Reflections Series #5 | Being Debt-free! Possibility or a Myth?

Is it actually possible to be Debt-Free? $$$

Dear Customer, your EMI for Aug is due on.....

Dear xxx, your Credit card bill of Rs. xxx is OVERDUE... pay immediately to..

Dear Cx, now get a Rs. 50,000 spot money in your account, no KYC needed....

Dude, where's my money you promised to return last month????

If you have received any of the above communications at any point of your time, well, welcome to current Debt trap we all live in!!

We live in an overwhelming market of consumerism and everyone everywhere every moment is tempting us to spend and spend even more. EVEN if we don't have the money for it.

However, it is absolutely difficult to know IF we can afford it or not.

Credit companies, Micro credit companies, and Umpteen number of banking solutions are all focused on ensuring this only compounds multi-fold and ensuring we stay in a Debt-trap = IF WE ARE NOT CAREFUL

Checking one's Credit scores is an absolute necessity to stay on track

Read: https://shorturl.at/kpuT8

Using any of the mainstream apps in the market gives you free access to knowing your personal credit score = Which basically gives us insights on what the market perceives our financial standing as:

1. Are we disciplined in seeking and settling credit,
2. If you pay your bills on time or not,
3. Do you constantly seek higher lending despite lower settlement discipline etc. Banks especially use this data to grade our credit behavior as an outcome.
4. In the above link you have guidance on how to increase our credit score also, do take a read and try to apply them

Evidently, I've faced my share of bad financial planning, high dependency on credit, over-spending, and bad excessive credit exposure in the past.

However, we can all overcome this by putting in place some amount of discipline in our money inflow & outflow.

Some Golden rules me and my wife have implemented that has helped us overcome debt to a large extent:

1. Delay your gratification!... That wonderful looking car, that tempting holiday, that once-in-a-lifetime offer every festival etc! :) Urgency is mostly in the mind than an actual need! So delaying or postponing where we can, might help in even losing interest in it altogether!
2. Be mindful on payments:... Children's school fees for ex, usually it's a ego game to pay fees in full start of the year, but not need to choke our finances start of the FY unless deadlines are near. This way we can balance funds for other expenses utilization.
3. Credit Cards usage: In case you've used it, check for the time period until which it's interest free, so you can ensure no additional charges are made - This eventually helps increase our credit score.
4. Urgent Important bucketing: Having a clear sense of this segmentation helps put money where there is absolute need for. In fact we've seen that it took us a painful 2-3 years to devise this, but eventually we've managed to free up money towards investments.
5. INVEST INVEST INVEST: There is never enough to be spoken about the power of investing and gaining returns from them. Shares, Mutual Funds, RD, FD, Term plans, Savings, what not! We've managed to build plans for serving us in short-term and long term. For that Vacation you had in mind, and for that asset you wanted to buy! etc. Many avenues of investment are available explore and test to suit our kitty. This actually gives us a sense of confidence and backing that I'm secure! It's a great feeling!

Credit: I owe a great deal to my significant other - Soumya for enduring my thrifty nature and helping us systematically unshackle and be prudent in our money matters! Thank you for building the financial discipline in us!

So reader, how did you Un-shackle from your Debt? Go ahead and tell us..

Thanks.