an anonymous reader’s story…read on…
Background : During 2002-06, I was in comfortable job in one of the Tata Companies and loved my work, team and organization. Happily married and blessed with wonderful daughter. 10 years in to the employment, had zero knowledge of personal finance.
In 2004-05, went into the show off mode that too with heavy borrowing. Taken two home loans in quick succession, car loan, two consumer loans for the own home and multiple personal loans. Personal loan taken for my daughter health emergency and also to give lavish gifts to family members.
Throughout my childhood and college life, my dad went on loan spree and somehow it got into me that eligibility of loan was an achievement. I used to feel proud about every tele caller’s call and used to say yes to loan offer. Because I was used to 24% to 36% of my dad’s personal loans, felt loans offered by institutes were damn cheaper. Still remember of taking personal loan with citibank @ 18% interest rate.
In no time I was servicing 9 loans each month. My salary was not sufficient to pay all EMIs and I was borrowing each month (personal unsecured loan) to pay all EMIs.
Near Wipe out Situation # 1 : I had to do something big. Thought of career move and started looking for jobs. But was only getting 30% jump in different city and I knew it would not help me. A chance encounter, applied for few overseas jobs, called for an interview and got accepted with 3X salary in a good company abroad. Honestly didn’t now what I was getting into but there was no other way out. It was desperate situation for me.
Long story short, faced lot of hurdles in run up to getting visa and nearly after 5 months, it arrived. Had to pay 3 months salary for quick relieving (another big drain). Last one month was worst time and with no source of lending from anywhere, had borrowed from FIL who just got retired and got retirement benefits. I felt lot guilty taking loan from him and I could realise very well that what am taking was 40 years of his service benefits.
The day of departure came. It was not my first international trip but extensively travelled within India and went for study tour to UK as well earlier. When my turn came,the international flight ticket counter guy at Mumbai noticed some descrepancy in my passport and told me to get it fixed for travel and he would not issue the boarding pass. My whole world started crumbling from the feet compounded by lack of sleep whole night. All those scenes started to scroll, how would I pay my home loan EMIs, how would I buy diapers, medicine and other essentials for my daugther, whether it was feasible to fix up the passport issue in given time with visa expiry hanging. I almost fainted and someone had to sprinkle water to wake me up. Never felt so low in life. I had few disappointments during study time but it was limited to me. Now I have family to take care and faced with such a bleak situation. Believe me ‘SUICIDE’ option felt more soothing than any other option.
Near Wipe out Situtaion # 2 :
By sheer luck, dramatic turns and hiccups, passport issue got fixed and I flew abroad on the last day of my visa expiry. 12 years later, painfully history repeated. For no fault of us, some stupid rule in the foreign country threatened our jobs and had to pack off. Let me share my journey and feelings this time.
While working abroad, had an opportunity to ponder over my grim financial situation and how I almost ended my life. Started my financial journey and hit up on your blog subramoney.com. Not a single article was missed in all these years. I am a regular reader of other blogs of personal finance too. I read and reread an interesting book ‘Debt is slavery’. Had developed somuch aversion towards debt, just got rid of every loan even though it was not optimal scenario for me. Nothing else mattered (emergency fund, tax saving, investments) except debt clearance in the initial few years. Worked like a hell on the job front, contribution was noticed and got good raises and rose upto the ranks. Post clearance of debts, started financial yoga and here is what I did.
- Saved diligently good portion of the salary (nearly 50%) each month without fail.
- Kept decent lifestyle and did not go for flamboyant life style (avoided renting big house, SUV, Fancy Jewelry, Latest gadgets and so on) for the first 5 years. However did not compromise on good school education for the kid.
- I believe in good living especially in prime years and gradually escalated but did not have to compromise to savings due to raise and promotions.
- Sold off all the depreciating properties in India after clearance of loans which were in my previous employment city. Bought limited real estate in India where I wanted to settle with the sale proceeds.
- Followed bit of AAP – RE, Gold, Debt Instruments (tax free NRE FDs & debt MFs) and Direct Equity
- We had started vacations only after full debt clearance and nearly after 5 years. Been to most of the continents and visited all Disney parks barring one.
Fast forward 12 years, I have built up a good corpus (over couple of millions of USD) that I can afford to retire at 46 in most parts of the world. I don’t have any loans and not worried about market crash because much of my networth is in debt instruments.
I am proud of the fact that today my investments generate passive income equivalent as that of my salary thanks to diligent savings and power of compounding magic.
One big thing that I have learnt from subra blog is that money management is more about relationships than technical (ROIs and RORs). Once burnt my fingers, did not get in to ‘show off’ mode and barring my own family (wife & kids), no one know our financial matters. Did not lend money to anyone although scores of requests that comes every year. I am only dealing with one RM for the last 12 years and he understands me completely and never attempted to sell any product to me nor made any investment suggestions.
Few gaps are certainly there like did not do investment optimization. I could have not cleared the debt initially and had I invested in equity, could have raked in much bigger corpus. My equity portion is still substantially low in comparison to debt but intend to flip in right time. But good part is, direct equity is doing OK.
Do I have any regrets. Yes. Did not start Equity MF SIP till today. Although I know the greatness of Equity SIP, just waiting for the right moment from the last 2 years. I might start in next FY if market reaches reasonable valuation. Buying gold that too substantial amount was another regret. Gold return was miniscule in last 6 years. Should have done slow purchase but stopped buying it in last 3 years.
Not worried about job loss and looked very much for early retirement. Fortunately got offers in hand. In spite of shock, not worried at all and luckily no ‘suicide’ thoughts this time.
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