Hi Sir, my income is 90k and I have a home loan of 28 lakhs which started 5 months back, tenure - 15 years, paying an emi of 29k per month and have a personal loan of 9 lakhs for tenure - 4 years, out of which 1 year is completed, paying an emi of 23k per month. 6k goes into my mutual funds and around 15k goes to my other expenses. If I want to clear my personal loan or home emi early than the tenure and save some amount for future. Please suggest me a way to do it. Thanks in advance.
Ans: You are already managing multiple financial responsibilities well.
Your focus on clearing loans and saving is a good mindset.
Let’s now build a 360-degree financial plan for you.
Knowing Your Current Financial Position
Monthly income: Rs 90,000
Home loan EMI: Rs 29,000
Personal loan EMI: Rs 23,000
Mutual fund SIP: Rs 6,000
Other expenses: Rs 15,000
Available monthly surplus: About Rs 17,000
This is a very crucial surplus.
It can be used to build a strong financial future.
Understanding Your Loan Structures
Personal Loan
Amount: Rs 9 lakhs
Tenure: 4 years
EMI: Rs 23,000
Paid: 1 year
Remaining: 3 years
High interest (usually 12–15%)
No tax benefit
Home Loan
Amount: Rs 28 lakhs
Tenure: 15 years
EMI: Rs 29,000
Started: 5 months ago
Lower interest (around 8.5%)
Has tax benefit
Personal loan is more expensive.
It also gives no tax savings.
So, your priority should be:
Clear personal loan first.
Step-by-Step Debt Strategy
Step 1: Create Loan Repayment Plan
Use Rs 15,000 from your monthly surplus
Save it monthly into a separate bank account
Don’t touch it for anything else
Every 6 months, use this to prepay personal loan
You can close this loan in 18–24 months
Step 2: Continue Home Loan EMI
Let the EMI continue as it is
Don’t prepay home loan right now
It gives you income tax savings
It has a longer, manageable tenure
Focus fully on personal loan for now
Step 3: Prepare an Emergency Fund
Currently, you don’t have emergency backup.
If any crisis happens, you may borrow again.
That will break your financial progress.
Action:
Once personal loan is over,
build Rs 2–3 lakhs as emergency fund
Use liquid mutual fund for this
Keep it separate from SIP or equity funds
Use Rs 10,000 per month to build this
This gives peace of mind for emergencies
Step 4: Mutual Fund Correction Plan
You invest Rs 6,000 monthly in mutual funds.
That is a very good start.
But mutual fund selection must be smart.
Avoid investing in index funds or ETFs.
Why Index Funds are risky:
They follow market blindly
No protection during market fall
No expert strategy or rebalancing
Returns match average market, not beat it
Why Regular Active Funds are better:
Managed by expert fund managers
Adjust portfolio during market risk
You get MFD + CFP support
Review and rebalance is easier
Helps create better long-term wealth
Action:
Shift to regular active equity mutual funds
Use large and mid-cap category
Use SIP route and continue for long term
Don’t stop SIPs when markets go down
Increase SIPs slowly once loans are closed
Step 5: What to do After Personal Loan Closure
After personal loan ends,
you will free up Rs 23,000 monthly.
This is a huge opportunity.
Use it wisely in this order:
Rs 10,000 to build emergency fund
Rs 10,000 increase to SIP amount
Rs 3,000 for any family buffer or medical
After 6 months of this,
you can start partial prepayment of home loan.
Use Rs 10,000 monthly to reduce home loan.
Once a year, make one extra EMI as part payment.
This will reduce total interest paid.
It will also cut loan tenure by 3–5 years.
Step 6: Handle Expenses Smartly
You spend Rs 15,000 monthly on lifestyle.
That is reasonable and under control.
But ensure you do this:
Avoid impulse online purchases
Don’t fall for lifestyle EMI schemes
Track every rupee spent using app or notebook
Avoid new credit cards or BNPL schemes
Keep credit card usage only for emergency
Don’t increase expenses just because salary increases
Step 7: Don’t Use Direct Mutual Funds
Some people invest in direct funds to save commission.
But they lose much more without expert support.
Disadvantages of direct funds:
No one helps to rebalance
No CFP to check goal mismatch
You might choose wrong scheme
No reminders or tracking help
High chances of panic redemption
Benefits of regular funds via MFD with CFP:
Professional help always available
Goal-based investing is easier
Portfolio is reviewed yearly
Mistakes are corrected early
Long-term growth is better
So avoid direct funds totally.
Step 8: Build Future Financial Strength
Once loans are gone and savings are strong:
You must create wealth for long term goals.
Goals like:
Child’s education
Health emergency
Retirement security
Travel or career break
Action Plan:
Increase SIPs every year by Rs 2,000
Use extra income or bonus to invest
Don’t redeem investments unless very urgent
Plan SIPs for minimum 10 years
Use only regular mutual funds
Track capital gains as per tax rules
Tax rules you must know:
Equity mutual fund LTCG above Rs 1.25 lakh taxed at 12.5%
Short-term gains taxed at 20%
Debt funds taxed as per income tax slab
So, hold funds for long term always
Step 9: Get Proper Insurance Protection
Loans are a risk if anything happens to you.
Ensure your family is protected.
Action Plan:
Buy pure term insurance of Rs 50 lakhs minimum
Premium is very low
Do not buy ULIP or return policies
Take health insurance of Rs 5–10 lakhs
Prefer floater plan for family
Buy policy separately from job policy
Step 10: Create a Personal Financial System
To make your money work for you:
Write your monthly budget
Write your EMI, SIP and expense dates
Create financial folder for documents
Check credit score once every year
Review SIPs once a year with MFD
Don’t discuss goals only in mind. Write them
This gives you full control.
Finally
You are already on the right path.
Just take the next few steps carefully.
First clear your personal loan.
Then build your emergency fund.
Shift to regular mutual funds with proper help.
Keep home loan EMI as it is for now.
Later, start reducing tenure slowly.
By following this system,
you will be loan-free and wealth-rich in few years.
You are doing well. Stay focused and consistent.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
Question by Nageshwar on Oct 14, 2022Hindi
