Huge Debts Cause Concern But These People Managed To Pay Them Off

It is a well-known fact that our lives depend on credit. The globalised economy and focus on consumerism almost always compel us to overspend than is actually necessary.

Raghunath Ramamurthy and Gayathri Raghunath will move into their own house in a couple of months. But this overwhelming experience came after a lot of hardships and emotional and financial turmoil. They have been married for four years now. And a year after their marriage, Gayathri discovered that Raghunath was sinking in a debt of about Rs 5 lakh.

“At that time, he was earning around Rs 2.4 lakh. The loans were all useless ones, high on interest rates. One was on a high-end bike and the other one was for a big television that he bought for Rs 1 lakh,” she said. And the worst part was he hid his credit from his wife.

“He would buy me everything I asked for without saying ‘no.’ I did not realize that all this was on credit,” said Gayathri. As expected, his credit score took a toll. “First, we worked towards clearing the bike loan and clearing the credit card bills. And I stopped asking for anything,” she said. They first cleared the loans and together worked towards improving the credit score. Today, Raghunath has only the home loan running, with an impressive credit score of 785.

Sharad Reddy is a Mumbai-based computer graphics artist. And he will be a very happy man in a few months from hence. That will be the month he will finish clearing his personal loan that he had taken about three years ago.

“I had a student loan of Rs 3 lakh. To clear that, I took a personal loan. Then I had a family emergency, I had no savings and was still in the beginning of my career. So I had to borrow more. Later, I bought an expensive bike and it further increased my loan burden. With just Rs 20,000 monthly salary in a city like Mumbai, I was staring at a debt of Rs 6 lakh,” he said.

Now, this is a scary figure. Financial experts insist that your credit size should not be more than three times your pay. But Sharad had crossed that threshold. “I pulled up all my debts together, did a lot of introspection and worked with a company that helped me by advising on the right things to do at that stage.”

Rajesh Kishore Atavle and Manjula Atavle had a home loan running and they moved into a bigger flat since their in-laws soon joined them. Their expenses skyrocketed but their income did not. “We were paying heavy credit card bills and our survival became a big issue every month. We had to do something drastic,” said Manjula.

Rajesh took up a higher paying job in a metro down south and Manjula took a bank transfer. “We still lived in a bigger house that accommodated my in-laws, ourselves and our children,” she added. They gave their own house on rent. “Now that was an additional income and my father-in-law took up architectural projects on a freelance basis. These things helped us tide over,” she said.
About the author: Rajiv Raj is the director and co-founder of www.creditvidya.com