Wednesday, September 9, 2009
What I've learnt about Money at the GRS Blog.
According to what I've learnt at the GRS blog, following is what I've already implemented:
1) Stopped using Credit Cards totally.
2) Taken a low interest loan and am going to pay off all high interest loans.
3) Am going to buy only what I need or postpone the purchase for 30 days.
I've learnt the following:
The Debt Snowball:
Order the debts in terms of low OS balances as priority, not high interest rate loans as priority. This creates a psychological boost to work towards becoming debt free. Because, one after another low balance OS loans start getting repaid quickly, until only the High amount loans are left.
Creating a Spending Plan:
List down all the debts, fixed expenses, project income, windfalls. Then allot the money towards each one of the expenses. Take into consideration any future expenses like marriage, etc. Plan ahead.
Emergency Fund: I need to have an emergency fund in place. It will help me sleep easier at nights. My emergency fund target is Rs. 50,000/- to start with.
Retirement Fund: I should start saving for retirement. I should be able to invest 6 lakhs per year for retirement.
Automatic Personal Finance: Have automatic debits of fixed bills from my a/c, so that I don't miss out on any one of them and have to pay extra late payment charges.
Every Penny Counts: The power of Compounding interest. Check out this video.