Thank God it's Monday #TGIF

Yes, you read it right - Do you thank God on mondays??.

I attended a talk in a professional forum today, it was on the topic "Holistic workplace".During the presentation, the speaker quoted some survey that said 66% of the employees around the world are "disengaged" and are not happy to go to work.( Rest 34% ,would be those who had miserable lives outside office and would have preferred devil over the deep shit, I thought :-) )

Coming back to the topic,I have had at least 10 -15 people who had told me over the  last couple of years  that they hated the job like hell. At least 60% of them had HUGE portion of their net pay being paid as EMI ( Car loan, Home loan, EMI for the latest gadget, personal loan to buy an unapproved plot, etc,etc). The latest conversation I had on EMI ...

(EMI = Easy Money from Idiots for the business people)

Ms. J: Hi IM

Me: Hi, How are you doing

Ms.J: Just finished a meeting with the CFO, he was all rude. Once I complete the Home loan EMI ( around 60 lakhs) outstanding, I would quit this job and mostly stop working thereafter.My husband's income is more than enough for us ( except for the loan)

Me: Oh is it??

Ms. J: True

Me: How much is the house worth?

Ms. J: 1 crore 

Me: Then why don't you sell that house ( where Ms J doesn't stay and it was fetching 15k ( EMI  > 60 Kpm) as rent per month- she never ever plans to get there), Short close your loan, Invest 40L which will provide you a monthly income if you need or let it compound.

Ms. J : Oh no! that sounds like a stupid idea. I will loose rental income, tax benefits, appreciation, blah,blah, blah...

Me; Fine , then why you feel that EMI and loan is a burden then?

Ms. J: Oh shit, I forgot ... I need to run to a meeting.

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If you are a shareholder of a GOOD bank that lends to retail, you can very happily proclaim- "Thank God , it's Monday" . #TGIF. 

What constitutes a GOOD bank is a bigger story :-) and would need to write a book on that!!

EMI on debit cards, Don't fall into this trap!

The following article talks about  EMI option on your debit card for purchasing a TV.

1. You can use your Debit card to purchase a TV.

2. For this, You need to have an FD with the bank which  pays you around 9%

2. You can  borrow from the bank up-to 90% of the FD for the TV purchase - paying an interest of around 13%

Your money is with the bank for which you earn 9% and bank lends it back to you for 4% more. why should someone avail this facility at all. To make the bank rich???

If at all you are desperate to get the TV, break your FD and go buy that "damn" TV.

If you want to buy a LED TV in the next two months, you could save for it, flash your credit card or use the zero-interest option. But if the TV is a Samsung one and your banker is ICICI Bank, you could also use your debit card and pay through equated monthly instalments (EMIs). At 13 per cent a year, the interest rate on reducing balance is substantially lower than a credit card's 36-45 per cent a year, as well as 15-25 per cent for personal loans.

However, you should have a fixed deposit with the bank and only 90 per cent of the deposit amount will be lent to you for a purchase (to buy an LED TV worth Rs 50,000, you should have a fixed deposit of Rs 55,556). Also, currently, the facility is only for Samsung products.

Since the fixed deposit will earn interest at nine per cent for 390 days, the effective rate of interest on EMIs is five per cent annualised (13-8 per cent). You will continue to earn interest on the fixed deposit. Also, as interest is on reducing balance, the net outgo will be less every month, says Suresh Sadagopan, founder Ladder7 Financial Advisors. full article

Apple set to relaunch #iphone in India - should you go grab it?

One of the personal finance  bloggers reported that his post on analysis of iphone offer with a service provider got the maximum hits this year. Apple is now trying to woo Indian buyers with "Subsidized" old model phones and "attractive" EMI offers for other models. One other website reports that Indian youth take "pride" in flaunting a smart phone. Of late, buying a tablet or smart phone on EMI has become a way of life.

Coming to the point, I have nothing against Apple or any other smart phone seller. But buying a smart phone on EMI  ( Easy Monthly Instalment) doesn't sound like a great option to me from a personal finance perspective. 

First , assess the "need" for the smart phone. Check whether you can "afford" it ( For me , buying a phone which is worth more than your month's salary is a financial 'mistake').  If it is only an emotional need to own this smart phone, then you should definitely not fall to trap on such offers.If you decide to buy after this evaluation, look for a genuine offer and pay for your phone upfront .

Whenever you buy something on a loan or EMI, you are consuming future income upfront. More so on an item like a smart phone. Be prudent and avoid EMI traps!

By doing this, you will not only help yourselves but save some valuable foreign exchange for the nation too.

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