Friday, 23 March 2018

Prepayment vs investment - My dilemma

Watching the sensex going down every day has put me in a dilemma. At the start of the year, I decided to prepay my home loan since the market was very high and frankly I couldn't understand why. So I decided to not invest and instead use that money to actively prepay my home loan. My calculations showed that if I do that I would be able to close it by this year and without any prepayment by 2022.

I made two part payments towards my home loan so far and my current loan end date is Dec 2020. Seeing the sensex going down, I am evaluating 3 options

1. Stop prepaying and run the loan to its course and close by Dec 2020. Resume investing in MF.
2. Invest 50% of my savings in MF and use the other 50% to prepay loan. I can see this is outright stupid and is more towards FMO.
3. Stick to my plan of prepaying as of now and decide later depending on how sensex goes.

I am leaning towards option #3 now though my brain says option#1.

My reasons for option #3

1. Want to get rid of my home loan and be debt free. This is more towards peace of mind and comfort feeling.
2. With Indian elections in 2019, I am thinking the sensex will keep going down till the elections. Also I do not see BJP forming the government next term and so it will result in political instability which in turn will impact the market. And if I start investing agressively from Jan 2019, I should still be able to ride some of the market downturn due to elections.

So as of now my plan of repaying home loan continues, and I will revisit my stand when sensex goes below 30k.

Till then, continue my dumb but emotionally comfortable travel of prepayment.

Give me also springs of water!

Saturday, 17 March 2018

Mid sprint review and smart goal 1

Spent some time in looking at my finances and where I am currently. 

I have a 
Term insurance
Medical insurance
positive net worth - In case of a job loss, I can repay my homeloan and car lease with my pf and gratuity
Have a roof over my head

My plan forward
Repay my home loan by this calendar year or at the max by the financial year end March 2019. I will not get influenced by stock market movements and start investing in MF. Will continue repaying my HL aggressively. Will repay as and when I get money and not hold on to it, in the hope of saving tax or earning more interest. Do not give in to shopping temptations but stick to the plans and budget I have made for the year.

Let's see how it goes. 

Give me also springs of water!

February 2018 status update

Short month. My husband landed a contract job this month. I am so thankful to God for this job. Even though it is for six months only, I see it as a glimmer of hope in my home loan repayment journey.

Had an engagement to attend out of station and tickets to book for another engagement in April. Travelled by sleeper class in Feb and booked sleeper class ticket for April as well. But then realised it may not work out in April, since we will be travelling with our relatives. Call it peer pressure but I gave in and cancelled my sleeper class and booked third a/c. Lost some money in ticket cancellation.

Other than this messed up ticket booking, managed to keep expenses in check.

Emotionally it was a roller coaster month. One of my schoolmate and his elder daughter died in a two wheeler accident and his wife was hospitalized in critical condition and finally passed away in March. They are survived by a little 3 year old angel who does not even realise what has happened. Was heart broken.

One of my office mate had a personal problem with her husband and was on the verge of issuing a divorce notice but finally the problems were all sorted out and they are back to living together.

Life is not just money and God is sovereign and we can never question him. We all run each day with hope but ultimately it is God's will that prevails. That doesn't give us an excuse to live a life without care or planning for future and so my journey in getting my house in order continues.

Give me also springs of water!

January 2018 status update

January was again a high spend month. A big credit card payment from the Christmas purchases and couple of weddings and guests at home with lunch/dinner made all my budget go wary. To give myself a boost, I made a part prepayment on my HL. Made withdrawal from my MF, since it was at a very high valuation and some money on my own made this prepayment.

Hopefully February will be better. Give me also springs of water.

Sunday, 21 January 2018

December status update

December was a month where our expenses sky rocketed and I lost all control. This being Christmas month and we also travelled to our native by car and gifts to give to people we visited there, our expenses were way too much. Hopefully I can make it up in 2018.

Some learnings - I had some old jewellery that I never wear. I am of the firm belief that even though money and investments are important, we should also enjoy life while we can. So decided to exchange it but then realised, I was going to loose almost  30% of its value interms of wastage in the old and new jewellery. The old jewels were not bought from a shop but were made by goldsmith, so the shops were asking for wastage for the old jewellery also. I did not rush into exchanging but did some shopping around and then exchanged for BIS hallmark jewellery. Lesson learnt. Also I made sure I did not pay any cash and only got jewels that can be obtained with the exchanged gold.  Have been using the new jewels a lot and love them so I consider it as a fair deal. Atleast I wear them and enjoy them.

Give me also springs of water!

November status update

A rather late post, but better late than never.

November went in better than expected. We travelled by sleeper class for the wedding I mentioned.  I was able to control my expenses and felt pretty happy.

Also I encashed my Jeevan saral. So a big win there. And found I have another LIC policy for which I paid single premium way back in 2010. Going to leave it as such and wait for the maturity in 2020. And the proceeds I got from Jeevan Saral plus my old car selling, I used to make part prepayment of my home loan. This s a big move and realised after almost 9 years of home loan repayment, I have not even paid 50% of my principle. This inspite of the fact, that I used to pay more than the EMI by a few thousands every month. Imagine what would be the state if I had not done that also. My aim now is to make payments as frequently as I can and be done with my home loan.

My husband landed a free lancing assignment, so I may get some additional income. Praying for a more stable job and happy for the way things have turned out so far.

My birthday was this month and I did not spend lavishly, was very clear on what I wanted and asked my hubby to get me just a 🍰. Had a lovely day and it was much better than my previous years. Finally realising you do not need to spend a lot to enjoy life.

Give me also springs of water!

Tuesday, 7 November 2017

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.


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!