Your guide to tackling debt smarter and faster in 2025

livemint.com:

India’s household debt is at its highest in years, leaving many grappling with how to regain financial control. The advice? Stop digging when you’re in a hole. 

According to the Reserve Bank of India’s June 2024 Financial Stability Report, this rise is fuelled more by an increase in the number of borrowers than by larger loan sizes, highlighting how many households are struggling to balance their budgets or build adequate savings.

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Consumer loans now account for over 40% of household debt, reflecting a growing reliance on credit to bridge financial gaps. Whether it’s credit card bills, personal loans, or other borrowings, managing debt effectively has become critical for financial stability and peace of mind. 

With the start of a new year offering a fresh slate, now is the perfect time to take charge of your finances with a practical three-step plan to reduce debt and move closer to financial independence.

A practical three-step plan can help individuals regain control, reduce financial stress, and accelerate their journey toward debt-free living.

The first step is to organize your debts and develop a clear repayment strategy. Begin by listing all outstanding debts, including the loan amount, interest rate, and tenure for each. This provides a comprehensive picture of your financial situation and helps prioritize repayment efforts.

Next, choose a repayment method that suits your circumstances:

The Snowball Method: Focus on paying off the smallest debt first while making minimum payments on others. This approach offers quick wins, building momentum and confidence to tackle larger debts. However, it may lead to higher overall interest