World bank has warned about a massive Debt wave which has started to show up its presence all over the world especially in Developing countries. Recent studies of Indian households also signalled that majority of the Indian households are under massive debt/loan issues .Majority of people in India are depended on farming for their livelihood.Hence it is a very big concern for Indian Farmers and the people who are dependent on farm income.
Currently in India,interest rates are in downward cycle.Hence the impact of these Loan amounts are not visible to an extend.People are not very well aware of this Risk.These Loans are like Tsunami waves.In the deep water,you cannot identify a Tsunami wave.Similarly ,during downward interest rate cycle,you will be comfortable with the loan outstanding and the interest you pay.But when the Tsunami wave reaches the shore,the height of the waves become larger and larger.It will show its real power within seconds before you can figure out what is happening.Similarly,when the interest rate cycle change and interest rates start to go high,you will start to feel the fire and it will be too late when you figure out the depth of the loan/Debt you are actually in.
Don't worry.We have enough time if we start working to reduce the loan burden today onwards. Since we are still in downward interest rate cycle,if we start to work today,we can easily ride over this Debt wave.Below are few points which you need to take care.The major problem while executing below points is the Generation of enough Money to pay off Debt.Fifth point given below will surely help you for this.
1) Take stock of your current Loans/Debts/Liabilities: Write down your loan amount,its interest rate and the financial institutions from which you have taken loan.Categorise these loans based on financial institutions.Like Banks,NBFCs,Co-operative societies etc to Local person, unorganised institution,informal institution etc.
2)Try to close loans from Local person, unorganised institution,informal institution etc. Normally these loans are having higher interest rates and they calculate it on monthly basis.Hence these kinds of loans are very dangerous and Bad.You can approach banks ,societies etc to get financing at best interest rates and payoff the bad loans.
3)Avoid taking new loans:You should stop the habit of taking loans to run your farm or for daily expenses.Write down your available options to avoid taking loans.Do not indulge in farming by taking loan.You are putting yourself in great danger by doing this.Do small things within your financial capacity.
4)Once you have closed bad loans and stopped taking new loans,Concentrate on closing high interest paying loans from formal institutions like banks,Societies etc.Once you reach and start executing this stage,you are almost ready to protect yourself from any debt wave.Hence reaching and executing this stage is very important.
5)Schedule a meeting daily with your family members:This is very important for Generation of enough Money to execute all of above steps.Without Money,you cannot step out of Loan/Debt.Schedule a meeting daily with your family members including your children.Explain your financial situation including your loans.Tell them how you are planning to get out of this Debt.Tell them what are the challenges you face to execute your plan.Tell them to suggest solutions and ideas to generate more Money.Think as a group and discuss openly.Many small business ideas and income generation opportunities will show up.
A group of people who think daily about solving an issue will Definitely find the solution and Solve the issue
The Daily meeting with your family will surely provide you the solution.You should welcome suggestions with open mind from all members including children.All ideas should be discussed positively and should arrive at a conclusion. Priority should be given for Eliminating Debt.Not for taking another Loan to implement the Idea.
I hope this post will help millions of Farmers and Common man to solve their Loan/Debt issues.
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