Cleared your home loan? here’s what you can do next
It’s time to celebrate when the home loan is finally paid off after years of servicing EMIs, or equated monthly instalments. There is jubilation, and relief. After all, the house is finally (technically and financially), yours. What next? Your home loan is over. That means you now have surplus money left over each month in the absence of EMIs. What should you do with that money?
Unless you love real estate, you may not want to take another home loan and repeat the process. Don’t get me wrong. If you think that it is right to invest in real estate again, then go ahead. It’s your money, your call. But what should you do if you don’t want to borrow again?
Being a Sebi-registered investment adviser (RIA), let me first put on my advisory hat and then, later, a more friendly one.
It may sound boring but I have to say this. Most of you have heard about why having an emergency fund can be a life saver. And if you already have one in place, then skip reading this paragraph and move on to the next one. But if your emergency fund is not properly funded, then this is the first thing to tackle with the new found surplus. The minimum that you should aim for is one having at least six months’ worth of basic expenses as your emergency buffer. If your basic monthly expenses are ₹50,000, then gradually put up an emergency fund of ₹3 lakh. If you are a single earner, have many dependents, and work in a sector where the job stability is lower, then get a bigger emergency fund please.
What next? Go after high-interest loans and credit card debts. Your personal loans are charged an interest of about 15% or more. And credit cards charge a monstrous 35-40% a year! So, use the surplus from the EMI money to start clearing these if you have
Read more on livemint.com
