Managing debt is a balancing act

Never bite off more than you can chew-Shraddha (32) and her banker husband live by this rule, which is probably why the couple are relatively debt-free despite servicing a home loan and a car loan - not to speak of their credit card bills.

"We are Indians and so saving comes naturally to us," reasons Shraddha, who does not wish to reveal her full name. The couple are now looking at investing for their two-year-old daughter Ananya's future.

"The home loan and car loan have a fixed EMI (equated monthly instalment) and after discounting for those and other necessities, we would rather save up and spend as little as possible on other aspirational products," she says adding that credit card usage is kept only for emergency purchases or online bookings.

It helps both of them work. "A double income has ensured that we have enough saved up for a rainy day and enough invested," says Shraddha, the kind of conservative customer a banker loves.

Madhivanan B, Senior General Manager, ICICI Bank (ICICIBANK.NS : 850.9 -14.6) said a sizeable number of customers mean well but slip up in credit card or personal loan payments. "There are people who try taking a personal loan at higher rates for speculative investments-a sure shot recipe for disaster because if the market falls they not only lose their money but are burdened with an extra loan to pay," says Madhivanan.Delayed EMI payments could even land you in court. In case you do get into debt trap because of unforeseen circumstances, don't lose hope. "Many banks try and run consumer camps where reduced charges are levied or a staggered settlement is agreed upon if the customer has defaulted a loan in a bid to help them get their finances back on track," says Madhivanan.