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How can a 44-year-old man with a combined family income of 22 lakhs and assets worth 3.8 crores come out of debt?

Ramalingam Kalirajan |7040 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Jul 16, 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 16, 2024Hindi

Dear Sir, I am 44 years old. With a total family salary income of 2.2 Lakhs/Month after tax, and I get a yearly one time bonus of Rs. 1.5 Lakhs. Below is my financial position. 1. Combined Family PF Accumulation - 50 Lakhs 2. Own individual house with no Loan(i.e. 20 years housing loan closed in 4 Years) 3. A empty commercial plot in a busy area in a First grade municipal town worth 1.6 Crores 4. A empty commercial land of area 32000 Sq.ft. on a busy National Highways worth 2 Crores 5. Gold Jewels - 2.1 Kg 6. Some ancestral houses and 7 acres agricultural lands from which I get 20K Per month excluding our(mine + wife) salary. 7. LIC Endowment Policies from which I can get Rs. 10 Lakhs if I surrender pre-maturely now. No FD, Mutual Funds and Shares. Debt: 1. 900 grams of gold to my close relative which I borrowed at Rs. 5500/gram in 2023, also has to return only as gold. 2. 35 Lakhs cash at Bank FD rate of interest from my Mom. 3. Gold Pledged for Rs. 18 Lakhs at a nationalized bank 4. Personal loan of Rs. 10 Lakhs, EMI Rs. 27000/month(Approx). - 50 Months remaining. Two daughters studying 11th and 6th respectively. Please guide me to come out of my debt as early as possible.

Ans: Your income and assets are strong. You have Rs. 2.2 lakhs monthly income and a Rs. 1.5 lakh yearly bonus. Your PF accumulation is Rs. 50 lakhs. You own a house with no loan. Your commercial properties are worth Rs. 3.6 crores. Your gold jewels weigh 2.1 kg. Your ancestral property provides Rs. 20,000 monthly.

Debt Analysis
You have some debts. You owe 900 grams of gold to a relative. You have Rs. 35 lakhs debt to your mother at FD interest rates. You have pledged gold for Rs. 18 lakhs at a bank. You have a personal loan of Rs. 10 lakhs with a Rs. 27,000 monthly EMI.

Liquidity Management
Consider surrendering your LIC endowment policies. This can provide Rs. 10 lakhs immediately. Use this amount to reduce high-interest debts. Prioritize paying off the personal loan and pledged gold loan first.

Debt Repayment Strategy
Focus on repaying high-interest loans. Use your bonus and part of your monthly income for this. Repay your personal loan early. This will save on interest costs.

Gold Loan Repayment
Repay the gold loan at the bank. Use part of your income and savings. This will free up your pledged gold. Return the borrowed gold to your relative as soon as possible.

Family Debt Clearance
Repay your mother’s debt with a structured plan. Consider paying a fixed amount monthly. This will reduce your financial burden over time.

Future Investment Planning
Start investing in mutual funds. Use a SIP to invest regularly. This will help grow your wealth. Actively managed funds are better than index funds. They can provide higher returns.

Education Planning for Daughters
Set up an education fund for your daughters. Invest in equity and debt funds. This will ensure their future expenses are covered.

Insurance Review
Review your insurance needs. Ensure you have adequate life and health insurance. This protects your family in case of emergencies.

Professional Guidance
Seek advice from a Certified Financial Planner (CFP). They can provide a tailored financial plan. Professional guidance will help you achieve your financial goals efficiently.

Final Insights
Focus on debt repayment first. Invest regularly for future growth. Secure your family’s financial future with proper planning.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

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