Home >money >personal-finance >‘I had 13-14 credit cards, but now I have none’

Difficult times helped Dr Nasim Akhtar, a neurosurgeon based in Kolkata, sharpen his financial perspective. In 2006-07, he was managing his family’s construction business as well as practising medicine. In 2012, he suffered a heart attack and recovery took almost nine months. Nasim was worried about his family—wife Parveen Akhtar, 42; elder daughter Sidra, who is 18 now; and younger daughter—12-year-old Rubain. “I am a spendthrift. When our second child was born, I realised that I won’t be able to save for her on my own," he said. This is when he took the help of financial planner Uttam Kumar Sen.

Sen’s questions about plans and goals helped Parveen and Nasim narrow down what they wanted from their money. Their main long-term plans were their daughters’ education and retirement. But to be able to effectively plan for these, some short-term adjustments were needed.

Tough decisions

To start with, the couple took a hard look at their expenses and high debt. “For example, we used to go for a holiday every 2-3 months. I also used to spend a lot on clothes and accessories," said Nasim. He had 13-14 credit cards. “I paid off all the dues and closed all these credit cards. I don’t have any credit card now. I use cash or debit card," said Nasim. Their expenses and spending are still reviewed every 3-4 months.

The aim was to reduce debt, and channel whatever was saved to increase investments. Parveen and Nasim know fully well that if they wish to fulfil their goals of children’s education and retirement, increasing investments is necessary. “As of now, I invest about 30% of my income every month. I want to save 50-60%," said Nasim.

Along with an increase in investments, the family’s insurance was also enhanced in the form of a comprehensive health cover, disability cover and term life plan. Nasim has also built an emergency fund.

“Some expenses have been cut to invest in mutual funds instead," said Nasim. Their investments are distributed between equity and debt funds, depending on the time horizon of various needs. One such need is managing a home loan (they have received possession of the house and plan to move into it soon instead of living on rent, as they currently do). “Sen advised us to take  a home loan (₹ 25 lakh) as it would be more beneficial to invest the money we would have used to buy," said Nasim. However, he wants to pre-pay it “in about 3 years". “Since I tend to spend a lot, I was advised to instead create a house fund to pre-pay the home loan," said Nasim.

Parveen wanted to buy another house, but they were advised against it as it would stretch their income too thin and the portfolio would be real estate-heavy. Parveen feels that having two houses—“one for each daughter"—would make her feel more secure.

The family wants to travel abroad every three years or so. To cater to this, they have reduced their short-duration holidays that they used to take every 2-3 months. Nasim also plans to keep only one car instead of two.

While the couple’s financial plan is work in progress, they are confident of the direction they have to travel in. “A planner is like a radar. He will know where you are and where you need to go," said Nasim. Parveen may not be intricately involved in the financial plan but she is happy with the way things are proceeding.

With an eye on increasing investments, the Kolkata-based couple is ready to do what it takes.

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