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Ep #4: Debt

04, Podcast July 24, 2020

Let’s talk more about money.

How to gain money?

How to grow it?

How to become happy with money or without money.

Debt should have neutral emotions attached to it, nor negative norpositive. It is the amount that you “bought” to get something that will help you achieve your goals and bring happiness. Look at debt from a different perspective.

It’s about how you utilize this amount of money and the value that you obtain from it.

For e.g.: A doctor who has taken debt to graduate.

For him, debt would be money that helped him purchase his experience and become who he/she is right now.


To understand debt, an individual needs to look at the total cost (mortgage, car payment, consumer debt, and/or other debts) that they have incurred.

Considering the total cost is important as some products are marked higher and not think of debt as just a monthly number. If you finance something, look at what is the actual cost. This will help you make a different and better decision. 

MISTAKES IN DEBTConsumer Debt Financing:

One should only get credit cards if they can pay the amount off at the end of the month.Try to eliminate debt as much as you can. Cars, houses are not a good idea for debt. 


Home Financing:

Investing in huge houses shouldn’t be your priority. Your house should not be more than 5%-10% of your income and mortgages shouldn’t be more than 25% of your income. It is also recommended to go for 15 years fixed rate for mortgages and pay it off within those years.


Car Financing:

People generally finance a car for $400-$500 a month. Once financing is over for one car the real problem begins due to refinancing of another car. If you invest this much of the amount in the market instead of financing a car, you would end up having more than $500m in forty years. Hence, save your money and utilize it in better ways. An individual thinks that leasing a car is better for expensive cars. We think that cars depreciate and the cost is avoidable. What we are not aware of is that the depreciation cost has already been added to the leasing cost and you are the one paying for it not the company.Borrowers think that leasing a car on business accounts would save them on taxes. But what they end up paying on this car is way more than actual. It is to be noted that never try to get a loan either for financing or for leasing a car. Companies have already calculated the cost and you are the one who is bearing the cost and paying more. 


Final Note:

Debt is more than finances. Ask yourself how much money are you borrowing and try to calculate the interest amount. Think about the things that you buy.

Are they worth it? Are you grateful for them?

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