Ready to pay the EMIs? Think Again!

Hi there! So here we are with another of Mr. Brainy’s and Mr. Dumbbell’s life experience. Hope you have read the previous ones, if not then do check them out, you might find some things of value and interest.

So, how many of you have really thought of buying a 5 BHK or a penthouse in some posh locality? All of us right? That’s cool!! That’s not a sin! Even I dream of buying one.
Like two ordinary young fellows in their early twenties, Mr. Brainy and Mr. Dumbbell also dreamt of buying a luxurious house.

After 5 years of job, Mr. Dumbbell, exhausted all his savings and got a home loan 6 times his annual salary, that’s a huge amount man!! And then as you can guess,he kept on paying 8-9% interest per annum for a major part of his life ; and as a result 30% of his salary went into paying installments of his home every month.

What did Mr. Brainy do?
He did what very few of us have the guts to do.
He bought a small house, first in a distant location but after a lot of research ( one that was safe, that did not deprive him of the basic facilities and was well connected with his workplace). He took a minimal loan, as he didn’t bother to exhaust his investment/ saving, and kept on searching for any fruitful real estate investment. Once he was getting some capital gain on his small property, he sold it and bought a better one at some other place.

He never thought of his home as a mere social status. For him, living in a rented home that was better than that of Mr. Dumbbell and enjoying life to the fullest without the dent of interest payments on his wallet, was more satisfying.

Now this was a big thing- a house, a big decision, where big money was spent.
So now lets talk about a small thing, a thing that we use everyday, that we all have and can easily relate to, (probably you are holding it right now) yes you guessed it right, a mobile phone.

Talking in the Indian context, these days people are crazy about mobile phones, that’s completely fine. But, do you think it is justified when you buy a smartphone double your monthly salary (that sounds crazy….right!!!)

After getting a job, Mr. Dumbbell did the same. He bought a phone with a scheme saying – CHEAP EMIs…. He availed the offer and jumped with joy…(he thought – oh yeah finally i have something to showoff among friends ) and believe me I know people who flaunt a phone when they actually cannot afford it . Well, people do it in the name of social status, for a fake sense of superiority and superficial satisfaction. According to me, its all just a hoax because no one cares which phone or which car do you have if you are not a good person.

As Warren buffet says, ‘ Three things in a person matter-intelligence, energy and integrity, don’t bother with the first two if the last isn’t there’.

And for all those who can’t get that CHEAP EMIs offer, they buy a 2 to 3 years old model or a second hand model just for the sake of owning a brand. (WHERE IS THE VALUE MAN!!!!)

(sorry for getting carried away)

Well coming back to our topic,
The crux is that we should avoid getting into debt for consumable goods, (mind you I am only talking about consumable items and I totally agree with the benefits of debt and the leverage it brings to the firm). My only concern is to not get in to a debt trap by raising debt that is a multiple of your fixed income and use it for buying things that are self depreciating and do not give any returns. Also, one must not fall for the false sense of accomplishment and fake satisfaction that these things give.

Well, these were some wise words from Mr. Brainy and Mr. Dumbbell. Hope you agree with them, and if you don’t then you can definitely write your opinions in the comments section below. We would love to know your thoughts and gain a different perspective, for life is a never ending learning journey. 🙂

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One thought on “Ready to pay the EMIs? Think Again!

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  1. What mr brainy did was good as a conventional approach since living in a rented apartment if own pocket is not big enough is better than to purchase a new one…….but what happens to this conventional approach when we take tutions from big MBA colleges and pay lakhs of fees just for the sake of degree…..even if your pocket does not allow it and for next 10 years u would be giving a handsome amount of salary to the bank who in case give you a loan for studies ……..in this case whether we should pursue MBA or not and if we should then how conventional wisdom is useful….I would like if u write something about it

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