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Ramalingam Kalirajan |10876 Answers |Ask -Follow

Mutual Funds, Financial Planning Expert - Answered on Aug 01, 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 - Jul 10, 2025Hindi

iam working in public sector bank and my gross pay is around 90k+4k allowances and netpay around 84k I have car loan of 7.45 lakh(present) with emi 13.5 k 7.8% roi and i have taken 6.5 lakh in loan from cooperative society at 10% si with emi around 11k also i have fully used staff od of 7 lakh 7% si roi. Also i get a medical exgratia of 19k per month and i have stocks worth 7 lakh and i am getting married in dec this year how should i manage things so that i clear all my loans except car loan in next 1 year. And after deductions my current net pay is 58k +19k exgratia. Kindly guide me how should i strengthen my finances i.e both refuce loan and how shoul i invest my current age is 28

Ans: – You are just 28, but already aware of your finances. That is rare and praiseworthy.
– Planning before marriage and wanting to repay loans is a sign of responsibility.
– Your focus on financial discipline and investment is a strong foundation for your future.
– You are on the right path. Now, you just need a more structured direction.

» Present Income and Cash Flow Assessment

– Gross salary is around Rs 94,000. Net in hand is Rs 58,000 after deductions.
– You get Rs 19,000 monthly as exgratia, which adds strength to your cash flow.
– Your total available income per month is about Rs 77,000.
– Car loan EMI is Rs 13,500 and cooperative loan EMI is Rs 11,000.
– You are paying Rs 24,500 every month just on these two loans.
– You also have a Rs 7 lakh overdraft at 7% interest, fully utilised.

» Total Debt Structure Overview

– Total liabilities are:

Car loan – Rs 7.45 lakh

Cooperative society loan – Rs 6.5 lakh

Staff OD – Rs 7 lakh
– That means Rs 20.95 lakh total outstanding loan.
– Out of this, you want to clear Rs 13.5 lakh (excluding car loan) in 1 year.
– Your goal is strong and time-bound. A structured strategy can help you achieve it.

» Evaluating the EMI Burden and Current Status

– Current EMI outgo is already 32% of your income (Rs 24.5k out of Rs 77k).
– That is quite high for your age and upcoming responsibilities like marriage.
– Excluding car loan, your EMI burden is Rs 11,000 per month.
– The OD interest of 7% is not in EMI form, but it silently eats into your savings.
– We need to reduce interest costs and manage repayment smartly.

» Stocks Holding Strategy – Risk and Realignment

– You have Rs 7 lakh in stocks. This is good at 28, but also risky.
– Stock value is not guaranteed and could drop when you may need it most.
– Since your aim is to close loans in one year, equity risk is not suitable.
– Consider partially exiting your stocks now, especially if you are in profits.
– Liquidate at least Rs 5 lakh from the Rs 7 lakh holding for debt reduction.
– This will not only reduce interest costs, but also free up cash flow.

» Suggested Loan Repayment Strategy for Next 12 Months

– Use Rs 5 lakh from stocks to immediately repay part of OD or society loan.
– Prioritise repaying the cooperative society loan first. It has highest interest (10%).
– Then reduce the OD. Since it has no fixed EMI, reducing principal helps.
– After stock liquidation, balance Rs 8.5 lakh loan can be paid over 12 months.
– That means you need to pay about Rs 70,000 monthly to clear the rest.
– From your Rs 77k income, that is possible by keeping expenses extremely tight.
– Keep Rs 7,000 for essential expenses. Avoid any new luxury expenses.
– Any bonus or additional income should also go into repayment.
– Discuss with family to keep marriage expenses modest.

» Managing Marriage Expenses without Creating New Debt

– Marriage costs can easily disrupt your entire plan if not controlled.
– Plan a budget wedding. Avoid personal loan or credit card funding.
– Any gifts or support from family should be used only for wedding, not loans.
– Do not touch your salary or exgratia amount for wedding shopping.
– Keep that income only for EMI payments and reducing overdraft.

» No New Investments Before Debt Is Cleared

– Do not start SIPs or ULIPs or any other investments till all loans are cleared.
– Right now, investing will only delay your goal of becoming debt-free.
– After becoming debt-free, start fresh investments with purpose and plan.

» How to Strengthen Finances After Loan Clearance

– Once cooperative loan and OD are cleared, you will save Rs 18,000 monthly.
– Redirect this saved EMI to mutual funds via SIPs.
– Start with Rs 15,000 SIP monthly. Keep Rs 3,000 for emergency fund buildup.
– Always choose regular plans through MFD backed by a Certified Financial Planner.
– Don’t go for direct funds. They look cheaper but lack advisory and portfolio reviews.
– MFD with CFP brings regular fund reviews and corrections if needed.

» Avoid Index Funds in Future Planning

– Index funds follow a fixed rule. They can’t protect you in market falls.
– No fund manager actively manages or rebalances them.
– They don’t adjust to market cycles or sectors.
– Actively managed mutual funds are more flexible. They protect better in market crash.
– Skilled fund managers can shift assets across sectors for better risk control.

» Medical Exgratia Utilisation

– The Rs 19,000 monthly medical exgratia is an advantage.
– Save this separately in a liquid fund. Use only in medical or emergency need.
– Don’t count it as part of regular income for EMI or investment.
– Treat this as your health protection reserve.

» Insurance Coverage Review After Marriage

– After marriage, review your health insurance again.
– Cover both yourself and spouse under a family floater plan.
– Maintain minimum Rs 10 lakh family floater health cover.
– Since you work in bank, you may get employee medical cover.
– Still, personal policy is a must.

– Also buy a term insurance plan after marriage.
– Coverage should be minimum 10 times your annual income.
– This will protect your spouse and future children financially.
– Avoid ULIPs or endowment policies. They mix insurance and investment badly.
– Keep insurance and investment separate.

» Building Emergency Fund After Loan Clearance

– After loans are paid off, build an emergency fund of at least Rs 2 lakh.
– Keep it in a liquid or ultra short-term fund.
– Don’t touch it unless there’s job loss or serious medical issue.
– It should cover at least 3 to 6 months of expenses.
– Without this, you may again fall into debt during emergencies.

» Investment Plan for Long-Term Goals

– Once loans are done, and emergency fund is ready, start planning for long-term.
– You are only 28, so time is on your side.
– Start SIPs in actively managed mutual funds through MFD + CFP guidance.
– Begin goal-wise investing. For example:

Rs 5,000 monthly SIP for your future home downpayment

Rs 7,000 monthly SIP for retirement at 60

Rs 3,000 SIP for future child education
– These can be adjusted as income grows.
– Review your funds every 6 months with your MFD.

» Tax Planning Post Debt Clearance

– Once you free your cash flow, use Rs 1.5 lakh 80C limit wisely.
– PPF, EPF, ELSS mutual funds are good options.
– Avoid ULIPs or tax-saving insurance.
– Invest under 80D for health insurance too.
– Keep income tax liability low but with purpose-driven instruments.

» Final Insights

– Your discipline and early planning mindset are your biggest strength.
– Pay off loans first. Start investments only after that.
– Don’t mix insurance and investment.
– Keep wedding simple. Don’t borrow more for celebration.
– Use stock gains to repay high-cost loans.
– Start SIPs only after your loan burden ends.
– Stay focused. Don’t rush into new investments because peers are doing it.
– Every step should be tied to a financial goal.

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

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