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Wedding planning must involve consideration for expenses (Photo: Shutterstock)
In a country where weddings are often grand affairs lasting days, many couples find themselves facing a financial hangover when the festivities end. As the average cost of weddings often exceeds lakhs, many couples take loans to finance celebrations.
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The Confederation of All India Traders (CAIT) estimates that between November and mid-December there will be some 3.5 million weddings in the country.
These weddings are expected to involve Rs 4.25 trillion in expenditure, according to a separate calculation made in Prabhudas Lilladher’s ‘Band, Baaja, Baarat and Markets’ report. There were 3.2 million weddings last year, according to this report.
With rising wedding spending people generally tend to take out loans. Let us understand how to pay off your wedding loans?
Develop a detailed budget
After a wedding, it is important to evaluate your total debt and create a budget. Make a list of all expenses, including loans, interest rates and monthly payments. This will provide a clear understanding of your financial commitments.
Focus on high-interest loans
If you have multiple loans, consider the avalanche method: Priortise the highest-interest debt while making minimum payments on the rest. This approach helps reduce the amount paid in interest over time.
Cut back on non-essential expenses
The post-wedding period is the right time to reassess spending habits.
Explore refinancing opportunities
If your current interest rates seem high, explore refinancing options. Some banks may offer lower rates, especially for existing customers or those with improved credit scores. Refinancing can lower your monthly payments and reduce overall interest costs.
Increase monthly contributions
If your budget allows, make payments that exceed the minimum requirement. Paying extra will help lower the principal balance faster, ultimately reducing the total interest you will pay over the life of the loan.
Consider earning extra income
Earning additional income can help ease financial stress. Look into freelance work or part-time opportunities that match your skills. The extra money can be put towards paying down your debt.
Utilise windfalls effectively
If you receive bonuses, tax refunds, or other unexpected income, use it to reduce your debt rather than spending it on non-essentials. This strategy will speed up your repayment process.
“ Start by developing a clear debt repayment plan. Avoid taking more unplanned loans and unnecessary spending till the ongoing ones are taken care of. In case you have multiple loans, you can choose between the debt snowball method, which involves paying off the smallest debts first, or the debt avalanche method, which focuses on tackling the debts with the highest interest rates. Both approaches are effective; your choice depends on whether you prefer the motivation of quick wins or the savings from reducing interest, said Anand Agrawal, co-founder & CPTO, Credgenics.
Setting up automatic payments is a smart way to avoid missed payments, late fees, and potential damage to your credit score. This will help you stay on track and reduce financial stress, he said.
First Published: Sep 27 2024 | 4:35 PM IS