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Ramalingam

Ramalingam Kalirajan  |3200 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 16, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
Asked by Anonymous - Apr 14, 2024Hindi
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Hi I am having more than 5 credit cards and Personal Loan along with a home loan..I am really facing problem to pay my dues and I have fallen in a debt trap. I am taking loan to pay off my another loan. I have no intention that I will not pay off my dues but on the other hand I am facing huge issue to pay off my debts, due to this even my Credit score and CIBIL is affecting. Kindly provide me a suggestion so that I can solve this issue without affecting my CIBIL.

Ans: Managing multiple loans and credit card debts can be overwhelming and lead to a debt trap, impacting your credit score and financial health. Here's a step-by-step plan to help you manage and eventually pay off your debts without further damaging your CIBIL score:

Assess Your Debts:

List down all your debts, including credit cards, personal loans, and home loans.
Note down the interest rates, outstanding amounts, and minimum monthly payments for each.
Create a Budget:

Make a realistic monthly budget to track your income and expenses.
Identify areas where you can cut expenses and allocate more funds towards debt repayment.
Prioritize Debts:

Prioritize debts with the highest interest rates to save on interest costs.
Continue making minimum payments on all debts to avoid penalties and further damaging your credit score.
Debt Consolidation:

Consider consolidating high-interest debts into a lower-interest loan or balance transfer credit card.
This can simplify payments and reduce overall interest costs, making it easier to manage.
Negotiate with Lenders:

Reach out to your lenders to negotiate lower interest rates or extended repayment terms.
Many lenders offer hardship programs or restructuring options to help borrowers in financial distress.
Increase Income:

Look for additional sources of income to boost your monthly cash flow.
This could be through a part-time job, freelancing, or selling unused items.
Financial Counseling:

Consider seeking professional financial counseling or debt management services.
They can provide personalized advice and strategies to manage and pay off your debts effectively.
Avoid Taking New Loans:

Stop taking new loans or using credit cards until you have paid off existing debts.
Focus on living within your means and building a savings buffer for emergencies.
Monitor Your Credit Score:

Regularly check your credit report to monitor your progress.
Ensure all information is accurate and dispute any errors to maintain a healthy credit score.
Stay Committed:

Stay committed to your debt repayment plan and avoid falling back into old habits.
Celebrate small victories along the way to stay motivated.
Remember, managing debt requires discipline, commitment, and patience. It may take time to get out of debt, but with a structured plan and determination, you can achieve financial freedom and improve your CIBIL score over time.
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Sanjeev

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Financial Planner - Answered on Aug 09, 2023

Asked by Anonymous - Aug 09, 2023Hindi
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I have multiple loan with outstanding of 32 lakhs. My salary is 1.3L pm and paying emi of 82k.Not able to figure it out how to get out 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.

..Read more

Ramalingam

Ramalingam Kalirajan  |3200 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 18, 2024

Ramalingam

Ramalingam Kalirajan  |3200 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 02, 2024

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Sir my monthly salary is 28000 and I took a personal loan of 5lacs last year and I have credit card also but with my daily expenses I couldn't pay the total emis and bills so I took some credit from cred application it's almost 3lacs and now I'm unable to pay any of them as my salary is very low to pay so many emis I can't stop thinking about all this I'm facing anxiety and depression due to debts. I want to come out of this debt and get clean from all this problem. I want to save money and live a normal life. I couldn't share it with anyone also. My father us retired and he couldn't help me.
Ans: I'm truly sorry to hear about the challenges you're facing with your debts, and I understand how overwhelming and stressful it can be. Please know that you're not alone, and there are steps you can take to work towards financial stability and peace of mind.

Assess Your Debts: Start by listing out all your debts, including personal loans, credit card dues, and any other outstanding amounts. Understanding the total amount owed and the interest rates associated with each debt is the first step towards managing them effectively.
Create a Budget: Evaluate your monthly income and expenses to create a realistic budget. Prioritize essential expenses such as food, rent, and utilities, and allocate any remaining funds towards debt repayment.
Communicate with Creditors: Reach out to your creditors to discuss your financial situation and explore options for repayment. They may be willing to negotiate a payment plan or offer assistance programs to help you manage your debts.
Explore Debt Consolidation: Consider consolidating your debts into a single loan with a lower interest rate, if possible. This can simplify your repayment process and potentially reduce the overall amount you owe.
Seek Professional Help: If you're feeling overwhelmed or unsure about how to proceed, consider seeking assistance from a financial counselor or debt management agency. They can provide guidance, support, and practical strategies for managing your debts and improving your financial situation.
Take Care of Your Mental Health: Remember to prioritize your mental health during this challenging time. Practice self-care techniques such as exercise, meditation, or talking to a trusted friend or therapist to help alleviate anxiety and depression associated with financial stress.
Lastly, please know that it's okay to ask for help, and reaching out for support is a positive step towards regaining control of your finances and your life. You have the strength and resilience to overcome these challenges, and with determination and perseverance, you can work towards a brighter financial future.

..Read more

Ramalingam

Ramalingam Kalirajan  |3200 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 04, 2024

Asked by Anonymous - May 04, 2024Hindi
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Dear Sir, I am a 31 year old married man.I am in a huge debt trap of multiple loans plus credit card mounting around 9 lakhs. I work in MNC company earning 70k per month. Please advise or suggest if I can come out of this.
Ans: I understand your concern about being in a debt trap, but there are steps you can take to address the situation and work towards financial stability:

Assess Your Debt: Start by listing out all your debts, including the outstanding amounts, interest rates, and minimum monthly payments. This will give you a clear picture of your financial situation.
Create a Budget: Develop a detailed budget that outlines your monthly income and expenses. Identify areas where you can cut back on spending to free up more money to put towards debt repayment.
Prioritize Debt Repayment: Focus on paying off high-interest debt first, such as credit card debt. Consider using the debt avalanche or debt snowball method to systematically tackle your debts.
Negotiate with Creditors: Reach out to your creditors to discuss repayment options. They may be willing to negotiate lower interest rates, waive fees, or offer a repayment plan that fits your budget.
Explore Debt Consolidation: Consolidating your debts into a single loan with a lower interest rate can make it easier to manage and potentially reduce your overall interest costs. However, be cautious and carefully evaluate the terms and fees associated with any consolidation offer.
Increase Your Income: Look for opportunities to increase your income, such as taking on a part-time job, freelancing, or seeking a higher-paying position within your company.
Seek Professional Help: If you're feeling overwhelmed or unsure about how to proceed, consider seeking assistance from a financial counselor or debt relief agency. They can provide guidance and support tailored to your specific situation.
Avoid Taking on New Debt: While you're working to pay off your existing debt, avoid taking on any new debt if possible. Stick to your budget and focus on living within your means.
It may take time and discipline, but with a solid plan and commitment to debt repayment, you can overcome your debt challenges and regain control of your finances. Remember to be patient with yourself and celebrate small victories along the way.

..Read more

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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