Thursday, April 2, 2020

HOW TO GET OUT OF FINANCIAL MESS.....CORONA SE DARO NA - PART 4 ....



Shanti Kumari was working from home for the past 2 months. This was even before the Coronovirus pandemic hit the World.
Last week, out of blue, she got an email that since her company’s business has slowed down, they did not need her services anymore.
Just last week, her husband, Rohit, who worked as Cashier in a local Darshini told her that his hotel has removed 6 workers and his boss has already that either you take 50% pay cut or look for another job.
This was a SIXER from both ends.

Even though we are healthy, almost everyone has been hit hard by the coronavirus with regard to Finances.
It has spared no one.  This is truly unprecedented.
Almost all types of workers and employees are either working from home or have no work at all as their offices/factories are closed.
Nobody knows for sure when it will be safe to open offices, factories, shops again.
India has come to standstill.
The biggest casualty has been the Workers who get paid in hourly or daily basis.

First thing you should do is
1.     1. DO NOT PANIC AND TAKE ANY DRASTIC DECISION.
This pandemic has affected not just you but the entire World and hence you are not alone who is suffering this pain. Do not get emotional and take rash decision which could affect your finances in a massive way. Be calm and take action only after considering all scenarios. Preferably consult your Financial Advisor and/or your Well wishers.
The good news is that Govt is trying to help in its own ways.
2.      

    2. The next thing you must do is LOOK AFTER YOURSELVES, not just physically but emotionally and psychologically.
It is natural to get depressed and be down on energy and lack appetite in these circumstances. Be why focus on things which you cannot control.
The only thing in your control right now is your HEALTH. Focus on what you can control and do that effectively. Avoid alcohol, sugary food, etc.  

3.      3. DO NOT SELL FAMILY SILVERInstead of selling off your prized assets, consider alternatives.
You can take loan on your Investments, You can take loan on your Insurance, even on your PPF.
check all alternatives. Only if its inevitable only then you should consider selling your Blue chip shares or other prized assets.

4.     4. DO NOT SKIP PAYMENTS
 
DELAY payment of bills and loans, wherever possible. There is no shame in delaying payments when you are facing a crises. DO NOT COMPLETELY STOP making the payment. Consider making part payment. Talk to your creditors. Tell them about your situation.
Since they too are aware of this situation, they could consider giving you relief. Make use of that.
Even some landlords are flexible when it comes to collecting rents.
If the situation is truly bad, do not worry about your credit rating and delay the payments.
Most importantly, if the situation turns desperate, do  make use of the RBI MORATORIUM.


5.     5. 
  
Build an Emergency Fund. Yes…its too late to save for this emergency but its not late to create an Emergency BUDGET based on your reduced level of income. Start with MOST important expenses like Food, Medical costs, etc which are uncompromisable. And gradually scale up. Eliminate all unwanted and non-need expenses without mercy.
But if you do have an Emergency fund as recommended by me innumerable times, it will be NECTOR in these troubled times.

      6.
REDUCE YOUR EXPENSES

Do remember that due to this LOCKDOWN, many number of expenses have reduced and even eliminated (Going out for food, movies, travel, etc) .
Yes....maybe vegetables prices may have increased but these are mainly due to supply constraints and things will be back to normal once lockdown ends.

You would have not got a list of NEEDS & COMFORTSBe unrelenting and ruthless in removing unwanted expenses.
This the best chance for you to reduce your expenses permanently.
And since you do have lot of time at your disposal, consider reducing some more expenses like saving on Groceries by CLEANING out your Fridge, freezer, pantry, etc . do your clothes ironing yourself, etc

7.      7.
LEARN SOMETHING NEW
Since you do have lot of time at your disposal, seriously consider learning new ways of earning income.
Improve your skill set so that you can earn more.
Consider learning a new technology or skill.
 
   8.  
Do not hesitate to take part time job.

Even in this pandemic there are job opportunities for Delivery Boys, Pharma companies, Grocery stores, etc.
Talk to them and offer your services. You could be lucky and get a decent pay.

9.      9. Connect with friends and loved ones.
This will not only keep in happy shape mentally but also could help in form of finances (in extreme cases). And if push comes to a shove, do not hesitate to take help from them to tide over the crises. There is no SHAME in asking for help from those you trust and believe in.


FINALLY,
Do note that like all crises that have hit humanity, even this pandemic will be won over soon. The challenge is to make sure that you do not fall into a FINANCIAL BLACK HOLE.



In a nutshell, 
DO NOT PANIC AND TAKE ANY DRASTIC DECISION.
LOOK AFTER YOURSELVES, not just physically but emotionally and psychologically.
Instead of selling off your prized assets, consider alternatives.

There is no shame in delaying payments (rbi emi)
budgeting
Consider learning a new technology or skill.


Regards,
Srikanth Matrubai



Srikanth Matrubai Author of the Amazon Best Seller DON'T RETIRE RICH
Do read the book and give your valuable feedback and request you to post positive comments on the Amazon. https://amzn.to/3cHUM6M/ You can purchase the book on amazon and flipkart Please subscribe to my TELEGRAM channel https://t.me/MutualFundWORLD/

Monday, March 30, 2020

EMI HOLIDAY BY RBI – BEWARE - YOU COULD GET TRAPPED !

RBI’S MORATORIUM ON EMI COULD LEAD YOU INTO A TRAP
Greetings,
The CORONA Pandemic impact has forced RBI to step in to offer relief to borrowers who obviously are facing huge Liquidity crunch.
RBI has ALLOWED Banks and Financial Institutions to provide a moratorium of 3 months to all TERM LOAN Borrowers.
RBI has clarified that the Credit Score of the borrowers will not get impacted due to Moratorium.
Let’s check one by one.
  1. IS THIS A WAIVER OF LOAN?
No…This is not a waiver of Loan…its just a sort of EMI HOLIDAY.
Please understand, Moratorium means DEFERMENT. So, suppose your loan was supposed to end in June 2021, it will now end in September 2021 (3 months postponement).
  • Will my CREDIT CARD dues be deferred?
    Yes. That can be deferred. But, don’t forget the INTEREST!
    You will be charged interest for the 3 months and you do know the Interest that Credit card companies charge !!!!
  • My EMI gets deducted by ECS every month…. So in April will there be no deduction ?
    There could be!!!!
    Note….RBI has not “Instructed” but only “Allowed” the Banks to give this 3 month EMI Holiday. It’s up to the Bank to give or not..
    Hence you need to request the bank for the deferment
  • Is my HOME LOAN covered for deferment?
    Yes. All types of Term Loans are covered for deferment.
    Home Loan, Education Loan, Car Loan, even BUSINESS LOAN is covered.
    But, make sure to contact your Bank and request for deferment
  • My loan is not with any Bank but with a NBFC. Am I eligible?
    Yes. Indeed, you are. RBI has very clearly mentioned that it has ALLOWED all Banks and Financial Institutions to grant EMI Holiday based on their discretion.
So, NBFCs like Bajaj Finance, IndiaBulls Fiinance, etc are also eligible for this.
  • It looks like a huge benefit to me!
Not exactly. The interest is not waived off…. It will continue to get accumulated and you will have to pay the EMI Holiday 3 months interest too immediately after the 3 months of Moratorium !!


FINALLY,

Please understand that a moratorium only leads to POSTPONEMENT of your EMI payments and not Waiver as such. 
And the postponement will INCLUDE INTEREST FOR THE POSTPONED PERIOD. 
Hence, use it only under Exceptional Circumstances. 
If your financial position allows you the luxury of continuing with paying the EMI. Go ahead and do make the payment.
This will help you reduce your debt burden.  And also, in case you need, fresh loans will be easy based on your payment history.
And if you have credit card…. PLEASE PAY THE DUES….don’t extend it.
Credit card companies charge a compound annual interest rate of anywhere between 36% to 42%.
Moreover, credit card interest gets charged an additional 18% GST
I would rather say that this EMI HOLIDAY is a TRAP as it increase your INTEREST OUTGO and keep you in EMI JAIL for further 3 months.

Even for Home Loan...the EMI Holiday could become a trap in the sense, it increases your burden considerably. 
To illustrate....
Suppose 
Home Loan = 50 lakhs
Rate of Interest = 8.5%
3 months Moretorium period
Additional interest will be
50 lakhs *8.5%*3/12 = 1.06 lakhs
Your additional burden will be Rs.1,06,000/-
Avoid….unless you don’t have an alternative.
Regards,
Srikanth Matrubai



Srikanth Matrubai Author of the Amazon Best Seller DON’T RETIRE RICH
Do read my book DON’T RETIRE RICH . 
Kindle version https://amzn.to/2QRnjNY
Paper back version : https://amzn.to/3cHUM6M/ 
The book is available on Amazon, Kindle, Flipkart
Please subscribe to my TELEGRAM channel https://t.me/MutualFundWORLD/




Srikanth Matrubai Author of the Amazon Best Seller DON'T RETIRE RICH
Do read the book and give your valuable feedback and request you to post positive comments on the Amazon. https://amzn.to/3cHUM6M/ You can purchase the book on amazon and flipkart Please subscribe to my TELEGRAM channel https://t.me/MutualFundWORLD/

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