ot a question about your money? What you should or should not do with it?

Our expert Uma Shashikant has the answers.

My monthly income is Rs 13,500 and I have an outstanding of Rs 30,000 on my credit card.

Should I apply for a personal loan to get rid of the credit card amount and then pay Rs 3,000 every month for a year to clear my debt?

- Bhavesh Chauhan

Even before you take the personal loan, make sure you have controlled the spending on the credit card. Like a pre-paid mobile card, keep a monthly limit on your card. 

Keep a simple clip/placeholder on your fridge and keep all credit card spending counterfoils on that. Alternatively, for the want of privacy, you could even keep them in a plastic box in your cupboard.

Every time you put the bills there, count and be sure you are within limits (like the cashier writing the total on the bundle, do a simple count). If you hit the limit, put your card into the box and keep it out of sight. 

Take it out only after you have paid for what has been spent.  Simple trick, but it works (with some self discipline). If you constantly see what you spend, you will fear spending more.

Once you have achieved some control on the spend, you are ready to take the one-time step of taking a loan and paying off the debt.

Your credit card loan is at a 20% simple rate of interest per annum. My guess is that the personal loan could be higher. Check it out.

• Too many loans? Here's help

Me and wife are both 25 and earning a joint monthly income of around Rs 35,00 to Rs 37,000. Most of our money is spent on servicing our home loan (Rs 15,000) and other loans (Rs 13,000).

Our monthly expenses are Rs 6,000 and Rs 3,200 is our quarterly insurance payments.

How do we get out of this mess?

- Praveen Joshi

My idea may sound ridiculous � but I am serious. If you get a good price, sell off the house.

Do you think you really need the Rs 15 lakh (Rs 1.5 million) home when you have limited income and savings?  Perhaps you have bitten off too much too soon.

Your loans represent your current needs, which is natural at your age. Think for a moment, would you pay a rent of Rs 15,000 a month?

Give yourself another five years. Spend carefully and save 30% to 40% of your income. Invest the savings � partly in Public Provident Fund and partly in an Equity Linked Tax Saving scheme. These are mutual fund schemes that offer you a tax benefit and invest in shares. 

To understand more about these investments, read How to make PPF work for you and All about ELSS.

If you save Rs 1,80,000 a year, you will save all the taxes you like. Read All about Section 80C to see where you can invest to save tax.

In 5 years, you will have a better income, a cushion of savings, and perhaps buy yourself a home of your dream. 

Think about it!

• Spend more than you earn? Here's help

I am 27 drawing a monthly income of Rs 10,325. Due to the problems my wife is facing (she is pregnant) living with my parents, I am planning to take a home loan of around Rs 4,50,000.

I have no special savings. What must I do?

- Mahesh Jawale

Pregnancy is only a natural state for the female species. Don't approach it like an illness, unless there is a clear medical problem or complication. 

Surely there is enough spend on the wings, on your wife, the child and perhaps the social customs. If you tie yourself down with a loan, more so when you have no cushion of savings, you will tie yourself in debt. 

Save all that you can, find out if you can increase your income � your wife can work from home to fund your house. 

• How to start saving

After you have a comfortable level of income and saving cushion to take care of your needs, and exigencies, go for the home. 

Do not make a financial decision on emotional considerations. It runs the big risk of going wrong.

Illustration: Dominic Xavier

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