It is said that one can learn from other's mistake. Nobdoy actually need to fall from 10th floor to learn consequences. Luckily, Indians are not badly exposed to subprime. But, since last decade there is a sharp increase in spending and using credit cards. People need to follow certain rules to make sure they play safe. 1. Use credit cards as ur personal accountant who lets you know how much you spent last month! Do not spend more than you can pay in the next month. Review your statement to work out where you could have saved some expenses. 2. Do not get loans that stretch your monthly spending and try to avoid longer durations. General tendancy is to spread the cost over longer duration to make your monthly budget easier. But the catch is you "Pay back lot more" and you are stretched over a longer period of time. You may have to consider what is affordable to you now and in future. 3. Make at least 20% savings every month. It helps in crisis time. 4. Plan ur future requirements. e.g. higher education expenses for child in 10 years. 5. This long term money can be invested in MFs, stcoks etc. u can earn far better returns in equities if u invest in longer terms. markets suddenly crash or surge. But, this shouldn't make much difference to ur plans. 6. Do not put money in stock exchange for short term! u may earn in 10 instances, but just 1 instance can wipe out all of your savings! Also if u had not taken out that money 10 times, u would have earned far better returns!
RE:This is a good lesson for Indians
by Pruthvi Simha on Feb 06, 2008 09:28 PM Permalink
nice one - well said and just to add a point if u r paying interest of 9 % u will end up paying double the amount u took in around 8 to 10 years
RE:This is a good lesson for Indians
by Rajendra Tapadia on Feb 06, 2008 10:32 PM Permalink
Wise advise.. Thanks. However most of IT/ITES folks spend money without thinking of saving for rainy days... God save such breed.
