Hyderabad: When in debt, take drastic steps. Most importantly, freeze that credit card that blocks your road to financial freedom. Do not take new loans until old ones are paid off. Getting a loan was very difficult in the past. Times have changed now dramatically so much so loans are sanctioned instantly and money getting transferred to your bank account within seconds. We need to exercise utmost control.
No need to have cash even to buy anything these days and everybody is offering EMI (equated monthly installment) facility. Many have availed these ubiquitous financial offers during the present hectic season of multiple festivals. If not careful, such debts made in the happy moments may derail your financial balance. Hence, such loans should be taken out as early as possible to prevent future financial difficulties.
First, get a clear estimate of how much money has been spent during festivals. What is the total amount of loans taken and their respective terms? Examine how much interest your are paying on each loan. List out personal and 'buy now pay later' (BNPL) loans. Write down a list of old and new loans in one place to get clarity. Then plan how to pay off these debts with the surplus from out of your income.
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It is important to find out which loans can be disposed first. Get rid of high interest loans as early as possible. Otherwise, they will consume majority share of your savings. Try to pay off small loans early as they will cause mental stress of having more debts. Also, find out what would be the burden of fines on account of pre-closure of such loans.
Investing in low income yielding policies will not be advantageous. It is not wise to continue savings in plans giving just 8 percent income while taking loans at 16 percent interest. If possible, take loans on fixed deposits and life insurance policies, which come at lower interest. Low interest loans can be taken by showing gold as surety.
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Explore available avenues to enhance your income. This will help quickly pay off your debts. Discuss with your family members about the efforts needed to reduce income-debt ratio. Also contact your bank to find out whether there is a possibility to reduce EMI on home loan. The joy of festivals will double only when the loans made in such happy times are repaid at the earliest possible time. Bear this in mind before drawing a plan to free yourself of debts.
Simultaneously, reduce your expenditure till the accumulated loans are paid off. Otherwise, financial trouble will coming knocking at your door. Needless, lavish expenses should be controlled. For sometime, live frugally. No new loans should be taken under any circumstances, stay away from credit card purchases. If needed, freeze your credit card for some days.
