Sunila walked out of the debt counselor’s office in a pensive mood. She had accompanied a close friend of hers for moral support. Her friend Divya had actually opted for the services of a debt counselor having run into some financial trouble and some pending loan dues.
After dropping Divya at her apartment post a cup of hot masala chai at their favourite hangout, Sunila realized she had to make a fresh start herself to get her finances in order. The discussions in the debt counselor’s office was like an eye opener.
Her husband Shekar had gone abroad for a short tour on the work front. After the client visits she knew her husband was spending most of his time indoors as it was pretty cold out there at that time of the year in Switzerland, where he was camping. She realized “now” was a better time as any for him to give this a lot of thought.
She decided to send him a mail right away, lest her resolve should get melted in the rigours of routine daily life. This was what was happening currently – they were taking one day at a time, oblivious to what tomorrow will hold, when the larger picture could prove to be a real shocker, when at the verge of their retirement they discover they do not have the funds to spend the rest of their lives not working!!
So her letter ran thus imbibing the “pearls of wisdom” she gathered at the counselor’s. ( As this is an informal mail, please note all figures mentioned are in Rs., L denotes lakh and k denotes thousand)
An excerpt from Sunila’s mail to Shekar :
“I now rue the way we have wasted options.
When we got married, our combined income was 60k…our loan eligibility (if we had opted for a home loan) was around 30 L with about 10k left to run the home after paying the rent of 7,000.
We could have easily set aside that assumed EMI of 30 K every month and at the end of 2 yrs or 24 months…we would have had around 7.20 L as savings or as down payment if we then had opted for a home loan!
However its never too late to start thinking about some financial goals! So now we must estimate that as a loss to be regained in our further investments. So how do we go about this? We should seriously consider a 75% -25% ratio in our debt and equity investment ratio.
This is the only way we can catch up on the option we lost out and also gives us the option of making some miracle money while we are young, salaried and fit to face some ups and downs in terms of financial losses. After we earmark our retirement age, then we can slow down this accelerated run to a slow paced walk as we near our deadline to retire!
Sounds good? Let us sit down this weekend or tonight when I catch you on chat, if you are up for it to discuss how to plan this. If we put this off now, then it is never going to happen.
Nearly 60% of my income currently has gone into savings these past two months, which I have consciously started only recently. However due to unexpected expenses for which 10% has gone, we should at least have the remainder of 50% of the savings .
Let’s plan our goals and compare them to see how best we can put our combined income to good use.
I would like to start off on –
1. A contingency fund – to offset a job loss – 6 months salary – putting it down to a generous 30 K expense per month
2. Savings – a small portion of 10% as small savings accessible at the bank account.
3. Investment – Remainder needs to be invested – 75% of this in equity – stocks, MFs and other useful funds, 25% – debt – FDs, PPF, NSC etc.
4. An infant fund – that takes care of all medical (vaccinations), clothing, toys for the first 2 years – lets draw a rough estimate based on research and arrive at a target figure and target time to save.
5. Medical Fund – A solid medical insurance policy and funds reserved for medical emergencies should be set aside over the next six months.
6. Other Funds -Parents fund, maintenance fund, entertainment fund, luxury fund, vacation fund and so on can be added to this list once we have covered the main fund boxes. However the above five are top priority in my financial goals list. Do take sometime to do a similar checklist, let’s compare notes and arrive at a final conclusion of how we want to take this forward.
Let’s discuss, conclude and start swinging into action. Until I see you on chat,
Love and hugs,
Sunila”
So take care not to give in to the temptations of your current lifestyle, where everything is screaming “buy now” at you- a bit of careful indulgence and careful planning could hold you good for the rainy days ahead – when you can sit back and enjoy the “rain”!