How To Solve Financial Problems In India - A Simple, Honest Guide
Key Summary
Most financial problems in India come from too much debt, low income, or zero savings.
The first step is always knowing exactly how much you owe - and to whom.
Even a simple monthly budget can stop the situation from getting worse.
Government schemes like PM Mudra Yojana and PM SVANidhi can help you restart.
If debt feels out of control, FREED can negotiate with your lenders and reduce what you owe.
What Are The Common Financial Problems In India?
Most people don't face just one problem. It's usually many things building up together over time.
Here are the most common ones:
Too much debt - Personal loans, credit cards, and buy-now-pay-later traps that spiral out of control.
No savings - Living salary to salary with nothing kept aside for emergencies.
EMI pressure - When your monthly EMIs eat up more than 50% of your income.
Job loss or pay cut - A sudden income drop that makes even basic expenses hard to manage.
Medical emergencies - Hospital bills that wipe out savings overnight.
No financial knowledge - Never being taught how money actually works.
If you relate to even one of these - keep reading. There's a way out.
Warning Signs Your Finances Are In Trouble
Sometimes we ignore the signs until it's too late. Watch out for these:
You're only paying the minimum due on your credit card every month
You have borrowed money from friends or family to pay for daily needs
You get calls from banks or recovery agents about missed EMIs
You feel anxious every time your phone rings - worried it's a lender
You have no idea how much total debt you actually owe
Your salary gets over before the month does
If 2 or more of these match your situation - it's time to act. Not tomorrow. Today.
How To Solve Financial Problems - Step By Step
There is no magic fix. But there is a clear path. Follow these steps one by one.
Step 1 - Write down everything you owe - List every loan, credit card, and person you owe money to. Write the amount, the interest rate, and the monthly EMI. Most people are shocked when they see the full picture - but knowing is the first step.
Step 2 - Stop adding new debt - Before you fix old debt, stop making it worse. No new credit cards. No new personal loans. No EMI purchases unless absolutely necessary.
Step 3 - Make a basic monthly budget - Write down your monthly income. Write down your fixed expenses - rent, EMIs, bills. What is left is what you have for food, travel, and everything else. Stick to it strictly.
Step 4 - Pay the most expensive debt first - Look at your list from Step 1. The loan or credit card with the highest interest rate is costing you the most. Pay extra on that one first, while paying the minimum on others.
Step 5 - Talk to your bank - If you are struggling to pay EMIs, call your bank. Ask for a restructuring or moratorium. Banks prefer this over a default. Many people don't know this is even an option.
Step 6 - Get professional help if needed - If your debt is large or spread across many lenders, a debt relief expert like FREED can negotiate on your behalf. This can reduce your total outstanding amount significantly.
How To Get Out Of Debt?
Debt is the number one financial problem for most Indians today. Here's how to approach it.
The Avalanche Method - Pay off the highest-interest debt first. This saves the most money over time.
The Snowball Method - Pay off the smallest debt first. This gives you quick wins and builds confidence.
Both methods work. The best one is whichever keeps you motivated.
What to avoid:
Taking a new loan to pay an old loan (unless it is a proper debt consolidation with lower interest)
Ignoring bank calls - it only makes things worse
Settling debt informally without getting it in writing
How To Build An Emergency Fund
An emergency fund is money kept aside only for real emergencies - job loss, medical bills, urgent repairs.
Without it, every emergency becomes a new debt.
How much do you need? At least 3 months of your monthly expenses. So if you spend ₹20,000 a month, your goal is ₹60,000.
How to build it when money is tight:
Start with just ₹500 or ₹1,000 a month
Open a separate savings account and don't touch it
Put any bonus, cashback, or extra income straight into it
Automate a small SIP - even ₹200 a month in a liquid mutual fund counts
It won't happen overnight. But even ₹5,000 set aside gives you breathing room the next time something unexpected happens.
Government Schemes That Can Help
If you're a small business owner, daily wage worker, or self-employed person - the government has several schemes that can help:
PM Mudra Yojana - Loans up to ₹10 lakh for small businesses. No collateral needed. Available at most PSU banks.
PM SVANidhi - Working capital loans for street vendors starting at ₹10,000. Very easy to apply.
Stand-Up India - Loans between ₹10 lakh and ₹1 crore for SC/ST and women entrepreneurs.
Atal Pension Yojana - A low-cost pension scheme for people in the unorganised sector.
PMSBY & PMJJBY - Accident and life insurance for just ₹12–₹330 per year. One of the best financial safety nets available.
Most of these can be applied for at your nearest public sector bank or via the Jan Dhan account.
How Freed Helps You Become Debt-Free
FREED is India's leading debt relief platform. We work with people who are stuck in personal loan and credit card debt - and help them find a real way out.
Here's what we do:
We talk to your lenders on your behalf
We negotiate to reduce your total outstanding amount
We create a single, manageable monthly payment plan
We guide you until you are completely debt-free
We have helped over 10,000 Indians across tier 2 and tier 3 cities. People who felt completely stuck - and found their way out.
No shame. No judgment. Just a plan.
What we offer: Debt Relief Plans | Free Expert Consultation | Debt Calculator | CIBIL Score Guidance | Financial Health Score Tool
Over 60,000 happy clients. Real results. No fine print.
FAQ
Q1. How do I solve financial problems when my salary is very low?
Start by writing down every rupee you spend for one week. You'll find things you can cut immediately. Then focus on paying off your most expensive debt first. Even ₹500 extra a month on the principal makes a big difference over time. If debt is the main issue, talk to FREED - we help people at all income levels.
Q2. What is the fastest way to get out of debt in India?
There's no overnight fix - but the fastest method is the debt avalanche: pay off the highest-interest loan first while paying minimum on others. If you have multiple loans, debt consolidation (merging them into one lower-interest loan) can also speed things up. FREED can assess which approach suits your situation best.
Q3. I have missed 3 EMIs. What should I do now?
Call your bank immediately. Don't wait. Tell them honestly what happened. Most banks will offer a restructuring or payment pause rather than push you into NPA (non-performing asset) status. If you find it hard to negotiate yourself, FREED can do it for you.
Q4. Can I negotiate with a bank to reduce my loan amount?
Yes. This is called a One-Time Settlement (OTS). If you are genuinely unable to pay the full outstanding amount, banks can agree to accept a lower lump-sum payment and close the account. FREED specialises in exactly this - and has negotiated settlements for thousands of borrowers.
Q5. Is it bad to take a loan to pay off another loan?
It depends. Taking a loan at 10% to pay off a credit card charging 36% is smart - that's debt consolidation. But taking a loan just to delay the problem without reducing your total burden is a trap. Always calculate the total interest cost before deciding.
Q6. What government help is available for people in financial trouble in India?
PM Mudra Yojana, PM SVANidhi, Atal Pension Yojana, and PMSBY/PMJJBY are some of the most accessible schemes. For people with debt problems specifically, RBI's loan restructuring guidelines give you the legal right to request a repayment plan from your bank.
Q7. How long does it take to solve financial problems?
It depends on how much debt you have and how consistent you are. Most people working with FREED see a clear plan within the first month and are debt-free within 2–4 years. The earlier you start, the faster it happens.