How to Pay Off Massive Debts – Part 2

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We looked at the banking options you have to pay off your massive debt in the last post.

In this next part of the 3-part series, we look at some practical steps to help you pay off your large debt faster.

Before we start here are some things that experts brush under the carpet when they give financial advice to pay off your debts.

Most financial experts only preach the gospel of cutting back on expenses and saving every rupee. While their advice might be rooted in good intentions, it is, to put it bluntly, very short-sighted. It ignores the essential human need to enjoy life and indulge in experiences that bring small doses of happiness.

Strict financial advice can leave us feeling trapped in a never-ending cycle of scrimping and saving, without any room for even small enjoyment. This restrictive mindset often leads to a sense of deprivation and resentment and people usually abandon their saving plans. This makes it difficult for individuals in debt to stick to their repayment plans and become debt free.

On the other hand, being in debt can take a significant toll on your mental well-being. You are faced with the constant worry about making ends meet, the fear of not being able to pay off your debts, and the shame associated with financial struggles. This leads to anxiety, depression, and strained familial relationships. Studies show that individuals with high levels of debt are more likely to experience mental health issues and reduced quality of life.

What then is the solution?

It may be a middle path which helps you strike a fine balance between saving your money to pay off debts and enjoying your life.

🌟 The Middle Path: Balance Between Saving and Enjoying Life 🌟

Adopting a middle path approach will help you allocate a portion of your income towards debt repayment and set aside funds for leisure and personal fulfilment. This way will enable you to avoid the psychological strain that comes with living with extreme frugality and at the same time, it becomes easier to stay on track with your financial goals.

Here are a few tips for achieving this balance:

Understand the Psychology Tricks Used on You

It can be difficult to rein in your need for material possessions when everything you see and hear is exhorting you to buy-buy-buy. You see glamorous ads that make you feel as if you have arrived, hoardings, SMSes and emails that make you take advantage of the latest discounts, handouts to try out the latest restaurant. The offers are endless.

But all of this is to profit the advertiser – not you. The reason you see ads with famous people dressed up in style is because the ad is conveying a message to you – that you are exactly like the star and that star is your friend. You are the only person they are talking to – no one else.

There is only one goal – to make you want to buy-buy-buy.

When You Buy, You Forever Give Away Your Money

Buying is a two-way street. But for the most part, you are giving your money for a fanciful item.

Do remember that even when you buy things at a discount, you are still transferring your hard-earned money from your wallet (or bank account) to the seller. Your money disappears the moment you make the purchase. You are not getting it back. They are not going to give it back to you. How do you think the Tatas, Ambanis, Adanis, etc. got so rich?

Don’t believe me? Buy some stuff at any of their stores and try returning it a day later. And why mention only the Tatas, Ambanis, Adanis or any other large business? Try doing it at any of your local stores and see how much they entertain you.

So what do you need to do?

Prioritise Experiences Over Material Possessions

Research shows that spending money on experiences, such as travelling or attending a concert, leads to greater happiness than buying material goods. Allocate a portion of your budget for meaningful experiences that enrich your life.

To experience this first-hand:

  • Go for walks in the morning or evening or both times. Walks have a way of clearing your mind. If possible, walk around nature. If you live in a city, choose a park. If you live in India’s concrete quagmires that we call metros, walk on empty or near-empty roads.
  • Get a hobby. It will help you do something different. You can try knitting, woodwork, learn a musical instrument, play chess, carrom or Go, try gardening (very rewarding), take up pottery or art, try astronomy (not recommended if you are in a large city) or learn how to code, make videos, animation, movies, or you can simply watch documentaries on topics you want to learn about. Life is too precious to give too much time to social media pundits, Instagram reel-makers or overly dramatic news channel anchors.
  • Go and visit museums. Too many people talk about how patriotic they are and haven’t been inside of a museum. If you don’t know how rich the history of this country is, you will never know how much social media and news channels are leading you on. Give yourself the gift of a museum visit. You will be surprised at how much you do not know. History books in school cover the bare minimum and movies tell you one-sided dramatized stories but a visit to the museum will tell you more in 1 minute than books and movies can tell you in 2 hours.

Find Affordable Ways to Treat Yourself

Look for cost-effective options to indulge in your hobbies or interests. For example, instead of dining out at expensive restaurants, host a potluck dinner with friends or cook a special meal at home. Rule of thumb, in winter or cooler temperatures, try picnics. In the summer and monsoon, potlucks are better.

Set Realistic Financial Goals

This is important. Instead of aiming for extreme savings or curtailing spending entirely, set achievable targets for savings and debt repayment. You will stay motivated and committed to your financial plan. For example, if you had read our earlier post on this series, you would remember we wrote of paying off ₹3 lakh in 8 months to a year. It may seem too much but ₹25k in savings each month will get you there. How do you save ₹25k each month? We talk about it in the next post.

Celebrate Small Victories

Don’t let the small victories go unrewarded. If you are able to save ₹25k for the first time, reward yourself and your family with an indulgent but budgeted meal. Acknowledge and reward yourself for achieving each milestone in your debt repayment journey. This will boost your morale and maintain your momentum. Moreover, when you celebrate the victories with your family, especially your children, they will learn the value of savings.

In the final part our 3-part series on how to pay off your massive debts, we will look at How to Save ₹25,000 Each Month.

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