I guess most of the doctors & lawyers will agree with me that, most of the cases we come across while practicing our profession are a challenge in themselves. The practical world is quite different from the theoretical stuff that we study. Though we may have done n number of case studies while preparing our exams but real life cases have their own dynamics & difficulties, because they are not just about passing an exam but about saving somebody’s life or money!

One distinct case which I came across & the solution which I could best think of are discussed herewith:

A gentleman named Raj (name changed); aged about 37 years had come to me. His wife, Reema (name changed), 35, is a housewife. They have two daughters Disha (name changed), 12 & Megha (name changed), 10. Rohit has a small business of his own. He always had the urge to earn big money. So he borrowed heavily to invest in business & even some part in stock markets. As luck would have had it & his inability to make the right decisions, his venture did not succeed & today he stands at a big amount of debt hovering on his head.

His current income from his small time business gets wiped off in household expenses & meager part of it is used to pay off the debt installments. But the debt burden is so huge that if his income remains at same levels then he might take another 30 years to pay it off. Apart from this, his major worry was that how would he accumulate money for his daughters’ marriage.

When he came to me with his these two problems, I told him not to panic; problems are a part of everybody’s life. Then at the cost of sounding blunt I even reminded him that it’s not only his daughters’ marriage but also his own retirement which he should plan. Agreed that due to debt burden he would retire late but it is due to happen some day as health would deteriorate. Imagine a situation, where (GOD Forbid) due to health problems he may have to stop working actively & hence his business closes down, then how will he source his income to take care of expenses & repay the debt(if it still persists)? Another important point was his insurance. The question is tomorrow if he dies, who will pay the debt? Hence adequate insurance is a must too.

It was like problems were plenty. So I suggested, let’s prioritize them & find solutions. The first & foremost thing was to take insurance. Hence I recommended him a term plan (cheapest life insurance solution) adequate enough to help his family maintain their standard of living & enough to repay his debt.
Then he thought the second most important thing is to accumulate for his daughters’ marriage. I just asked him; do you remember whose marriage you attended last? As in the name of the bride & the groom. He had no answer. He almost got my point but still I explained him that, why to think about splurging on marriages? Who anyway remembers them? Apparently the food, caterers & jewellery are more important than the bride & groom. Obviously one should celebrate the occasion, but should not go overboard about it, especially when one cannot afford. So I suggested that don’t worry about daughters’ marriage expenses, rather invest that amount in their education. If you cannot afford that too then there are various NGOs to help you for the same. Remember “Investment in Knowledge is the best Investment”. If his daughters’ will be educated enough then all other things will automatically fall in place.

The next question was his retirement planning. He would have needed X amount if at all he retires at XYZ age to sustain the post retirement phase. For that he would have to invest ABC amount every month to reach his goal. But as stated above, his current income could hardly manage to take care of expenses, how could he save & invest?

I suggested him, try to concentrate on your business, may be take up a course like part time MBA & empower your knowledge about your business & expand it, ultimately your income will increase, which will have answer to all your problems. So if business & hence income improves then, debt can be repaid faster, saving & investments can be started & after a point business can be left to be run by some one else & you can take voluntary retirement. It all seems rosy but will require your willpower & self motivation to take you there. Obviously I am with you throughout the journey as your friend, philosopher & guide to support you.

He appreciated my eye opener on Importance of education rather than marriage & promised that he would concentrate all his energies (time & effort, because money he tried before & could not afford it now) to his business & make it more successful. At the end I was satisfied too for the fact that, I could help my clients beyond their financial problems. Though his problems were related to finance, but their solutions were psychological. Hence in my entire article I have not mentioned numbers (apart from age) as I BELIEVE FINANCIAL PLANNING IS BEYOND NUMBERS!

This is the best solution I could think of for such a case. I would really appreciate if you readers have any other view about it. Do mail me your views.

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This entry was posted on Thursday, March 4th, 2010 at 1:31 am and is filed under Mukesh Dedhia's published articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.