Jegan Kunniya's Key Ideas from Zero EMI
by Ra Ma Palaniappan

If you spend money that is not yet earned then we may end up in debt.

But if we become impulsive that’s when the danger creeps in.

Loans is the path to debt!

No.

If you take debt, for an item that grows in value, then it is a good debt. For example, education loan, business loan, and to an extent housing loan.

If you take debt, for an item that diminishes in value, then it is a bad debt. For example, automobile loan, loan on mobile phones, home appliances, etc.,

if you have leveraged, “No cost EMI” or “Zero percent EMI”, then the good and bad will be much more relatable.

Is a financing option that allows the buyer to pay the agreed price over equal monthly instalments over an agreed time, without any additional interest charges.

Reserve Bank of India (RBI) has banned Zero percent EMI, in 2013.

Then, what is No cost EMI? Is it not Zero Percent EMI?

No, the present day No Cost EMI, builds on the same concept but has additional interest passed on to the customers/consumers, increasing the price, and offering them as discounts.

A nice illustration video on No Cost EMI.

A debt trap is a situation one gets in if they don’t handle the money well. It favours the lender more than the consumer.

The lenders, including the banks, is in the business of making money. They do so by giving money with more interest rates, penalities, defaulting, etc.,

In my view, the lenders if not from an institution, is even more dangerous, as their means of getting back the money in case of bankruptcy is unimaginable.

1. Housing loan
2. Credit card
3. Automobile loan
4. Personal loan
5. Education loan

of these loans, credit card and automobile loans of found home with many people.

Even worse is the face that there is more than one credit card with individuals.

1. Always pay the dues in full, not just minimum due.
2. Keep track of your credit card expenses.
3. Read credit card statement carefully - it is possible to have erroneous bills though it is generated by system.
4. Do not withdraw cash from credit card.
5. Do not do balance transfer between cards to manage the show.
6. Do not pay another loan to repay your credit card debt.

1. Repay - Simple and Straightforward - Pay the dues on time.
2. Prepay - Simple yet profound - Pay the dues and any surplus that’s left. Paying 1 extra EMI a year can reduce your loan term significantly.
3. Restructure - Difficult but possible - Working with banks to restructure the loan if you are bankrupt. This option gives some breathing room for repayment by amicably working out on a repayment schedule.

If we avoid taking loan, then we can be out of debt trap and lead a peaceful life.

Here are ways to avoid them

1. Create a budget - Most conventional old school style- Take a stock of your incomes and expenses including miscellaneous expenses.
2. Cut down your expenses - Be frugal.
3. Build an emergency fund - at least 6 times of your monthly expenses as emergency fund.
4. Do not take loan - Delay the gratification by saving the money needed to get the product that you want.

Managing money is the most important part than earning. Failing which it will bring bankruptcy in no time.

1. Be diligent with your budget
2. Invest wisely, and not be greedy
3. Take help of a credible financial consultant
4. Have a financial goals and invest for each of them based on priority and urgency
5. Don’t ignore inflation
6. Don’t oversee health insurance even if you are employed and covered by your employment