Live the life King Size not with Loans - 2

In the last article we had seen about the loans and credit cards, in thisarticle we will see about how these EMI's are coughing up pur lives if not paid properly.

Life had become an EMI

Let us see the number of loans available in our lifetime to live an easy life,

• Education loan
• Personal Loan
• Credit card
• Home Loan
• Reverse Mortgage loan

For many EMI starts in their life with education loan, once the education is completed it then turns to getting a job and closing out this education loan. Life becomes a full circle once you get money in your hand and the immediate joy would be to buy things which we have longed as a teenager and start splashing money.

Now once the education loan is closed, thoughts move towards taking a personal loan as the credit card EMI’s has become a huge hill from being a mole as monthly expenditure had increased gradually. Now paying this personal loan due will be a regular expenditure and once this is about to get closed, marriage comes across and obviously the personal loan needs to be taken to have an above average marriage among peers.

Now being a family once we start a new life, new home needs new things and those EMI’s get added to monthly budget. Life gets moving all these days, slowly with kids and with family and peer pressure we are forced to buy a home. Absolutely this will also be above our buying capacity as we have home loans to cater. This home loan will take around 20 years to close and we never think about other luxuries until we close this. Now at the time of closing we would have reached near our retirement life and have kids who had grown reaching the college or finished their college.

Again no worries, we have reverse mortgage loan which is easy to obtain to have the retirement life as easy as you have wished. Based on the net worth of the home you can get a lumpsum or spread out across the years as you wish, once your lifetime is over the lender will take over your home. The only condition is that you need to maintain your home in good condition and any changes should be informed to the lender in advance.

Now looking back in whichever stage you are now, it is easy to completely live the life you had thought off in loans or financially stable and luxurious life.

Risk of living this life with loans:

It is easy to live this kind of life as you have loans available in each stage of life, but the only risk is that if there is any medical emergency for yourself or your closed ones at any stage of life. Further when you are living on loans you can thrive to go to next stage of luxury by crawling, but when you are living a EMI free life, you can get things which was an aspiration once and have vacations which you have never thought off in your life.

   

Easy way to get rid of Loans

The only way to get a financial discipline in your life is to, start a recurring deposit so that you are saving some amount every month, once you have accumulated an emergency fund you can start planning to invest via equity mutual funds,

Monthly investment of 1000 over a period of 5 years can give you around one lakh which is difficult with any other type of investment. By getting a loan, you would have ended up paying the same amount to any of the lender as interest.

Live the life King Size not with Loans

                                                 

     

Many of the Youngsters never think of the future and live the present including the newly married. You will not be able to sell any product except tax savers as they pay for all the bills in the first week and rely on credit card for the whole month. We can discuss here about these and make you to take a right decision. Don't wait for fat paycheck to start your savings or investments, start saving from your meager income itself, let us go through on how to achieve it. You would have heard many tips already and read through many articles on the same, so am not going to list down points to follow or prepare a excel sheet to make your budget for a month, let us do a common analysis and try to follow a simple exercise and see if it works.

Many of us dont even think about the interest part while taking personal loans, everyone of us are happy that we are getting money immediately and paying off in easy EMI's. Let that be buying home appliances, bike or anything we tend to buy things in easy EMI’s. Every last week of the month will be difficult to go through with less amount or swipe in credit cards which needs to be paid once the salary is credited to your account. This cycle continues and over the time we are not sure on how to get out of this vicious cycle.

Before going through ways to have a better financial life, below products should be touched upon only when it is really essential in your life and not in any other circumstances,

Credit card:

Credit card and its effects on our spending habit has been discussed in detail in our earlier article, thus it should be used only when it is essential and not more than 10% of your credit limit should be used for purchases. All credit card companies will lure with cash back offers and 0% EMI, but it is upto you to decide on whether to get it and spend. Interest rate of credit card is higher and many may tend to argue that you are paying your dues every month but the luxury can be limited and bought only when needed and can buy by paying in full.

Personal Loans:

Your pay slip and credit card in some of the cases are more than enough to get a personal loan and there are many people outside your companies offering these loans like vegetable nowadays. Many living the days with monthly salary tend to get things with these personal loans which are easy to get, many marriages and many important functions are happening with this personal loans. Though there are many positive things with this loan there are some options which can be explored if any careful planning or our search towards better financial life would have lead us to better path.

Unlike Home loans which can be used for showing for taxation under Section 80 C, this does not have any benefits. Though Tax saver mutual funds offer the best returns as well as can be shown for taxation.

To be continued in our next article....