Despite the harsh climate, millions of Pakistanis are working their entire lives to pay off debts they incurred decades ago

Vasanti Megwhar, 70, along with her son, daughter-in-law and 12-year-old grandson, have worked at the brick factory for more than 23 years. Their main job is to make bricks by hand. They mix soil and water into a large mass, shape them into small pieces and put them in brick moulds, then dry them. These pieces of clay are then put into a kiln at 110°C. The end result is bricks that are used in thousands of construction projects large and small in Pakistan.
The work is hard, but three generations of the Megwhar family have worked and will work their entire lives to pay off the debt they took out from the kiln owner more than two decades ago to pay for hospital bills. Each day the Megwhar family makes about 1,000 bricks and receives $1.50 dollars (about 38,000 VND) for their work. The remaining $1.50 dollars will be deducted from the debt.

Yet, after more than 20 years of work, they still don’t know how much they’ve paid back, how much interest they’ve earned, or how long they’ll have to keep doing this work. A fingerprint more than 20 years ago in a loan agreement with a brick kiln owner has plunged the Megwhar family and generations to come into a slave contract from which they can never escape.

As the saying goes, “A mistake of an inch can lead to a huge loss.” A small initial mistake can have serious consequences. Worse, the consequences can be irreversible and last a lifetime. This was the hard lesson that the Megwhar family and millions of other Pakistanis learned the hard way when they decided to borrow money from a brick kiln owner.

To minimize mistakes in decision making, Jeff Bezos, founder of Amazon, divides his decisions into two categories:

Type 1 – One-way doors : These are decisions that have a long-term impact on the future, and once you make a choice, you cannot go back but must follow it to the end.

For example, you need money urgently but cannot borrow from the bank because of your low income. So you decide to borrow money from the loan shark. The maximum interest rate allowed by law is 20%/year, or 1.66%/month. If you have to pay 5 times this interest rate, it is considered usury.

Suppose you borrow 100 million VND at an interest rate of 9%/month, and this is compound interest. Compound interest is understood as interest calculated based on the amount you borrow plus the interest of the previous month. For example:

January:
Interest = 100 million x 9% = 9 million. Total debt = 109 million.
February:
Interest rate = 109 million x 9% = 9 million 810 thousand.
Total debt = 118 million 810 thousand.

Just like that, after a year, the compound interest has caused the debt to reach 281 million VND. The decision to borrow at high interest rates has caused you to have to bear a debt much larger than the amount you borrowed. Borrowing at high interest rates is one of those “one-way door decisions” that you must consider carefully before deciding.

Some other examples of type 1 decisions include where to buy a house, who to marry, or whether to have children.