Friday, October 7, 2011

Rising Interest Rate…How It Impact on your budget



RBI is constantly raising interest rate since a year.


Inflation has become so scary for middle class people, and if one is paying a housing loan EMI under a floating rate, the EMI’s are going up too creating a picture scarier.




Some suggestions to cope up with this issue are:-


  • As Festival seasons are around like Diwali & Christmas thereafter, look at your family budgets and actual expenses occurred or going to occur, cut down on unnecessary expenses, this is the right time to write your expenses and record it on daily basis.
  • There are so many offers and discounts offered by Consumer good companies and electronic companies this festive season. (If not necessary) Try to get out of this mouth watering offers on LED’s & changing your old car to the newer one as it will increase the burden on your Monthly Budget by paying an EMI towards it.
  • Pay by Cash / Cheque or by Debit Cards Instead of Credit Cards, this will automatically limit your expenses
  • Don’t think of investing extra money to make quick returns….instead Prepay your Housing / Car loan as soon as possible.
  • We as an Indian Middle Class always feels rising interest rate gives them more returns on FD’s, but the fact is inflation is rising with the same pace (example- FD Rate is 10% and inflation remains in the range of 9%-11%) ultimately one is not making money in FD’s + taxes to be paid on FD’s If any) (invest in asset class, which can have power to beat inflation in long run)

 

Manan Mankad

m2(money.manage)