From Debt to Financial Freedom: A Mother’s Journey

Debt can feel like a heavy chain—especially when you’re a mother juggling bills, childcare, and household responsibilities. But debt doesn’t have to be a life sentence. This is the story of Priya Sharma, a working mother from Pune, who transformed her ₹6 lakh debt into a path to true financial freedom. Through mindset shifts, practical budgeting, government schemes, smart investing, and perseverance, she not only cleared her debts but also built a secure future for her family. Follow Priya’s journey, learn from her challenges and victories, and discover actionable steps you can take to move from debt to financial freedom yourself.

1. Facing the Debt Reality

When Priya’s second child was born in 2019, her husband had a modest IT job and she worked part‑time as a school teacher. Hospital bills, home renovation costs, and her daughter’s school fees pushed them to rely on credit cards and a personal loan of ₹4 lakh. Soon, medical emergencies and everyday expenses added another ₹2 lakh in high‑interest debt. By mid‑2020, Priya stared at a ₹6 lakh liability, with interest rates ranging from 18% on credit cards to 12% on personal loans.

She felt overwhelmed:

  • Minimum payments barely covered interest, let alone principal.
  • No emergency fund meant every surprise expense went onto a card.
  • Untracked spending masked how little money was left each month.

Deep down, Priya knew something had to change—but she didn’t know where to start.

2. Mindset Shift: From Overwhelm to Ownership

Priya’s first breakthrough came when she reframed debt not as an insurmountable burden, but as a challenge she could tackle step by step. She:

  1. Set clear “why” statements:
    • “I want to be debt‑free so I can save for my children’s education.”
    • “I want peace of mind knowing we have financial security.”
  2. Adopted a growth mindset:
    • Viewed setbacks—like missing a payment—as learning opportunities, not failures.
    • Celebrated small wins: paying off one credit card, saving the first ₹5,000.
  3. Committed to transparency:
    • Shared all numbers with her husband over regular “money meetings.”
    • Involved her teenage daughter in age‑appropriate discussions to foster responsibility.

By shifting her mindset, Priya turned anxiety into motivation, laying the groundwork for disciplined action.

3. Auditing & Budgeting: Knowing Every Rupee

Priya’s second step was understanding exactly where their money went. She spent one weekend:

  • Gathering statements from three banks, two credit cards, and her personal loan account.
  • Listing fixed expenses: rent, utilities, school fees, insurance (₹55,000/month).
  • Tracking variable spending: groceries, fuel, dining out, small purchases (averaging ₹20,000/month).

She chose a simple spreadsheet with columns for date, amount, category (needs, wants, debt), and notes. Within two weeks, Priya realized:

  • 20% of variable expenses came from impulse buys like coffee and snacks.
  • 10% went to subscriptions they no longer used (streaming services, magazines).

Armed with data, Priya could allocate resources intentionally.

4. Building the First Emergency Fund

With zero savings at the start, any unplanned cost risked new debt. Priya followed a three‑phase approach:

  1. Phase 1—Mini‑Buffer: Save ₹5,000 as soon as possible.
  2. Phase 2—Debt Snowball Boost: Redirect mini‑buffer funds to highest‑interest debt once initial buffer was built.
  3. Phase 3—3‑Month Cushion: Build savings equal to three months of essential expenses (₹1.5 lakh).

She automated a weekly ₹1,000 transfer from her salary account into a liquid mutual fund. Within five weeks, her mini‑buffer of ₹5,000 was secured. Though small, this cushion prevented new credit charges for minor emergencies.

5. Leveraging Government Schemes & Tax Breaks

India offers several schemes that helped Priya accelerate progress:

5.1. National Pension System (NPS)

  • Benefit: Low fees (~0.01% annual charge), market‑linked returns (8–10% historically).
  • Action: Priya opened an NPS Tier I account and began with ₹500 monthly. Under Section 80CCD(1B), she gained an extra ₹50,000 tax deduction.

5.2. Public Provident Fund (PPF)

  • Benefit: Guaranteed ~7% interest, tax‑free, partial withdrawals after Year 5.
  • Action: She committed ₹1,000 monthly to PPF—slow but steady growth.

5.3. Pradhan Mantri Mudra Yojana (PMMY)

  • Benefit: Collateral‑free loans up to ₹10 lakh for microenterprises at 8–10% interest.
  • Action: After exploring a tailoring side‑business (see Section 7), Priya secured a ₹1 lakh Mudra loan to buy a sewing machine—cheaper than personal‑loan rates.

Combined, these schemes reduced Priya’s effective cost of saving and gave her lower‑rate borrowing when needed.

6. Strategic Debt Repayment: The Snowball Method

Instead of paying minimums across all debts, Priya tried the debt-snowball strategy:

  1. List Debts by Balance:
    • Card A: ₹1.2 lakh at 18%
    • Card B: ₹80,000 at 18%
    • Personal Loan: ₹3.0 lakh at 12%
    • Mudra Loan: ₹1.0 lakh at 10%
  2. Zero in on the Smallest Balance:
    • Card B (₹80,000).
    • Paid minimums on all, plus an extra ₹3,000/month toward Card B.
  3. Roll Over Payments:
    • Once Card B was cleared in 7 months, she added its ₹3,000+ minimum to Card A’s extra payment, accelerating payoff.

Results after 12 months:

  • Card B: Cleared.
  • Card A: Reduced from ₹1.2 lakh to ₹40,000.
  • Personal Loan: Down to ₹2.5 lakh.
  • Total Interest Saved: ~₹35,000 compared to standard minimum payments.

The fast win on Card B kept motivation high.

7. Side Hustle & Income Boost

With two young children, Priya needed flexible work. She tapped into her tailoring skills:

  • Tailoring at Home:
    • Offered custom alterations and simple garments to neighbors.
    • Earned ₹5,000–₹7,000/month extra.
  • Online Craft Sales:
    • Created embroidered cushion covers and pots’ holders.
    • Sold on Instagram and local WhatsApp groups, adding another ₹3,000/month.
  • Weekend Tutoring:
    • Tutored two school children in Maths and English for ₹4,000/month.

Combined side‑income averaged ₹15,000/month. She allocated:

  • 50% (₹7,500) to debt repayment.
  • 25% (₹3,750) to her emergency fund.
  • 25% (₹3,750) to a small investment SIP.

Within a year, side hustles shaved 10 months off her personal‑loan timeline.

8. Community Support: Self‑Help Groups (SHGs)

Priya joined a local women’s SHG under the National Rural Livelihood Mission:

  • Benefits:
    • Group‑sourced micro‑credit at 6% interest.
    • Mutual accountability and financial literacy workshops.
    • Bulk‑purchase discounts on raw materials for her crafts.

By pooling resources with 10 other women, she accessed credit at half the cost of bank loans. The SHG also taught basic bookkeeping—skills she applied to her personal finances.

9. Smart Investing for Long‑Term Growth

As debt shrank, Priya gradually shifted focus to wealth creation:

9.1. Systematic Investment Plans (SIPs)

  • Choice: Large‑cap index fund with a 0.06% expense ratio.
  • Amount: Started with ₹1,000/month in Year 2; increased by ₹500/year as debts cleared.

9.2. Gold ETFs

  • Rationale: Hedge against inflation and currency fluctuations.
  • Action: Allocated ₹500/month to a Gold ETF—cheaper and more liquid than buying physical gold.

9.3. Emergency Fund to E‑FD

  • While paying down debts, she kept her emergency fund in a liquid mutual fund.
  • Post‑debt, she moved part of it into electronic fixed deposits offering 7.5% returns.

These investments delivered a blended average return of ~9% annually, outpacing simple savings accounts.

10. Leveraging Technology & Fintech

Priya’s journey was accelerated by technology:

  • Budgeting Apps: Walnut for expense tracking and subscription alerts.
  • Auto‑Sweep Accounts: ICICI Bank’s sweep feature, earning ~6.8% on idle balances.
  • Round‑Up Savings: A fintech tool that rounded up every UPI transaction to the nearest ₹10, squirreling away spare change.
  • Brokerage Platform: Groww for SIPs, Gold ETFs, and quick portfolio reviews.

Automation reduced friction—Priya rarely had to log in manually, and transfers happened reliably.

11. Balancing Family & Finances

As a mother, Priya had to juggle financial tasks with childcare:

  • “Money Dates”: 30‑minute sessions with her husband every Sunday evening to review progress, update budgets, and plan for the week.
  • Involving the Kids: Her 13‑year‑old daughter learned to track pocket money, teaching her early money management.
  • Time Blocking: Dedicated two early‑morning hours three times a week to her side hustle and financial planning.

By scheduling finances around family life, Priya avoided burnout and maintained harmony at home.

12. Overcoming Setbacks

No journey is linear. Priya faced:

  • Medical Emergency in Year 2: An unplanned surgery cost ₹25,000.
    • Solution: Used part of her mini‑buffer, then replenished it with no‑spend weekends.
  • Market Volatility (2022): SIP values dipped 8% in a month.
    • Solution: Stayed the course, increased SIP contributions at lower NAVs.
  • Burnout: Juggling so many tasks led to fatigue.
    • Solution: Paused side hustles briefly, practiced self‑care, and returned reinvigorated.

These hiccups taught Priya resilience and reinforced the importance of an emergency fund.

13. Achieving Financial Freedom

By mid‑2024, after five years of disciplined action:

  • All high‑interest credit cards were paid off.
  • Personal loan of ₹3 lakh was fully repaid.
  • Mudra loan was reduced to ₹20,000, on track for full clearance in three months.
  • Emergency fund covered six months of expenses (~₹3 lakh).
  • Investments:
    • SIP corpus: ~₹2.4 lakh.
    • Gold ETF: ~₹36,000.
    • NPS: ~₹48,000.

Priya and her husband could now:

  • Redirect monthly debt payments (~₹15,000) into new investments or family goals.
  • Plan for their children’s higher education without scholarship anxiety.
  • Consider a small down payment on a 1‑BHK home, moving out of rented accommodation.

Most importantly, Priya felt liberated: no more sleepless nights over bills, and a clear roadmap for future prosperity.

14. Key Lessons from Priya’s Journey

  1. Mindset Matters: Frame debt as a solvable challenge, not a moral failing.
  2. Data Before Decisions: Track expenses rigorously before cutting or reallocating funds.
  3. Start Small: Even ₹250/week automates momentum and prevents paralysis by large numbers.
  4. Leverage Subsidies: Government schemes can tilt the scales in your favor.
  5. Community Counts: SHGs and peer support boost both finances and morale.
  6. Automation Is Your Friend: Let technology handle transfers, reminders, and investments.
  7. Balance Is Essential: Schedule finances around life, not life around finances.
  8. Expect & Embrace Setbacks: Build buffers and a resilient mindset.
  9. Celebrate Milestones: Each debt paid, each investment started, is a victory.

Conclusion

Priya’s mother’s journey from ₹6 lakh debt to solid financial footing shows that no matter how deep the hole, there is a way out. By combining mindset shifts, meticulous budgeting, targeted debt repayment, smart use of government schemes, income‑boosting side hustles, and savvy investing, any family can move from stress to security. If you’re ready to rewrite your financial story, start today with Priya’s blueprint: audit your finances, automate small savings, tackle your smallest debt first, and leverage every resource at your disposal. Financial freedom is not a distant dream but a step‑by‑step journey—and it begins the moment you decide to take control.

Source : thepumumedia.com

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