I have a plan, infact, I have two plans to spend my bonus. I would be getting it at the end of next week along with my increased salary. I have been waiting for it since two months and also been thinking on how to spend it for the past two months. The amount I will receive is somewhere near to Rs.150,000 ($3750).
And I am confused. Here’s why
- I have Rs.110,000 ($2750) debt on a total of three cards.
- I have personal loans amounting to Rs.300,000 ($7500)
- I have a car loan of Rs.600,000 ($15000)
- I have a mortgage of Rs.1,725,000 ($43125)
That’s a lot of debt to clear off. I accumulated it due to lack of financial know-how, bad planning and carelessness. Definitely not due to lack of intelligence.
Now I have the necessary financial knowledge, thanks to the blogs of J.D at Get Rich Slowly, Ramit Sethi at I Will Teach You To Be Rich and Trent at The Simple Dollar. I intend to apply some of the debt elimination principles to the bonus amount.
Here is the Plan 1
- Save Rs.100,000 ($2500) as emergency fund ( as I am currently living paycheck to paycheck).
- Prepare a budget for the month and keep aside the required amount.
- Start debt snowball on the credit card having the least balance.
My wife disagrees with plan 1 and suggested Plan 2
- Save Rs.50000 ($1250) as an emergency fund.
- Prepare a budget for the month and keep aside the required amount.
- Clear off entire amount on 1 credit card.
- Start debt snowball on the credit card having the least balance with the left money.
My concern with Plan 2 is that the emergency fund is 50% of the Plan 1. My wife is of the opinion that we don’t need such a big emergency fund and can fall back to using credit card if and when required. I don’t like that idea, here’s an article from Get Rich Slowly on why a credit card is not a emergency fund.
What do you suggest ? Let me know your view in the comments and help me reach a decision!!
Filed under: personal finance , bonus, debt, personal finance, saving
April 16, 2008 • 11:53 pm
Every year my company sets a few goals for me and defines the measures for determining my performance in meeting those goals. This year they came up with templates, a template for a Software Engineer, a template for a Team Leader and so on.
I hate templates, they put you in a mould. Templates generalize things ( goals in this case) . They have one serious problem, a template can’t fit everyone. I can’t fit in a template because I am different from the person who sits in the next cubicle to mine and so are everybody else.
How can the goals be same for all of us? I agree that they are based on designation, but still all team leaders are not the same.
I guess this makes the job of HR easier, cast everybody in the same mould. I differ!
Instead of templates, establish a framework, a set of guidelines within which employees can set up their own goals. Let the managers sit with his/her teams and come up with specific goals aligned to that of the department/company. Then measure them and see if he/r has met them. Then reward!!!
Is it so difficult to achieve ? What do you think ? Does the company you work for does something similar to templates or something different ? Let me know in the comments.
Filed under: cubicle , goals, job, success, work
Could you make a list, a list that lists why you work so hard at your job ?
Make another list, this list should have items from the first list that you have done or currently doing.
Well, what does it tell you ?
Are you doing the things that you want to do ?
Think !
Filed under: everything else , life, work life balance
My financial goal for the next 4 years is to become a millionaire. Here is the plan
- 2008 – get out of all debt except for home loan.
- 2009 – building the base of my finances, start paying additional amounts to my home loan.
- 2010 – saving aggresively, investing and paying additional amounts to my home loan.
- 2011 – saving 50% of my salary
- 2012 – home loan cleared off!!! Hurray I’m a millionaire!!
This is my road map for becoming a millionaire. What’s yours ?
Filed under: personal finance , planning
Taking a personal loan at a high interest rate and then topping it up when I have already paid most of the interest to the company.Dumb !! I guess I left my brain at home when I came to office that day. Use me as an example and don’t you do it!Let me learn from you too, Whats the biggest money mistake you did this year, or the previous or the last ? tell me
Filed under: personal finance , finance, mistake, personal loan
In India insurance is generally mistaken for investment. The guys in the IT industry are a suckers for insurance, believe me, I work there. Come December and everybody is hurrying up to take on new insurance plans to save tax. “Hey Naveen, I have taken up this policy to invest money and save tax” and the guy is not even married. Now before I go overboard in mocking everybody who has done this, let me say that I too have been doing the same. But now that I am over insured and needlessly allowing the top insurance companies in India to take a significant portion of my salary I have realized what a jackass I have been. Now that my eyes are opened I am re-evaluating my insurance needs. After I complete this excercise, I plan to re-structure my insurance accordingly. But for now I am going to tell you a few things about insurance.
- Life insurance is a risk mitigation strategy you adopt when you have some liabilities ( loans, debt etc). So if you don’t have any loans and are unmarried then don’t take insurance.
- Health insurance is a must for all. period. There is no alternative to it. If you are not married yet and have dependent parents then you can take a health insurance policy for your parents. Whats more, you can even save some income tax on it!! Beware of sales guys who sell you policies that cover only common illness. You don’t need health insurance to cover common cold. Buy one that covers dangerous, life threatening dieseases and those that cost a bomb to treat.
- Money back policies are expensive and they only payback what you have paid as premiums. You don’t get much out of the bargain in case nothing happens to you till the policy gets expired.
- Term insurance is the cheapest insurance. Most people shy away from term insurance because you don’t get anything back after the policy expires. But thats not the reason why you take insurance (Refer point no 1).
- The price difference between the premiums you pay for a term insurance compared to a money back policy is generally in the range of 1:6 or more. So you are better off taking a term insurance and investing the additional amount in other asset classes like stocks, mutual funds, bonds etc for better returns.
If you are still not convinced, you can find expert advice here.
So the next time you plan to take a insurance policy, decide and choose wisely.
Let me know about what you think on insurance and investment in the comments.
Filed under: insurance, personal finance , insurance, investment, personal finance
