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Ramalingam Kalirajan |11205 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Sep 08, 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 - Aug 13, 2025Hindi

Hi Sir, I have 80 lakhs (gold loan 30lakhhs+ credit cards 15lakhs +35 personal loans) debt and no emergency fund and saving but I have around 600 grams gold which is in gold loan. I am drawing 2 Lakhs salary per month. Kindly advise how can I plan repayment. Selling gold or any other plans please advise

Ans: You have shown courage by sharing your present money situation. Many people hide such matters, but by opening up, you are already taking the first strong step. Your high debt is heavy, but with steady salary and discipline, you can clear it and rebuild. I will share a full plan in simple words covering repayment, cash flow, and future stability.

» Understanding your debt position
– You hold Rs. 80 lakhs total debt.
– This includes Rs. 30 lakhs gold loan, Rs. 15 lakhs credit cards, and Rs. 35 lakhs personal loans.
– All three carry very high interest rates.
– Gold loan has medium to high rate.
– Personal loans usually carry high interest for long time.
– Credit card debt is the most dangerous, with extremely high monthly compounding.
– You also have no emergency fund and no present savings.
– You do have 600 grams of gold, but it is pledged under the gold loan.

» Why repayment plan is urgent
– Your salary is Rs. 2 lakhs per month.
– With such high debt, a large share of income will vanish in EMIs and card dues.
– Credit card interest grows rapidly if unpaid, creating endless debt trap.
– Personal loan tenure is long, so repayment will keep cash flow tight.
– Gold loan is secured against your own asset, so you cannot keep it pledged forever.
– Delay in repayment will also impact your credit score and future loan chances.
– Hence, repayment order and strategy is the most important priority.

» Setting right repayment order
– First, attack the credit card dues. These carry 30–40% annual cost.
– After clearing credit cards, focus on gold loan.
– Finally, reduce personal loan balances gradually.
– This order saves you maximum interest outgo and stress.

» Using your gold wisely
– You already have 600 grams gold pledged.
– Gold is a non-income producing asset. It does not give monthly income.
– Holding gold under loan only creates negative cash flow.
– Selling part of your gold can release money to repay high-cost debt.
– Selling now may feel emotional, but it is smarter than paying huge card interest.
– If you clear loans today, later you can buy gold again when your finances improve.
– This is not a permanent loss. It is a temporary sacrifice for a bigger win.

» Cash flow restructuring
– Salary is Rs. 2 lakhs.
– Fix monthly expenses strictly within Rs. 60,000–70,000.
– This leaves Rs. 1.3 lakhs to 1.4 lakhs free each month.
– Use this full amount for debt repayment only, not for new expenses.
– Stop using credit cards for purchases until debts are closed.
– Use debit card or UPI for all spending to stay within budget.
– Prepare a strict expense diary. Every rupee must be tracked.

» Loan restructuring options
– Approach banks to consolidate personal loan and gold loan if possible.
– A single lower interest loan can replace multiple high-cost loans.
– This may reduce EMI stress.
– But only do this if bank offers lower rate and longer tenure.
– Do not extend tenure too much, as it may drag repayment for many years.

» Role of gold in repayment
– Immediate sale of some gold can clear credit card dues fully.
– Example: 600 grams can fetch about Rs. 35–36 lakhs in present market.
– Use this to wipe out Rs. 15 lakhs credit cards and part of personal loan.
– This step alone reduces monthly cash pressure heavily.
– Keep remaining gold as safety, or slowly redeem it once loans are under control.

» Emergency fund creation
– Right now, you have no safety buffer.
– After high-interest loans are cleared, next priority is small emergency fund.
– Keep at least Rs. 2–3 lakhs aside in liquid form.
– This protects you from falling into debt again for small needs.

» Lifestyle adjustments
– Control lifestyle expenses till loans are cleared.
– Avoid travel, luxury items, gadgets, or high-cost leisure.
– Cut down eating out and unnecessary subscriptions.
– Family must also support you in keeping expenses tight.
– For next 3 years, loan freedom should be the only dream.

» Future financial rebuilding
– Once loans are gone, start saving Rs. 50,000 monthly in regular mutual funds through Certified Financial Planner support.
– Avoid direct funds. They may look cheaper but do not offer expert guidance.
– Regular funds with CFP guidance give better handholding and discipline.
– Avoid index funds also. They only copy markets, with no smart research.
– Active funds managed by skilled professionals have better potential in Indian market.
– Also, build proper insurance protection before large investments.

» Psychological support
– Heavy debt causes stress and sleepless nights.
– Remind yourself that you have a stable salary of Rs. 2 lakhs.
– Many do not have this strength.
– With discipline, you can clear even Rs. 80 lakhs in a few years.
– Each month, as debt reduces, your confidence will grow.

» Finally
– Sell gold partly and clear credit cards fast.
– Restructure loans if banks allow better deal.
– Fix strict budget and repay aggressively.
– Create small emergency fund after first phase.
– Rebuild wealth slowly through guided investments.
– Debt trap can end if you act firm today.

Best Regards,
K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

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