I was in a debt of 1.34 lakhs at the age of 25 – Shashank Udupa

I was in a debt of 1.34 lakhs at the age of 25.

You might be shocked to read the above line coming from a finance educator.

But the thing is, the best way to teach other people is through your own mistakes, stories, and learnings.

The story goes something like this- I had just landed an investment banker job with a salary of Rs 50,000.

I also got a credit card issued by the bank. For me, everything seemed perfect- a new job, money, freedom, and the rewards, points, and discounts I could avail myself of through the credit card.

Initially, young Shashank was disciplined.
I was spending only 30K from my salary – swiping the credit card for all transactions, even the ones where a credit card was not required.

Soon the bank called, “Sir, let us increase your limit to 50K.”
Wow! I agreed! Who would deny more credit card limits?
Soon, the limit increased to 80k and 90k and crossed 1.34 lakh.

Bank was happy. I was happy.

Soon, my otherwise disciplined self went overboard.
I made the first mistake of purchasing an iPhone on an EMI using my credit card. And now, my spending habits were getting out of hand.

I started hitting the credit limit every month.
My salary was not sufficient to pay the dues.
So, I made the second mistake- I started paying the minimum amount due.

This way, I could continue spending without paying the entire amount.
But, the minimum amount due kept increasing while the principal amount stayed intact.

I realized later that the 15k I was paying to the bank every month- Rs 7,500 was only the interest amount. The principle of compounding is not always good – the interest kept ballooning, and I got stuck in a loop.

Now, I started paying 30K every month to clear my dues. Still, I was nowhere close to clearing it off. Ultimately, I had to take my father’s help to clear off the debt.

I felt so embarrassed. I hated the label of “debtor” attached to my head.
I messed up BIG TIME! (my credit score went for a toss)

After this experience
I decided not to use a credit card until I had a stable income (Got a credit card 3 years later).
I still say NO to the upper credit limit even when I can afford it.
I use credit cards more prudently.

A message for anyone who is reading this:

Don’t do stuff just to look COOL –

Buying something expensive when you can’t afford it or
Issuing a credit card when you know you are not disciplined or
saying YES to tempting things (like increased credit limit)

Personal finance is not only a matter of earning money.
It’s also about developing the right mindset- stemming from awareness.

Shashank Udupa