ExpertDabbler

Lets take the case of X, an IT pro. His net take-home salary is say around 35K.
But his ‘actual’ take-home after providing for his commitments, incredible it may seem, is hardly 7000 per month. With that he would meet whatever little needed to run the family and other general expenses. What happens with the rest? Loans - I mean all kinds of it. Home loans, car loans, two-wheeler loans, personal loans, credit card payments etc. etc. Savings? Excuse me, what is meant by that?

What’s wrong with this financial culture? Well pretty much everything.

Call me conservative or financially ultra-conservative or whatever, but I feel some of today’s educated professionals do not have the sense of financial literacy and discipline that was our parents’ forte.

New age multinational banks in metros have significantly changed the way of spending by offering and sometimes even begging a gullible salaried person to take loans and credit cards for buying products he does not need.

If a person will spend a major portion of his monthly income on debts, where does this leave him in terms of planning for the future, his own ventures in the later years, his children’s education, unforeseen medical expenses etc?

No prizes for guessing, he will take yet another loan.

And there is no such thing as free loans. All of them comes with a steady interest rate and some do have a hidden component as well. I know so many of my friends who have bought palatial houses and grand cars but also eagerly waiting for that long term onsite assignment. Because that is the only way they stand a chance of repaying the loans in the foreseeable future.

Where are we heading? I understand this is boom time in the Indian urban economy. But an economy goes trough cycles. A boom will not remain so till the rest of our lives.

The other intangible losses are that this leaves very little scope for a person to take a risk - a course in some business school or a shift in job. Many of my friends are scared of changing a job because of their existing commitments. Any hiccups in the professional front will have a deep impact in their financials and they don’t want to risk it. If they cannot take a risk in their late 20s, what will they do as they get older and when their dependents grow?

I am not against taking loans. Sure we can always go for a loan to buy that house we always wanted to buy. But there should be a measure about how much of our monthly salary goes for a loan commitment and what goes for savings etc.
Uncontrolled consumerism in the garb of globalization, trendy modern living where a major chunk of one’s hard earned money is devoured by multinational financial institutions as interest just plain disturbs me. It will keep a salaried person always a salaried person, always in the rat race and always insecure about the future.