I am currently servicing three loans-a home loan, a car loan and a loan on my credit card. The collective EMI amounts to about Rs 40,000 and I often feel burdened because of it. Can you please suggest a strategy that I should follow to free myself from this burden of debt?
- Ankush Jain
All the loans that you have taken are actually consuming your future income. I can only suggest that get rid of the credit card loan at the earliest and do whatever it takes to do that. Even if it demands doing an additional part-time job, do that. It is the most expensive loan. And if you are making some investments, stop them and first get rid of this credit card loan. A credit card loan is not worth taking ever, except for an emergency. Taking a credit card loan is justified only during an emergency. After the credit card, you should get rid of the car loan. The only loan that can be justified is the home loan. This is because it is a long-term asset which appreciates in value, gets you tax benefits, saves on rent and comes at a relatively less cost.
So, my strategy is very simple. If you have any investment or savings, immediately pay off your credit card loan. Try and accelerate the repayment of the car loan and carry on with your home loan only. And if you do not have enough income to support this, then think of a way to increase your income.