How to Come out of Debt Trap?

Debt Erased

Acknowledging that you are over leveraged is one of most important steps to get debt free. If you understand your finances, you will learn to manage them better. We have all gone through phases in life when we release that we are spending more than what we are earning and its important we understand this and take steps to manage things better.

Understand your debt: I have learned to split my debt into 4 parts

    1. Revolver: high cost debt usually linked to credit card spends or cash loans where interest loans are too high and not paying on time results in multiplier effect on outstanding.
    2. Live life debt: EMI loans linked to buying products or holidays. This type of debt is usually not visible as it gets camouflaged under subvention or supplier funding.
    3. Asset class debt: long term loans of cars and homes.
    4. Liquid class debt: using asset class products to take a loan like Gold loan, loan against property.

Some board thumb rules:

  • your loan amount should never be more than 8X your annual salary.
  • Revolver loans should never be more than 50% your monthly salary.
  • Total EMI should not be more than 50% of salary

Quick solutions to reduce debt burden:

  • 1. Balance transfer: Banks offer to people with large outstanding the option of balance transfer from one credit card to another. You can opt for a fixed duration balance transfer(3-12months repayment), in such transfers interest rates are usually 9 – 15% depending on your bank. Some banks also offer a ‘Lifetime duration’ option to make the repayment, though interest rates can be much higher (12-24%). Please note banks also levy process fee, which usually is 2% of the outstanding amount. After the bank verified your details, they will send you the cheque on the demand draft in favour of your existing credit card that you can use to repay.
  • 2. Converting outstanding balance to a EMI: usually if the net outstanding across credit cards is too high I will suggest you can take a small personal loan and repay your credit cards. Please note credit card debt comes at above 2% interest per month (36% – 46% per annum) and also attaches service charge while a simple personal loan will cost between 12-16% per annum.
  • 3. Negotiating lower interest rates with existing bank/institution or look at loan transfer: most institution allow some amount of negotiation usually linked to a bullet payment.
  • 4. Salary cover to paying credit card outstanding : usually credit card outstanding can be managed by paying over two salary cycles and managing funds better. Pay day or bridge salary loans like EarlySalary can be very usual in such stages.
  • 5. Loan against FD’s or Gold Loan: loan against asset comes at much lower interest usually loan against FDs come at 2-4% while Gold loans come b/w 4-8% per annum and thus are very good way to reduce debt burden.

Simple life rule to manage finances be save 30% of salary and don’t leave more than 25% in EMIs.

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Save Your Neck, Save Your Tax


Often it happens that salaried people end up paying more tax than actually needed. This happens mostly because of lack of knowledge about tax saving.
If you feel that you have a similar story and are figuring a way out to reduce the tax burden, then this article is for YOU…
Indeed, there are many ways; you can save tax while you are earning your salary. Here are 5 simple and legal tips to save tax.

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How to Save Your Salary Till Month End?


It’s really hard to live a life when you are too dependent on your paychecks. Having your life decisions depend so much on the date of your next paycheck can be frustrating.
Things like going out for a dinner with your friends or catching up the rock concert in town needs to be cancelled!
The country’s economy might be doing well, but that does not mean you don’t have to save right? Isn’t this a very serious problem to look upon to?

Well, if you’re spending more than you are earning, then naturally you’re bound to run out of cash. The good thing for you is it is still not late. Since you have realized it now you can turn the tables down. We have noted some simple steps which one can take up and easily control his spending with little efforts.

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Factors Impacting Your CIBIL Score

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Nothing is worse than having a bad credit score, as it can tarnish your social image. How do I improve my credit score, what are the factors which hit your CIBIL score hard and what should we do to avoid them, are some of the common difficulties, most of the people go through but they lack awareness or ignore it. This ignorance is the cause of the diminishing CIBIL score.    Many people are stuck with a bad credit score due to their poor credit behavior of the borrowers or the lender’s mistakes. Having a good CIBIL score can help you get loans easily.

Below highlighted are some common mistakes which should not be ignored.

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Common Money Management Mistakes, Freshers commit in their Early Years


Many young adults in their 20-30s make money mistakes due to lack of complete knowledge, resulting in serious blunders further.

It is important to understand their finances, and keep a proper tab on it.

Check out these 5 common money management mistakes freshers wish they realized in their Early years.

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Get Tough on Money – 5 Money Resolutions to Make In 2016

Paying your bank loans, saving for this year’s family vacation or planning for a secured retirement, no matter what your financial goals are it is time to get them on board and finally complete them.
Rather than setting high end resolutions which may not be so important, indulge your mind in those which may drastically benefit you and your family.
But why make resolutions now? That is because you are starting afresh and you are already in a state of mind of making strong convictions.

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