No one prefers to be in debt. It’s stressful, it’s messy, and it can make life miserable. Yet, so many people are failing to stay out of it. The pandemic might have made things worse. Indian household core debt went up from 32.9% of GDP to 35.8% of GDP from 2016 to June 2021.

We are a young nation, and two-thirds of our population is below 35. This is a tech-savvy and ambitious generation. They crave an aspirational lifestyle and are ready to access credit to get what they want. While they have access to so much information online, there are fewer discussions on how to manage money and invest for the future. Over 50% of millennials and Gen Zs in India remain stressed about their financial security and family welfare among other things. 

Taking up debt is a great way to build your credit score, but mismanagement of personal finances shouldn’t be the result.

If you are entrenched in debt, the only way to get rid of it is to face it head-on. Here are 5 great ways to go about it.

#1 Track and List Your Debts Regardless of Interest Rate

Let’s introduce you to the debt snowball method. It might look crazy but it can work. 

  • Use a spreadsheet or your diary and list out your debts from smallest to largest, irrespective of the interest rate.
  • Try to pay off the smallest debt, while making minimum payments on the rest
  • After you pay off the smallest debt, use that payment and pay off the next

Repeat this process, until you clear all debts. It could take some months or some years. You might be concerned about the interest rates? Let us explain. If your largest interest rate is for the largest debt, it will take you a long time before you see some reduction in the whole debt balance. If you stick to this plan, without getting jittery about interest rates, you might be able to pay off small debts quickly. That’s a step ahead, and that is what will motivate you to pay off the rest.

Don’t forget to map your progress. On LazyPay App, you can set reminders and get alerts about missed payments so that you remain on track.

#2 Restrict Useless Spending

Resist that urge to get retail therapy. Restrict dining in restaurants every weekend. Remember your extensive debt levels. That’s it; resist, restrict, and remember! Ask yourself these questions:

  • Do I need these (clothes or accessories or vacation) right now?
  • Will it be ok if I don’t spend money on this?
  • Will there be money left with me after I purchase this?

#3 Indulge in Smart Shopping 

Regular purchases are important. You have to get groceries and other essentials. But, you need to spend within a budget. Get an app that lets you make a budget before the month begins. Some platforms will let you connect to your bank account, and let you track your spending and debt in real-time. Now it’s time to do some smart shopping.

  • Stick to your grocery list, don’t shop impulsively
  • Look for online groceries and other essentials. Many eCommerce platforms offer items at discounts and offer cashback.
  • Learn to say no to yourself and your kids
  • Search for smart deals online for electronic items
  • Carpool with your friends, and stop spending too much on petrol

Also, take a look at how much of your credit card balance is dominated by these essential spends. If the proportion is high, perhaps it’s time to get a card like LazyCard by LazyPay. Getting a LazyCard is not only quick and paperless, with no hidden fees, and low-interest rates, it is a cheaper alternative.

#4 Ask for a Raise or Start a Side Gig

Aim for a rise in income so that you can pay off debts faster. If you think you deserve a raise, ask for it. If that’s not an option, do a side gig. With the rise in the platform economy, there is so much scope for freelancing or selling your artworks. You can easily start a small eCommerce platform. Social media platforms are becoming great places to sell products, especially for people who have a knack for making things.

#5 Do Responsible Spending with BNPL 

This one sounds crazy, right? But, studies show that the Buy Now Pay Later (BNPL) method can prevent overspending habits while increasing affordability. Over 28% of consumers worldwide say that BNPL helps in improved cash management so that they can manage other expenses. Around 31% say that it helps them to budget, and 33% favour it due to no interest charges.

If you are short on cash, use the pay-later option at the checkout point, to use your credit limit. For instance, you can pay for emergency plane tickets after 30 days, without swiping your high-interest credit card. You can pay small utility bills too.

Repay on time, and avail this credit interest-free! The more you repay on time, the greater the chances of increasing credit scores, and the credit limit. If you are committed to being in control of your credit, the app will let you track transactions, and keep your budget on track.

The road toward becoming debt-free can be long. LazyPay is there with you every step of the way. 

 

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