Living on 50 Lakhs Package in India | Fix your Finance Ep 19 #Finance

2022 has been one good year, right? -What was the Loan amount? -Around 62 lakhs. So I think this car Loan is one area where we could have made a better financial decision. Savings, as in, if you say emergency fund, nil. Nothing. You

don’t like to read up about all these stocks. Personally speaking, this was one of my favourite episodes. Hello and welcome to another episode of Fix Your Finance, powered by CRED.

Today, we are in Electronic City. We have Shilpa and Harish with us. Both of them are computer engineers and work in software companies. Thank you so much for inviting us. How is it going? -We are all good, how are you? -I’m doing good. Perfect. Since how long have you been in Bangalore? For

the past 8 years. 8 years. What about you? 10-12 years. So you must have lived in different parts of the city? Kind of, yeah. From Silk Board to here, I have. So what do you currently do in your job? Basically, my profile is of a Java Developer. As a Java Developer, I am into the Cyber Security

domain. Okay. What about you? My role is devised Java Developer. So I build software on top of hardware. Mostly things related to motherboards and everything. You joined this company in May 2022. Before this, how much were you earning? I was earning about Rs. 40,000. And right now, what’s

your current Income? It’s around Rs. 1,24,000. Rs. 1,24,000. So that’s a three times jump. Which company… Was the previous company not so generous, or is this company too good? I would say the market was good. Yeah, it was in demand. -Do you think you were

underpaid in your previous company? -A bit, yes. Okay. So how hard was the negotiation bit? I won’t say it was very hard, because that time -the market was booming for us. -Yeah. The switch was very easy. What about you? How much do you make? -I get Rs. 1,26,000 monthly. -Okay. -So

collectively, you guys are earning Rs. 2.5 lakhs. -Yeah. Because you have seen such a big jump this year, Have you also seen your lifestyle enhancing in the last 6-8 months? Actually, before changing our lifestyle, -We did invest. We got a home and all. -Oh, congrats! So, I’m guessing…

Did you take a Loan for the home? Yeah, we got a Loan. -What was the Loan amount? -The Loan amount is around 62 lakhs. Okay. What is the EMI amount? Rs. 57,500. And what is the price of the house? -Rs. 76 lakhs. -Rs. 76 lakhs. So

you arranged about, almost 20% of the amount as a downpayment. One great thing that you guys are doing is that in the first 2-3 years, the interest component would be very low. So in the first three years, you are only paying off the principal, which is basically reducing the tenure of the

Loan in a way. But currently, you are staying in a rented apartment. -What’s the rent for this place? -Rs. 20,000. Do you travel every day to work? For me, it’s work from home, so I don’t. -What about you? -Two weeks… I mean, sorry… -Twice a week?

-Twice a week. And how do you travel? Volvo buses? They haven’t introduced Volvo buses after the pandemic, but I think they will start next year. Right now, I’m driving. Only for 2 days. -So when did you buy this MG Hector? -Like, 3 months back. So, three months back you bought a car.

When did you buy the house? -May. -So 2022 has been one good year. Right? Like one big step year. What was the cost of the car? Since it got registered in Kerala, I got it for 28 lakhs. What part of this car’s total cost was Loan and downpayment? The downpayment was around

2.5 lakhs. We took a Loan for 26 lakhs. Since we had a little lumpsum amount, we added that, and now the Loan amount is 22 lakhs. What’s the EMI and what’s the tenure? EMI is Rs. 40,000 and tenure is 7 years. So I think this car Loan is

one area where we could have made a better financial decision. Since a car is not an "asset" asset, it’s an asset that is constantly depreciating, the EMI should not be more than 10% of your total Income. And the Loan duration should not be more

than 4-5 years. In your case, you have taken a Loan of, I think, almost 20% of your total Income, and it is similar to your home Loan. You get it? So it wasn’t that valuable. Is there any way we can close the Loan faster?

Your car Loan? Yeah, we have to do that, actually. Can you get me my laptop? I’ll just show it to you. This is the EMI calculator. I have put up your Loan amount, the rate of interest and the tenure. The EMI turn out to be Rs. 40,000. Okay? Now, if you

continue paying Rs. 40,000, then this Loan will be there for 84 months. 7 years, okay? Now, if you want to close it earlier, then you have to do something more than Rs. 40,000. There are two ways. The first way is, every year, you save up Rs. 80,000, or Rs. 40,000. and pay one or

two extra EMIs. If you put two extra EMIs every year, then you’ll be done with the Loan in 66-67 months. -That’s five and a half years. -Okay. The other way is, every year, all of us get a pay hike from our companies. Why don’t we use a part of that pay hike to

increase the EMI amount every year? That’s possible, right? In this case, let’s say, we are increasing the EMI amount every year by 10%. Your amount will be cleared in 64 months. -Okay. -Five years and four months, okay? I am giving you this calculator. Play around, and I hope you take

the necessary actions. Okay, apart from this, what are some other fixed expenses? -We do send some money to our parents. -Okay. Then, we have a parental Insurance. Just separate from the company. Okay, how much do you send your parents? Almost around 15k. Rs. 15,000, okay. What

about the Insurance for your parents? -It’s about Rs. 5,000. -Every month, okay. So you have Insurance for yourself and your parents. One person is missing, which is your dog. You need a pet Insurance, because if he ever falls sick, you will

need the best treatment, and that can be an expensive affair. So do get pet Insurance, okay? Tell your parents, okay? That’s one thing. So how do you guys manage your food? -Mostly, we cook ourselves. -Okay. -And do you have any help? -No, we do it ourselves. -Both of us.

-Perfect. How much do you spend on groceries? Almost Rs. 8,000. Rs. 8,000-10,000. That’s a decent figure, a realistic figure. How much do you spend on ordering from outside or eating at restaurants? Around Rs. 2,000-3,000 ordering out, and on restaurants, the same. Around Rs. 2,000-3,000. So

you guys don’t like eating out as much. It’s a good thing. -Currently, do you have any Credit cards? -Yes. I have one. I have around 5-6 Credit cards. -5-6 Credit cards? -Yes. Because you guys collectively have 5-6

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If you use the link below, you will also get a special referral bonus from yours truly. I can also see that one of you is an audiophile and loves gadgets, because there as a lot of very good speakers and I also saw a Playstation 5. So after buying all this, are you left with

Savings? Savings, as in, if you say, emergency fund, nil. Nothing. But in mutual funds, we do have some amount. In Cryptos, we have some amount. But when you

need money for an emergency, you ideally would not want to redeem that or your Equity investment, right? So, start building up an emergency fund. It can be a recurring deposit, it can be a normal Debt mutual fund, but every month, please try to set aside an amount

just to have that safety and backup. If you want to calculate the amount, it should be at least 3-4 times of your monthly expenditure. Currently, you’re saying that you’re not able to save much. Do you invest every month? -We have a SIP. -Okay. -One LIC as well. -Okay. Apart from that,

our PF. We do have VPF as well. Like, voluntary. Around how much do you invest every month? Apart from the PF. -These two things, Rs. 20,000-25,000. -Yes, Rs. 20,000-Rs. 25,000. Rs. 20,000-25,000. Okay. Yeah, so what you can do is, for some months, if you could pause those and build up your

Savings, The problem is, those Investments are made so that you can reap the benefits in the long run. Like, 5-6 years down the line, if you need to get your new house renovated or something, those Investments will help you, and help you upgrade

your life. But if you want those Investments to stay there, you need some Savings, which will basically be the wall to protect that corpus. We have a question that we have a three-year gap for the possession of our house. We would need about 15-20 lakhs for the

interior as well as the registration. How to get that amount? Continue with your mutual fund SIPs. Right now, you are only investing in Equity-based mutual funds. This is a 3-year goal, so you cannot have a pure Equity investment. You need to have some in

Bonds, and some in stocks. Now in your case, while having a conversation, I got an idea that you don’t like to read up about all these stocks and everything. So one thing you can do is, there is a category of mutual funds known as hybrid funds which are a mix of

Bonds and stocks. In the last year, it has given around 9%. Over a period of three years, it has given around 11-12%. So in your case, let’s assume that you are investing around Rs. 20,000 every month just for that goal. Just to have that 15-20 lakhs for renovation. So in

that case, assuming a 10% interest rate, this investment should Yield you anywhere between 10-11 lakhs. So the majority part is sorted. Apart from that, if you need, you can also redeem some amount from your mutual fund Portfolio because this is a big life expense.

But don’t consider taking any Loan for this. I’m being very honest, because in your case, the good part is you guys are earning a lot. Even after paying 1 lakh for those two Loans, you are still left with a good amount. But, as the

Income keeps on increasing, if you keep on accumulating more Liabilities, then, even 6-7 lakhs will seem less. You won’t be able to save like you are now. So I’ve recently started watching a lot of Instagram reels. I’m going to ask you a few

questions, and you do this or this, okay? -Who is better at bargaining? -Me. -Okay. -But we end up paying more. -Which means that you are extremely bad at it. -Kind of. -Who is more likely to forget paying a bill? -Me. Who spends more on shopping? Not just clothes. Gadgets, tech, everything. Yeah!

Who is more likely to hide an expense from their partner? Me. -Last thing that you hid from her? -Recently I bought the PS5 subscription. I haven’t told her yet. So this is the revelation! The big moment. Okay. All right, guys. That’s all for today’s CashNews.co. Personally

speaking, this was one of my favourite episodes. You guys were very stressed when I came, but I think if you take these necessary steps, you might be in a better position. So, all the best, and I hope to have a similar call with you guys after one and a half years. -Sure. -Thank you so much for

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