Do you need a loan?

If you are a salaried employee you must have received calls asking whether you need a personal  loan or not. They will tell you that you can get a loan in less than a week. That was before the recession. Now the same people ask you if you need a credit card. No matter what way the loan is handed to you, here are some tips and thoughts to ponder about when deciding to take a loan.

1) Do you really need the loan?

Do you really need the money. In case you plan to buy yourself something like a bike or car or electronics, ask yourself "is it really important for me to have it"

2)Is it an investment or waste?

An investment is not always a mutual fund or insurance. When I say investment, it means that you use the money to become wealthy and successful. If you work for more than 12 hours a day, a holiday is an investment since it will help you recharge. If you buy clothes or make-up that help your self-esteem and builds a reputation with others, it's an investment. Similarly, if a bike can cut your traveling time, it becomes an investment provided, of course, the time you save is utilised well. 

3) Can I afford it?

Suize Orman has a segment in her show called Can I Afford It? where callers ask if they can afford something based on their income and expenditure. Some of the things in her check-list that she goes through before she gives a verdict "approved or denied" are

• Do you have any credit card debt or other loaned
  
• Do you have enough in your retirement(IRA, Provident Fund, LIC insurance etc)? That money cannot and should not be touched under any circumstances.
  
• Do you have enough saving? She also adds

"YOU SHOULD HAVE ENOUGH CASH IN YOUR SAVING TO LAST YOU 6 MONTHS IF YOU LOOSE ALL YOUR SOURCES OF INCOME"

Before taking the loan, you should keep aside atleast 6 months worth instalments, in case of emergency.

4) Read the terms and conditions

This will require some research. If you dont have the time to do it yourself, consult a lawyer or accountant. In general, you should check out the repayment options (including the duration, interest, EMI, the date of payment every month-do you get your monthly salary by then?), refinancing options, early payment and closure details etc.

Dont be fooled, the lenders are very polite and friendly when they offer you the loan but during repayment they turn into vampires or sharks waiting to suck every last rupee form your bank account at the very first mistake you make (for example, late payment). It's their job to make money off you so be cautious.

5) Learn all you can about money

If you dont know to calculate your EMI or dont know how to write a cheque or if you hate going to the bank or reading long contracts and terms and conditions or other related concepts, please do not take a loan or a credit card. You will suffer the consequences. Lots of people are in deep financial debts simply because they didn't read the fine print or have put wrong dates on their instalment cheques.

I hope this helps you when you decided to take a loan.

We want STD at 10p/min

TRAI had last year recommended unrestricted domestic telephony which would have allowed mobile subscribers in India to route their STD calls via the Internet, thus making them very cheap, nearly 10p/minute

However, the telecom operators like vodafone, idea cellular and airtel are opposing the move to allow free domestic telephony because they had paid huge licence fees of around 1600Cr that allows them to provide STD services to their customer and allowing domestic Internet telephony will cause them loss in revenues and provide an advantage to ISPs

Why should the customer have to suffer for the poor judgement on part of the cellular operators. Nobody forced them to pay such huge amounts for the licence. They didn't have foresight on the potential of the Internet for which they must pay the price but instead they are bullying the TRAI into preventing the ISPs from providing a cheaper and better option for the consumers. 

Fuel Prices raises fear of deflation

Its not the consumers who fear deflation. Deflation is when the prices of items don't rise significantly. With fuel prices being cut, deflation seems to be eminent and has some people worried. Who are these people, definitely not you and me?

The people who fear deflation are the very people who knock on your door, ambush you outside your office premises, make unsolicited calls on you mobile etc etc. They are the mutual fund, insurance, provident fund companies. Now that you know who they are, the question is why do they fear deflation?

For some years now these companies have been trying to convince you and me not to have our money lying in the savings account because it will loose its value due to high inflation. If the banks give an interest of 4% and inflation is 6%, a Rs 100 note in your bank will have the value of Rs 98 the next year. That why, they say, you should invest your money in (risky) mutual funds that give you more than 10% interest. Thats how they've made money for you and themselves have become giants in the financial world.

Now that inflation is down, they cannot tell you that your money is loosing its value and therefore do not have a valid reason to ask you to gamble your money in the stock market. I don't know what they'll tell you but I do know that they'll persuade the govt to decrease the interest rates to neutralize the growth effect deflation has on your savings. But for now, govt will not listen for now because elections are around the corner and prices must come down for the govt to prove that they've made progress and successfully defended and defeated the spiraling inflation that plagued our country (India) few months back.

Home Loan Refinancing in India

Home Loan Refinancing simply means that, if you have an existing home loan, you can repay it by taking a new loan which has better interest rate and/or terms and conditions.

Why would you need to refinance your home loan?
1. Interest rates in the economy have dropped which is why switching from the old high cost fixed rate loan over to a new fixed rate loan at the lower rate proves profitable. You can do this provided rates have fallen enough to cover your prepayment penalty and the up front costs of initiating a new loan (like processing fee, administrative fee etc.)

2. If you plan to sell the home during the tenure of the original loan you will need to terminate the loan borrowing the remaining principal amount against the home equity or from the potential buyer.

3. Switch from a Fixed rate loan to a more flexible Floating rate / Hybrid product You may want to switch from a Floating rate loan to a fixed rate loan if interest rates start to move up.

4. You can lower your monthly installment payments by extending the tenure of the new loan. In order to improve your monthly cash flows you can prepay an existing loan with 5 years to go by taking a new 15 year loan for the remaining principal amount.

Fear of loosing job drives man to commit suicide

Do you love a job? If you loose it will you feel like a loser and commit suicide? That just what a 23 year man from Satyam did. Its sad.

Everyone should understand that money, job, companies, scams are all virtual. They dont exists and are merely created to make things more challenging and tempting.Whereas life, family, happiness etc are real. How can you give up something real for something virtual that never exited

Advertisers Committing Moral Pedophilia!

Have you seen advertisements these days. Dont you think there are too many kids in these ads. Gone are the days when children used to be sparingly used for chocolates, candy and nutritional drinks, biscuits, and so on: stuff that were only meant to be consumed by kids. People believed in the evil eye and thought that displaying their kids in public, let alone TV will cause harm as a result of envy of others. But today kids are seen as an alternate income source of the family, atleast the cute and talented ones(i didnt mention smart since those kids are only supposed to study).

Im not against kids working, I believe it bring discipline. But what I hate these days is that the way kids are used to bring out emotions in brands that first, dont require kids and second, the product needs to be chosen on logic not emotion. Insurance is just one product. Every brand is competing amongst each other, not in the benefits of their product (and what clauses they hide) but in how much emotion and GUILT they can bring in out in the viewer. If you dont insure, your daughter (and not son) wont have money to pay for their education, you family wont be able to live a happy life, your wife wont be able to afford your daughters marriage etc etc. Not just that, you are branded as smart (ICICI prudential advertisement) if you select their product; else it implies you are dumb.

And what about cell phones (Reliance, Vodaphone) and other products like electronics(LG, Samsung), toothpastes(close-up, miswak pepsodent etc) even cement(Ambuja Cement). I feel companies are trying to show innocent faces on Television to show how honest and innocent they are. That they care about you like a parent cares for their child. We all know that is far away from the truth unless you are talking about turtle parents.

I hate govt regulation but I cant help but wonder whether in this case it is required. Then again nothing is enforced in India and there are always crack through which you can getaway with anything.

An undeniable fact is that advertisers have lost their creative neurons and are stooping to new lows. They have run out of ideas. All that they can use is Sex, Violence(in most bike ads like Pulser, Hero Honda etc) and Children. Although it hasnt happened till now, its just a matter of time that some imbecile with a deadline and without new ideas will combine all three.

Can we turn away from them, yes and no. Eitherway if this doesnt work and some day it wont, advertisers will seek new ways of attracting and attaching customers to their brands. Untill then one things for sure, there are a lot of parent who are smiling away to their bank accounts.

Why I use Kotak Bank

I have a Kotak Bank account and I'm more than happy with the facilities they provide. Well, I first opted for Kotak account because of the trading account that came along with it. Since the bank was new the politeness and hospitality was expected. The best and my favourite was the netbanking. Simple and easy to use. I used ICICI and HDFC both had their issues (with me to be fair). Before Kotak, I liked Citibanks' Net Banking but had to abandon than when they decided to cut cost and shut the only ATM in Goa.
I needed a credit card for online purchases but didnt want the risky baggage that came along also know as Terms and Conditions. Kotak provides a solution in it net card where it creates a temporary (virtual) credit card for you for the amount you allot from your savings account. The credit card is valid for one day. You can make your purchase and the remain unused money comes back to your account when your card expires. Simple, neat and hassle free. Oh yes, interest free to.The only think you cant do that i realised today was to book railway tickets online. I hope they work on that.
So when opening your bank account, have a  look as kotak as well.