Small Wins

A quick update on how we are doing

Direct MF

Somewhere towards the end of last month converted the last of my regular MF units to Direct MF units. No more paying commission to some random company. I was not aware of direct MF when I started my investment journey, so gave my account opening form to my bank (convenience since being a salary account a bank representative will visit our office often) instead of directly sending to AMC and they promptly added their broker code.

Lifestyle

I have a wedding to attend this month and generally we would have driven there. But the new me calculated the costs and it came to around 7000 Rs. So checked train options. Given it is November and winter/rainy season here, and the wedding being on a week day, promptly booked sleeper class thereby paying only around 1000 Rs. Its been a long time since I traveled in sleeper class. Hope there are no major inconvenience and we will be able to use more of this cheap mode of transport.

Emergency Fund

My emergency fund is back on track, thanks to the money that I got by selling my old car. I have put it in a regular sweep in bank FD, so it is easily available.

Yet to do

Close my Jeevan Saral LIC policy and use that money to prepay part of my Home loan.

Give me also Springs of water!

October 2017 update

I have not made much progress in the last couple of months in terms of net worth. I need to keep myself accountable and so planning to update the blog more frequently as that would give me the much needed boost to keep up my frugal living.

I have taken a car lease from my company. But did I need it?

First the why No?

1. I am still not FI.
2. I have no job security.
3. Ours is a single income family as of now.
4. I still have 5 years in my home loan.
5. I can use ola/uber as needed
6. Car lease is a 4 years liability

Now for the Why Not?

1. I used to drive when I was in the US. But have never had the confidence to drive in Indian roads. So I wanted to get a automatic car and start practicing slowly, to get myself confident. Our previous car was a manual one.
2. My husband may move out of country if he gets a job and I want to be independent should that happen.
3. Wanted to try driving even when my husband is here, so he can help me.
4. We go out late in the night sometimes and getting a cab is difficult at that time.
5. I am already 36 and if I do not start driving now, I may never learn to drive.
6. Car lease gives me tax advantage and I also will get a  10K gift voucher.

I am still waiting for the car to be delivered, so once that happens will update how I am doing wrt my driving.

Financial Mistake #2

This is a mistake which I realized very recently and I am still working at correcting it. And it is related to my mobile payments. I was having a airtel post paid connection for the past 10+ years and I must have at a minimum paid them upwards of 70,000INR during that time. Last year when Jio was introduced in India, I hesitated initially and then finally got additional Jio connection in Dec 2016. Still I held on to my airtel post paid connection. Then I realized I was not using Airtel data and called airtel support sometime in February to remove data from my plan.

Still continued with my Airtel post paid and then sometime in May converted my post paid to pre paid and then started making calls through Jio. I had to retain airtel as I have been using it as my primary number for more than 10 years and all my records are linked to it.

Then one fine day this week, on my way to work, my manager calls me in my airtel and asks me to conference one of our colleagues while he adds another person to the call. Now this call went on for a hour and most my airtel prepaid balance was wiped out at 60p/min. So I reach office and search for plans and find at 13 Rs for 28 days , I can change this 60p/min to 10p/min which is a real deal. So I immediately add this rate cutter.

After this, I have asked my husband also to move to airtel pre paid. Between us, we should be able to reduce our phone bills by half.

So my lesson learnt is look at all the money outgo and see if there is a better deal around. You never know!

Financial Mistake #1

It was way back in the year 2008. I just had Ms. Achsah and we were literally spending all the money that I was earning. So my mom forced me to buy an apartment even though there was no need for it. We were not going to stay in it. And so after the big economic crash and just before the real estate crash, we booked our apartment with a hefty home loan.

RE price crashed after we booked it and the builder was selling similar apartments in the same complex at 85% of what we had paid (if only we had waited 3 months). Also the handover was delayed and it was handed over to us only by the end of 2010. So right through the economic crash of 2008 and layoffs happening all around me, I was sinfully waiting for my apartment and paying a pre-Emi on this. I was so naïve that even though my teammates were being laid off, I stupidly assumed because I was smart enough in my job, I will always have my job. But now, I know better and frantically saving / investing for my FI. My #1 goal now is to have enough liquid money (from MF & FD) to prepay the outstanding home laon. And I hope to achieve it in the second half of 2018.

Luckily after the apartment was handed over, we always had tenants, which is a good news (touchwood). But the rental income is no match to the EMI. I never thought of pre-paying the loan and let it run.

Then in 2015 when I realized our sad financial status, I took a stock of all the things I was doing. Not prepaying the loan was the top of it. I could have very well increased the EMI amount and my loan would have ended long back. So in 2015, I increased my EMI amount by about 30% and decided to let the loan run its course. I also made a solemn vow J to invest my surplus with the hope that the returns would be higher than the home loan interest. At this rate I hope to close the home loan by mid of 2022, a good 15 years after I first took the loan.  

The rental yield is 2% of the current value. The apartment price has not gone up much, hardly 20% increase in 10 years but since it right on the main road have decided to hold it. Also there is a sentimental reason. My mom is no more but it was she who forced me to buy it, so wanted to retain it in memory of her.

One more mistake I did was to take the home loan from HDFC and every time there is a interest rate reduction I have to pay a conversion fee on it and so far I would have paid atleast 5 conversion fees to them. Yes I do not remember how many times I have paid the conversion fees and that’s how bad I was managing my finances.

On top of it, after paying pre-EMI for 2 years and EMI for 7 years I have only paid 30% of the original loan and the major part of it is in the last two years after increasing the EMI.

And inspite of all this, I still dream to construct my dream home but have decided to venture into it only if I am able to fund it 100% from my investments. Whether I actually use the investments or partially use it and also get a home loan to get the tax benefit will be decided at the time of constructing. For now, I am dreaming of my home.

So here is it for all of you to read, #1 of the many financial mistakes I have made.

PS: I will be documenting the financial mistakes in no particular order.

Its me - Achsah

I write under the pseudo name of Achsah to maintain anonymity. I have been reading a lot about FIRE movement and wanted to embark on this journey myself and what better way to keep myself accountable than start a blog.

I am 36+ now, happily married, single income and one kid. I consider myself asset rich (few inheritance expected, so hopefully will have some physical assets) but when I calculate the cash flow that I would get, it is next to nothing. And being an Indian, I am averse to selling assets to increase my cash flow. Hence the journey to FI.

I do have a full time job which provides me average Indian salary but there is no job security whatsoever. I hope my job situation turns out to be "Nithya kandam and poorana aayusu" :)

My goals primarily are to provide for my kids education, kids wedding (I know typical Indian mentality), a dream house and our retirement.

My financial journey

I am a bit, ok , ok, not so , very late joiner to the Financial Independence movement (FI). I have been trying to streamline my finances since 2015 or so far, but seemed to not really get the rhythm going. So I started this blog as an online account to share my goals, learning & failures and mainly to keep myself accountable.