How to get out of overwhelming Credit Card & Personal Loan Debt?


Often the stress from work, family and financial crunches catches up very severely, we get to the feeling of the lowest and usually, the mind gets drained and foggy and hence we are not able to think clearly or reason.

And in todays world as the accessibility has become easier for almost anything we desire, with multiple credit options available from bank, apps, pay later options, these all make us believe that we afford what we desire usually things that are about 3/4 times of our current income, we usually get started smaller EMIs often less than 1/4th of out income and over a while the EMI burden doubles, that is half of your income, over a time it gets bigger almost 3/4th of our income, and usually this is when we start thinking about taking corrective actions, we realise we overspent than we could manage, usually at this stage we tend to take a larger loan, that can clear all the EMIs and we think we can only pay one EMI which is again almost halt of 2/3rd of your income, and since this loan/credit was to clear all the existing credits/EMIs we trust its fair, usually these are long term loans so that you can afford, we bank on our promotions/increments/incentives to clear off these long-term credits/loans but apparently life comes with very unexpected future in it, and most often people end up taking more loan with longer duration to pacify the month end payout burden and they come on board with higher interest rates that look acceptable as it solves our momentary problems. And this is how usually in our early career we get ingested into this credit cycle, most often individuals who are from a lower middle class, with family responsibility on themselves get more drawn to this cycle as they constantly need to provide for their families and him/her selves.

And, after a time of 3-4 years, this becomes one of the biggest regrets in our lives, we start thinking and counting all that we could have avoided and all the purchases that only became liabilities. Although we learnt this lesson, it still stays challenging to get out of this situation cause by now we are tied to it. And this is when we will be alienated and lost, and still, we keep this to ourselves cause now we feel embarrassed of putting ourselves in this situation and also it's stigmatic to discuss your poor finances.

Well, if you are in a similar situation or if you are aware of someone being in this situation, I want to admit that I was in your shoes just about 5 months back, I was making x in a month while my overall credits were around 17x meaning, in theory, I could pay off my debt within 17 months, however, life isn’t this easy, out of x, my personal expenses were around 2/3rd of x, meaning I was a long way away from my credit pay-off, also the increasing interest rate would only make it harder. And, while I was caught in this poorest state of mind, like I was fancying the latest iPhone, with a really good-looking salary, only I was aware of how poorly I was, I took an extremely bold step, to talk about my situation with a friend, this friend was my best friend. He was extremely well known to manage his finances, at the age of 27, he had a profitable portfolio of around a few million INR, while he was literally making 70-75% of what I was making.
Initially, it was very painful and embarrassing to open up to him, but I did, I made him promise that he will keep this between us (typical Indian behaviour), which I trust he did, the first thing he told me was, differentiate between ABSOLUTE NEEDS vs DESIRES, he told me, NEVER MAKE YOUR DESIRES YOUR NEEDS, and it wasn’t something I did not know, but while listening to him, I felt the difference, he told that when we have a credit line, we are so tempted to use it, that, over a period of time we exhaust it, better, we seek more credit line and exhaust that as well, exactly what had happened to me. I took his advise immediately, and I literally sold my iPhone for an Xiomi, like literally, this hurt my ego a lot, but I figured, it doesn’t matter, know one really cares, second thing he told me to start paying than my EMI amount per month, usually 1.5X and it was possible as I sold some of my belongings which really weren’t my true needs and made about 2.5X and hence I had more cash in my hand, and I did that religiously, I never bought something that I can live without, he said expect for your food, compromise on everything, literally everything, once my entertainment subscriptions got over, I never renewed them, these initially looked insignificant however, it was worth it over a long term, these small and few big changes actually helped me pay off another 2x of my 17x credit, while I was still sending money to my family and living a descent life, I could not move out of my high rent apartment as that wasn’t gonna make me any profit, so my stay remained the only the highest non-essential bill, and overall I got about, about 7-8x ahead of my loan within first 4 months, and I paid it immediately, in about 7 months I had paid around 13x, I was very proud of myself, I did borrow some cash during this period from couple of friends which was interest free and I had a flexibility to pay it back, and then in next 4 months I paid of complete debt I had, so a journey of 17 months I completed within 11 months, I would admit it wasn’t easy at all, I had times I broke down but I stayed to mindset of freeing my debt, I know many people would be even in more dire situation that I was, may be your credit are 20-30x your income and it looks a huge mountain to climb, yet it is possible, its hard, in fact extremely painful but its possible and I know you would trust me on this, credit free life is way more freeing than living in luxury while being drowned in debt.

Some of my learnings and advice at this stage would be, to take a brief break, review your total debt and find someone who you know is good with finance, and be shameless (honestly there isn’t any shame in bad finance but we feel it), hence we shameless and talk about your situation or you may talk to some professionals, recently there are few professional who thoroughly accesses our finances and give extremely practical suggestions that will help you to get out of this situation and remember Your Desires Shall Not Be Your Needs if you can’t pay it in cash, you don’t afford it. I hope you will find my experience helpful and encouraging to take a solid and bold step towards improving your financial situation.

Hope you get to a debt-free very soon.

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