THE DARK SIDE OF CREDIT CARDS | Fix Your Finance Ep 34 #Finance

In today’s CashNews.co, we will meet Akash, who has changed his job thrice in the past year. He has a lot of Debt, struggles with impulse spending, but in 2023, he has finally decided to change his financial health. Today, I am in Navi Mumbai to help Akash fix his

Finance. And if you want to help me, then before the CashNews.co starts, press the like button right now. Hi Akash, how are you? What do you do now? I am working as a

performance marketing executive. It’s an agency and I have been in this profession for the last 4 years. If a company comes to you, what do you solve for them? Every company has their own requirement with their product. If a company wants to run their product as an ROI based, or they have a

service which they want leads for, so all these kind of requirements, I make sure that I execute those campaigns on the platform. Currently, what is your total compensation? Total CTC would be ₹ 8.5 lakhs. In hand monthly would be around ₹62,400 So, there is a variable bonus, a joining bonus?

Yeah, there is a joining bonus of 50k that comes with the first salary. How long have you been in this company? I have joined this month in April. This is my first month. What was the reason for switching to this job? Yeah, it was purely a situation in which I have completed a tenure and now I want

to step up my remuneration as well. So, I had to take a switch. How much did you earn in your previous job? 48k and 6.2 as CTC. So, you have almost got a 25-30% jump. Yes. Right? How long have you been in this job? Total 4 years of experience. So, where do you stay? So, I stay with my parents in

Panvel and my workplace is in Gansoli, Mumbai. Okay. Is this house owned or rented? What is the situation? This house is owned by my parents. Okay. So there’s no rent Zero. So you save a lot of money in that. Okay. What is the situation of food after that? Mostly, my mom cooks. I just keep an

expense of 100 rupees, per day. It would be some snacks and anything. Otherwise, tiffin is obviously there. So, that’s an expense of about how much? ₹3000-₹3500. How do you travel? I have a bike. It takes around 1500 of petrol for the entire month. And the bike that you have bought, did

you buy it in cash or in EMI? What is the situation? It was a Loan 2-2.5 years ago and currently, 3-4 months EMI is pending. How much is the EMI of that? ₹2700. How much is the amount? The bike was ₹96000 and the Loan was ₹74000. Okay. Rest, you have done the

down payment. Do you have other areas where you are spending your money? I have a course fee which I pay around ₹3900 per month. Upskilling course? Yes. And also, I pay around ₹10k to my parents for grocery and… It’s like a contribution towards household expenses and everything. So,

all the bills that I can pay online, I use that money to pay the bills that they don’t have to pay. You are talking about the upskilling course. How long is this course going to last? This is 3 years from now. After that, what are you expecting? Like, will there be a significant jump in the

pay and everything for you? Yeah. So, this will actually help me to get eligible for a lot of jobs that I am not right now. Okay. And then obviously, after 3 years, I will be looking for a different job. After that, what do you do in your weekends? Like, food and all that. Do you have any external

expenses? So, around ₹3000 I would keep only for restaurants. Okay. And mostly, if there is a movie or something, then around ₹5000. So, you are saying that movies are ₹5000? Around ₹5000. At least, I won’t go alone. So, 2 people, popcorns and everything. Yeah. And if you count 3

movies in a month, it is 5000. But, are there 3 good movies in a month nowadays? Even if there is not a movie, I will expect to go around the theatre and if something is now showing, I will go. So, the money you send to your parents, your fixed travel, food, accommodation expenses and your going

out expenses, all of these together, is ₹30,000. Hmm. Okay? Yeah. What is the problem? This is just 50% of your Income. The challenge is basically, I usually spend a lot more into small, small impulse purchases, which does not let me have that Savings or

investment kind of thing. Your last drawn salary was ₹48K. In the current situation, your ₹18K should be saved. Yes. Okay? What are you doing, because of which nothing is saved? What happens is, I make some purchases and I pay with my Credit cards. And after that, I mostly use

my Credit cards for paying the rest of the current month’s things. So, basically, you end up spending a lot more using your Credit cards. Yes. Where do you spend this money? Where is it going? What kind of things are you buying? Let’s say, for example,

I was into YouTuber first. Instead of buying a microphone of ₹300-₹400, I got a Blue Yeti, which costs around ₹12,000. Yeah. So, mostly anything with gadgets or something, is that I have a liking for pens. So, any pen would cost me, a good pen would be 600-2000 rupees. You feel really good

after buying these things, I’m guessing. Yes. And how much time do you wait? Let’s say, you see a Blue Yeti microphone. Okay, you like it. Yeah. Within how many days do you act upon it? I research a lot about it for a week or two. And then, in the next month, I try to purchase it

directly. Every month, your Credit card bills are running and these are basically purchases. Yes. Nothing else. No. But is this like a situation wherein you have converted a few expenses or a few purchases into EMI? Did that happen or are you buying new things every month? So,

there was a washing machine which I purchased in a previous month. So, I converted that into an EMI at 13%, I think. Okay. Washing machine was not available at no cost in EMI? No, the offer was not available on that card. Okay. How much was the washing machine? It was around ₹43k for a washing

machine. And the rest, setup fee and motor and everything would go around ₹50k. But I’m guessing that you could have got a good washing machine in ₹20K-25K. Correct. I have understood your mentality completely. What are some other things wherein you have used the same mentality, made

similar purchases? Two years back, was a big purchase was my TV. It was ₹1.65 lakhs TV. Okay. Yeah, my father paid the half but I was the one who wanted to buy a ₹45K TV. And I was the one who wanted to push them for that. But do you understand the difference between a 50k TV and a 1.65k TV? Is

it that much of a difference as compared to the price difference? Now that I see that way, it is a regret because at one point, The TV costed 1.65 lakhs but now after 2 years, that same kind of technology is available at 50k. Yeah, yeah. So, I have paid the early adapter fee. So, that is something

that I would like to change if I was sent back. He has said it right that if you buy any TV, if it is a 2023 model, that thing will be obsolete by 2025. Because every time a new panel is coming, new things are coming. Apart from your current Loans and Credit card

Debt, have you ever taken any Loan before? That is basically when I was into day trading. So, I used to trade a lot on a scale of ₹1.5 to ₹2 lakhs with a budget, which was not something which resulted in a good way. And I ended up losing a lot of money there.

And that’s where these Credit card Debts actually started. Then my father took things into hand. He took a Loan and he cleared off all those Debts. Since then till date, I have not invested a single penny into the

Stock Market as of now. Of course, your personal experience was not the best. And that’s the thing guys, whenever you guys or any of us are talking or thinking about day trading, we only think about the positive examples, which you get in the internet, newspapers, novels. But

as a stat, 95% of the people who trade in the Indian Stock Market end up losing money. So, what is your total Credit card Debt? What is your total Debt? The total Debt would be 3.7 lakhs. And in which

Credit card Debt should be ₹1 lakh. What is the Debt of the course? ₹1.2 lakhs. How much is left of the bike? ₹15,000. Okay, what about the rest? The rest is from the friends I took the Loan from. So, it is ₹1.15 lakhs. How

long has it been going on? It is not a tenured thing. They wanted to help me out whenever I needed. It has been there for around 8 to 9 months. But I am trying to pay them back as soon as possible. So, your first priority is the friend’s Debt? Yes. You said that you are going

to get a join in bonus from your Income, right? Yes. How much is that? 50k. 50k. That is going to come at the end of this month? Yes. So, can you service the whole ₹50,000 to that Loan? Yes. That you can give to your friends? Yes. How much will you have left

after that? Total around 2.7 lakhs. According to you, what is your current financial priority as of today? I would say that my education Loan is going to keep on going. What is the interest rate of that? It is actually 12% to 13%. The friend’s Loan has no

interest No. And your Credit card Debt is around 35% to 40%. Yes. You have converted to EMIs, right? Yes. and none of them are no-cost EMI. I personally feel that you should first attack the Credit card Loans because it has a lot

of interest. The most important thing according to me for the next two years is that you should only focus on clearing all these Debts. And for that, you will have to increase your Income. The skill that you have is in high demand today. Performance marketing is

something that every company wants to do. I feel that in the next six months, you should try to get at least two clients. From which you are earning ₹10K-15K And the ₹30K that you are getting every month, you should only service your Debt with that. You have to increase your

Income. That’s the first thing. Second, you should also decrease your impulse purchases. Wait it out. It happens that you don’t need a microphone for a long time. You don’t need a washing machine. You can settle for a cheaper one. So wait for some time before you

make any purchase decisions. And third is optimize your spending. So now you have to pay the Loan. You have to spend money to pay the Loans. Okay. But you can optimize it better if you save every month and pay the principal amount Let’s say every month you

have an EMI of 13,000 rupees. If you put 25,000 rupees instead of 13,000 rupees, whatever is 12,000 rupees extra, that will go to reduce your principal amount. Do you have an emergency fund by any chance? I am not able to create that because I have always been trying to pay up

Loans. And that emergency fund is not made in the middle of catch and run. The challenge here is that if you go without Savings And if anything goes down, you will go back to the Credit card Debt problem. Yes. Now you will go back

to the same cycle. So I personally feel it is equally important to also build your emergency fund. I had only one challenge. I had an interview. An interviewer told me that in March you had ₹35K, in June you got ₹48K. And now you are asking for a hike again. 30-35%. So you want to increase your

salary for the third time in the same year. So that’s when it struck me that okay, I am now touching the roof. That this year I might not be able to do it. Obviously I have to stay somewhere. That’s why I am saying that you should get into freelancing. Spend your extra time on that. I

think you can easily earn ₹30K-₹40K from two or three clients. Switching jobs every three months is not good for your career also. Think about it. If you come for an interview in front of me, okay? I will think that if he has left three places in a year, then he will leave me after six months.

Yeah. While I was actually going through your CashNews.cos, I see people keeping ₹10,000 aside a month to travel. Or maybe investing in some… which may be right or wrong but they have a Portfolio and at that point of time I really envied because I never reached that stage

where I can think about all this That’s the whole thing right? Personal Finance is very personal The reason why I am doing this also, okay? I could have just said all

25 year olds should invest like this, should save like this, should do all this But everyone’s circumstances are very different Everyone’s background is different, everyone’s exposure is different Everyone’s experiences are different, everyone’s education is different

If you compare just by looking at the age, you are also being harsher to yourself According to me, you have to do only 3 things Earn more, cut costs and optimize your spending by constantly decreasing your principal Do this, give yourself 18-24 months And I am sure that the next time I get in touch

with you I hope after today’s conversation, you are in a better position Yes, definitely And that’s all for today’s CashNews.co guys, if you liked anything in this CashNews.co Then please hit the like button If you are new here then subscribe to the channel And if you want to be a

part of these conversations We go to different houses every week Right now we are going to Bombay, after a month we may go to Delhi or some other city So just fill the form in the description below And I will get in touch with you very soon Goodbye