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36-Year-Old Engineer Seeking Financial Freedom: How to Eliminate Debt and Achieve Financial Independence?

Ramalingam Kalirajan |8058 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 03, 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

Asked by Anonymous - Jul 20, 2024Hindi

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I am 36 yr old working in an Engine Manufacturing company and I earn 1L per month. I have a loan of 25L, MF portfolio of 6L, EPF 2L, shares 50k, plot land of about 15L. I live on a rented apartment (30k). My monthly expenses is 50k. I want to get rid of loan and be financially free as soon as possible. Kindly advise.

Ans: Your Financial Snapshot

Age: 36 years
Monthly income: Rs. 1 lakh
Loan: Rs. 25 lakhs
Investments: Rs. 8.5 lakhs (MF, EPF, shares)
Land value: Rs. 15 lakhs
Monthly rent: Rs. 30,000
Monthly expenses: Rs. 50,000

Appreciating Your Efforts

You've built a good investment portfolio despite having a loan.
Your desire to be debt-free shows financial responsibility.
Having diverse investments is a smart move.

Debt Repayment Strategy

Focus on paying off your loan faster.
Consider using some of your investments to reduce the loan.
This can save you interest in the long run.

Budgeting for Financial Freedom

Try to cut down on your Rs. 50,000 monthly expenses.
Every small saving can go towards loan repayment.
Look for areas where you can reduce spending.

Maximizing Your Investments

Keep your EPF as it offers good returns.
Review your mutual fund portfolio regularly.
Consider selling shares to pay off some loan amount.

Actively Managed Funds Advantage

These funds are managed by expert fund managers.
They can adjust to market changes quickly.
This can potentially lead to better returns than index funds.

Rethinking Your Living Situation

Rs. 30,000 rent seems high compared to your income.
Look for cheaper rental options if possible.
Use the saved money to pay off your loan faster.

Income Enhancement

Look for ways to increase your Rs. 1 lakh monthly income.
Consider part-time work or freelancing opportunities.
Use any extra income to accelerate loan repayment.

Insurance Check

Ensure you have adequate life and health insurance.
This protects your finances from unexpected events.
Don't mix insurance with investments for better returns.

Regular Financial Review

Check your progress towards debt freedom every 3 months.
Adjust your strategy if needed.
Stay motivated by tracking how much loan you've paid off.

Finally
Focus on loan repayment for financial freedom. Balance this with maintaining some investments. Regular review and adjustments will help you reach your goal faster.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in

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