Last week I was travelling and therefore watched Television – and it was Utvi Bloomberg that I watched. Here the very sensible (and not so shrill) Surabhi Upadhyay was doing a program on debt reduction / consolidation. Funnily it is perhaps the only program on the borrowing side. Most other channels and ‘personal finance’ experts concentrate on start early, do compounding, do an SIP kind of spiel. Nothing wrong, except that it is terribly over done.

Good job, Surabhi..but I got only the last part of the program…and so will not comment anything about the program content!

However, here are some of my thoughts on debt…

Today it is very easy to live beyond ones’ means. If you take any magazine you will find about 15 advertisements – of this about 14 will extol you to live beyond your means. If you can afford a Ford Ikon, they will urge you to buy a Honda City. If you can buy a Honda City, they will push you to an Octavia.

If you tell a real estate broker you are looking for a house for 6 million, be prepared to shell out 9 million!

All of this is easy – because there is a huge push to make you think in EMI language – not full price language! Sir a Merc is available for “only” Rs. 54,000 p.m. as EMI!

What are the indicators that you are living a little beyond your means? They are as follows:

a. Your cheques are bouncing! This is perhaps the worst indicator that you are issuing “rubber” cheques…so this is not a good idea.

b. Your credit score (currently in India you do not have a copy of this) is falling and the people who have lent or wanting to lend to you are hesitant about default and are increasing the interest rate. Speaking of credit scores CIBIL is the place everybody likes to go to…but there are others and they are FREE. At Cibil you pay some charges.

c. You are saving less than 15% of your salary! This is SCARY, very scary there is little elbow room, beware!

d. You are charging everything to your credit card and are paying only a part of the amount! I hope you noticed Hdfc bank has raised the interest charges to 3.25% p.m. Translate it to a per annum basis and you will not be far away from a number which is half a century!!

e. You have 4 credit cards and you are borrowing from one card to pay the other 3!

f. More than 30% of your earnings are going towards EMI payments – and these are all long term commitments

g. You have no emergency fund, losing your job is one of the nightmares you go through regularly, one small repair like having to replace your car tyres can create hell for you!

h. you are happy visiting your parents for 10 day vacations because you can save some living expenses

i. if you will touch your parents’ kitty for your purchase of car, bike or your marriage expenses

if you have any of the above mentioned problems, you need to set your financial house in order. TODAY.

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  1. Hi Subra,

    Excellent views. My view is that Debt is trap at every age level, however youngsters are more prone and tricked than responsible family person. When moving into debt trap people have “Chalta Hain”, “Dekha Jayega” attitude without realizing the repurcssions.



  2. Thanks for the views.

    My currnt Home Loan EMI is 40% of my salary. I don’t have any other EMI. Is this a case for concern? Pls let me know your views.

    S Chowdhury

  3. Mr Chowdhury,

    it actually depends on your employer! If you have a government job – you are sure that month on month the salary will come, and you will not lose your job. At the end of 2-3 years thanks to pay revision this %age will fall. However if you are in a job where there is uncertainty of job and timing of need to be worried for sure. One emergency – like a car breakdown or an illness causing a temporary fall in salary can hurt you.

  4. How true.. The other day I visited a mobile shop and told him that my budget is 5000 and what are my choices? He started showing mobiles of 6000 onwards. He reached till 10,000 also while telling me that – Sir, if you increase your budget a little bit… 🙂

  5. Hi Subra,

    Been following your blog for some time now – I really like your voice of sanity and your “potentially unpopular” thoughts on finance 🙂

    I had applied for and received a CIBIL report about 3 months back. It tells you whether you are in red or not. But, there is no score to indicate how credit worthy you are. You had mentioned other sources for getting credit scores – can you please list them? Banks? HFCs?


  6. Seller pushing is based on this concept. If you say your “comfort level” is x, agent knows that “stretch level” is x+30%. Those greedy guys want you to sell lock stock and barrel, stretch like a rubber band and pay …. So buyer technique is to tell budget is (x-20%) and appear to stretch to x.

  7. ^^ gee rrp. if it the buyer whose who shells out the x+30 because of HIS greed.the sellers are only doing their job.only if the buyers did theirs

  8. h. you are happy visiting your parents for 10 day vacations because you can save some living expenses

    hahaha… im rolling here on this point… good one

  9. Baalachandran Narayan

    My application was rejected. Credit Sudhaar was my choice. Initially they were slow. But their counsellors were able to handle all my queries. I will give Credit Sudhaar a positive review.

  10. My loan was rejected. Credit Sudhaar was my choice. Initially they were slow. But their counsellors were able to handle all my queries. I will give Credit Sudhaar a positive review

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