How I achieved the dream of a own house & became debt-free by 36

Published: July 2, 2020 at 11:50 am

In this edition of reader story, Kannan Hariharan describes his financial journey from humble beginnings to buying a house, becoming debt-free and starting as a goal-based DIY investor. His journey has several lessons on home-buying and goal-based investing.

Editor’s note: Kannan had posted an insightful comment on Youtube in response to my Tamil video on buying a house. I requested Kannan to share his journey with freefincal readers. I thank him for readily agreeing. To preserve the emotions of the author’s journey, reader stories are published in an as-received informal tone.

About reader stories: In this category, we showcase the money management experiences of readers. Check out some popular articles: What 25 Years of Tracking Expenses Taught Me; I achieved financial independence at 35: My journey and lessons and We lost sleep after using a retirement calculator! This is how we recovered. Explore the full reader story archive. Do contact us, if you have a story or know of a friend’s story that the DIY community would benefit from.

I was born in a small village near Madurai in a lower-middle-class family. I’ve done schooling in Vivekananda Gurukulam, during the class of 10th my father passed away, and my family survived many painful hurdles. My mother was a homemaker and supported us via home food preparation. My younger sister and I couldn’t plan and continue the Higher secondary. With all my relations, Education trust support, I had completed my Diploma(we relocated to Madurai).

At my place there is a saying to develop yourself and stand on in your own as an independent, we MUST have either one: 1 Money;  2. Connections with wealthy people and have a voice in society;  3 Education. As I didn’t have any choice, I picked option three and very much curious to have my study go in the right path and get it done.

Post which I started my career (not exactly as like now) in the year 2002, in the small company for Safety systems sales and service. This was a first experience to travel and connect with the real external world, worked in major constructions to have burglar alarm fixed(mainly in Big Temples, Hospitals) and somehow with good faith, I entered as an On-Job Trainee to an IT industry in 2003 at Madurai.

During the time, the company planned to be an MNC(now it is) I had put down all my hard work in an efficient way, towards learning along with experience. I encountered travel to lot many places around the southern part of TN and prolonged for a year.

With my education scores and hard work, I had joined as a regular employee in the same company and Transferred to North India(UP, Bihar, Delhi). During the 4-5 years, I had stayed along with other state colleagues (helped a lot to improve in Communication, learn other languages, cultures. Had good trips around North/East India). This real-life experience turned up to Personal development, promotions, salary hike, Other IT certifications towards journey with more connect.

With my two years of continuous try(so many failed due to 2008 crash) and finally joined in Chennai in US-based MNC in 2009. The only savings I had was the mandatory PF deductions, one LIC Jeevan Beema Gold. Until this, I never had any choice or a possible way for investments in any other type.

In the new workspace, I have undergone so many business-relationship training and matured enough to have Knowledge Transfer. During the time I had seen, my co-worker met with a severe accident and the for the first time in my life. I realized the importance of Health Insurance. I had ensured for me and Mother are covered enough from the employer and additional third party as well in the year of 2011.

My peers struggled due to personal Loans EMI due to Marriage, other goals expenses. I had planned(since I had 2-3 years for my Marriage) and my mindset clear – Not to avail any loan and all from Debit(few credits from sibling/friends). I also avoided unnecessary expenses due to new lifestyle change and adoption from MNC, and lead to some good debt to put towards education (I had completed B.E through Parttime with University Topper and continued my education journey till M.E as of now).

During this period, as usual, my portfolio was full of fixed income options with EPF, NSC’s/few LIC policies(referred by my Sister’s In-Law) to avail Tax savings on yearly. I didn’t have an emergency fund or liquid(my aim to use it for Marriage/my own studies).

In addition – my mom’s lifetime goal to have own house to live, and this was my thought to return her for all her hard work, Sacrifice of Single parenting to manage all of the family(she managed for my sis marriage expenses) until my first work/salary. As a single earning person to have all my goals attained, I segregated with priority in terms of goals nature, start with studies(company-sponsored for my UG education), Marriage, House…etc. I had planned my savings which will be approx. 30-40% equivalent of my expenses and maintained to accumulate. This was made me disciplined in nature of savings and have envisioned of expenses for upcoming(exclude of emergency can’t be in nature to predict).

In the Year 2012 at age 28, when I got married, I was B.E final year parttime student. I used a few NSC’s and FD’s to fulfil marriage expenses without any liability as my wife is a Homemaker and fully capable of doing/self manage all things by nature including good parenting at home(My daughter was born in 2013), Which supported me to complete my thurst to fulfil my Masters Graduation in Engineering.

Post my Marriage. I was planning to have a Lifetime goal to fulfil with own house – Unfortunately, I couldn’t accommodate to plan for Individual home, rather I had thought for Flat @ Chennai in the Year 2013. With all remaining NSC’s, remaining accumulated surplus I had availed a Homeloan for 15 Years(I was just six months married) and all my relations/In-law’s are astonished why this required and planned now? But I was made very clear I MUST have to close all my liabilities(at least major) before I turned up 40 since my kid’s education will turn up.

With the home loan started, I set the expectations to wife/family and are encouraged/fully supported to avoid unnecessary lavish expenses/no BIG purchase. I had planned the for EMI to ensure for upcoming months(once my loan sanctioned, I availed some free lockin period of 6 months not to pay EMI from next month, I used this opportunity to accumulate as much for future EMIs) and even small bonus or credit, I used to close from loan principle.

This self-discipline made me maintain the consistency in terms of payout of loan and not miss EMIs. Due to high in Interest(~9-10%) of the home loan, I had used my old EPF, gratuity and superannuation contributions, few Gold jewels, along with surplus to pre-close my loan successfully at the age of 36.

But unfortunately, I had no chance of looking in Equity as an option for investment. The bitter truth is until I’m part of this Freefincal DIY, I didn’t have any clue of Inflation and how it impacts expenses.

Now I’m quite late for Retirement Planning, Child education and other goals, and I’ve overrunning of Fixed income than Equity. Since last year, I had thought through for the equity options(too late for me at this age group) and have few Regular MFs through market brokerage(somehow trimmed to 2 Funds). With this Freefincal Personal finance and DIY, I have started in Direct MFs.

With this new learning of Personal finance management checklist, very recently I had availed Pure Term Life insurance(with high Premium at the age factor and picked Insurance choice from your article) and move on to Direct funds(your FAQs helped to have a good understanding of base and viewpoints).

I had thought many times, why personal financial management aspects are never part of any of our education syllabus, and unfortunately middle-class family doesn’t have any clue and reluctant to start looking for options other than fixed income.

I hope with this younger generation, and new earners will definitely use like this forum to look and shape themselves, enrich in knowledge to reach desired goals.

With this my own Self Learning (past 17 years) of a few aspects of personal finance management, it is a MUST to be self-aware. This is very much required to have knowledge pass on to our kids/next generation, to enable them with FULL confidence to stand on OWN comfortably. I always believe in knowledge, and it’s a BIG Wealth.

From the bottom of my heart a Big Thanks to you Sir, to make awareness especially in middle-class people like me, to understand the importance of goal-based approach, Strat investing with discipline will beat most of fear and INFLATION (very big animal), help to avoid sleepless nights… etc.

Your knowledge sharing and way you put down the things in the table as a fact, it’s really amazing. Keep up your good work, Sir!!!! Happy to part of the DIY family —  Kannan

Editor’s note:  Thank you, Kannan, for readily sharing your journey. I think everyone who reads this would agree that your personal financial compass is pointed in the right direction. Having realized the importance of what your goals are and what is necessary to achieve them, with time and discipline, I have no doubt that you would achieve them. I wish you all the best.

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About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various topics of money management. He is a patron and co-founder of “Fee-only India” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations on the basis of money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements write to pattu [at] freefincal [dot] com
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