I have a 70 lakh debt on a salary of 37,250. How do I clear it?

Ans: Hello;

Restructure the loan with the lending agency to increase term and reduce EMI.

Seek help from your family and friends to repay the loan and pay them back as soon as you are capable to do so.

Try to sell some asset (jewellery or land) and repay the loan.

Never try to seek another loan to fulfill previous loan because then you are getting into a vicious debt trap.

Excessive leverage is dangerous to your financial health.

I would never recommend anybody to seek borrowing except home loan and/or education loan.

Best wishes;

Ans: You are carrying a total debt of Rs 11 lakh.
Rs 5 lakh is borrowed from a relative with Rs 10,000 monthly interest.
This is a serious outgoing. Let’s now work on a full plan.

You need to reduce debt pressure without disturbing long-term wealth goals.
We will solve this with a 360-degree strategy—step by step.

Understanding the Debt Structure
Rs 5 lakh borrowed from relative with Rs 10,000 interest per month.

Balance Rs 6 lakh assumed to be other debts. May be personal loan or credit card.

Interest cost on Rs 5 lakh alone is Rs 1.2 lakh per year.

That’s 24% annual interest—very high for any borrower.

If this continues, you lose wealth faster than you build it.

Impact of High-Interest Debt on Your Finances
Monthly cash outflow rises unnecessarily.

Even if you invest well, returns are cancelled by debt interest.

You lose compounding on both sides—investments and payments.

Emotional stress increases as debt continues.

Education planning and retirement planning get disturbed.

First Priority—Settle Rs 5 Lakh Relative Loan
You must prioritise clearing this Rs 5 lakh loan.

Interest of Rs 10,000 monthly is too expensive.

Ask the relative for a possible interest-free period.

Or ask to convert it into EMIs with no interest.

If they agree, repayment becomes easier and faster.

If not, arrange partial payment soon to reduce this burden.

Create a Temporary Emergency Exit Plan
You already have:

Rs 1 crore in shares.

Rs 1 crore in 401(k) account (foreign).

Rs 60 lakh land (non-productive asset).

Here is what you must do immediately:

Do not sell equity in panic.

Identify Rs 3–4 lakh worth of non-core stocks.

Redeem from low-performing holdings.

Use part of this to reduce your Rs 5 lakh loan.

Set up a 3-month action plan to reduce at least Rs 3 lakh.

Setup a Structured Debt Clearance Fund
Open a new liquid mutual fund.

Every month, invest Rs 20,000 here.

Use this only for repaying debt step-by-step.

Don’t touch this fund for any other use.

It is better than spending randomly and then falling short.

Avoid These Actions at All Costs
Do not sell long-term equity mutual funds suddenly.

Don’t use PPF or retirement-linked investments to repay debt.

Don’t take another loan to close current loans.

Don’t use credit cards or overdraft to manage interest payments.

Don’t sell real estate unless it is urgent.

How to Handle Remaining Rs 6 Lakh Debt
Assuming this is formal debt (like personal loan or EMI):

List each loan with rate and EMI.

Check if any loan is of higher interest.

Use surplus equity money to clear the costliest loan.

Maintain EMI payment discipline always.

Avoid pre-closure penalties. Check terms carefully before part-payment.

Restructure Cash Flow to Improve Debt Repayment
Review your monthly income and expenses.

Identify unnecessary spends and cancel them.

Pause SIPs temporarily for 3 months if needed.

Re-start SIPs after debt control is achieved.

Use every cash bonus or windfall to repay loan.

Gift money, tax refund, or savings—redirect all to debt fund.

Emotional and Family-Side Planning
Involve your family in debt repayment goal.

Inform your relative that loan will be cleared soon.

Ask for a 3-month or 6-month grace period if possible.

This reduces tension and avoids family friction.

Transparency builds long-term family trust.

Setup a Financial Control Chart
Make a simple monthly chart for income, expense, debt.

List exact payments due with due dates.

Track total debt balance after every payment.

Watch this number fall monthly. It keeps you motivated.

What Happens Once Debt Is Cleared?
Rs 10,000 monthly interest will stop.

This becomes your new saving potential.

You can restart SIPs with better confidence.

You can increase emergency fund faster.

You will feel more in control of your finances.

Reinvest to Rebuild Long-Term Corpus
Once Rs 11 lakh debt is cleared:

Start new SIPs from Rs 10,000 to Rs 15,000 monthly.

Choose equity mutual funds in regular plan through MFD.

Avoid index funds. They follow market blindly.

Actively managed funds protect in downturns and plan growth.

Avoid direct plans. They don’t offer human support or rebalancing.

Use a Certified Financial Planner to guide reentry.

If You Hold Any LIC or ULIPs
If any part of your cash is in LIC or investment insurance:

Surrender such plans immediately.

Use that money to clear debt or build liquid fund.

These policies give low returns and high lock-in.

Mutual funds offer better transparency and flexibility.

Prioritise These Key Steps in Order
Repay Rs 5 lakh relative loan with partial lump sum.

Build Rs 20,000/month debt fund for 6 months.

Use surplus or dividend income to repay Rs 6 lakh loans.

Avoid pausing good SIPs beyond 3 months.

Resume SIPs and create strong long-term financial base.

Finally
You can definitely become debt-free with steady effort.

Don’t let the Rs 11 lakh number scare you.

You already have strong assets and good discipline.

Focus now on wiping high-interest debt first.

Use mutual funds for rebuilding—not for emergency redemption.

Avoid real estate, index funds, annuity plans, and direct options.

Use structured guidance from a Certified Financial Planner.

You will reach zero debt with better clarity, peace, and long-term gain.

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

Ans: It takes great strength to face a big debt issue at your age. Managing Rs 80 lakh debt is challenging but not impossible. With a clear plan, you can reduce and eventually clear the debt. Your willingness to get help shows you are on the right path.

» Assessing your current financial situation

First, understand the nature of the Rs 80 lakh debt. Note down the interest rates, tenure, and monthly payments. This will help in prioritising the high-cost debt first. Also, calculate your household income and monthly expenses carefully. This view will reveal your repayment capacity without hurting essential needs.

» Creating a structured repayment plan

Start by focusing on debts with the highest interest rates. Paying these first lowers cost over time. If possible, negotiate with lenders for better terms or lower interest rates. Also, focus on cutting unnecessary expenses to free up money for repayments. A disciplined monthly budget will be your best ally.

» Leveraging available income and assets

Evaluate if the household has any idle savings or investments. If they exist, consider using them to reduce debt immediately. Avoid investing in new schemes until debt is under control. Your priority now is lowering debt risk, not increasing risky exposures. Additional income sources, like part-time work or freelancing, can boost repayments.

» Prioritising emergency fund and insurance

While repaying debt, maintain a small emergency fund. It keeps you from borrowing more in emergencies. Also, ensure adequate health and life insurance coverage. This protects your family from financial shocks that can worsen your debt situation.

» Understanding the role of mutual funds in your case

Direct or regular mutual funds are not the solution now. Avoid direct funds as they require expertise and can be risky without guidance. Regular mutual fund investments through a Certified Financial Planner provide professional oversight and discipline. However, since your focus should be on debt clearance, diverting money into funds is not advisable until debt is manageable.

» Avoiding common traps for debt clearance

Do not borrow more to pay existing debt, which worsens your burden. Also, avoid investment-cum-insurance products or ULIPs as they offer poor returns and lock your money, making debt clearance slower. Instead, focus on steady, practical cash flow management. Keeping mental and emotional health stable helps decision-making.

» Seeking professional guidance

A Certified Financial Planner can help analyse your full financial picture. They bring expertise on budgeting, prioritising debts, and long-term financial stability. Planning with a professional prevents mistakes and sets a clear path for solvency and wealth building later.

» Encouragement for the future

Debt situations feel heavy but are temporary with proper steps. Tracking progress monthly provides motivation and control. As debt reduces, you gain confidence and financial freedom. This phase builds skills for strong money management throughout life.

» Final insights

Acknowledge the difficulty but hold hope.

Understand debt details and your income deeply.

Prioritise high-rate debts and expenses cutting.

Use any disposable income to accelerate repayments.

Keep emergency funds and insurance active.

Avoid investments or fresh loans until debt falls.

Seek a Certified Financial Planner’s advice to guide you.

Stay consistent and patient; progress can be steady.

Your courage now prepares you for a financially secure future. This challenge will become a story of your resilience and planning.

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