Rohit (name changed) works in a private company in Delhi. His monthly salary is about 40 thousand rupees. At this time, the festive season has started in the country. New rates of GST have also come into force. The prices of many things have come down. The iPhone 17 has also come in the market. Rohit’s office friends were buying new phones one by one. ‘No Cost EMI’, ‘Trade-in bonus’ and ‘easy installments of 24 months’ … these offers were roaming in front of Rohit’s eyes. Rohit’s heart was also buying iPhone 17.
He went to a shop to take the phone. The shopkeeper explained to him, ‘Sir, there is no need to pay 83 thousand rupees simultaneously. Just pay 7000 rupees a month. Cashback will also be available on your bank card. Hearing this, Rohit’s footsteps stumbled. He said, ‘I am giving only 7000 rupees with luck.’ But when he got out of the shop, he looked at a shop selling books. A thick book was – Warren Buffett’s investment strategies. Rohit turned the pages of the book. There was a line written in it – ‘Loose gradually takes away your sleep, freedom and future.’
People are trapped in EMI trap
Rohit did not buy the phone on EMI, but he is already paying the bike and personal loan EMI. Credit card bills are also being repaid. Every month, about half of his salary goes to pay for EMI and credit card bills. Not only Rohit, there are many people who are paying EMI. This EMI can be of phone, car, home, TV etc. A large part of the monthly earnings is going through EMI.
Statistics show that about 70% of people in India buy iPhone through EMI. A recent study found that 93% salaried Indians, who have earned less than Rs 50,000, are using credit cards to meet their daily needs. Credit and EMI have now become a lifeline, not alternative.
Life goes on with money
It seems easy to buy things on EMI when it is bright everywhere, when it is bright. But when many EMIs accumulate, the interest rates of credit cards are high and you live on borrowed money for appearance, the loss is not just economic. This causes stress, you feel weak, and you see your future bleak.
Doubly pay money
The psychology of EMI is very subtle. This simply means that it is not asked to make a complete payment immediately. Just have to pay a small amount. Sometimes nothing has to be given as a downpayment. Go directly to the shop and take anything on EMI. In such a situation it seems very easy.
But the real game begins after purchasing goods on EMI. Suppose you have purchased an item of 50 thousand rupees on EMI from your credit card. If you miss EMI payment, your liability may double in two years.
Not only this, one-fourth of users are struggling to pay one-fourth of the bye-pay letter (BNPL) plan, which many people consider to be risky. EMI, which was once for home and car, has now become a default for phone, clothes and even holidays.
What is the advice of Warren Buffett?
Warren Buffett has always given priority to savings. He says that a person should live life according to his ability. He often says, “You cannot become rich by spending more than earnings.” According to him, the loan is not just an economic burden, it is a mental burden that increases over time. In India’s current credit culture, this burden is spreading rapidly.
These 4 suggestions of buffet will be useful
1. Save before spending
Buffett says that do not wait until the end of the month to see how much money is left for savings. First decide how much money you want to keep separate, then spend the rest. Even if it is small amount, it matters more than habit numbers.
2. Credit card properly utilized
Use credit only for convenience. Buffett says the credit card is not an additional money. This is just a means to make payment easier. If you are not paying your entire bill on time, then you are already in danger. Credit card interest rates in India can reach about 40% annually. This is not a loan; This is a net.
3. Get into investment habit
Invest money in a place where compound increases rapidly with interest. If you invest a few thousand rupees every month, then the amount will increase faster than your expected. But this principle also applies upside down in terms of debt.
4. Create an emergency fund
Buffett recommends that everyone should maintain an emergency fund. Whenever there is an economic crisis, emergency this fund works. In this way, you do not have to be forced to swipe your card in the worst time or take another EMI.