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Old 17th March 2012, 12:09   #91
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Default Re: Debt free life?

So we all agree than that talking 'Meaningful loans' is viable and good.....Home Loan, Education Loan, Business Loan (with planned business course) and to a certain extent a Car Loan (which has become a necessity today).

But what I would call a debt free life for myself is life without Bad Loans. Period. And these are Personal Loans with monster interest rates, Credit Cards and Loan Against Security (it comes with sleepless nights).

I'LL SHARE MY STORY:
4 years back, I took a Loan against my only investment flat on the outskirts of the city which I bought with my own hard earned money and was quickly given 70% of the loan on this property by a local bank with the option of putting in interest only (not too much, 10.75% annual compared to 2% monthly on credit cards) on the money used at the end of each month. I thought wow this is so convenient, I can keep investing the surplus money that I could save and withdraw money for my personal needs (just like we do with credit cards, coz this one came with a debit card too!). I realised that sooner than later I had reached the upper limit of the loan and when I looked back I had spent 2.5 times per month almost of my usual expenses, for 2.5 years. Why? Free money at my disposal which wasn't actually free and had to be paid back sooner than later! Because this flat was an investment, I asked the Loan Manager that I intend to sell it....sold off and paid bank their dues and kept the small surplus with me. And realised that I could have been living on my means easily and with a flat in hand too.

I cross that flat every third day and every third day of my life I realise that because of the metro station coming there shortly its value has gone up by almost 17 lacs and still growing! Now, havent I done a big mistake and burnt my fingers!

But as my mom says, you dont get in life what is not in your destiny. Best was that I moved on towards a debt free life pretty early in my age and now again stable in life. But I know another such mistake has a potential to financially dent and demotivate me.

Lessons I have learnt from my little experience are:
1) Never spend beyond your means
2) Never take loans for leisure, banks will leisurely take them back from you!
3) Invest! Invest your surplus be it only 500 rs., not only because it grows that ways, but it also prevents you spending right now in unnecessary things and most importantly prevents you from taking loans in rainy day.
4) Dont take good loans also beyond your capacity!
5) Learn from your financial mistakes if you have managed to get over them....they won't forgive you the next time.
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Old 17th March 2012, 12:23   #92
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Default Re: Debt free life?

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Originally Posted by carbookie View Post
When I was searching for a existing thread I saw many threads for credit card, loan problems, payment issues and CIBIL reports. Is there anyone who believes in the old fundamental of debt free life anymore?

Personally speaking, I have been earning a salary for last 15 years. But I don't have a credit card for last 11 years. I hold debit cards, but I have not used one is years. I have never taken a loan. I do all my shopping by paying cash.

I am wondering, am I the only one here who is relic of past or there are other people out here who don't believe in taking a debt at all?
You are not alone. 3 years ago, we decided not to buy anything on loan. House loan of old is going on, but will end soon. No car loans, no credit card loans. All credit cards are paid off before due data, and any call offering interest free EMI is simply hung up.

If we want a big purchase, we start putting funds in a separate account. If we can't afford something without loan, we will try not to buy that thing.

That said I would not consider the house or land property loan as debt. Thats a loan which creates an asset which appreciated very well. However, we have decided to avoid loans for depreciating assets. If we cannot afford a 10L car on downpayment, there are 5L cars in the market.

Infact, when we discovered that we will not be able to buy a 6L hatch after selling off the indica without taking a loan, we flogged our indica for 2 more years. So the car came late, but atleast we did not have to take a loan for it.

Banks are bloodsuckers, and our aim is to have as little of them as possible in our life as far as loans are concerned.

Last edited by tsk1979 : 17th March 2012 at 12:31.
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Old 19th March 2012, 16:56   #93
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Default Re: Debt free life?

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Originally Posted by PAVAN KADAM View Post
Credit Cards - Had them all . CLOSED them 7 yrs ago and living in peace
Although OT, I wanted to know, now that i have closed both my cards, if there are any places i would absolutely need a credit card, especially International travel and hotel bookings. Rest of the places Debit card is fine

How have you managed all this while? or have come across occasions where Debit wont be accepted.
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Old 26th March 2012, 10:22   #94
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While going through a blog, I found this quote.

India is definitely happening and there are a lot of opportunities in different fields. If you are thinking of starting up, this is the best time. But donít take a home loan,that actually kills entrepreneurship. You can never get out of it. - Binny Bansal , co-founder flipkart.com
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