I am 40 years old and run a clearing and forwarding business. My wife, 36, is a home maker. I have a son aged 11 and a daughter who is 7 years old. My business was flourishing till a few years back. When I expanded operations in the initial period, it was going well, but in the last one year I have accumulated a huge amount of debt. My cost of borrowing in some cases was as high as 48 per cent a year.

I have taken personal loans with a few banks to the tune of Rs 12 lakh and gold loans with a few banks and NBFCs to the tune of Rs 6 lakh. Besides these, I borrowed Rs 5 lakh. Because of the high debt, I am borrowing every month to pay the interest.

I have a flat worth Rs 32 lakh and a plot worth Rs 5 lakh. I have a share of Rs 30 lakh in family property and another Rs 10 lakh from my wife’s side.

I let out the flat to an influential person. Now he is not vacating and is asking me to sell the flat at discount to market price. I have issues in land sale also. How do I repay this debt and save for my children’s education, their marriage and my retirement?

— Adhikesavan (name changed on request)

Filing a case against the occupant will lead to delays. Moreover, with the recent steep hike in the guideline prices, we are not sure whether you have let your property in line with the fair or standard rent rates.

Any legal proceeding will also lead to more complications. Settle the tenant issue with common friends at the earliest even if it means selling your house at a little less the market price.

Alternatively, try and sell the plot and clear your high interest borrowing to get temporary relief.

Second, request your relatives to either allow you to sell your share in the property or give cash equivalent.

If these steps don’t work, raise loan with your relatives equivalent to the gold loan on NBFC and high interest personal loan. This will help you to stop fresh borrowing.

On the business front, you need to cut the manpower or you need to slash the non-core business activity till you get back to profits.

Try to bring in a partner with deep pockets to support you.

Take a health insurance policy through your credit card and pay the premiums in quarterly mode. Buy term insurance cover for Rs 1 crore.

Assume that your son needs Rs 4 lakh in present value for his higher education. After seven years it will be Rs 6.4 lakh considering inflation of seven per cent. To reach the target you need to save a sum of Rs 4,940 for next 84 months. At the same inflation, your daughter’s higher education cost after 11 years will be Rs 8.4 lakh. To reach the target you need to save a sum of Rs 3,090 for the next 132 months. For her marriage you may need Rs 31.5 lakh, if the present value of Rs 10 lakh is inflated at 7 per cent. To reach the target you need to save monthly a sum of Rs 4,780 for next 204 months.

By clearing Rs 5 lakh loan which is borrowed at high cost, your surplus will increase. This can be useful in meeting three goals. Once your business prospects improve, start saving for your retirement.

>Mail your queries to fp@thehindu.co.in

(The author is CEO, >myassetsconsolidation.com )

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