As 2025 is almost upon us, it heralds a promise of a new life with financial discipline and prudent savings habits. This year for 2025, rather than the evergreen weight loss resolution, make a promise to avoid debt traps, excessive overspending and cutting down wasteful expenditure while laying the foundation stones for a strong financial future which builds up your wealth in the long term. In 2024, you may have suffered from a year of excessive debt fuelled by discretionary expenditure.
In India, borrowing for aspirational spending has increased due to Borrow Now and Pay Later (BNPL) schemes, easy access to credit card debt and unsecured personal loans. This has become a route to easy money for many millennials and Gen Z population. Plus, the various festival season sales offered by e-commerce giants have encouraged impulse spending without a clearly defined pathway to settle the indebtedness easily. The effects of this dangerous cycle of debt is easily seen in the credit card debt statistics which spiralled to Rs 2.7 lakh crores in June 2024 due to the swipe – spend – default habit of India’s millennial population showing a CAGR of 24% over a five year period.
SingleDebt is a well-reputed debt management agency and financial advisory company with an excellent track record of performance in India. At SingleDebt, we are well poised to advise you on strategies of debt reduction through debt management strategies, keeping your spirits and credit scores high and educating you in financial prudence and savings discipline.
Acknowledging the existence of unmanageable debt is the first step to recognizing the problem and containing it. 2025 is all about laying the foundation to a debt free future. Building real, actionable steps to contain debt, control impulse buying, and build a robust financial future.
The 50: 30: 20 budget rule is very useful to apportion your income into three distinctive buckets. 50% of the budget is targeted for meeting living expenses, 30% of the budget is for loan repayments and spending on wants and 20% of your income targeted at long term savings. For example, if you have a monthly Rs 50,000, the 50:30:20 allocation would be Rs 25000 for living expenses, Rs 15000 for paying off loans and other spending and Rs 10,000 towards your savings pool.
These schemes get you into long term debt. When you buy expensive equipment or a smart phone on EMIs. You may be paying off these EMIs during which period you continue to remain in debt. On the other hand, you could acquire the object of your desire by waiting for six months and saving the money to buy it. This way, you can avoid debt, boost your savings habit. This will also have a positive effect on your credit history and credit score. You can also operate a more flexible budget where your financial position is not constrained by preset monthly EMI payment requirements.
On our website, we have discussed the determinants of a credit score in other articles. One of the key determinants of a credit score is credit utilization percentage. An ideal credit utilization percentage is less than or around 30%. Try to not buy excessively on your credit cards and drive up your credit utilization ratio. This will adversely affect your credit score and make taking on new debt more difficult. Missing a credit card payment can lead to ~60% annual interest rate charges.
It is always better to plan your savings around specific objectives. Whether it is your children’s education, your daughter’s marriage, building or renovating your home, a predetermined objective can help you to define goals in terms of a specific measure, plan the period over which you will save the amount, each installment that will go towards making the savings pool etc. This kind of a targeted savings plan makes it easier for you to build up your savings rather than aimlessly saving without any plans in place.
As you progress in your career, your income will also grow simultaneously. Do not spend away any extra savings on unnecessary expenditures, but increase your contribution towards your long-term savings. This way your wealth building exercise will proceed at pace and you can also get rid of your debt burden sooner. This will help improve your retirement savings fund and enable you to live an independent life after your retirement.
Debt Avalanche or debt snowball strategy
In a debt avalanche strategy, you use your income to pay off the high interest loans first. This will help you to pay off the loans faster and reduce your outstanding debt burden. In a debt snowball, you do the opposite when you pay off the smallest debts first. Your debt will reduce slowly but surely..
Exchange high interest debts and replace them by lower cost debt
Credit card debt is one of the most expensive debt types, especially when there is delinquency in payments. Try to switch potentially high interest debt like credit card debt for lower interest debt like unsecured personal debt. This way you can save on your high interest costs.
Start with small savings
Start your savings habit by building an emergency fund. This should ideally cover about six months of your living expenses. You must contribute to this fund religiously without missing any payments. This will not only inculcate the savings habit and inculcate financial discipline. You can contribute up to 20% of your salary.
Use a financial advisor or planner
When you use an experienced debt planning agency or a financial advisor, you need not struggle to build your budget and savings. They will use their expertise in building a customized plan suited to your financial circumstances and help get you relief from any creditor harassment as well for a stress-free stable future.
Make 2025 a debt free, financial year, full of hope of financial security. Like you discard bad habits, make it a point to discard your debt by paying it off. Our tailored debt management solutions provide a clear path to freedom, helping you consolidate repayments, reduce interest rates, and avoid mounting debt. More importantly, we’re here to support you every step of the way. Don’t let debt hold you back from achieving your New Year goals. Imagine starting 2025 with a lighter financial burden and a brighter stress-free outlook. Take the first step today. Reach out to SingleDebt for a FREE confidential consultation and let us help you build a future of financial and mental freedom.
Contact us now and embrace a debt free, stress free 2025!
SingleDebt specializes in effective debt management solutions, helping individuals and businesses reduce their debt and regain financial stability.
