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Is that sinking feeling that accompanies overdue bills and loans becoming too common? It’s time to fix our toxic relationships with recurring debts. 

Debt isn’t the only thing that adds up with unpaid bills. Worry piles up too. They might seem minor at first, but if short-term debts such as overdue credit card bills and personal loans are ignored, they start nibbling away at our finances and peace of mind. So, here’s a five-point action plan that won’t just resolve current debts, but change our relationship with debt for good. 

1. Restrict yourself to a budget

Jot down your fixed expenses and try to shift a good portion of what remains towards settling your debts. Give your trusty credit cards a rest and cut down on spending. Postpone big purchases and, if you must, dip into your savings to pay debts off. And most importantly, keep paying the minimum monthly payment on your credit cards on time to avoid late fees.

2. Choose a repayment strategy

Make a list of these details under each debt:

  • Amount owed
  • Interest rate
  • Minimum monthly payment
  • Due date

Now, try to pay off the debts with the highest interest rate first. Repayments are initially used to clear the interest before the principal that’s owed, so if you can make extra payments towards this debt, you’ll end up paying less in the long term. If that sounds daunting, start small. Tackle the debt with the lowest balance first. It will give you the satisfaction of striking one debt off your list and the motivation to deal with the bigger ones.


Read up on the different repayment strategies before deciding on one that’s sustainable.  

3. Lower the interest rate

Try to negotiate with your bank to lower the interest rate on your credit card dues. Some banks oblige in the hope of recovering at least a certain percentage of the dues quickly. It also helps to have a good credit score and payment history. If that’s not an option, try shifting your debt to a credit card with a lower interest rate. But, as they say in hyperspeed in all financial ads, terms and conditions apply, so read the offer document carefully. 

4. Build an emergency fund

Once you’ve cleared your debts, create a financial buffer of 6-12 months’ living expenses. So, if you’re faced with an emergency, you won’t have to lean on your credit card or a take a personal loan with a high-interest rate. Keep adding to this fund with investments in low-risk options such as liquid funds or low duration debt funds, that can be easily converted into cash if required.  

5. Get an expert to help

Financial planning companies such as  Basis can work with you to build a healthy financial portfolio based on your resources and goals. Think zero debt, plus a robust investment plan and retirement fund. We also offer information and tools that don’t just empower you to make better financial decisions, but also change your approach to money. 

We often see debt as a necessary evil that’s always popping in and out of our lives. The truth is, with the right kind of financial planning, it could be something that we can happily look back on as a vague, distant memory. 

Want to build an emergency fund or simply invest for a debt-free future? Get on the Basis app where you can learn with unique curated content and receive a guided investing experience. Download here.

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