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Ramalingam

Ramalingam Kalirajan  |8192 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Jul 06, 2024

Ramalingam Kalirajan has over 23 years of experience in mutual funds and financial planning.
He has an MBA in finance from the University of Madras and is a certified financial planner.
He is the director and chief financial planner at Holistic Investment, a Chennai-based firm that offers financial planning and wealth management advice.... more
golden Question by golden on Jun 28, 2024Hindi
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I am 28 years old unmarried. Im in a very bad position as of now. I have 10L debt and i dont have a job. Everymonth i have to pay around 50k so that i am taking credit from other sources and paying the immediate debts. but my debt has been increased exponentially i dont have any other source to take loans, borrow etc. I am stuck now what to do? Please help me out of this. And i dont have any good skills to get a high paying job.

Ans: I understand that you are in a tough situation right now, and it can feel overwhelming. Let’s work through a plan step-by-step to help you manage your debt and improve your financial situation.

Assessing Your Current Financial Situation
Total Debt
Debt: Rs. 10 lakhs
Monthly Payment: Rs. 50,000
Immediate Actions
1. Stop Taking More Loans
Taking more loans to pay off existing ones will only increase your debt. It’s crucial to stop this cycle immediately.

2. Prioritize Essential Expenses
Identify your essential expenses. Focus on food, shelter, and basic utilities. Everything else should be secondary.

Debt Management Plan
3. Contact Your Creditors
Reach out to your creditors. Explain your situation honestly. Request a lower monthly payment or an extension on the repayment period. Many creditors are willing to negotiate.

4. Consolidate Your Debt
If possible, consolidate your debt into a single loan with a lower interest rate. This can make managing your debt easier and reduce your monthly payment.

Finding Income Sources
5. Temporary or Part-Time Jobs
Look for temporary or part-time jobs. These might not be high-paying, but every bit helps. Consider gig economy jobs like delivery services, freelancing, or part-time retail work.

6. Upskill
Invest in learning new skills. Many online platforms offer free or low-cost courses. Focus on skills that are in high demand, like digital marketing, coding, or data analysis. This can improve your chances of getting a better job.

Budgeting and Saving
7. Create a Budget
Create a strict budget. Track every rupee you spend. Cut down on non-essential expenses. This will help you manage your money better.

8. Emergency Fund
Once you start earning, build an emergency fund. This fund should cover 3-6 months of your essential expenses. It will provide a safety net in case of unexpected financial emergencies.

Emotional and Mental Health
9. Seek Support
Talk to friends, family, or a professional counselor. Sharing your problems can reduce stress and provide new perspectives.

Long-Term Financial Planning
10. Set Financial Goals
Set clear, achievable financial goals. This will give you a sense of direction and motivation. Start with small goals, like saving a certain amount each month.

Practical Steps to Find a Job
11. Networking
Network with people in your field. Attend job fairs, join professional groups, and use social media to connect with potential employers.

12. Tailored Resume and Cover Letter
Tailor your resume and cover letter for each job application. Highlight your strengths and any relevant experience. Even if your experience is limited, focus on your willingness to learn and adapt.

Exploring Government Schemes and Non-Profit Organizations
13. Government Schemes
Look into government schemes for unemployed individuals. There might be programs offering financial aid, training, or job placement services.

14. Non-Profit Organizations
Reach out to non-profit organizations. Many offer financial counseling, job training, and placement services for free.

Utilizing Free Resources
15. Online Learning Platforms
Use free resources like Coursera, edX, and Khan Academy. These platforms offer a wide range of courses that can help you learn new skills and improve your employability.

Summary and Action Plan
Stop Taking More Loans: Avoid increasing your debt further.

Prioritize Essential Expenses: Focus on basic needs.

Contact Creditors: Negotiate for lower payments.

Consolidate Debt: Simplify and reduce your debt.

Find Temporary Jobs: Look for any available work.

Upskill: Learn new, marketable skills online.

Create a Budget: Manage your money carefully.

Build an Emergency Fund: Save for unexpected expenses.

Seek Support: Talk to loved ones or a counselor.

Set Financial Goals: Plan for the future.

Network for Jobs: Connect with potential employers.

Tailored Applications: Customize your job applications.

Explore Government Schemes: Look for aid programs.

Utilize Non-Profits: Seek help from organizations.

Use Free Resources: Learn and improve skills online.

Starting from a challenging position requires determination and patience. By taking these steps, you can gradually improve your financial situation and build a stable future.

Best Regards,

K. Ramalingam, MBA, CFP

Chief Financial Planner

www.holisticinvestment.in
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Ramalingam

Ramalingam Kalirajan  |8192 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on May 04, 2024

Asked by Anonymous - May 04, 2024Hindi
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Dear Sir, I am a 31 year old married man.I am in a huge debt trap of multiple loans plus credit card mounting around 9 lakhs. I work in MNC company earning 70k per month. Please advise or suggest if I can come out of this.
Ans: I understand your concern about being in a debt trap, but there are steps you can take to address the situation and work towards financial stability:

Assess Your Debt: Start by listing out all your debts, including the outstanding amounts, interest rates, and minimum monthly payments. This will give you a clear picture of your financial situation.
Create a Budget: Develop a detailed budget that outlines your monthly income and expenses. Identify areas where you can cut back on spending to free up more money to put towards debt repayment.
Prioritize Debt Repayment: Focus on paying off high-interest debt first, such as credit card debt. Consider using the debt avalanche or debt snowball method to systematically tackle your debts.
Negotiate with Creditors: Reach out to your creditors to discuss repayment options. They may be willing to negotiate lower interest rates, waive fees, or offer a repayment plan that fits your budget.
Explore Debt Consolidation: Consolidating your debts into a single loan with a lower interest rate can make it easier to manage and potentially reduce your overall interest costs. However, be cautious and carefully evaluate the terms and fees associated with any consolidation offer.
Increase Your Income: Look for opportunities to increase your income, such as taking on a part-time job, freelancing, or seeking a higher-paying position within your company.
Seek Professional Help: If you're feeling overwhelmed or unsure about how to proceed, consider seeking assistance from a financial counselor or debt relief agency. They can provide guidance and support tailored to your specific situation.
Avoid Taking on New Debt: While you're working to pay off your existing debt, avoid taking on any new debt if possible. Stick to your budget and focus on living within your means.
It may take time and discipline, but with a solid plan and commitment to debt repayment, you can overcome your debt challenges and regain control of your finances. Remember to be patient with yourself and celebrate small victories along the way.

..Read more

Ramalingam

Ramalingam Kalirajan  |8192 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Aug 14, 2024

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Hi, I'm having 10lakhs of debts because of credit card and loans almost half of that is just charges and interest. I just earn 25-30k per month. Bank agents are coming to home daily. Its giving me mentally so much pressure and unable to do or think anything. Suicide thoughts are running in my mind. I wish to do settlement of everything. How do i do, I dont even have enough money to pay that as well. I was working since 6years 90% of my earnings has been paid towards bank now i cant keep paying. I want to live my life earn something for me and my family. I wanted to buy a home but i cant even buy a home toy for myself. Please someone help me.
Ans: It's essential to recognise that your situation is serious and needs immediate attention. You're facing significant financial stress, but there are steps you can take to manage this situation. It's commendable that you're reaching out for help, which is the first step toward resolving your financial challenges.

Understanding Your Debt Situation
You have Rs. 10 lakhs in debt, mostly from credit cards and loans. The charges and interest have made it difficult to repay. Your monthly income of Rs. 25,000-30,000 is insufficient to manage these debts effectively. The pressure from bank agents is adding to your mental stress, which needs to be addressed immediately.

Emotional Well-being and Mental Health
Your mental well-being is as important as your financial situation. Experiencing suicidal thoughts is a sign that the pressure has become overwhelming. Please consider speaking to a mental health professional immediately. They can provide you with the support you need to navigate this difficult period.

Immediate Steps for Debt Management
1. Prioritise Your Mental Health:
The stress of debt can cloud your judgment. Take small steps to manage your mental health. Reach out to trusted friends, family, or a counsellor who can offer support.

2. Assess Your Debts:
List all your debts, including principal amounts, interest rates, and due dates. This will give you a clear picture of your financial obligations.

3. Negotiate with Creditors:
Contact your creditors to negotiate better terms. Explain your financial situation and request a reduction in interest rates or a more manageable payment plan. Creditors might agree to a settlement amount that is less than what you owe, but it will require a lump sum payment.

4. Consider Debt Consolidation:
If possible, consolidate your debts into a single loan with a lower interest rate. This can simplify repayments and reduce the overall interest burden.

5. Stop Using Credit Cards:
Stop using credit cards to avoid further debt accumulation. Focus on paying off existing balances.

6. Create a Budget:
Create a strict budget that focuses on essential expenses. Allocate any remaining income toward debt repayment.

7. Look for Additional Income:
Consider taking up a part-time job or freelance work to supplement your income. Even a small increase in income can help you manage your debts better.

8. Explore Financial Assistance:
Seek assistance from a Certified Financial Planner (CFP) who can provide guidance tailored to your situation. They may help you find government or non-profit programs designed to assist people in financial distress.

Long-term Financial Planning
1. Build an Emergency Fund:
Once your debts are under control, focus on building an emergency fund to avoid falling back into debt. Start small, even if it's just Rs. 500 per month.

2. Rebuild Your Credit:
Work on improving your credit score by paying your bills on time and keeping your credit utilisation low.

3. Start Saving for the Future:
Gradually start saving for your future goals, such as buying a home. Start with small, regular contributions to a savings account or a low-risk investment.

4. Educate Yourself Financially:
Take the time to learn about personal finance, budgeting, and debt management. This knowledge will empower you to make better financial decisions in the future.

Addressing Your Emotional Well-being
1. Reach Out to Support Groups:
Join support groups for people facing similar financial challenges. Sharing your experiences and hearing from others can provide relief and practical advice.

2. Practice Stress-relief Techniques:
Engage in activities that help reduce stress, such as meditation, exercise, or spending time with loved ones. These activities can improve your mental clarity and resilience.

3. Maintain Open Communication:
Discuss your financial situation with your family, if possible. They can provide emotional support and might help you in finding a solution.

Finally
You are in a challenging situation, but you have options. Taking small, steady steps can lead to significant improvements over time. Focus on both your financial and emotional well-being, and don't hesitate to seek professional help when needed.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

..Read more

Latest Questions
Ramalingam

Ramalingam Kalirajan  |8192 Answers  |Ask -

Mutual Funds, Financial Planning Expert - Answered on Apr 05, 2025

Money
I am 49 yrs and monthly expense is 165000. no other liabilities of children's and parents. Only expense of myself and wife and if want to retire in next 1 year what corpus would be needed for next 25 yrs considering inflation. we have adequate Mediclaim policy of 75 lakhs.
Ans: You are 49 now, with monthly expenses of Rs. 1.65 lakh. You have no children's or parents' liabilities. You plan to retire in one year. Also, you and your wife are well-covered by a Rs. 75 lakh Mediclaim policy.

That’s a strong and admirable starting point. Let us now assess your retirement readiness. We will consider inflation, lifestyle, and long-term wealth management.

Let us start with the key areas you must evaluate before retirement.

Monthly Expenses and Lifestyle Assessment
Your current monthly expenses are Rs. 1,65,000. That is Rs. 19.8 lakh a year.

This includes only you and your wife. That simplifies planning.

It seems your lifestyle is stable and well-managed.

As inflation rises, your expenses will rise each year.

With average inflation of 6%, costs double in 12 years.

So, your Rs. 1.65 lakh today can become about Rs. 3.3 lakh per month in 12 years.

You must plan for these higher costs in future years.

Retirement corpus should grow steadily and beat inflation.

That way, your wealth can support you for 25+ years.

Evaluating Retirement Duration
You are retiring at 50. We will plan till 75 years.

But people are living longer now. Life expectancy is increasing.

So, it is better to plan till 85 or 90 years.

That means your money must last for 35 to 40 years.

But your question is for 25 years. Let us assess for 25 first.

Later, we will share how to stretch this for longer, if needed.

How Much Corpus Is Needed?
You will need income for 300 months (25 years × 12 months).

Each year, expenses will rise due to inflation.

So, in early years you may spend less.

But in later years, your expenses will be much more.

Your corpus must grow and give monthly income.

At the same time, the principal must not fall quickly.

A safe starting estimate: You will need around Rs. 8 to 10 crores.

This is to cover 25 years with rising expenses.

This estimate assumes post-retirement returns of 10% to 11%.

It also assumes inflation at 6% per year.

The more return your investments earn, the less corpus you need.

The less return, the more corpus you need.

Corpus must be invested smartly to earn and grow.

We will now see how to manage this corpus efficiently.

Key Factors That Affect Your Retirement Plan
Inflation: Your biggest hidden enemy. It silently eats wealth.

Longevity: If you live longer, you need more money.

Medical Expenses: You have good Mediclaim cover. That is great.

Unexpected Costs: Home repair, travel, or emergencies may arise.

Return on Investments: You must beat inflation every year.

Tax Efficiency: Returns must be tax-optimized.

Withdrawal Plan: Monthly withdrawal must be well structured.

Ideal Investment Strategy for Retirement
Your goal is simple: monthly income of Rs. 1.65 lakh, rising with inflation.

At the same time, principal must stay intact or reduce slowly.

Here is the strategy:

Invest the full retirement corpus in mutual funds.

Choose a mix of equity and hybrid funds.

Start with a 60:40 ratio. 60% equity, 40% debt/hybrid.

This gives growth and stability.

Every year, rebalance the portfolio.

If equity grows fast, shift some to hybrid for safety.

Use Systematic Withdrawal Plan (SWP) for monthly income.

Withdraw only what you need. Let the rest grow.

Avoid fixed deposits for full corpus. They do not beat inflation.

Keep only 6 to 9 months of expenses in FDs or liquid funds.

That acts as an emergency buffer.

You should invest through a Certified Financial Planner.

A CFP will help you create a strong plan.

They can also handle taxes, rebalancing, and fund review.

Why You Should Avoid Index Funds
Index funds follow the market blindly.

They invest in every stock, good or bad.

No fund manager takes active decisions.

During market fall, they fall fully.

They cannot protect your money in crisis.

They do not outperform consistently.

In retirement, you cannot afford sudden deep losses.

You need actively managed funds.

These funds are managed by experts.

They aim to protect during fall and grow during rise.

That is safer for long-term retired life.

Why You Should Avoid Annuities
Annuities give fixed income for life.

But they are not inflation protected.

If you get Rs. 1 lakh today, it stays Rs. 1 lakh forever.

After 10 years, that has much less value.

They also offer very low returns.

Most annuities lock your money permanently.

There is little flexibility and no liquidity.

You cannot exit midway if your needs change.

That is not ideal for someone in your situation.

You need a growing income, not fixed.

SWP from mutual funds is better than annuities.

Why You Should Avoid Real Estate
Real estate needs large one-time investment.

It has poor liquidity. You cannot sell fast.

Maintenance cost is high.

Rental income is often low and irregular.

Property disputes are common.

In retirement, you need easy-to-manage assets.

Real estate is not ideal for retirees.

Tax Planning for Retirement
SWP from equity mutual funds is taxed.

Long-term capital gains (LTCG) above Rs. 1.25 lakh yearly are taxed at 12.5%.

Short-term capital gains are taxed at 20%.

Debt fund withdrawals are taxed as per your tax slab.

With right planning, you can reduce tax.

You can stagger withdrawals to stay under limit.

Keep long-term view for most equity funds.

Let them grow for at least 3 to 5 years before major withdrawals.

A Certified Financial Planner will guide your tax planning.

Annual Review of Retirement Plan
Every year, review your expenses.

Match your SWP amount with your needs.

If inflation rises faster, adjust SWP upward.

Rebalance portfolio to maintain equity and debt mix.

Track returns of each fund regularly.

Remove underperformers after 2-3 years.

Add new funds with good consistency.

Review Mediclaim and emergency fund each year.

Make a will or estate plan.

Ensure all documents are updated and in order.

Other Key Tips for Retired Life
Don’t give large loans to friends or relatives.

Avoid co-signing loans for anyone.

Keep your lifestyle simple and meaningful.

Spend more on health and wellness.

Invest time in hobbies and charity.

Keep your money safe from online fraud.

Don’t chase high return risky investments.

Always discuss big financial decisions with your wife.

If needed, involve your Certified Financial Planner for support.

What If You Live Beyond 25 Years?
Your current plan is for 25 years.

But you may live till 85 or 90.

So your corpus must grow even after withdrawals.

Let at least 40% of your corpus stay in equity.

Equity gives long-term inflation beating returns.

If your corpus allows, reduce SWP amount after 75.

Or maintain same SWP, but reduce expenses.

This will help your corpus last longer.

Review the corpus regularly post 75 years of age.

Final Insights
You are well prepared for retirement at 50.

Rs. 1.65 lakh monthly expenses are realistic.

But inflation must be planned seriously.

You will need about Rs. 8 to 10 crore corpus.

Invest in equity and hybrid mutual funds.

Use SWP for monthly income.

Avoid index funds, annuities, and real estate.

Keep liquidity for emergencies.

Review portfolio and expenses yearly.

Involve a Certified Financial Planner for full planning support.

Your focus now should be wealth preservation and moderate growth.

This is a golden phase of life. Plan it smartly.

You deserve peace, dignity, and freedom in retirement.

Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment

...Read more

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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