A defence employee, I'm struggling with loans, with my EMIs surpassing my income. What should I do?

I work in the defence sector, and my current monthly take-home salary is Rs 90,000. Unfortunately, I find myself in a challenging situation due to a significant error in judgement—I've accumulated several loans, leaving me feeling confused and overwhelmed. Presently, I am managing a personal loan of Rs 26 lakh with an EMI of Rs 50,000, a second loan of Rs 11 lakh with an EMI of Rs 21,000, and a Kreditbee loan with an EMI of Rs 13,000. Additionally, I have an overdraft with a monthly payment of Rs 25,000, and an EMI from Slice app amounting to Rs 6,000.

The complexity deepens as I've sought financial assistance from three friends, who have taken loans on my behalf. I am now responsible for paying EMIs of Rs 11,000, Rs 8,000, and Rs 23,000 for these borrowed amounts. In total, my monthly EMIs add up to Rs 1,60,000, significantly surpassing my monthly income of Rs 90,000. Consequently, I find myself seeking help from others every month, asking for financial assistance ranging from Rs 30,000-60,000.

I am not able to understand what to do, please help me with this. My mental health has been completely destroyed. And I have lost all this money in the stock market, and I have left the stock market for 3 months.

Reply by Adhil Shetty, CEO, BankBazaar.com

Whatever it is that you have been trying to do with the stock market, be it timing the market or shorting it, please know that it isn’t working. All the money you have invested has been lost and there’s little to no way you can get it back. There’s no shortcut to financial security. You have to invest slowly and regularly for the long term, and watch your investments grow.

For starters, stop taking loans to invest in the stock market. There may be legal liabilities if you are using loans for speculative purposes. Second, calculate your total outstanding loans. From what you have shared here, your liability is in the range of approximately Rs 50,000. Look at all the assets you own and liquidate some of them to reduce your loan burden. Gold, vehicle, whatever you can, use them to close off as many loans as you can, starting from the most expensive ones. Consolidate all the remaining loans and focus on paying them off. Speak with the lenders and see if you can get an extension or moratorium on any of your loans. While this would make your loans more expensive, it would also give you a temporary respite from the burden.

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This is going to be a tough time for you, and you should be mentally prepared to face it. Maintain financial discipline. Prioritise repayments, reduce other expenses as much as possible, and do not take any new loans until you are back on your feet. Once you have paid out your loans, start investing again.

(Views expressed by the investment expert are his/her own. E-mail us your investment queries at askmoneytoday@intoday.com. We will get your queries answered by our panel of experts.)