Last, we spoke of debt traps and how easy it is to fall into one – easy EMI options flashing across e-commerce platforms, personal loans available and of course the credit card and its unpaid bills. Today, let’s talk about how to get out of and more importantly stay out of debt traps.

If dealt with systematically, you’ll be able to get out of a debt trap sooner than you think! You don’t have to be the one to live paycheck to paycheck with unpaid loans, EMIs and bills hanging like a nook from your neck.

Here are some easy to follow suggestions that can prove handy when you feel trapped under debts:


First thing first, list down all the debts so that you clearly understand the trouble and the depth of it. The details should include the kind of loan – EMI on car loan, home loan, personal loan or credit card bills along with principal amount borrowed, rate of interest, installment amount and number of years left. This will help you prioritize which one to focus on, which is also our next step.


Once the above list is ready, identify the most expensive debts – a large principal amount and higher interest rate. For example, a credit card bill is expected to have a very high interest rate compared to personal loan, car loan or education loan. You need to clear the biggest rock first. Even if it means refinancing, i.e., taking another loan with a lower interest rate.


As a next step, you need a plan. A plan that can help you pay off the loan. You could either try consolidating all the loans and have one singular loan instead. You may check with your bank for this, as some banks provide such an option to let you have a single EMI instead of several. Or you can look into your existing investments that are yielding really low returns and are not ear-marked for any financial goals. Use those idle investments to pay off your loan.

You can also figure out an extra means of income (even if temporary) just to pay off the loans. As the years go by, there will be increase in income, some bonuses, investment income or even a matured FD. Use these to pre-pay your loan and get off the debt earlier.

PS. – If you have too many loans looming over your head then commit all your surplus income towards paying off these loans instead of investing the money. Take this decision only when you have consulted a certified financial advisor.


The moment you decide to use the credit card, it is an indication that you’re going beyond your pocket. Unless unavoidable, refrain from using credit cards. They have the maximum interest, options like paying minimum amount due seem lucrative at first but come back with interest rates as high as 40% when free credit period is over. Not only the purchases but such high rate is applied on outstanding amount too. Making you fall into a trap difficult to get out of.


Ideally, all loan amount combined shouldn’t be more than 40% of your total income. However, if you feel you’re in a debt trap, then most likely you’ve crossed the 40% limit that are straining your finances anyway. With uncertain times ahead, it is pertinent to not take any additional amounts and instead put all efforts towards easing off the existing ones.

It might seem extremely difficult to get out of a debt situation but all you need to do is believe there’s a way out, figure the way out and then stick to your debt pay off plan till you get out of it. If it’s too overwhelming for you to sit down and do this analysis on your own, drop us your details here and we’ll help you chalk out a plan for FREE.

How to know if you’re falling into a debt trap?

In today’s world, debts are unavoidable. Loan or credit facilities assist you to buy things you need and enable you to pay as you earn. As good as it sounds, this anticipated help becomes a big trouble when handled irresponsibly. It has even become the cause of businesses or individuals going bankrupt or falling into the never ending debt cycle.

Are you heading towards a debt trap?

An overdue credit card payment, a missed EMI, a sudden need to take a personal loan to pay off another loan are often the first signs of falling into a debt trap that most of us ignore thinking “Oh, I’ll handle it as I will have money soon”. Unfortunately, its these debts and their missed payments that become a problem later.

So here are the 5 things that you need to keep a tap on to ensure you’re not falling into the debt trap before it’s too late-:

Easy EMI may not be so easy after all

It does seem tempting to buy products on 0% EMI. It also seems fine to pay Rs. 2,000-5,000 a month spread over 6-12 months instead of a lump sum amount immediately. Now if we add 3-4 such ‘easy’ EMIs in a month; does it look easy anymore?

According to a survey by ET Wealth, 15% of the respondents, had an EMI outgo of more than 50%. If your EMIs are eating up 40-50% of your salary, right there is your warning sign.

Personal Loans

So many of us end up taking a personal loan to cover for big expenditures like taking exotic vacations, funding education abroad, big fat weddings etc; expenses that could have been paid for through our savings too. While it’s easy to get a personal loan when we need if we have a recurring income; but what we ignore is the high interest rate on personal loans that eats away our recurring income later.

Keep personal loan as last choice and only if there’s an actual emergency that you cannot handle otherwise.  

Loan to clear a loan

It might seem luring to get a loan to pay off a previous loan; an option that a lot of banks offer. But what people forget it that you will have to pay off that loan someday. So if you’re doing so just to buy some more time to pay off the loan; you’re entering into a clear debt trap and that too a cyclic one.

If you want to pay off a loan, use you low return investments to pay off rather get it refinanced often.

Misusing Credit Cards

Credit card is the worst form of debt because when you’re assuming the debt, you don’t even realise you have assumed it. On swiping a credit card the amount does not gets debited immediately and hence we don’t realise until the end of the month how much we’ve spent/ overspent.

Remember with credit cards, the amount to be paid gets delayed but you still have to pay it. So use it wisely. If you get shocked at the month end to see your credit card expenses; it’s time for you to say goodbye to your credit cards. 

Unpaid credit card bills

While having a credit card in the first place can create problems, non-payment of credit card bills can worsen the situation. Delay in the credit card payments beyond the due date attracts interest which is as high as 24%-36%.

Not just this, it brings down your CIBIL score making it more difficult to get loans in future for more legitimate things like house or car or emergencies. And paying minimum amount due doesn’t help in the long run because the interest cycle does not stop.

Thus, don’t miss your credit card payments no matter what it is.

When borrowing money, it is important to know how you will return it. Debt-taking plan should also include the debt-returning plan that is logical and doable. Look out for early signs from above and set a fixed date to close all debts and make your best effort to stick to it. Debts are meant to help and should be kept that way. Don’t let it become a noose around your neck.



As the country progresses into Unlocking phase, the word everywhere is we must learn to live with the virus and be future ready for such global adversities.

The second worst affected, after human lives, by Corona Virus, is the economy of all the countries with affected citizens. And if we were to go by what experts have to say, there could be more such global crisis in future. So how do we get ready for such adversity?


True there are relaxations in place, but only as an attempt to get ready for the life ahead one step at a time. Unlock doesn’t mean all is well and back to how it was. Unlock is only to get us ready to adopt new ways of living – safe and more hygienic.

The 1918 pandemic more commonly called the Spanish Flu’s second wave, has a lot to teach us here. It was worse than the first and so could be the case this time. Virus mutations are unpredictable and till we have a well-tested vaccine available, it’s wiser to be preventive in whatever we do.


According to Economic Times article of May 13, 27 million youth in the age bracket of 20-30 years lost jobs in April 2020. It also goes on to add 33 million men and women in their 30s lost jobs as well.

Financial Express predicted, 74% small businesses, start-ups will either shut down or marginally scale down in the next few months as an aftermath of the pandemic.

If these figures tell you anything, there’s going to be a severe financial crunch everywhere. Create back-ups, review your savings and expenditures to better fit into the new lifestyle both personal and professional.


Businesses can be rebuilt, jobs can be reinstated or found new. But one area where we become helpless is the health – ours and of those close to us.

Though corona virus has taken a front seat in our lives right now, there are several other factors in play that are detrimental to our health, whether it is diseases like cardiac arrests or cancer or even flu and fatal accidents. With finances already dwindling, health care expenses would be a burden that would be difficult to shoulder. While we cannot predict or avert such problems, what we can do is have an insurance cover to support us and our families when faced with such adversity.

Let’s get our future days pandemic ready!