How to Pay Off Massive Debts – Part 3

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In the next part of the series on how to pay off your massive debt, we look at how to save approx. ₹25,000 each month. This will add upto ₹3 lakh a year and will help our friend who asked us how to pay off a loan of ₹50 lakh on a monthly income of ₹1 lakh, pay off his smaller credit card debts or personal loans.

You can read the first part of the series where we talked of how you can approach banks and credit card companies to pay off your debt by clicking the highlighted link.

You can read the second part of the series here: The Middle Path: Balance Between Saving and Enjoying Life.

Let’s then start with the final part of our 3-part series on: How to Pay Off Massive Debts

How to Save ₹25,000 Each Month

🚩 1. Unleash the Power of Budgeting

Budgeting is the most powerful weapon in your savings arsenal. Just as you cannot win a game without strategy and planning, similarly you cannot win at savings and debt repayment without budgeting.

Take out a notebook or open up MS Excel (or Google Spreadsheets) and start a budget plan. This is the first step to financial freedom. US-based personal finance expert Dave Ramsey says, “A budget is telling your money where to go instead of wondering where it went.” These are smart words. Pay heed to them and start your budget. We look at the major items and see how much you can save under each category in the sections below.

💡 Pro Tip: Categorise your expenses and set limits for each. There are essential and non-essential items on that list. Keep the essential items and reduce the budget for non-essential items. You will be amazed at how much you can save!

📈 Savings Potential: ₹5,000 – ₹25,000 per month

Now, we look at how much you can reduce your expenses under different categories.

🚩 2. Save on Groceries

There are significant savings to be made here. Let us show a few things you can do.

  • Reduce and if possible remove all fancy food items such as salted dry fruits, pitted olives, tinned biscuits, gourmet cakes, premium cheese, sweets, ice cream, premium tea or coffee, expensive wines and alcohol.
  • Remove or at least reduce snacks and related ready-to-munch food. We eat these items when we are a little bit hungry in the evenings or bored during the day. Replace the chakhnas and the makhnas with puffed rice and make a simple bhel when you need a snack.
  • Replace white and brown bread with multigrain bread or homemade bread. They are better and keep you fuller for long. They may seem expensive but a person who can eat 5 slices of white bread will eat 3-4 slices of multigrain bread. They also reduce your health bills later.
  • Try mixed flour instead of refined flour. Again, better for health and keep you fuller longer.
  • Remove the long-grained Basmati and go for Basmati Tukda, parboiled rice or other local rice. The long-grained Basmati is doing nothing for you. There is no flavour, questionable nutrients and the only one benefitting is the manufacturer. Not you. So, ditch it.

💡 Pro Tip: Start slow. Don’t remove all items at first. Reduce them first. Limit your intake.

📈 Savings Potential: ₹2,500 – ₹7,500 per month

🚩 3. Save on Fruits and Vegetables

Reduce your intake of off-season or imported fruits and vegetables. Don’t buy Bok Choy, Pak Choi, Pok Choi or Celery unless you get them cheaper than cabbage. Don’t buy Rocket Leaves unless they are cheaper than Spinach. Don’t buy imported Apples, Cherries, Kiwis, Dragon Fruits or any other expensive fruits. Try local and seasonal fruits.

A fruits and vegetables bill of ₹1,000-1,200 at most should last a family of four a week. In a month, this bill should not go beyond ₹4,000-5,000. If it is going beyond that, then you need to get back to your budget and see what you can reduce and replace with other cheaper items.

💡 Pro Tip 1: If there are 1-2 expensive fruits or vegetables that you and your family like, don’t remove them from the list. These can be the rewards you give yourself.

💡 Pro Tip 2: Start a garden. Even if you live in a concrete jungle, you can grow a lot of vegetables in your kitchen garden. If you have a house with a garden or a terrace then you can go all out. You can cut down your vegetable bill by nearly half or more if you set up your own garden. It may involve some initial investment in pots and soil and you may need a gardener to come once a week. But on the plus side, you will get pesticide-free vegetables. The reward of eating your own produce is something to cherish.

📈 Savings Potential: ₹2,500 – ₹7,500 per month

🚩 4. Go DIY: The Power of Homemade

Your kitchen can be a gold mine of savings. Financial experts have long suggested cooking at home and packing lunches to save big. Here are some tips to reduce your expenses:

Cut down on eating out and instead break your week down to specific meals you and your family love on specific days. Monday can be sandwich day, while Wednesday can be salad day, and so on. This will need some planning but will unleash your creative juices and make your debt repayment journey more rewarding.

Try interesting and delicious alternatives. For instance, instead of buying expensive biscuits, putting some jam or custard on a Marie or digestive biscuit or even toast is a great way to reduce your expenses.

Try baking. It can seem difficult at first but can turn into a hobby soon enough if you are keen on exploring it. Research shows that people who bake, grow their own fruits and vegetables or make their own stuff like cushions, sweaters, etc. are happier and more content than those who buy these items.

💡 Pro Tip: Experiment with new recipes that can be made in less than an hour or even 30 minutes. There are tonnes of YouTube videos out there by chefs and cooking aficionados to inspire you to become a Master Chef yourself in 30 minutes or less.

📈 Savings Potential: ₹5,000 – ₹10,000 per month

🚩 5. Go Bargain Hunting

Heard of the 30-Day Rule? Personal finance author Ramit Sethi suggests waiting 30 days before making a non-essential purchase. This helps you avoid a tonne of expenses and save big.

Use other options like sales to save big. Online stores allow you to keep a tab on when the price of something you want goes below a specific limit. Use this to save a few rupees every time.

Keep an eye out for discounts, coupon codes and cashback offers. UPI payment apps like Paytm, Google Pay, and other wallets always have some deals. Make using these discounts a habit whether you are ordering a meal or buying other stuff.

Buy from local stores that give you a discount. The MRP you see on packets stands for Maximum Retail Price. The cost for the seller is lesser than that. Choose sellers who give you good discounts. The same goes for buying items like medicines, electronic items, clothes, etc. To use an old proverb but slightly altered: a rupee saved is a rupee earned.

💡 Pro Tip 1: Find local stores that give discounts on your purchases.

💡 Pro Tip 2: Browse online marketplaces for good deals.

💡 Pro Tip 3: Don’t order from online food delivery apps if you have the restaurant number and they deliver. You will do both the restaurant and yourself a favour. The restaurant will get the full price of the meal and you will save on unnecessary delivery charges and surge pricings.

📈 Savings Potential: ₹3,000 – ₹5,000 per month

Total Savings

₹13,000 – ₹30,000 per month or ₹1.5-3.6 lakh each year – enough for our friend to pay off his ₹3 lakh credit card debt.

To Conclude

Saving more than you usually do requires sacrifices and the road is not easy. But if you stick to a budget, weed out the unnecessary stuff and focus on saving and celebrating small wins, you will never have to worry about anything.

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