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Ramalingam Kalirajan |10879 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 10, 2025

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

Asked by Anonymous - Jun 26, 2025Hindi

I have 29000 yes bank loan plus 10267 lic loan plus and 8105 paysense loan plus ahand loan of 10000 to be paid every month. Right now i am using the money that i got for being laid off. Paysense laon is at 16p.a and the two at betwwn 9 and 11%. I cannot afford sip and no insurances i have. Pls help how to clear loan and start something in mf or trading or equities

Ans: ? Understanding Your Current Situation
– You have multiple personal loans totalling around Rs.?59,372 monthly repayments.
– You mentioned paysense loan interest is 16% p.a.
– Other loans (Yes Bank, LIC, a hand loan) are around 9–11% p.a.
– You’re using severance money after layoff.
– You have no SIP or insurance currently.
– This situation is stressful, and you need a clear plan.

? Acknowledge Your Effort
– You are taking responsibility by asking for help.
– That is a strong first step.
– Many feel lost in such times.
– Your sincerity shows you care about your future.
– Appreciate your readiness to change.

? Immediate Focus: Build a Small Cash Buffer
– You lack an emergency fund now.
– Keep a small buffer of at least Rs.?25,000–50,000.
– This avoids using high-interest credit again.
– Use this only for essentials.
– Having this gives mental stability.

? Prioritise Loan Repayments by Interest Rate
– Highest rate is paysense at 16%.
– Next are loans at 9–11%.
– Clear high-rate debt first to save more.
– Use “debt avalanche” method for best net benefit.

? Use Severance Money Wisely
– Allocate a portion (say 50%) to pay off paysense loan fully.
– This removes the highest-cost debt immediately.
– Then use another part to reduce another 9–11% loan.
– Keep enough for living expenses and buffer.

? Arrange Loans’ Repayment Priority
– Step 1: Clear paysense loan (16% p.a.).
– Step 2: Pay off Yes Bank loan (~10%).
– Step 3: Settle LIC loan (~9-11%).
– Step 4: Address hand loan (~10%).
– Prioritise using saved severance, not future earnings.

? Avoid Digging Deeper into Loan Traps
– Do not borrow to repay other loans.
– Avoid credit card or new loan debt.
– Stay off high-cost borrowing like payday loans.
– This keeps you from falling back into debt cycle.

? Adjust Your Monthly Cash Flow
– After debt clearance, revise your monthly budget.
– Rent or living cut possible? Evaluate if feasible.
– Delay discretionary spending until debts are gone.
– Switch to minimal subsistence mode for now.
– This will free up funds to avoid loan reuse.

? Planning for Loan-Free Future
– Once all loans are gone, your monthly outgo reduces significantly.
– Use surplus cash to build proper emergency fund (3–6 months cost).
– Then allocate towards disciplined investments.
– Goal is to start SIP or other wealth plan soon.

? Why Not Start SIP or Investments Now
– With high cash outgo, investments may add pressure.
– Without debt-free state, returns are overshadowed by loan costs.
– Biggest return is interest saved by debt closure.
– After clearing debt, any investment will be pure growth.

? Avoid Trading or Direct Equity Now
– Trading is risky and requires funds and mental stability.
– In current financial stress, it may lead to bigger losses.
– Laying foundation first is safer path.
– Once stable, you can explore investing.

? New Investments Only After Debt-Free
– Focus on zero-interest obligations.
– Then build a small SIP of Rs.?5,000–10,000 monthly.
– Select actively managed mutual funds.
– Avoid index funds—they mirror the market blindly.
– Active funds adjust during market drops.

? Insurance Planning Once Stable
– You currently have no insurance.
– Not suggested to buy insurance now.
– After debt closure and small SIP start, review insurance need.
– A small term insurance and health cover is essential then.

? Create a Step-by-Step 360° Plan

• Phase 1 – Debt Elimination (next 3–6 months):
– Use severance to clear highest rate loan (paysense).
– Then clear next expensive loan using remaining severance + buffer.
– Use discipline to avoid new debt.
– Keep small buffer and handle living expense strictly.

• Phase 2 – Emergency Buffer Building (next 6–12 months):
– After being debt-free, channel monthly surplus into savings.
– Build emergency fund covering 3–6 months essential expenses.
– Keep this in liquid form.

• Phase 3 – Start Systematic Investments (12 months onward):
– Begin with SIP of Rs.?5,000–10,000 into actively managed equity or hybrid funds.
– Prioritise funds managed by experienced Certified Financial Planner.
– Regularly review performance and rebalance annually.
– Increase SIP gradually as income improves.

• Phase 4 – Insurance and Long-Term Planning (after 18–24 months):
– Introduce term insurance and ?y health cover.
– Use Certified Financial Planner to optimise protection vs. cost.
– Invest additional funds in long-term instruments like PPF or suitable debt funds after equity stage matures.

? Avoid Quick-Fix Schemes
– Trading or speculative bets may hurt your progress.
– Bounce back from layoff requires financial solidity.
– Real success is built slowly but sustainably.

? Stay Emotionally Grounded
– Debt stress creates anxiety.
– Take one step at a time.
– Use support from family and professionals if needed.
– Emotional stability helps stick to the plan.

? Work with a Certified Financial Planner
– You need a guiding hand to track your progress.
– A CFP will help with budget, debt plan, and eventual investments.
– They help you avoid financial pitfalls.
– Their credibility matters for your growth.

? Final Insights
– Your current resources can clear all debt.
– Once debt is gone, build buffer and start SIPs only.
– Trading now can risk your limited funds.
– Actively manage investments with expert help later.
– At each phase, track, adjust, and commit.
– A disciplined approach will bring you to financial stability.
– The road may be challenging, but it leads to freedom.

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

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