Sir I draw a salary of 36,000 and recently took a loan of 958000 without closing the previous personal loan of 8,03,000 and the total amount of EMI is now 34,400. How do I get put of this debt trap?

Ans: My inputs sent for a magazine article yesterday may help you. Please go through it:-

Strategy to get out of debt trap

1. Debt Consolidation: This is streamlining your debts for clarity. Debt without consolidation is like juggling a bunch of puzzle pieces while presuming that you’re in control. Merge your scattered debts into one manageable loan, reducing confusion and the risk of missing payments. This smart move can lead to lower interest rates and simplified monthly payments, giving you a clearer path out of the debt maze.

2. Debt Avalanche Strategy: This strategy treats your debts as mountains and tells you to start climbing the steepest ones first, that is, tackling the highest peaks first and the lower peaks will then automatically become a cake-walk. So, with this strategy, you focus on the high-interest loans while making minimum payments on others. As you conquer one peak after another, your momentum builds, and soon you'll find yourself on the summit of debt-free living.

3. Credit Card Balance Transfer: IN this strategy, you swap the high-interest credit card debts for friendlier ones. Through a balance transfer, you move your existing credit card debt to a new card with lower interest, that is, shifting to a smoother terrain. This gives you breathing room to pay off the principal without being weighed down by sky-high interest.

4. Practical Tips to Conquer Debt:
1. Budget with Purpose: Lay out a clear budget that allocates extra funds to debt repayment while covering essentials.
2. Cut Unnecessary Expenses: Trim down on luxuries, and redirect the saved money towards settling your debts faster.
3. Build an Emergency Fund: Having a financial safety net prevents you from resorting to more debt during unexpected setbacks.
4. Negotiate with Lenders: Reach out to your lenders for potential interest rate reductions or extended payment plans.
5. Financial Windfalls: Put unexpected bonuses, tax refunds, or gifts towards debt reduction to accelerate your progress.

Remember, Rome wasn't built in a day – the same applies to debt repayment. By combining strategic methods and prudent financial habits, you can pave the way to a debt-free horizon.

Ans: You're a Civil Engineer with significant experience, facing a tough financial situation. Here's a holistic approach to tackle your debt:

Assessing the Debt Situation
Understand the total debt burden and prioritize repayments.
Evaluate personal loan terms and conditions for possible restructuring.
Managing Current Expenses
Budget meticulously to cover essential expenses for your family.
Minimize discretionary spending to allocate more towards debt repayment.
Maximizing Income Opportunities
Explore opportunities for additional income leveraging your engineering skills.
Consider freelance projects or consulting work to boost earnings.
Debt Repayment Strategy
Focus on paying off high-interest loans first to reduce overall interest burden.
Negotiate with lenders for feasible repayment schedules or interest rate reductions.
Emergency Fund Creation
Start building an emergency fund gradually, even with small amounts.
Ensure it covers at least 3-6 months' worth of living expenses.
Family Financial Security
Review insurance coverage for health and life to protect against unforeseen events.
Plan for your child's future needs, such as education and upbringing costs.
Long-Term Financial Planning
Once debt is under control, prioritize systematic savings and investments.
Avoid high-risk investments; opt for diversified options suited to your risk tolerance.
Final Insights
By strategically managing your debts, expenses, and income, you can gradually regain financial stability. Seek professional advice if needed to tailor a plan that fits your specific circumstances.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Hello;

Sell any gold which you may have and repay the loan. Once the loan burden is over you can buy gold again later.

Check if you can port the loan to another lender with lesser rate of interest.

Borrow from your close relatives/employer, if possible, to get you over the loan and repay it later.

If the recovery agents are harassing you beyond due follow-up then report it to the Police/RBI.

Please be firm and positive to get over this difficult phase.

However if you feel depressed kindly consult a psychiatrist.

Best wishes;

Ans: You are carrying a huge burden. Still, you are not giving up. That shows strength.

Now, we need a 360-degree plan to escape this debt trap.

This answer is detailed, practical, and designed to rebuild your financial life.

1. Understand Your Current Debt Burden

Rs. 9 lakhs loan with Rs. 26,000 monthly EMI.

Rs. 2.5 lakhs credit card dues added pressure.

No savings. No help from others.

You are using credit cards to pay EMIs.

This cycle is dangerous and needs to stop now.

2. Respect Your Courage First

You are working over 12 hours every day.

You are managing home needs and family.

Even in this pressure, you are still standing.

You deserve appreciation for not running away.

That self-discipline is your biggest asset.

3. The Truth – You Cannot Continue Like This

This debt trap will grow every month.

Credit card interest is above 36% yearly.

Paying EMI from cards creates bigger problem.

In 2 months, situation will get worse.

4. Take Control – Accept Reality First

You cannot solve this by earning more.

You have no time to work extra.

You must now reset your financial structure.

5. Step One – STOP Using Credit Cards Immediately

Do not swipe them again for anything.

Do not use cards to pay EMI.

Do not pay minimum due only. Pay in full if possible.

6. Step Two – List All Your Debts

Make a simple sheet with 3 columns:

  • Amount you owe
  
  • Monthly EMI or bill
  
  • Interest rate

List loan, credit cards, other dues separately.

This gives you full picture of your debt.

7. Step Three – Prioritise Debt Based on Risk

Credit cards come first – they have highest interest.

Unsecured loans come next.

Family debts come last.

8. Step Four – Approach the Lender for Loan Restructuring

Contact the bank or NBFC where you have loan.

Ask for “restructuring” under RBI’s personal loan scheme.

They may allow:

  • Lower EMI for longer term
  
  • Temporary EMI holiday for few months

You need to write a request letter to them.

Mention your financial stress and genuine intention to repay.

9. Step Five – Convert Credit Card to Personal Loan

Most banks allow this.

Convert the Rs. 2.5 lakhs into term loan.

That gives fixed EMI and stops interest growth.

Interest on term loan is lesser than card interest.

10. Step Six – Avoid Minimum Payments on Cards

Paying only minimum keeps the card running.

But interest keeps growing every month.

Within 6 months, amount doubles.

11. Step Seven – STOP Any Fresh Loans

Don’t take new loans to repay old ones.

This is not a solution. This is poison.

12. Step Eight – Talk to a Certified Financial Planner

A CFP will guide debt restructuring.

He will suggest repayment plan based on cash flow.

You cannot handle this stress alone.

13. Step Nine – Cut All Non-Essential Expenses

Reduce phone recharge, DTH, fuel usage.

Postpone all festivals, trips, functions, purchases.

Stop all online shopping, gifts, donations temporarily.

14. Step Ten – Pause All Investments for Now

If you are doing SIPs, stop them temporarily.

Your priority now is to clear debts.

SIP can restart later when stable.

15. Step Eleven – Build Emergency Cushion Slowly

Even in tight cash flow, save Rs. 500/month.

Keep in a separate savings account.

This avoids using card for small needs.

16. Emotional Discipline is Now Your Biggest Tool

Say “No” without guilt to social pressure.

Your family must know your full financial truth.

Be honest and take them into confidence.

17. No Shortcuts – Avoid These Traps

Don’t try day trading or crypto schemes.

Don’t fall for quick-money jobs or part-time scams.

Don’t apply for payday loans online.

18. Use Professional Help If Required

There are RBI-registered debt resolution agencies.

They negotiate with banks on your behalf.

They may reduce interest or combine loans.

19. Stay Away from Informal Money Lenders

Never take from local agents or unlicensed lenders.

They can become dangerous if unpaid.

20. Sell Unused Assets If Any

Do you have gold, gadgets, or vehicle?

If not essential, sell to reduce debt.

A temporary sacrifice gives long-term peace.

21. Speak to Employer If Trusted

Some companies offer salary advance or loan.

Check if your HR has such policy.

Keep repayment terms clear and transparent.

22. Review All Bank Accounts

Do you have any FD or RD?

Break it and use it to clear debt.

23. Debt Avalanche Method – Use When Situation Stabilises

Once stable, start paying highest interest loan first.

After that, clear next highest.

24. Inform Lender Before You Default

If you miss EMI, inform bank in writing.

Don’t avoid calls. That worsens credit record.

25. Start Rebuilding Credit Score After 6 Months

Once you close credit card debt, wait 6 months.

Keep one card with Rs. 5,000 limit.

Use it once a month and pay full.

26. Remember – This Pain is Temporary

You are in deep stress today.

But your mindset is strong.

You are ready to act.

That alone can bring you out of this trap.

27. Final Insights

Your life is more valuable than this debt.

You have already proven hard work.

Now you must build financial wisdom.

Stop credit card use immediately.

Speak to lender. Ask for EMI restructuring.

Convert credit card dues into lower-interest loan.

Cut expenses. Postpone luxuries.

Pause investments till loan burden is reduced.

Set a monthly budget. Stick to it.

Don’t give up. Don’t lose hope.

Within 12 months, you can come out.

After that, you will feel proud.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment