Devang has not provided a solution. The goal is to clear the debt and get out of the debt trap. It would be difficult to clear off the dues in a year considering the current income and expense levels. The right way is to phase out the costliest loan first and then retire the low cost loan. Based on this idea, credit card outstanding would be the first to be attacked and killed. In order to do this it could also be advisable to take a personal loan probably at a cost that is half the cost of credit card loan and it would be paid on a monthly basis so that you have a defined period of repayment. As for the cash loan, in case it is a soft loan, then it could be paid off when you receive the incentive else also incorporate the same with the personal loan. The base idea is the same as what Devang has mentioned Live within your means and be disciplined. Raghu must put a complete embargo on his expense levels for the period of loan repayment. Even after the loans has been repaid, he must consult with a financial planner and set a realistic savings / investment targets so that assets can be created in a systematic manner.
Hi raghu, Total debt you wish to repay = Rs 84,000
First try to take an advance salary of Rs 25000. I am sure that there will be interest free period on your credit card upto 45 -50 days period, so you can take advantage of this to meet the living expenses of Rs 8000. You will get a interest free period of 45 -50 days & no interest will be chargable on this 8000. Out of this Advance salary pay yr credit card debt first of Rs 23000. Loan left = 61000. And now you will save a lot of money on interest which is the maximum on credit card. In this way you can use the Rs 8000 per month to pay the principal of the other loans, as such your interest will diminish. When later you will be getting the incentives of not less than Rs 45000. you can pay the O/s amount on credit card and make the balance amount to pay the reaming debt. Hence in this way you save a lot on the interest. Rs 8000 * 6 mths=48000 + 13000 (out of incentives)= 61000. thus you hv paid all the loans within the year. Then out of 45000 - 13000 = 32000 you pay the 8000 that is remaining on the credit card. And now you are left with 24000 + 2000 + interest saved on installments. ALL DEBTS FREE AND PAID.
considering the debt level and earnings of the querist, the debt is not too high nor is the situation hopeless. He should resolve once and for all to get out of credit card mess and ensure 100%payment every month.Next he shoud explore with his bank debt consolidation with addi tional loan of Rs.50000,repayable in 36 months.This will entail a total outflow of about Rs5500 i.e. incremental outflow of just Rs 800 which can be easily met with avai lable surplus.Also the annual bonus should be used to prepay the loan partly.Not only the querist will be debt free but also have investible surplus very soon.
