Oh my God! I cannot handle this growing debt - Help eliminate debt!

What is debt?

Debt is a financial term of meaning owing money to someone.

Debt Crisis? Are you under a shadow of very bad debt. If yes, then you would need to take a serious look at financial(also debt management) management loopholes. There are many ways to curb the deep-holes a bad debt could create or has already created. Yes, of course there are good debts as well as bad debts. Wondering?

Say for example you have purchased a home loan. It's a good debt as it would allow you to save some of your taxes(under 80C section you can claim till rupees 1.5 lakhs) apart from earning you a property.

Here are some steps you should take a look at before considering that you have lost the battle and which might give you insights to help eliminate debt.

• Prioritization while paying off your debts.

When you have abundant sum of money at any point then you should first make list of all you debts and prioritize debts which have the highest interest rate and pay those first as those are eating away a lot of your hard earned money. Once those loans/debts are cleared focus of the one's which are not beneficial like the personal loan, which can neither save you tax nor help you build asset.

• Balance transfers

Choose your new banker wisely before you balance transfer your credit card dues to a new banker. Consider things like:

• What is rate of interest applied on the transferred amount?
• Do not fall prey to the short term benefits like initial interest free timeframe, as there might be long term huge interest charges from the banker.
• Term of the re-payment offered along with the pre-payment charges are very important aspects to look at as these would also impact if you are actually less or more compared to the earlier credit card issuer.
 
• Luxury versus need

Do not get tempted to go for that spanking new gadget or the new budget car that is recently launched an X company as soon as you have received any excess cash in your hand. Think on how to route the sum into a meaningful channel.

• Invest in high yielding funds versus clearing of your loan.
• E.g. Home loan - 14% interest rate versus mutual fund yielding 18% returns. In this case obvious decision is to go for mutual fund rather than clearing the home loan as that would be profitable.
 
• Keep a check on expenses

Once you have reached a stage where you have just cleared some of your debts. Make sure you are not repeating your mistake and weed out any unnecessary purchase temptations. Plan wisely and always have a 6 to 8 months of reserves to at least run your basic household and bills. This emergency fund can also be helpful if you are in a crisis situation as well.

Debt consolidation is a major step in reducing the monthly financial commitment. You can opt for a personal loan to clear off your credit card debts saving lot of money in interest payments. 

Debt reduction loan:

Some good options to choose personal loan from

So friends. Make decisions wisely and have a prosperous finances in your life. Always give importance to savings that cannot be easily withdrawn making it difficult for you to waste your hard earned income.

Happy Debt Management!

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