How I Paid Off Rs. 10 Lakh Debt in 6 Months Using This Amazing Method

Debt can be a huge burden on your finances, your mental health, and your relationships. It can feel like a trap that you can’t escape from, especially if you have high-interest loans or credit cards. But don’t lose hope, because there is a way out. In this blog post, I will share with you how I paid off Rs. 10 lakh debt in just 6 months, and how you can do it too.

How I Got Into Debt

I was not always in debt. In fact, I used to be very careful with my money and always saved a portion of my income. But things changed when I lost my job due to the pandemic. I had to rely on my savings and credit cards to pay for my living expenses and bills. I also had some medical emergencies that drained my savings even more. Before I knew it, I was in debt of Rs. 10 lakh, with no income and no savings.

How I Decided to Pay Off My Debt

I was feeling depressed and hopeless about my situation. I felt like I had no future and no control over my life. I was constantly stressed and worried about how to pay off my debt and avoid bankruptcy. I knew I had to do something, but I didn’t know where to start.

One day, I came across a blog post by a financial expert who shared his story of paying off his debt in a short period of time. He explained how he used a method called the “debt snowball” to tackle his debt. The debt snowball is a strategy where you pay off your smallest debt first, while making minimum payments on the rest. Once you pay off the smallest debt, you move on to the next smallest one, and so on, until you pay off all your debts. The idea is that by paying off your smallest debt first, you get a sense of accomplishment and motivation to keep going.

I decided to give it a try. I made a list of all my debts, from the smallest to the largest, along with their interest rates and minimum payments. Here is what it looked like:

How I Paid Off My Debt

The first thing I did was to find a new source of income. I started freelancing online as a content writer and web developer. I also sold some of my unused items on online platforms like OLX and Quikr. I managed to earn around Rs. 50,000 per month from these sources. 

The next thing I did was to cut down on my expenses as much as possible. I moved to a smaller and cheaper apartment, cancelled my cable TV and gym membership, cooked at home instead of eating out, used public transport instead of driving, and avoided any unnecessary spending.

I also created a budget and tracked every rupee that I spent and earned. I used an app called Money Manager to help me with this task.

With these steps, I was able to save around Rs. 30,000 per month after paying for my essential expenses and minimum payments on all my debts.

I used this amount to pay off my smallest debt first: Credit Card A. It took me two months to pay it off completely.

Then, I moved on to the next smallest debt: Credit Card B. With the extra money that I saved from paying off Credit Card A (Rs. 2,000), plus the money that I saved from my income and expenses (Rs. 30,000), I had a total of Rs. 32,000 per month to pay off Credit Card B.

It took me another three months to pay it off completely.

Then, I repeated the same process for the rest of my debts: Personal Loan A, Personal Loan B, Car Loan, and Home Loan.

By paying more than the minimum amount on each debt every month, I was able to reduce the interest charges and the time it took to pay them off.

After six months of following this method, I was able to pay off all my debts, totaling Rs. 10 lakh.

How I Felt After Paying Off My Debt

I can’t describe the feeling of relief and happiness that I felt after paying off my debt. I felt like a huge weight was lifted off my shoulders. I felt free and empowered. I felt proud of myself for achieving this goal.

I also learned a lot from this experience. I learned how to manage my money better, how to live within my means, and how to plan for the future. I learned how to be more disciplined and focused on my goals.

I also learned to appreciate the things that matter most in life: my health, my family, and my friends.

How You Can Pay Off Your Debt

If you are in debt, don’t lose hope. You can pay off your debt too, just like I did. All you need is a plan, a strategy, and a commitment.

Here are some tips that can help you:

• Make a list of all your debts, from the smallest to the largest, along with their interest rates and minimum payments.
• Find ways to increase your income, such as freelancing, selling your stuff, or getting a side hustle.
• Find ways to reduce your expenses, such as moving to a cheaper place, cancelling unnecessary subscriptions, cooking at home, or using public transport.
• Create a budget and track your income and expenses every month.
• Use the debt snowball method to pay off your debts one by one, starting from the smallest one.
• Celebrate every milestone and reward yourself for your progress.
• Stay motivated and focused on your goal.

You can do it. You can pay off your debt and achieve financial freedom. Just take the first step and don’t give up.

Sources:

• How the Debt Snowball Method Works – Ramsey Solutions
• The Debt Snowball Method: How It Works And How To Use It – Forbes Advisor
• Debt snowball method – Wikipedia
• The Debt Snowball Method | Capital One