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Ramalingam Kalirajan |10872 Answers |Ask -Follow
Mutual Funds, Financial Planning Expert - Answered on May 16, 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
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 - May 16, 2025
Dear sir, i have a personal loan of 28 lacs with emi of 70k, i hv no MF or other saving. I have a salary of 1.5 lac/month. How can i pay this loan as soon as possible..
Ans: You are earning Rs. 1.5 lakh per month. You are paying Rs. 70,000 as EMI. You have no savings or mutual funds. You are carrying a large personal loan of Rs. 28 lakhs. You are worried and want to close this loan soon. You are not alone. Many professionals go through this phase.
You are earning well. That’s your biggest strength now. You want a clear plan. That’s a very good decision. Let us now evaluate your situation in detail. Let’s move towards a solution, step by step.
Understanding Your Present Cash Flow
Your salary is Rs. 1,50,000 per month.
Your EMI is Rs. 70,000 per month. That is nearly 47% of your income.
You have no other EMIs or savings at this moment.
You are using the rest of Rs. 80,000 for your expenses.
You want to become loan-free as early as possible.
This intention is very good. Stay consistent with that.
Step 1: Evaluate and Trim Monthly Expenses
Write down every single monthly expense.
Split into essentials and non-essentials.
Try to reduce expenses by 20–30%.
Cancel unwanted subscriptions, upgrades, or luxuries.
Limit outings, dining, gadgets, and impulsive spends.
If you are living alone, shift to a modest house.
If you are supporting family, discuss financial goals together.
Try to save Rs. 15,000 to Rs. 20,000 more each month.
Your goal is to free up maximum cash flow.
Step 2: Create an Emergency Reserve
Loan EMI is high. So, you must plan for emergencies.
Keep 2 months’ worth of EMI and basic expenses aside.
That means around Rs. 2 lakh in savings account or liquid fund.
Do not touch this amount unless urgent.
It will protect your credit score during job loss or illness.
Build it slowly over 6–8 months.
Keep it parked separately, not mixed with other expenses.
Step 3: Prioritise Loan Repayment
Your main goal is to repay the Rs. 28 lakh loan quickly.
Use every extra rupee for part-payment.
Contact your bank to know prepayment terms.
Ask if there are charges for extra payments.
Try to part-pay every 6 months.
Even Rs. 1 lakh every 6 months can reduce tenure.
Avoid extending the tenure for short-term relief.
Focus on reducing principal, not EMI amount.
Never miss EMI. It affects credit and future loan options.
Step 4: Avoid Taking Any New Loan
Do not apply for car, gadget, or holiday loans.
Say no to top-up on personal loans.
Do not buy items on credit cards or EMI offers.
Personal loan is already a costly loan.
Your focus should remain on clearing it, not adding to it.
Step 5: Protect Yourself With Term Insurance
In case of sudden death, the burden shifts to family.
Take a pure term insurance cover of Rs. 1 crore.
Premium is low if taken at a younger age.
It will not return money but gives protection.
Avoid any endowment or return-based insurance now.
Keep insurance and investment separate always.
Step 6: Don’t Invest While Repaying Loan? No.
Many think they must repay the loan fully before investing.
But you are still young. Time is on your side.
Wealth creation also needs early action.
So, start small SIPs while repaying loan.
Begin with Rs. 3,000–5,000 per month if possible.
Gradually increase SIP with every increment or bonus.
Don’t wait for a “perfect time” to invest.
Discipline matters more than timing.
Step 7: Avoid Direct Mutual Fund Investing
Some people invest directly without guidance.
Direct plans have no human advisor.
Mistakes and panic are more likely without support.
Performance tracking, rebalancing, goal alignment is missing.
It may look cheaper, but it costs more in long term.
Better to invest through a Mutual Fund Distributor with CFP.
Regular plans give ongoing service and portfolio control.
That’s how you stay committed and consistent.
Step 8: Why Not Index Funds?
Index funds follow stock index without human skill.
They copy the market. They don’t beat it.
They lack flexibility during market crashes.
They can’t avoid bad stocks in index.
You need alpha, not average returns.
Actively managed funds offer better growth options.
Fund managers analyse and select best stocks actively.
This approach fits your goal better.
Step 9: Create a Bonus Utilisation Strategy
Use your annual bonus wisely.
Keep 10% for personal use.
Use 40% for loan part-payment.
Use 30% for emergency fund building.
Use 20% for starting or increasing investments.
This strategy balances loan and wealth building.
Step 10: Build Financial Habits
Set monthly bank auto-debit for SIP and savings.
Track spending weekly using a mobile app.
Read about financial awareness 15 minutes weekly.
Review your money goals every 3 months.
Reward yourself when you stay consistent.
Share progress with family or trusted friend.
Step 11: Stop All High-Interest Debt
If you are using credit cards, pay full amount monthly.
Never roll over or pay minimum due only.
Credit card interest is higher than personal loan.
Stop using credit card till loan is reduced.
Avoid payday loans, buy-now-pay-later, or fast cash apps.
Step 12: Plan For Next 3 Years
In next 3 years, aim to reduce 40–50% of loan.
Start investing alongside debt repayment.
Slowly reduce lifestyle expenses.
Make yearly part-payments without fail.
Increase income through part-time consulting or freelancing.
Even Rs. 10,000 extra income helps in early closure.
Step 13: Track Credit Score and Loan Behaviour
Download credit report every 6 months.
Keep your score above 750 always.
Never delay EMI even by 1 day.
Do not apply for too many loans or credit cards.
A healthy score keeps your options open in future.
Step 14: Avoid Mixing Insurance and Investment
Do not buy ULIPs, endowment or money-back plans.
These give low returns, long lock-ins, and poor liquidity.
Focus on mutual funds for wealth building.
Keep term insurance for protection.
Do not fall for “tax-saving + insurance” traps.
Step 15: Choose Right Mutual Fund Strategy
Select 2–3 equity mutual funds with growth track record.
Begin SIP with small amount like Rs. 3,000–5,000.
Choose regular plans via MFD with CFP credential.
Review performance yearly.
Invest for long term, not for short term gains.
Don’t stop SIP during market crash. Add more if possible.
Step 16: Discipline and Patience Are Game Changers
Becoming debt-free takes time and patience.
Avoid shortcuts or emotional financial decisions.
Be consistent with part-payments and SIPs.
Track your money monthly.
Reward yourself for milestones achieved.
Celebrate progress without spending more.
Finally
You are earning well. That is your best asset now.
Your loan is high. But it can be reduced with discipline.
You need a plan. You now have it.
Cut expenses. Start saving. Make regular part-payments.
Also begin investing. Even with small amount.
Don’t delay building wealth.
Don’t wait till loan is over.
Take term cover. Avoid credit traps.
Invest through mutual funds with CFP and MFD.
Avoid index funds. Avoid direct plans.
Stay on track. Review progress yearly.
You will win over time. You have already taken the first step.
Keep walking. Stay focused. Stay steady.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
You are earning well. That’s your biggest strength now. You want a clear plan. That’s a very good decision. Let us now evaluate your situation in detail. Let’s move towards a solution, step by step.
Understanding Your Present Cash Flow
Your salary is Rs. 1,50,000 per month.
Your EMI is Rs. 70,000 per month. That is nearly 47% of your income.
You have no other EMIs or savings at this moment.
You are using the rest of Rs. 80,000 for your expenses.
You want to become loan-free as early as possible.
This intention is very good. Stay consistent with that.
Step 1: Evaluate and Trim Monthly Expenses
Write down every single monthly expense.
Split into essentials and non-essentials.
Try to reduce expenses by 20–30%.
Cancel unwanted subscriptions, upgrades, or luxuries.
Limit outings, dining, gadgets, and impulsive spends.
If you are living alone, shift to a modest house.
If you are supporting family, discuss financial goals together.
Try to save Rs. 15,000 to Rs. 20,000 more each month.
Your goal is to free up maximum cash flow.
Step 2: Create an Emergency Reserve
Loan EMI is high. So, you must plan for emergencies.
Keep 2 months’ worth of EMI and basic expenses aside.
That means around Rs. 2 lakh in savings account or liquid fund.
Do not touch this amount unless urgent.
It will protect your credit score during job loss or illness.
Build it slowly over 6–8 months.
Keep it parked separately, not mixed with other expenses.
Step 3: Prioritise Loan Repayment
Your main goal is to repay the Rs. 28 lakh loan quickly.
Use every extra rupee for part-payment.
Contact your bank to know prepayment terms.
Ask if there are charges for extra payments.
Try to part-pay every 6 months.
Even Rs. 1 lakh every 6 months can reduce tenure.
Avoid extending the tenure for short-term relief.
Focus on reducing principal, not EMI amount.
Never miss EMI. It affects credit and future loan options.
Step 4: Avoid Taking Any New Loan
Do not apply for car, gadget, or holiday loans.
Say no to top-up on personal loans.
Do not buy items on credit cards or EMI offers.
Personal loan is already a costly loan.
Your focus should remain on clearing it, not adding to it.
Step 5: Protect Yourself With Term Insurance
In case of sudden death, the burden shifts to family.
Take a pure term insurance cover of Rs. 1 crore.
Premium is low if taken at a younger age.
It will not return money but gives protection.
Avoid any endowment or return-based insurance now.
Keep insurance and investment separate always.
Step 6: Don’t Invest While Repaying Loan? No.
Many think they must repay the loan fully before investing.
But you are still young. Time is on your side.
Wealth creation also needs early action.
So, start small SIPs while repaying loan.
Begin with Rs. 3,000–5,000 per month if possible.
Gradually increase SIP with every increment or bonus.
Don’t wait for a “perfect time” to invest.
Discipline matters more than timing.
Step 7: Avoid Direct Mutual Fund Investing
Some people invest directly without guidance.
Direct plans have no human advisor.
Mistakes and panic are more likely without support.
Performance tracking, rebalancing, goal alignment is missing.
It may look cheaper, but it costs more in long term.
Better to invest through a Mutual Fund Distributor with CFP.
Regular plans give ongoing service and portfolio control.
That’s how you stay committed and consistent.
Step 8: Why Not Index Funds?
Index funds follow stock index without human skill.
They copy the market. They don’t beat it.
They lack flexibility during market crashes.
They can’t avoid bad stocks in index.
You need alpha, not average returns.
Actively managed funds offer better growth options.
Fund managers analyse and select best stocks actively.
This approach fits your goal better.
Step 9: Create a Bonus Utilisation Strategy
Use your annual bonus wisely.
Keep 10% for personal use.
Use 40% for loan part-payment.
Use 30% for emergency fund building.
Use 20% for starting or increasing investments.
This strategy balances loan and wealth building.
Step 10: Build Financial Habits
Set monthly bank auto-debit for SIP and savings.
Track spending weekly using a mobile app.
Read about financial awareness 15 minutes weekly.
Review your money goals every 3 months.
Reward yourself when you stay consistent.
Share progress with family or trusted friend.
Step 11: Stop All High-Interest Debt
If you are using credit cards, pay full amount monthly.
Never roll over or pay minimum due only.
Credit card interest is higher than personal loan.
Stop using credit card till loan is reduced.
Avoid payday loans, buy-now-pay-later, or fast cash apps.
Step 12: Plan For Next 3 Years
In next 3 years, aim to reduce 40–50% of loan.
Start investing alongside debt repayment.
Slowly reduce lifestyle expenses.
Make yearly part-payments without fail.
Increase income through part-time consulting or freelancing.
Even Rs. 10,000 extra income helps in early closure.
Step 13: Track Credit Score and Loan Behaviour
Download credit report every 6 months.
Keep your score above 750 always.
Never delay EMI even by 1 day.
Do not apply for too many loans or credit cards.
A healthy score keeps your options open in future.
Step 14: Avoid Mixing Insurance and Investment
Do not buy ULIPs, endowment or money-back plans.
These give low returns, long lock-ins, and poor liquidity.
Focus on mutual funds for wealth building.
Keep term insurance for protection.
Do not fall for “tax-saving + insurance” traps.
Step 15: Choose Right Mutual Fund Strategy
Select 2–3 equity mutual funds with growth track record.
Begin SIP with small amount like Rs. 3,000–5,000.
Choose regular plans via MFD with CFP credential.
Review performance yearly.
Invest for long term, not for short term gains.
Don’t stop SIP during market crash. Add more if possible.
Step 16: Discipline and Patience Are Game Changers
Becoming debt-free takes time and patience.
Avoid shortcuts or emotional financial decisions.
Be consistent with part-payments and SIPs.
Track your money monthly.
Reward yourself for milestones achieved.
Celebrate progress without spending more.
Finally
You are earning well. That is your best asset now.
Your loan is high. But it can be reduced with discipline.
You need a plan. You now have it.
Cut expenses. Start saving. Make regular part-payments.
Also begin investing. Even with small amount.
Don’t delay building wealth.
Don’t wait till loan is over.
Take term cover. Avoid credit traps.
Invest through mutual funds with CFP and MFD.
Avoid index funds. Avoid direct plans.
Stay on track. Review progress yearly.
You will win over time. You have already taken the first step.
Keep walking. Stay focused. Stay steady.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment
DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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