Hello Sir, Due to my sister marriage and health issues in the family I have accumulated a very high debt of 56 lakhs including credit cards and personal loans. I am a pvt employee with 14 lacs per annum salary package, monthly its approximately 1 lac take home. Please suggest a way out to ease my burden and come out of this mess.

Ans: Dear KS,
First things first. A lot of decisions have gone wrong. It cannot be erased, but certainly you must find a way of recovering from it.
Yes, it is highly disheartening, but once you decide that you want to be in a better place, you have to take certain actions to reach that better place.
So, time to quit being upset and taking firm actions on what to do next to get out of this situation that you are in.
Seek the help of someone within your family or friends circle who is strong with their finances and managing their monies well. Of course, they must be someone you trust as well. Share everything with them (you need the help, so kindly be truthful and honest with them).
Let them put together a plan of action that manages your existing financial resources and inbound channels and match that with all the payments and debts.
Allow them to 'advise' you as you need this strong advice right now. Discuss what's possible and what's not and they will come up with something that is close to perfect.
Once, you start with the first small baby step. things start to look up. Even clearing a small debt will take a load off your chest. So, get into that action mode NOW. And yes, do promise yourself that this situation is teaching you a lesson on how to be financially prudent and that you will learn from it.

Best wishes and look bright and happy NOW!

Ans: If you are struggling to keep up with your EMI payments due to high debt, including health issues, here are some tips to help you manage your finances:

• Create a budget and track your expenses. This will help you to identify areas where you can cut back.

• Prioritize your debt payments. Pay off the debts with the highest interest rates first, such as credit card debt.

• Talk to your creditors. They may be willing to work with you to reduce your monthly payments or waive late fees.

• Shop around for health insurance. There may be more affordable options available to you.

• Increase your income. This could involve getting a part-time job, starting a side hustle, or negotiating a raise at work.

• Reduce your expenses. This could involve cutting back on unnecessary spending, such as eating out or shopping.

Remember, you are not alone. Millions of people struggle with debt each year. There are resources available to help you get back on your feet.

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: Referring to your query regarding the debt and uncertain expenses at all times. Please find some suggestions for your reference.

• Get a part-time job (Increase your Source of Income): If you have the time and energy, getting a part-time job can be a great way to earn extra money to pay down your debt.

• Make a budget: Once you have a good understanding of your cash flows, you can create a budget to help you track your spending and make sure your cash flow will be managed properly (Expenses are not more than your earnings)

• Prioritize your debts: Not all debts are the same. Some debts, like credit card bills, have higher interest rates, which means that you will be paying more in interest over time. Focus on paying off these debts first.

• Negotiate with your creditors: If you are struggling to make your payments, contact your creditors and see if they are willing to negotiate with you. Many creditors may adjust the repayment schedule you can afford.

There are some resources that may be helpful:

Debt relief organizations: There are a number of organizations that can help you get out of debt. They can provide you with counseling, and they can also help you negotiate with your creditors to reduce your payments or create a repayment plan.
• National Foundation for Credit Counseling: 1-800-388-2227
• Consumer Credit Counseling Service: 1-800-642-2227
• Credit Karma: 1-888-239-7066