Managing Debt During Major Life Events: A Practical Guide for Indians

In India, it can often feel as though life is not going in a single direction; One moment you could be looking forward to saving for your Dream Wedding, and the next you’ll be faced with a sudden medical emergency or job change. Major events in life (wedding, buying a home, educating a child, or planning for retirement) typically result in large expenses and, thus, an increase in debt as a go-to solution. However, the real story is that debt is not necessarily the enemy when it is handled correctly, just like you can rely on an auto-rickshaw during monsoon season – useful; however, you cannot depend on it indefinitely.

Through my experience with finances within India over many years and observing friends/family experience the same in their own lives, I have seen countless examples of individuals utilising overwhelming amounts of debt as a stepping stone towards establishing a sound financial foundation. In this guide, I will outline how I believe the smartest way to approach debt management during major milestones in one’s life is. I will discuss what to prepare for, how to borrow smartly, and provide tips on repayment strategies, as well as pitfalls to avoid. The information contained in this guide is applicable to people in all areas of India, whether it be a Metropolis (such as Delhi) or smaller Tier 2 cities (such as Ghaziabad), based on the ground reality of today’s world with the Reserve Bank of India’s policies, the convenience of UPI payments, and the ever-increasing expectation from relatives and friends.

 

Why Major Life Events Hit Indian Wallets Hard

At 28 years of age, you have received a promotion at work, and your sister will be getting married in the near future; alternatively, you may be 45 and looking to purchase a house or flat in your hometown after living in the city for several years. These aren’t just events; they’re financial earthquakes. In India, we spend big on them—weddings average ₹20-50 lakhs, home down payments start at ₹10 lakhs, and medical bills can wipe out savings overnight.

Our culture has assigned intensity to weddings. While weddings appear to be isolated events, they are actually family events consisting of over 500 guests, gold jewellery, and many weddings with destination themes. What do we do about educational loans for children who are going to school abroad? Common. Job loss during layoffs? Add festival season expenses on top. A 2024 RBI report showed household debt rising 12% post-pandemic, largely from such events. Personal loans jumped 25%, fueled by fintech apps like Paytm or LazyPay.

The good news? You can prepare. Start by tracking your cash flow. Apps like Walnut or Money View give a free snapshot of your income, EMIs, and leftovers. Aim for an emergency fund covering 6 months’ expenses—park it in a liquid FD from SBI or HDFC for 7% returns.

When borrowing money, make sure that you are capable of paying back the amount borrowed in an acceptable fashion. When choosing to take out a home loan, it is best to consider the option of taking out non-secured loans with lower interest rates (8%-9%) instead of unsecured loans that will carry higher interest rates (12%-18%). Before applying for any loans, check your CIBIL rating to see where your score currently lies, as anyone with a score of above 750 will receive the best offers. Next up

 

Weddings: Turning ‘Shaadi Ka Kharcha’ into a Manageable Affair

Indian wedding celebrations are colossal events, and trendy wedding staples include: saris, wedding celebrations, and a wedding. According to a WeddingWire survey in 2025, the average cost of a traditional Indian wedding for middle-class families is approximately ₹25 lakhs. Gold prices soaring to ₹75,000/10g and venue inflation make it worse. Many dip into personal loans or credit cards, landing EMIs that stretch years.

Budgeting before a Mandap wedding: follow the 50/30/20 budget rule for this (50% necessary – hall & catering, 30% entertaining – event decoration & photography, 20% contingency) by reducing guests by 20% (use ‘virtual invitations’ to cut costs of ₹50,000). Negotiate with vendors to pay by UPI in multiple instalments to get discounts.

Smart Borrowing: Skip high-interest gold loans (15%+) unless it’s a family heirloom. Opt for personal loans from Bajaj Finserv or IDFC FIRST (10-14% if CIBIL score is strong). For ₹5 lakhs at 12%, EMI is ₹10,600/month over 4 years. Prepay when bonuses hit—RBI allows it penalty-free on most floating-rate loans.

Real Story: My cousin in Pune borrowed ₹8 lakhs for her wedding via a top-up home loan (9.5%). She repaid extra using wedding gifts (₹3 lakhs cash). Debt cleared in 2 years, not 5. Pro tip: Involve family early. A joint potluck sangeet slashes catering bills by 40%.

Post-Wedding Reset: Freeze cards for 6 months. Channel savings into SIPs—₹5,000/month in a Nifty 50 fund grows steadily.

Weddings teach discipline. Nail this, and you’re set for bigger leaps.

 

Buying a Home: From Dream Flat to EMI Master

Nothing screams ‘milestone’ like your first home. In cities like Bengaluru or Noida, a 2BHK costs ₹80 lakhs+. Down payment (20%, ₹16 lakhs) often forces loans or family chips. But with PMAY subsidies (up to ₹2.67 lakhs) and repo rate cuts, 2026 looks promising—home loans at 8.25-8.75%.

EMI Traps to Dodge: Don’t borrow 90% LTV; it balloons EMIs. For ₹64 lakhs at 8.5% (20 years), it’s ₹53,000/month. Factor hikes—RBI’s repo at 6.5% means floating rates rise with inflation.

Step-by-Step Strategy:

• Save the Down Payment: Use EPF withdrawal (up to 90% for housing) or Sukanya Samriddhi for girls’ future homes. Aim 6-12 months ahead.
• Shop Rates: Compare via BankBazaar—SBI at 8.3%, private banks slightly higher but faster. Women borrowers get 0.05-0.1% off.
• Manage During Transition: Rent out old place? Income offsets EMIs. Job shift? Transfer loan seamlessly (RBI mandates no-charge porting).

Case in Point: A Ghaziabad friend bought a ₹60-lakh flat. He stacked PMAY, EPF (₹10 lakhs), and a ₹40-lakh loan. Monthly EMI: ₹32,000 (affordable on a ₹1 lakh salary). He co-borrowed with his spouse for dual income stability.

Long-Term Hacks: Prepay 10-20% yearly—saves lakhs in interest. Rent vs. buy calculator apps show if it’s worth it amid rising stamp duties (5-7% in UP).

Homeownership builds wealth, but only if EMIs stay under 40% income.

 

Job Changes and Layoffs: Keeping Debt at Bay Amid Uncertainty

Switching jobs? Exciting, but scary. IT layoffs in 2025 hit 50,000+; salaries dip 10-20% during gaps. Existing EMIs (car, personal) suddenly feel like boulders, especially with Diwali bonuses gone.

Bridge the Gap: Build a 9-month fund pre-switch. During notice, negotiate retention bonuses or ESOPs. New job? Delay big buys till first paycheck.

Debt Juggling:

• Moratorium: The Reserve Bank of India allows customers to take personal loans with a 3 to 6-month moratorium, with interest being charged during this time.
• Balance Transfer: Transfer your high-interest rate credit card debt to 0% Introductory Rate Offers for 6 months from Axis Bank or ICICI Bank.
• Side Gigs: Earn ₹20,000-50,000 monthly through Upwork freelance jobs or UrbanClap.

A real-life story about a Mumbai Engineer who was unemployed during the 2024 tech meltdown. To reduce his ₹4 Lakhs credit card debts, he took a personal loan with a low interest of 11% and did freelance work to pay off all the debt within 18 months. The key to it all was cutting back on monthly subscriptions (such as Zomato Gold and Netflix) that allowed him to save an additional ₹2,000 every month.

Career Shift Tip: Update LinkedIn, network on Naukri. Fintech like RazorpayX offers instant salary advances.

Stability returns faster with a plan.

 

Medical Emergencies: Health Bills Without the Financial Heartbreak

Health shocks strike without warning—appendicitis (₹1-2 lakhs), cancer treatment (₹20 lakhs+), or elder care. Ayushman Bharat covers 50 crore, but gaps remain. Out-of-pocket spends? 60% of families, per NSSO.

Immediate Moves:

• Claim insurance first—₹5 lakh family floaters from Star Health pay 80-90%.
• Crowdfund via Milaap or Ketto—₹1-5 lakhs raised in days for genuine cases.

Borrowing Blueprint:

• Health Loans: Dedicated from Tata Capital (9-12%), collateral-free up to ₹25 lakhs.
• Gold Loans: Muthoot or Manappuram at 10-12%, quick disbursal against jewellery.
• Avoid P2P lenders (18%+ rates).

Family Example: Uncle’s bypass in Chennai cost ₹8 lakhs. Insurance covered ₹6 lakhs; the gold loan bridged the rest. Repaid via maturity proceeds from the LIC policy.

Preventive Play: Annual health checkups (₹1,500), top-up insurance (₹10 lakhs cover for ₹5,000 premium). Track via the Practo app.

Health first, but smart debt keeps you standing.

 

Education Milestones: Funding Dreams Without Drowning in Loans

Bachche ki engineering abroad? IIT coaching? Costs soar—₹50 lakhs for US undergrad, ₹20 lakhs for private MBBS. Education loans hit ₹1.2 lakh crore outstanding (2025 RBI data).

Affordable Paths:

• Govt Schemes: Vidya Lakshmi portal aggregates 40+ banks. Rates 8.5-10%, moratorium till job.
• Scholarships: Buddy4Study lists 500+ for SC/ST, merit.

Loan Smarts: Borrow only tuition + living; self-fund extras. Co-sign with parents for better terms. Repay via a grace period.

Parents Win: A Delhi dad funded daughter’s UK MS (₹30 lakhs loan). She repaid 50% post-job via ECS. Pro rata prepayments shaved 2 years.

Side Funding: Sell old gold, start RD (₹10,000/month yields ₹1.3 lakhs in 10 years).

Education pays dividends—literally.

 

Family Milestones and Retirement: Planning for the Long Haul

• New baby? Parents’ anniversary bash? Retirement corpus? These sneak up. Baby expenses: ₹5-10 lakhs first year. Retirement: ₹2-3 crore needed for 25 post-60 years.
• Baby Boom Budget: Maternity loans via banks (covered under personal). NPS for kids’ future (tax-free growth).
• Retirement Debt Dump: Clear high-interest first. Reverse mortgage for seniors (HDFC offers against home).
• Couple’s Story: Retired Ahmedabad duo had ₹15 lakhs in debt. They downsized, invested pension in SCSS (8.2%), and cleared in 3 years.
• Golden Rule: Debt-free by 50. Use NPS Tier 1 for 14% equity returns.

 

Universal Debt Management Strategies That Work in India

Across events, these tactics shine:

• Debt Snowball: List debts smallest to largest; crush one by one for momentum.
• Fintech Allies: PhonePe Credit Line (instant ₹50,000 at 12%), Navi for low-rate personal loans.
• RBI Rights: Dispute errors via the Sachet portal; ECS bounce? No penalty if it’s a first time.
• Tax Hacks: Section 80E deducts education loan interest; 24(b) for home loans.
• Mindset Shift: Debt is a tool, not shame. Talk to advisors via the Fisdom app.

Warning Signs: Multiple rollovers, using salary advances for EMIs—seek NFCC counselling (free).

 

Red Flags and How to Avoid Debt Disasters

Ignoring these spells trouble:

• Overborrowing: Total EMIs >50% take-home? Red alert.
• High-Interest Traps: NBFCs above 15%? Switch.
• Co-signer Risks: Family liability lingers.
• Inflation Bite: Fixed EMIs erode with 6% CPI—prepay.

Recovery Roadmap: Missed EMI? 30-day grace. Defaults hurt CIBIL for 7 years. Restructure via the bank (one-time settlement).

 

Building a Debt-Proof Future: Your Action Plan

Life events will come, but you’re ready. Start today:

1. Audit debts monthly.
2. Automate 20% income to savings.
3. Review insurance yearly.
4. Upskill for income jumps.

Debt during milestones isn’t failure—mismanagement is. With these steps, you’ll emerge stronger, funding the next chapter on your terms.

What’s your biggest upcoming event? Share in comments—we’re all in this together.