interesting article by Yogesh Chhabria

It's interesting article by Yogesh Chhabria.....

LATELY, I have been thinking a lot about the Lehman crisis .. Spending money
that they didn't have and going beyond their means is one of the mainreasons for their situation today. In fact that is the cause for thecurrent economic crisis in the US.
When I see all this happening, I can only remember the good old days. Then,
karz was bad. People looked down upon those who took loans. Parents wouldnot give their daughter's hand in marriage to a man with loans.
But of course, the times have changed now. Everyone I know has a loan. Thebuzz word is EMI (equated monthly installment). Today, you can buyeverything on EMI - a house, a television, an i-Pod. In fact I know ofsomeone who just bought a fancy BMW 3 series on EMI, instead of buying acheaper car outright with cash. I mostly prefer to take public transport,but then I am an old man with old thoughts!
Anyway, coming back to what caused the crisis. Imagine having Rs 2 lakh inyour bank account, no regular income, yet buying a house worth Rs 65 lakh,in the hope of selling it for a higher price. Even if the price of thehouse fell by just 5 per cent (that is Rs 3 lakh), you will go bankrupt.This is what Lehman Brothers did; with around USD 20 billion they went andbought assets worth over USD 600 billion. Isn't it suicidal and simplyfoolish?
I am sure things would have been different, had I been the head of Lehmanbrothers. But who wants an old conservative man like me to head a complexfinancial institution.
But there are a few lessons that we can learn:
1.Live a balanced life and avoid overspending.
2.Don¢t buy things we don't need.
3.Don¢t buy Branded good¢s.
4.Don¢t buy excess Food, Cloths, Cosmetics, Footwear, electronics andFashion accuraciesjust think before you buy.Tip: World still has a lot of growth ahead and the future holds immenseopportunities for us. Let us make the most of it and save and investitwisely instead of wasting our precious little on things we don'tneed.
5.Try to balance life with work (No one is happy to work in thereprofession¢s).
6. Don¢t stress out your self, after work try to do some extra activitieslike swimming,yoga, walking, running where you can divert your mind from stress.A thumb rule: Health is more important than money.
7.Try to understand each other (Wife and Husband) in financial matter¢s andhelp eachother.
Tip: As soon as you get your monthly salary, set aside a fixed amount,usually 35 per cent, for insurance, savings and investments. You can thenspend the rest.
8. Not all loans are bad. Loans that are 'need based' (home loans,education loans) can always find a place in your finances against thosethat are largely 'want based' (Credit cards, personal loans, car loans).
9. Borrow only if repayment is financially comfortable.A thumb rule: Keep EMIs within 35 to 45 per cent of your monthly income
In that respect, there is one American who I really respect - WarrenBuffet. He has lived in the same ordinary house for over three decades,drives his own medium sized car and leads an extremely regular 'middleclass' life. If that's all it takes for the richest person on earth to behappy, why do all of us need to take extra stress just so that we can getthings which aren't even essential?