My name is mushataq ahmad 47 years of age having solitary daughter aged around 15 years .I have my own ancestral home I have monthly income of 25 thousand rupees and further having a liability of 13 lakh of banks how to get rid of that
Ans: You are 47 years old, with a 15-year-old daughter. You have an ancestral home and a monthly income of Rs 25,000. You also have a bank liability of Rs 13 lakhs.
Evaluating Your Financial Situation
Income Analysis: Your monthly income is Rs 25,000. We need to allocate this wisely.
Debt Concern: The bank liability of Rs 13 lakhs is significant. Reducing this should be a priority.
Future Planning: Planning for your daughter’s education and your retirement is essential.
Steps to Reduce Debt
Budgeting: Create a monthly budget. Track all your expenses and identify areas to cut costs.
Debt Repayment Plan: Allocate a fixed amount each month towards loan repayment. Consistency is key.
Prioritise High-Interest Loans: Focus on repaying loans with the highest interest first. This reduces the overall interest burden.
Boosting Income
Additional Income Sources: Look for additional income opportunities. Part-time jobs or freelancing can help.
Skills Upgrade: Consider learning new skills. This can lead to better job opportunities and higher income.
Investment Strategy
Emergency Fund: Maintain an emergency fund. This should cover 6 months of expenses for unforeseen circumstances.
Systematic Investment Plan (SIP): Start SIPs in actively managed equity mutual funds. These offer potential for higher returns.
Public Provident Fund (PPF): Invest in PPF for long-term savings. It offers tax benefits and guaranteed returns.
Avoiding Index and Direct Funds
Actively Managed Funds: These funds have professional managers. They make strategic decisions to maximise returns.
Regular Funds Through CFP: Investing through a Certified Financial Planner ensures expert advice and better fund selection.
Education Planning for Daughter
Child Education Plan: Start a dedicated fund for your daughter’s education. Regular contributions will grow over time.
Scholarship Opportunities: Explore scholarship options for your daughter. This can reduce future education expenses.
Retirement Planning
Retirement Fund: Start a retirement fund with long-term growth investments. SIPs in equity mutual funds can be effective.
Review Existing Policies: If you have LIC or ULIP policies, evaluate their performance. Consider surrendering underperforming policies and reinvesting in mutual funds.
Managing Expenses
Frugal Living: Adopt a frugal lifestyle. Prioritise needs over wants.
Avoid Unnecessary Debt: Avoid taking on new loans. Focus on clearing existing liabilities first.
Closing Remarks
Reducing debt, increasing income, and strategic investments will improve your financial health. Regular reviews and adjustments are key to staying on track.
Best Regards,
K. Ramalingam, MBA, CFP,
Chief Financial Planner,
www.holisticinvestment.in
