Author
LoansJagat Team
Read Time
10 Min
04 Apr 2025
Two years ago, Rajesh was stuck in a ₹50,00,000 debt trap—₹20,00,000 in personal loans, ₹15,00,000 in credit card bills, and ₹15,00,000 lost in a failed business. He faced substantial monthly EMI obligations because interest rates rapidly increased, and debt collectors made endless phone calls. Even his
chaiwala started asking him, “Bhaiya, udhaar kab chukaoge?”
With no other option, Rajesh made a strict 24-month repayment plan. Let's see how he managed to do it:
Through this rigid financial strategy, Rajesh managed to clear his ₹50,00,000 debt burden over two years. He is now debt-free and actively saving for his future needs.
Rajesh's narrative demonstrates how proper budgeting and financial discipline enable debtors to recover from their situation.
When Rajesh first sat down with his bank statements, it felt like decoding a stock market crash—numbers in red, interest piling up, and no clear way out. Instead of succumbing to stress, he made 'Jugaadu' choices to proceed forward.
2. Udhaar Pe Kamao: His spare room? Listed on Airbnb. His bike? Rented it out on weekends. Passive income started flowing in.
3. Skills over Struggle: Instead of random side gigs, Rajesh monetised his expertise. He took on high-paying freelance projects, pulling in an extra ₹70,000/month.
4. Bank Se Baatcheet: This allowed Rajesh to remove ₹5,00,000 from his financial load by negotiating lower interest rates on his loans instead of making automatic huge EMI payments.
5. Every Rupee Matters: He lowered his monthly expenses to ₹30,000 by implementing two expense reduction strategies as a part of his goal—the first was to move his groceries to a discount grocery store, and the second was to cancel his paid OTT subscriptions he felt weren't necessary.
He wasn't simply reducing costs—he was altering his financial structure. Every financial unit went directly to savings, investments, or transformation purposes. His ₹50,00,000 debt disappeared entirely within 24 months.
The numbers at his desk showed Rajesh that random spending cuts wouldn't solve his problems—he needed to create a merciless budget.
The story's moral is that a budget isn’t about restriction but direction. Rajesh ensured every rupee was working for him and not against him.
Simply reducing costs would not solve Rajesh's financial problems because he needed to raise his cash flow. He used the following means to increase his revenue stream:
Strategy | Explanation | How Rajesh Used It |
Freelancing | Using existing skills to earn extra income through online platforms or independent projects. | Leveraged his expertise in content writing and took on freelance projects and earned ₹70,000/month. |
Renting Assets | Monetising unused possessions like a spare room, vehicle, or gadgets for passive income. | Listed his spare room on Airbnb and rented out his bike, generating ₹15,000/month. |
Selling Unused Items | Turning old, unused belongings into quick cash by selling them online or offline. | The sale of old devices, furniture and electronics earned him an immediate surplus of ₹3,00,000. |
Freelance Consulting | A person who delivers specialised consultation to clients in exchange for a fee. | He generated another income source by providing individual consulting sessions on content writing. |
Weekend Gig Work | Taking short-term side jobs combined with high-paying assignments during spare time. | He sought out weekend industry-related side jobs that allowed him to earn more. |
Rajesh achieved maximum savings by removing pointless costs through simple budgeting measures. Here’s how he did it:
2. Shopping
3. Subscriptions
4. Luxury & Travel
5 Misc. Expenses
Rajesh expanded his financial resources by adding the following strategic revenue streams to his business portfolio:
Income Source | Explanation | How Rajesh Used It |
Freelance Content Writing | Writing blogs, articles, and website content for businesses and online platforms. | Took on content writing gigs through Upwork, Fiverr, and LinkedIn, earning ₹70,000/month. |
Blog Monetization | Running a personal blog with ads, sponsored posts, and affiliate marketing. | Started a finance & career blog, earning ₹25,000/month from Google AdSense & brand collaborations. |
E-book & Course Sales | Selling digital products like e-books and online courses. | Wrote an e-book on content writing strategies, making a passive income of ₹15,000/month. |
Ghostwriting | Writing content for clients at premium rates. | Offered ghostwriting services for business leaders and influencers, bringing in ₹30,000/month. |
Tutoring and Workshops | Teaching content writing to beginners through online classes or workshops. | He conducted writing workshops on weekends and earned ₹20,000 per month by charging participants per session. |
Total Monthly Earnings from Side Hustles: ₹1,60,000
Debt Consolidation – The Game-Changer That Saved Him Lakhs!
Availing one low-interest loan to settle several high-interest debts, lowering the overall interest cost and easing repayments.
He availed a debt consolidation loan at a 12% interest rate and settled his high-interest debts (25%+).
Let’s see how this financial tactic saved him more than ₹8,00,000 in interest amounts and eased his repayments.
Debt Type | Loan Amount | Interest Rate | EMI | Total Interest Paid |
Credit Card Debt | ₹10,00,000 | 36% | ₹45,000 | ₹3,80,000 |
Personal Loan 1 | ₹8,00,000 | 24% | ₹18,000 | ₹1,50,000 |
Personal Loan 2 | ₹6,00,000 | 22% | ₹15,000 | ₹1,10,000 |
Car Loan | ₹5,00,000 | 18% | ₹12,000 | ₹60,000 |
Miscellaneous Loans | ₹4,00,000 | 20% | ₹10,000 | ₹50,000 |
Total EMI Before: ₹1,00,000
Total Interest Paid: ₹7,50,000
Debt Type | Consolidated Loan | New Interest Rate | New EMI | New Total Interest Paid | Interest Saved |
Consolidated Loan | ₹33,00,000 | 12% | ₹67,400 | ₹5,00,000 | ₹2,50,000 |
Total EMI After: ₹67,400
Total Interest Paid: ₹5,00,000
The 70/20/10 Rule: How Rajesh Managed His Income Smartly
Saving money effectively is not only about making more—it's about spending effectively. Most people either spend all that they make or concentrate too much on paying off debt, ignoring savings for the future.
Rajesh steered clear of both these extremes by adhering to the 70/20/10 Rule, maintaining a well-balanced financial plan while working on his ₹50,00,000 debt.
This budgeting system allocates income into three primary categories, which provide financial security and growth:
Rajesh was making ₹1,60,000/month from his side businesses and full-time employment. Rather than mindlessly spending, he organised his income as follows:
Category | Percentage of Income | Amount | Usage |
Essentials | 70% | ₹1,12,000 | Rent, food, bills, transport, insurance, and other necessary expenses. |
Debt Repayment | 20% | ₹32,000 | Paying off his consolidated loan aggressively to reduce interest faster. |
Investments and Savings | 10% | ₹16,000 | Invested in SIPs, stocks, and emergency savings for financial security. |
Credit Card Ka Jalwa? Not Anymore! Breaking Free From the Plastic Trap
Credit cards typically begin as a convenience, but they can turn into a financial burden rapidly thanks to their high interest rates (30%+ per year!) and the ease of overspending.
Rajesh was stuck in a minimum payment trap with increasing debt, so he made the drastic decision—he eliminated credit cards altogether!
His outstanding credit card balance was increasing at 36% annually, piling lakhs of rupees on his debt.
2. Impulse Spending Control
Swiping a card was convenient, but actual cash flow transparency was lacking, and he ended up overspending.
3. No More Minimum Payment Trap
Paying only the minimum amount due every month meant he was paying interest only, not decreasing the principal.
Strategy | Why Does It Work? | How Did Rajesh Apply It? |
Switched to UPI & Debit Cards | Spends only what’s in his account—no future debt. | Used UPI (PhonePe, Paytm) & debit card for all purchases, limiting spending to ₹50,000/month instead of using credit. |
Used Cash for Daily Expenses | Physical money spending reduces impulse buys. | Withdrew ₹5,000/week in cash for groceries & miscellaneous spending, helping him cut costs by 20%. |
Automated Bill Payments | No need for credit cards for recurring payments. | Set up UPI autopay for rent (₹25,000/month), electricity, and phone bills (₹5,000/month). |
Emergency Fund Instead of Credit | No need to rely on credit in urgent situations. | Built a ₹1,00,000 emergency fund, so he didn’t have to depend on credit cards for sudden expenses. |
Rajesh's transformation from deep debt to total financial independence reflects the strength of his planning and self-discipline. Through the elimination of wasteful spending, optimisation of income sources, and utilisation of intelligent financial resources such as debt consolidation, he changed his financial status within two years.
Over the past six months, he has used all the bonuses, tax refunds, and additional income to pay off the outstanding debt faster. Rajesh is now debt-free, financially secure, and dedicated to increasing his savings.
His experience confirms that with the correct attitude, debt is not the end—it's merely a hurdle to be crossed!
Yes, it can save you money in case you get a lower interest rate than your existing loans.
Freelancing, passive income investments, or renting out assets.
Yes! Avoid credit cards until your debt is under control so you don't end up spending more.
Not tracking expenses and failing to prioritise high-interest loans.
About the Author
LoansJagat Team
We are a team of writers, editors, and proofreaders with 15+ years of experience in the finance field. We are your personal finance gurus! But, we will explain everything in simplified language. Our aim is to make personal and business finance easier for you. While we help you upgrade your financial knowledge, why don't you read some of our blogs?
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