“If you buy things you don’t need, you will soon have to sell things you need” Warren buffet. Now a days people are spending huge amount of money on luxuries and for the same they take on debts. People have forgotten the concept of affordability, people themselves don’t know what they can actually afford. You can afford a thing only when you can buy that thing in cash i.e money you have already earned. Now people think that if they are eligible to take a loan for a thing that means they can afford it. In todays world credit is easily available to any person earning a minimum salary. From buying a cell phone to buying a house people are getting loans very easily. “……Now With EASY EMI” are the most dangerous words you are hearing these days. It is projected to you that buying things on EMI is a very easy and cost effective way, but people forget to calculate the processing fees, other charges and interest. Taking personal loan at the rate of 10-11% for things which are not required is a proper waste of money. People love paying bills through credit cards but are unaware of interest rates which swing from 18-24%, 24% Per annum means paying 2% every month which is huge….HUGE. People pile up loans like Car loan, credit card bills, home loan and Many other kind of loans, this leads to payment of huge interest. People pay as big as 70% of their income as EMI’s which is fatal for their future. Rather than investing money people keep servicing the loans and end up with no investments. In conclusion, loans are not bad if they are take for the right reasons paying sensible interest on it. Luxuries should never be bought on loan. Your EMIs should not be more then 30% of your income.
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