Is debt bad?

We have seen finance experts like Dave Ramsay tell us to cut up our credit cards. We have seen how delinquent home loans not only caused people to lose their homes but also a systemic crisis that spread across several financial institution and countries during 2008. Repossessed cars and two wheeler are common in many low income households. To add to this trouble student loan defaults have become high all over the world as the income opportunities often don’t match up with the cost of some of these courses.

So is debt a bad thing? Should we indeed cut up credit cards? Save for 15+ years to buy a home. Never take a loan in our life?

From Shylock of ‘Merchant of Venice’ to today’s bank that offer Personal loans and credit cards with dubious terms the bankers have been portrayed as Vultures. It is often joked ‘Banks will only lend money to those that don’t need them.’. Are these Financial institutions just vultures that serve no real need?

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Why thrifty saving is not the same as investing

‘A penny saved is a penny earned’ is an adage you will hear so often that its sheer repetition will make you believe it to be true. But is it really true? Sure, money not spent right now is sitting to be spent on something else later. Economics defines this as opportunity cost. But in this article, I am going to argue against ‘thrifty saving’ as a way to ‘grow your money’ or to ‘get and live rich’. Continue reading Why thrifty saving is not the same as investing

Book Summary: The Richest Man in Babylon

This is one of the oldest books on investments and personal finance that has survived time and covers all the basic knowledge required for a beginner wealth builder. The fable covers simple advice to start wealth building to most common mistakes committed by those in their journey to financial independence.

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Book Summary: Automatic Wealth – Michael Masterson

automatic wealth
Automatic Wealth

Buy the book here: Automatic Wealth: The six steps to Financial Independence

A book of the title ‘Automatic Wealth‘ is sure to get interest from many, however the this is no get rich quick with no work book. Some specific advice in the book, revolves around USA, however the basic premises of the book is applicable across countries and markets.

The book breaks down the process of wealth building into six steps:

Six Steps to Automatic Wealth:

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Everything you need to know about life insurance (incl if you need it at all )

Life Insurance in India

India has one of the lowest penetration of life insurance of under 3.5 %. But many of us have a number of policies for which we dutifully, pay premiums every year but don’t know for sure if we it is useful or not. Even as a finance professional, I have made a number of those rookie mistakes, so I can totally understand how gullible one can be to those pitches.

So let us examine, some basic questions to help us guide through these decisions.

What is insurance?

Insurance contract ensures the policy holder is compensated for his loss when a certain event happens. So extending this definition, we can say a life insurance is a monetary compensation for loss of earning potential due to death or disability.

This simple definition provides us all the necessary understanding required to evaluate a policy. So let me try and break this done into a checklist.

Benefits of Term Insurance
Benefits of Term Insurance

 

Continue reading Everything you need to know about life insurance (incl if you need it at all )

Four Steps to Setting and Achieving Your Financial Goals

Financial Goals

This is Part of our Personal Finance Education Series. You can check Part I, Part II, Part III, Part IV here.

From our expenses Account, we know how much money we spend/need every month. We also know where we stand today in terms of wealth, from calculating our Net worth. The next step is to know where we need to go

What are your short term and long term Financial Goals?

Money is only a means to get somewhere. Instead of simply saving money for the sake of it, we need to clearly define goals against which want to save money for.

Financial Goals
Financial Goals

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What is your Networth?

Forbes list of Billionaires and their net worth never fails to gather interest of one and all. We often read with great interest, news that ‘Mukesh Ambani ‘s net worth is 36 B USD, Sachin Bansal is over $1 B USD etc. Let’s explore what this means and why it is important.

What does a Net worth Mean?

Net worth is the net of what you own over what you owe, i.e Assets over the liabilities. For a company this information is captured in the Balance Sheet and is updated at the end of an year.

Why is Net worth Important?

While your personal Income and Expenses statement that we earlier saw captures your current earning, spending and savings on a monthly basis, Net worth is the end result or your progress card of how well you have done so far with your Income and Expenses.

Your Personal Balance sheet/Net worth is an indicator of your resilience to impact in your earning ability. This is why bank’s ask for surety when they extend a loan.

Networth
Networth

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Where is my money, honey ?

Money Thoughts:

Have you wondered “I’ve been working for nearly a decade or more now. How is it that my Zero Balance Salary account is stuck forever at that ‘Zero Balance'”

“I started my career with a salary close to what my dad retired with, and in spite of all the generous increments and all these years of hard work I’ll probably own nothing more than what he did when he retired and to top it all I don’t even have a pension”

I dont know
“It’s only 5th, how come it’s showing zero balance again”

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The one habit that enabled me to quit my job and become my own boss

Good habits are, often over a period of time, the difference between a roaring success and a crashing failure. Good habits make things possible by setting you in the right direction step by step instead of a whimsical leap of faith. But, there are often habits that once practised and reviewed, DO help you take that leap of faith! One such habit helped me quit my day job, eventually freeing up my time for working on the kind of projects that I had always wanted to work on and do things that I had always wanted to do without worrying about leaves. In this post, I help you discover what that habit is and how much it can liberate you to follow your long put-off dreams.

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