Complete Debt Management Guide
Break free from debt with proven strategies and smart repayment plans
What You'll Learn
Debt Assessment & Planning
The first step to becoming debt-free is understanding your complete debt situation. Create a comprehensive debt inventory to plan your repayment strategy effectively.
⚠️ Warning Signs of Debt Problems
- • Making only minimum payments on credit cards
- • Using credit cards for basic expenses
- • Taking cash advances or loans to pay other debts
- • Debt payments exceed 40% of income
- • Losing sleep or stress over money
- • Avoiding opening bills or checking balances
Debt Inventory Checklist
- • List all debts (credit cards, loans, EMIs)
- • Note outstanding balance for each
- • Record interest rates (APR)
- • Note minimum monthly payments
- • Calculate total debt amount
- • Identify secured vs unsecured debt
Debt-to-Income Ratios
- • Excellent: Below 20%
- • Good: 20-30%
- • Fair: 30-40%
- • Poor: Above 40%
- • Critical: Above 50%
- • Include all monthly debt payments
Types of Debt & Interest Rates
| Debt Type | Typical Interest Rate | Priority Level | Strategy |
|---|---|---|---|
| Credit Cards | 24-48% APR | Highest | Pay off immediately |
| Personal Loans | 12-24% APR | High | Aggressive repayment |
| Car Loans | 8-15% APR | Medium | Regular payments |
| Home Loans | 7-10% APR | Low | Tax benefits, long-term |
| Education Loans | 8-12% APR | Low-Medium | Tax deduction available |
🚨 High-Interest Debt Emergency
Credit card debt at 30%+ interest can double in just 2.5 years with minimum payments. This should be your absolute top priority.
Example: ₹1 lakh credit card debt at 36% APR takes 30+ years to pay off with minimum payments!
Debt Repayment Strategies
Debt Avalanche Method
Pay minimums on all debts, then attack the highest interest rate debt first. Mathematically optimal - saves most money.
Steps:
- List debts by interest rate (highest first)
- Pay minimums on all debts
- Put extra money toward highest rate debt
- Once paid off, move to next highest rate
- Repeat until debt-free
Best for: Disciplined individuals focused on saving money
Debt Snowball Method
Pay minimums on all debts, then attack the smallest balance first. Builds momentum through quick wins.
Steps:
- List debts by balance (smallest first)
- Pay minimums on all debts
- Put extra money toward smallest balance
- Once paid off, move to next smallest
- Repeat until debt-free
Best for: Those needing motivation and quick psychological wins
💡 Hybrid Approach
Start with debt snowball for motivation, then switch to avalanche method once you build momentum. This combines psychological benefits with mathematical optimization.
Alternative: Pay off any debt under ₹10,000 first (quick wins), then use avalanche method.
Your Debt-Free Action Plan
Emergency Stop
Stop using credit cards immediately. Cut them up if necessary. Switch to cash/debit only.
Create Inventory
List all debts with balances, interest rates, and minimum payments. Calculate total debt.
Choose Strategy
Pick debt avalanche (save money) or snowball (build momentum) method.
Calculate Your Debt Freedom Date
Use our EMI calculator to see how extra payments can dramatically reduce your debt payoff time and interest costs.