Time for a Financial detox ..

Diwali , one of the largest festivals in India is just over. Meeting people , giving and getting gifts and basically going through multiple sale offers and buying so many things that are not really required.. but hey we are human right ..

But now the time is over... the moment.. or many many moments have passed and now it is time for us to detox .. get a financial detox.

Here are some things that we should be doing now...

1. Take a look at our credit card bills... if you have many credit cards... then many credit card bills... remember the dates and pay them off...

   In full... so that there is no 36% charge of interest.... OR

Convert them into an EMI with the card company at a 12% interest rate.

2. If you bought goods on an EMI ... plan for them well. Ensure you have the funds for the first in the bank account you gave for direct debit... and also of course ensure that the other emi are paid on an ongoing basis.

3. Stop any more shopping for the next few months.  Yes , i know Christmas is coming and so will other sales.. but if you already bought a lot at diwali... no more excuses of shopping for the soul.

4. Stop and take a look at the damage done. Ensure it doesnt impact your financial planning and SIPs that you would have done.

5. Dont break your emergency fund to pay for all of this. That is not acceptable. Paying off using your emergency fund is a big mistake.  This is not an emergency !!

It is a good time. Soul is happy and so is family. Take an effort  to spend time with family and not money..

Detox.. its a good idea..

Renting out a house- key things to take care of.

For the last couple of days, my family and me have been very tied up trying to take back possession and rent out our house to a new tenant. Its been a trying few weeks of effort. There are a lot of  learnings, and i thought it may make sense for me to write what i have learnt so that it can be shared with my readers.

Broker

• 99% of brokers job is to close the deal. They are interested in making their money vs trying to ensure that the tenant and the owner are happy with the deal.
• Brokers will ask for money to get the house on rent. Now- what you should do is to ask if the broker is from the side of the tenant or the owner. ONLY one side should be paid. If the broker has contacted you saying he has a client who wants to take your house- then you need not pay anything!!
• Ensure that the broker gives all the documentation required for the house to go on rent.
• Lease papers are signed and couriered ( dont pay the money for the courier)
• The tenant has been notified to the nearest police station for verification( get the documents couried to you)
• The advance and security deposit are given to you
• Never give the broker of your tenant the keys to your house. Always ask the question to the tenant before giving the keys to the house to the broker- always verify!

Old tenant

• The security deposit is NOT to be adjusted with the rent of the month. The security deposit is for the owner to ensure that everything is in a good condition.
• Ensure that the tenant has cleaned up the house- all sweeping and mopping done before they leave the house. It is extremely difficult to get these done- especially since you are not staying in the same complex or town!
• Ensure that keys and maintenance fees are all cleared up. It becomes a problem for the owner and the new tenant.
• All fixtures and lights need to be taken care of- if you gave it to them in a working condition- you should get it back in a working condition!
• Ensure that the electricity meters are in working condition.

New tenant

• Get the proof of the person being in the company that they say they belong to.
• Try and get a company lease
• There is a higher risk involved in giving the flat to a business person than giving it to a person who is from a service background.
• Ensure that the money is paid as per the dates agreed to.
• Make a list of all things that are provided and the condition of these things to the tenant. They have to give it back in a good condition.

Advertising on your house

• There are a lot of websites that allow you to advertise your house - http://www.99acres.com/, http://www.makaan.com/, http://www.sulekha.com/ among others.
• Advertise your house on the websites of your society. One can avoid brokerage charges which are quite high
• Let people know about your house being available- your neighbours etc. 

I know that the list can go on and on. But the house is yours and the tenant should not take you for a ride. There is a risk involved in giving your house to anyone else- and good precautions must be taken before giving out the house on rent to anyone.

comments welcome.

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Petrol Hike -- is it valid

The FM - Mr Pranab Mukherjee is nowdays fighting a battle with the opposition and some members of the government itself on the fuel price hike.

We need to understand the rationale of the hike. The core of the issue is fiscal prudence. The FM wants to bring down the fiscal deficit ( difference between earnings and expenditure of the government) to 5.5% in this fiscal-- Thats his target.

For this he needs to be able to reduce his subsidies and increase taxes.

He has actually reduced the personal tax and increased some of the excise duties and brought more businesses into the services net. However he has increased the expenditure in key areas of infrastructure etc. So to compensate he needs to reduce the subsidy on petroleum products and he has done that by raising the prices of fuel  ( he has also reduced subsidy in fertilizers)

Thats the basic rationale. -- ensuring you spend less than you earn!

I look at this as positive. We as indians need to understand the importance of fuel and fuel conservation technologies and tips. We can everyday see lots of wastage of fuel and sometimes the advertisements on the conservation of fuel ( like the kid who tells his father that he would like to start a cycle company since by the time he grows up all fuel would have finished) hopefully resonate with people's consciousness.

We all need to do our part on conversation of fuel-- petrol and diesel and gas. ( read some of my tips and experiences here)

I say kudos to the FM and PM for holding their ground.... keep it up--- we are with you.

What do you really "Want"

I know the topic has lots of connotiations to the world-- but my focus here is on finance and financial freedom.

Today is an age of consumerism. We have so many new things we get attracted to or are brainwashed to get attracted to , that the basic impulse is to go out an buy the product. The "I' gets a big boost when i have that product with me-- I flaunt it, I slowly show it, I have it made.

Many a times one forgets what the product actually is and what is the basic use of the product. We attach more value to the "Image" than to the actual product.

I mean lets take a look at buying a car in a city like Bangalore. The roads are small, parking is scarce, petrol is costly-- so logically speaking a small car would be great ( NANO :))   ... however as one starts looking around and seeing the advertisements of cars on the road-- most of them are of Large cars--- and some gas guzzlers like scorpio. The advertisers play on the "I" factor to get their sales up.

Even some of the changes that are there as compared to one model with the higher model-- a ZX vs a GX... changes are very minimal-- changes in the door handle being wooden vs plastic, etc etc...

BUT when we say we own a honda city GX--- it makes a statement.!!

It is important to really understand what you need , want and have--- and pay the right price for it .

Brand Value--- is money out of the pocket... Be concious of what you spend for it vs a lower brand.

Define what you want--- and then conciously reach out to your pocket... it may save you some money.

Happy Investing.