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Old 31st March 2016, 17:45   #16
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Fully understand your predicament, when I took a vacation to Europe in 2012 with family of 4 adults, I was in the same situation: was it going to be worth it spending a pile on a vacation, in 2016, I feel it was the best 2 weeks, I've had in my life with my family and so does my family. Absolutely no regrets! So do what you gotta do; pray to God Almighty for his benevolence!
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Old 31st March 2016, 17:46   #17
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Quote:
Originally Posted by tsk1979 View Post
The thing is, its your Dream. Not your friend's. Not your family's. Your's
So you have to decide what is more important to you? That nice car, or additional security in the bank account.
I think it eventually comes down to what you eventually want to do. I can't tell you, nor can anybody else.
Financially speaking, routing half your savings for a car is not really financial prudence. Emotionally speaking, you live once. So decide!
Thanks . Thanks for the prompt response. Its sure is a heart vs mind thing.

Quote:
Originally Posted by Nikhilb2008 View Post
I would agree with KiloAlpha. You have kinda secured the future of your family. Obviously, more is always welcome. Maybe if you dont buy the S Cross now, you may be able to afford a Merc or BMW in the future (sooner than if you buy the S Cross now).

However, life is not all about having money in the bank anticipating that rainy day. You have enough for that (by the looks of it).

Just go for it and indulge yourself.


At the end of your life, you wont care how much money you have saved but how many memories you created along the way.
The kind of advise I was hoping for. Glad to see there are people who think like I do.

Quote:
Originally Posted by Chethan B G View Post
Hi DMD!

First of all, welcome to T-Bhp!

I myself have been through similar stages in life. Therefore, I can very well relate to your query.

I never thought in my life that I would spend exorbitant amount on a premium car. I believed that we as a middle class family have a lot better reasons to spend our hard earned money, than spending it on a premium car which only takes us from point A to point B, may-be in a better way. Spending 20L on a car when one can buy a site for that money, is a crime! I thought.

BUT, our dreams / aspirations in life are also important!! Life is short and we only live once!!!

You are just 32 and lucky enough to have settled in life. That is, you already have a own house, a secure job, emergency funds in the form of an investment (site), financially independent parents (?), just one kid who is 3 year old and above all, a supporting family. Also, most important thing is "You do not have any loans / liabilities". Please correct me if I am wrong?

You still have a minimum of 25 years left in your career. IMHO, this is the best period to live your dreams. Later, as children grow, our responsibilities increase and it becomes harder!

OT: Since you are cautious about things, I would suggest you to stick with companies like Toyota / Maruthi... etc, so that you will not have unexpected expenses. This is one aspect to be considered while choosing a premium car with a stretched budget.

All the very best! Have fun!!
Well, Sir,..you are a true inspiration for people like me. Thanks a lot for your advice. And yes, I do not have any loans. The money is just sitting in the bank to be paid to the nearest NEXA dealer I suppose

Quote:
Originally Posted by EPMV View Post
I can relate you situation to mine. I'm in the same situation but no where close to your financial background. My kid is also nearing 3 years and already started going to play school.

But I was fighting with family to get my dream car Fiat Punto Evo from last year, my dream still couldn't find way to become real from 2004. I'm sure on getting it this year.

I second the opinion of tsk1979. This is your situation and you only can decide what is important. According to me I can still buy home and settle after 10 years, but I can't live the moments passing now. My primary argument at home is "let me live now, i will settle down whenever possible"

Best of luck for your SCross.
Thanks. I hope you too will be able to fulfill you dreams very soon

Quote:
Originally Posted by gypsyFreak View Post
Well, i would say it is early to decide. Since you are planning to come to India next year, you can decide at that time, because a lot of things can change in a year (your finance condition, newer cars, your family condition...)
Unless you want to buy a car in India now and have your brother or family use it, you can put-off this thinking process..



All of us here in Tbhp love driving and are passionate about our cars.
This is a matter of decision of heart vs brain. It is up to you to decide.

I had the same dillema 3.5 years back and more or less in the same financial state except no 17.5 lakh backup and no kid for dependency.
But realized my dream and bought my Scorpio. Enjoying it every moment since.
Now, working on creating the 17.5 lakh security ..
Its true that lot of things can change. My initial dilemma was whether its okay to spend that kind of money. Looks like it is. For now its S Cross unless something similar comes along in a years time

Thanks to all who has replied. I couldn't quote all the individual posts.

regards,
DMD

Last edited by Zappo : 31st March 2016 at 18:38. Reason: Limit smilies to 2 please
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Old 31st March 2016, 18:21   #18
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

A contra perspective.

Today, in India, rental cars are available at pretty decent rates.
If you would NOT use the car for daily commute (office has decent cabs or home too long from office, etc), then it may not be wise to invest so much. Instead, you can rent a car everytime you drive (Positive: You can upgrade as you like!). Additionally, you money isnt depreciating in garage when you dont use .

Bangalore traffic is not that much a pleasure to drive either.

Anyways, take your time in deciding (if possible let that car josh wane off and then decide. But decide after you come back, after few commutes to office!
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Old 31st March 2016, 18:39   #19
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Quote:
Originally Posted by cs_rajesh View Post
t we all must be aware of the uncertain world in which we live in and what do we value the most considering all the uncertainties around us.

Use your money to create appreciating assets


Also What I see when one is married and has kid(s) that liabilities never goto zero but rather tend to increase slow and steady and it is wise to constantly counter the increase with good earnings (active and passive income).

And today's craving may be gone tomorrow once satisfied and then a new craving starts. Man's wishes are endless as we all know.

Make your money grow: With your savings, check where you can invest and make it grow or reduce/remove your already existing liabilities.

Inflation: What you buy with 100 bucks today buys less tomorrow. Hence your savings should at the least grow to counter the prevailing inflation.

Fulfill your wish with extra disposable income. Part of the interest of any finance scheme anyways helps you deflect the erosion of money value by inflation.
Very sensible advice but ensure you have plans on how you invest your liquid funds

Quote:
Originally Posted by Chethan B G View Post
Hi DMD!



BUT, our dreams / aspirations in life are also important!! Life is short and we only live once!!!

You are just 32 and lucky enough to have settled in life. That is, you already have a own house, a secure job, emergency funds in the form of an investment (site), financially independent parents (?), just one kid who is 3 year old and above all, a supporting family. Also, most important thing is "You do not have any loans / liabilities". Please correct me if I am wrong?
!
I was and am in the same situation. Let me tell my story below

Quote:
Originally Posted by androdev View Post
.
Rent a nice car on Zoomcar every tine you want to have a good drive.

So yes, you can't empty your bank account on a new car.
Agreed but the condition of Zoomcars are so pathetic nowadays

Quote:
Originally Posted by Durango Dude View Post
Fully understand your predicament, when I took a vacation to Europe in 2012 with family of 4 adults, I was in the same situation: was it going to be worth it spending a pile on a vacation, in 2016, I feel it was the best 2 weeks, I've had in my life with my family and so does my family. Absolutely no regrets! So do what you gotta do; pray to God Almighty for his benevolence!
Experiences beat objects believe me

Let me tell my story

I had substantial savings when I was younger, I only splurged on good value items. Let me tell my story when I returned to India in 1994. It was a case of a Contessa, an M800, M1000 or a Tata Sierra. Due to high interest rates at the time. I plonked full cash for the Sierra. It was a great car for a newly wed me but it had issues. I got rid of it in time but used the resale + loan against fixed asset to buy a Zen as I had a baby on the way. (I also had a company 800).

A change of job and joining a dubious startup meant I needed another car - bought a new 800 cash down to avoid liabilities. Times got tight but I owned no one

I then got a job in an MNC. I then bought my place cash down (at a 20% discount to market). I then partially plonked cash for a Honda Vtec and paid it off early. I bought my Skoda for cash but in reality found what I paid maintenance offset initial depreciation.

My Swift was a company lease. The money released did well in the stock market. The Jetta was a stretch and is 33% financed. The emi's are offset by its low running costs. I look after it well since I will keep it for a while since college fees will be demanding. If it starts costing, I will downsize.

I also take my family on good holidays. An experience, you cannot miss out on.

Remember, cars you can always buy but think hard and think ahead. It is important to monitor your investments. I sometimes lose track and lose a lot. A good financial advisor will keep you sane

Last edited by ajmat : 31st March 2016 at 19:26.
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Old 31st March 2016, 18:51   #20
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

I have a simple 2x rule when it comes to buying luxury / non-essential goods in my life.
i.e. Have twice the amount of money you would need to buy x so you aren't really broke as a result of buying it. This has served me pretty well thus far.

Hope it gives you some food for thought, there are plenty of great cars in the 5-10l range that are an absolute joy to drive.
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Old 31st March 2016, 18:56   #21
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

I am currently in a position that you anticipate yourself being in about a year
( I booked a XUV 500 W6 last week by the way)

So here is my opinion:
  1. Keep aside some liquid funds for emergency situations. Balance this with point 2
  2. Get good insurance. For everything. Life, Health (consider over and above what your employer might be providing you in India), House, Education, Valuables etc.
  3. Don't take a loan, buy with cash. Again its a personal opinion, I tend to avoid the burden of debt whenever possible (I guess I am old fashioned that way).
  4. Go buy the great car you desire. But decide only when you are in India and after taking test drive of all cars in your budget (except the ones you outright dislike - and maybe even then, a test drive doesn't hurt).
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Old 31st March 2016, 19:06   #22
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Why dont you consider the Used Car Market?

You can get a used Civic Or CRV for as less as 5 Lakhs.

I did the same and was extremely happy as well as proud of my purchase for 2.5 years.
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Old 31st March 2016, 19:17   #23
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Mate, I was never good at economics. But believe me, you have worked hard and sacrificed enough to deserve a nice car! Get that S-Cross 1.6 and enjoy every moment of driving it.

I am a responsible husband and father too, but I have seen so many unexpected things happen in life and close ones passing overnight without a warning that you won't believe. Planning for the future is well and good, but today is all we have for certain! Live your life to the fullest. It is too short and precious to waste over something as pointless as money.
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Old 31st March 2016, 19:54   #24
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Quote:
Originally Posted by DMD View Post

I have exactly 17.5L in my account at this point. I think I could save between 5L -8L in addition or so before I go back to India early next year.

I love driving and and has been longing to own a really good car since a long long time.
Hi DMD,

Welcome to the forum.

I'm younger to you and at this moment not as financially stable (still paying off my education loans that I incurred while studying abroad). However, I am in a nice job now and am confident of being sound (relatively) by later this year.

This is purely my perspective- all through graduate school- I was crazy about (still am) about Mazda Miata and I thought I will buy one the moment I get a job. Also because I was without a car after leaving India (2 years almost) Once I got a job though, I started thinking about the future. With a few life changes coming up, I now see it pointless to invest so much in a car that I wont be able to enjoy for long. So now, I rent nice cars over the weekend and drive around town enjoying my time here in the states. And this is when I can really afford the Miata (even m3). My rules for myself are changing and now I think about buying a car that's one level below my dream and that too used. For example, instead of plonking 30k$ into a Miata, I can buy a slightly used Mazda 6 for 15k$. I know for someone upgrading from an Esteem, even the Mazda 6 (or the 3 for that matter) is a huge bonus (83bhp vs 180 bhp).

Similarly for you, I would advise that keep your 17.5l in a medium growth investment and buy whatever you can from the 8l you plan to save. You can get used Scross 1.3 in that price by next year for sure. Use it for a while, then remap it when you need more.

Tapish
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Old 31st March 2016, 20:11   #25
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Its good to know you have your eyes set on the S cross which in my opinion your decision is sane and sensible. With your state of current financial stability, you have not thought of a Jaguar or a Ferrari which says you are still in control of your self and not reckless.

Just follow your instincts do the due diligence and go for it.
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Old 31st March 2016, 21:05   #26
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Quote:
Originally Posted by DMD View Post
Hey Guys,

My take home (Indian salary) is just above 60K a month. I was able to build my own house in Bangalore). I also have a son who will turn 3 years in a few months and my wife is a home maker.

I also managed to buy a decent residential plot in my home town (if I would sell it in 2 years, I would get a return of 20lacs and upwards approx)

I also have another form of savings in a govt. run chit fund (extremely safe). I would soon join a new chit fund savings next month where I need to pay 7500INR monthly. If I am lucky enough in the 1st 40 months lucky draw, I would get 7.5 lacs, which I intend to use exclusively for my son's schooling.

Actual Question:
------------------

I have exactly 17.5L in my account at this point. I think I could save between 5L -8L in addition

I love driving. And it shall be a Maruti Suzuki S Cross 1.6 Alpha

since I have had the opportunity to have the basic needs (a house, savings for my son's education and a job which looks secure at the moment) met, it should be okay to make my dream (dreaming since 2009) come true after all.

I'd be really grateful for an honest advice.
I might be stupid , but really, is there a financial criteria one has to qualify to own a car of certain premium value.
Hi DMD,
1) You have a house
2) You have a land that can be liquidated
3) You will have 25 lakhs by the time you come back
4) You have a KSFE Chitty with 40 x 25000
Now lets break down some things, I assume

5) Your wife is not going to work
6) You have no pension plan
7) You have no health insurance or term insurance
8) You fall in 20% tax slab
If your ONLY dream is owning S-cross 1.6 , then don't read further BUY IT.
If not, get 6 and 7 at the earliest.
The KSFE Chitty is not an inflation beating instrument and due to 8) the actual returns will be around 6% after tax liability. You can get 7.35% tax free bonds,if you are risk averse.
You need to invest in Equity MF to overcome inflation.
If you are very very conservative investor and is only going to rely on chit funds, start it in your wife's name and you can escape from tax burden by 10%. Please ask me if you want to know how to save tax by using your wife as a loophole.
Yes there is some kind of rule on how much money to be spent on cars, usually 6-8 months salary, but 1 year will be fine for Indian scenario.
Still you can buy the S-cross using your money and taking a small loan.By the time you return you will find enough S-cross in used market for 10-11 lakhs.

Regards,
The Rationalist.

Last edited by GTO : 1st April 2016 at 13:12. Reason: No helping via PM please :). Do so on the public forum itself. Thanks!
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Old 31st March 2016, 21:52   #27
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Let's say that you decide to compromise and buy a cheaper car (let's call it Car 2). One fine day, you go to a mall, step out of Car 2 and see a shimmering S-Cross 1.6 in the parking lot.....nuff said. You get the idea, right?
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Old 31st March 2016, 21:57   #28
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Cars are never an investment. They dont grow. They are simple expenses. From my experience i can say after 6 years, if i go back in Time would i have got a Jetta or invested in a land. I would say i would have invested in a land.

Cars are fun and there is no second thought about it. But putting all your money on something that depreciates right outside the dealers showroom makes no sense to me at all.My only suggestion is, if you have surplus that tomorrow if that surplus gets burned in fire and wont bother you much, you should do whatever you want to with that money.

But if you are talking about savings, think of ways to multiply it. Invest wisely and you will have surplus to splurge on in the future. 6 years back I should have invested that money i spent on a Jetta(but i still took a loan. I should have taken a loan to invest on a land or house) at the same time do i regret the decision. I dont. Yes i would have had thrice the money i spent on a car then, right now today but its too late to get myself burnt on that decision making.

My Jetta depreciated so bad now that i have no intention ever in my life to spend on cars unless its super surplus. Even then my thoughts are on putting it in world tours and things the family can enjoy.

My personal take - Invest this money in something that yields better return in say 5-10 years. Take one for the family and the long run and avoid impulsive decision. If you have surplus, take a plunge, else stick to what works for the family, your kid, his/her future and your dreams are not dead even after 10 years. You can still get something you want later.

Thats my personal take and i again say, rewind 2010 - I would definitely invest on a land than Car

Last edited by VW2010 : 31st March 2016 at 21:58.
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Old 31st March 2016, 23:03   #29
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I agree with VW here.

17.5 in the account for a married man is very less inspite of your fixed investments, which by the way are not liquid, and finding a buyer sometimes is easier said than done during distressed situations.

Go the used route and get yourself a fabulous deal. Ask our friend gto and he will vehemently agree. Spend time shopping and you will hit bulls eye. Taking a loan for a car with a salary like yours is just going to pressure cook you if shit hits the fan for any reason. Try to be as loan free as possible, and try to keep a good amount of liquid cash in your account, I would say close to about 50 lakhs at least. So even if you are sacked, you won't be distressed immediately, and best of all you can never be held for ransom by your employer.

The key question to ask is, how long can you go without a job and meet all your current expenses and without touching any of your capital or fixed investments? Do the math. If your current expenses are too high to meet without a job in hand then something is wrong. And you have to either save up to meet that expense without you being in the equation OR reduce your expenses to meet your existing cash inflow minus the job. I would go so far as to say that your job should actually be a bonus income. But you are a family man and I am not.

Unfortunately this is how the whole world runs and everyone lives on fumes, loans and credit cards. Works for some.

And you can always go on a sabbatical and try something different.

Isn't that nicer than a new car now which will be an old car in a year's time?

Hell, am going to be burned on a stake for saying this on a car Forum. Lol.
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Old 31st March 2016, 23:06   #30
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Default re: 17.5 lakhs liquid cash: Save or spend on new car?

Quote:
Originally Posted by DMD View Post
Hey Guys,

I also managed to buy a decent residential plot in my home town (if I would sell it in 2 years, I would get a return of 20lacs and upwards approx)

I have exactly 17.5L in my account at this point. I think I could save between 5L -8L in addition or so before I go back to India early next year.
Hi,

I have quoted some of the important lines from your original post.

You will not be able to use the money from the chit fund as that money is for your son's education. Hence you have to plan based on the land that you purchased and the savings you have in your bank, plus the amount you can save in another year. Therefore, you might have to wait till you make profit from the land. Below is the plan assuming you have made profit from the land you purchased.


Amount from sale of land : 20 lacs
Amount in bank (currently): 17.5 lacs
Amount saved in another year : 8 lacs
Total amount as savings : 45.5 lacs

Now assuming you invest this money into a fixed deposit for 5 years, you could easily pay off your car EMI with the interest itself.

At current rate of 7.5% at federal bank, you will earn a monthly interest of Rs.28,437. There are other banks that give higher interest.

You will also have some money as savings from the interest itself, after paying off the EMI. You can also invest this money in a Public Provident Fund (PPF) for the next 5 or 15 years and almost double the capital that you invest in the PPF.

That way you still have your original capital and you have also saved up for an upgrade in the future.

So you might have to wait until you make profit from the land.

All the best in your purchase.
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