Saving tips: How not to be a Vijay Mallya in 7 easy steps
Find out more by clicking on the following slides
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Can you survive without a job for 7 months?
Reality Check:In an uncertain economic environment, getting a high-paying job and holding on to it is easier said than done. And losing it can be quite a disaster, particularly if you lead an extravagant lifestyle.
Calculate your income for the next 7 months, assess your current expenditure and think whether you can live comfortably for the next 7 months if you actually end up losing your job.
What you can do: If you find out you can't, then you know rightaway your spending habits aren't exactly sensible.
Start investing smartly, and try to build up enough savings to see you through at least one year of a no-job situation.
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Do you borrow to go on vacation?
Reality Check: The importance of the occasional break to rejuvenate yourself and your family cannot be overstated. Vacations are important, but how well are you positioned to afford it?
If you have been indeed been borrowing to go on vacations, then there's a one word description for you- irresponsible.
What you can do: Look for vacation deals on reliable websites. Check out deals being offered by hotels. Also, start saving for it separately. Plan well and book tickets in advance.
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Can you pay off your car loan in 3 years or less?
Reality Check: With public transport in Indian towns and cities often leaving a lot to be desired, the average Indian is left with no option but to buy a personal vehicle for her family. An owning a car comes with mutliple financial challenges such as down payments, EMIs, maintenance and fuel expenditure.
What you can do
Once again, save up for the expenditure. Don't get carried away by deals offered by car companies or banks offering car loans, no matter how lucrative they might sound. Do a thorough, independent background check of both. Also ask yourself whether you can comfortably pay off the entire amount withing the next 3 years.
Choose wisely between a diesel and petrol option depending on your monthly usage. Mileage and maintenance requirements of the car you are planning to buy must be ascertained from others who've bought it previously.
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Can you pay off your house loan in 30 years or less?
Reality Check:Ek bangla bane nyaara-so went the song of yesteryears. While bunglows might now be out of reach for many of us with price of real estate touching record highs, an apartment is something most salaried or self-employed men and women aspire for.
What you can do
Keeping all your steady sources of income and regular expenditures in mind, calculate your EMI-paying capability for the next 30 years. In particular, you must assess whether you can pay the principal back in 20 years or less. If yes, then go ahead and sign the deal. If no, then start saving and planning better.
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Are you regularly over-shooting your credit limit?
Reality Check:Are you struggling to or even unable to pay your credit card bills regularly? Do remember that it was Vijay Mallya's decision to borrow beyond his credit limit that ended him with a debt of over Rs 16,000 crore.
What you can do
Use your credit card for non-essential payments only after making sure you can comfortably afford to after paying all your monthly EMIs.
Avoid needless delays in payment of bills. Fix a credit card budget and stick to it. Don't reveal your card details to anyone. Don't give in to the temptation of raising your credit card limit. Also, avoid using your credit card to withdraw cash from a bank/ ATM. Such money is considered a cash advance and attracts a very high interest rate (1.5-3.5 per cent).