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  • Category: Miscellaneous

    One who is debt free is the richest

    We often tend to compare ourselves with people around us regarding material comforts we are possessing. Sometimes we feel that others have a big house, a big car, costly branded items, furniture etc while we in their comparison have a small car, small house and reasonably priced items at home. Now a question comes who is richer? You or that other person? The answer obviously seems another person.

    But just wait. Sometimes this richness, pomp, and show by few people may merely be a show business. When you try to have a closer look at these people sometimes you find that most of the things they possess like house, car etc are on loan and they are paying EMI for it. Loan for a big expense like buying a house is quite understandable but for other comforts, it is better to avoid taking loans.

    So most of the things they possess are through debt and do not belong to them truly. Assuming that in your case whatever little you possess is by your own earning and not through loans who would you consider richer now? Yes, the answer is you yourself since you are debt free and you do not owe any money to anyone.

    It is advisable always to spend as per one's capacity and it is far better to have small things with your own money rather than having big things via debt by taking loans.
  • #630922
    Nicely said and rightly observed. We must live such a life just with the available things , the life must be adjusted without extravagant expenses and thus self discipline on expenditure would bring a drastic change in us and therefore debts are avoided to much extent. Normally I have seen people with little earnings and they seems to compete with their friends and relatives in acquiring things which are not required at all for their living. Just for the sake of competition things are purchased and never put to use properly and thus the burden of credit goes up which gives uneasy calm in the life. I am of the opinion that as long as one prefers to live in simplicity and for the self, the rest of the life is assured to be peaceful from debts and worries . And if a person inculcates the habit of savings on his own, surely he would desist from extravagant expenses and debts.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #630923
    I feel that a person without any debt lives a very peaceful life. But, in the present society, debt has become almost essential. The financial experts divide debt into two classes, viz., good debt or bad debt. Bad debt, i.e., debt to purchase perishable and consumer goods must be avoided at all cost. But good debt, i.e., taking a loan for building a house or for the education of children is essential. It also helps in saving tax.

    But all said and done, debt-free life is very desirable for peace if not for prosperity.

    Beware! I question everything and everybody.

  • #630931
    Impulsive buying using credit card is one thing but availing home loan or education loan in deserving cases is totally a different thing. Taking car loans and home loans is a norm in developed countries like USA where rate of interest is very very less compared to rate of interest in India. Generally, it is in the range of 4 to 5 percent compared to 10 to 12 percent in India.

    People working in other cities have to rent houses for living and pay a monthly rent. Therefore, the trend nowadays is to take loan, buy a house and instead of paying monthly rent, pay EMI of the loan.

    Having said so, I concur with the views expressed by the author that loan should not be taken merely for showing off. In my opinion, bank loan should not be taken for buying jwellary or electronic gadgets etc.

    Let us encourage each other in sharing knowledge.

  • #630972
    Yes. I agree A debt free man is the happiest man. Definitely he is the richest man in the world. These days making loans is a fashion. Purchasing items with a credit card and paying EMI is the fashion of the day. I have never seen any person without loan or debt. The old generation people especially we born before 1950s are very scared of taking debts. But these days the other people will always go for purchases with loans and more than 50% of their salaries will go for these EMIs. Nobody bother about these loans.
    I 100% agree with the author that going for loans for show off is never advisable. Taking bank loans or using credit cards without money in your account is not good. If you have money as a fixed deposit or in other savings we can go for credit card use and pay the total amount in one go. But no loans and EMIs.

    always confident

  • #630974
    Well said one, people who are debt free will be leading a peaceful life than others. When we take loan no one cares for the interest rates, as it is high in India and it will take double the time to pay off your loans. We can see that people buy things which are not necessarily needed in their households. They are doing it for showing off with other high society members. One need to take proper care before you go a car loan or home loan, as you need to have a certain amount of deposit in your account to pay off your loans.
    "Earning knowledge is by sharing it with ISC and we will rectify our mistakes."

  • #630987
    A very good thread and nicely observed by the author. I agree with the author that a person free of the debt is the richest person on the earth.
    Honesty is the best policy.

  • #630994
    I totally agree with the author. I have read the best book about financial literacy which is Rich Dad Poor Dad by Robert T Kiyosaki. The books says that one must focus on increasing the assets ( inflow of money into the pocket) and decrease the liabilities (outflow of money). As per the author, person called A who has monthly income of 80,000 and expense of 60,000 is considered equivalent with person B with monthly income of Rs 50,000 and expense of Rs 30,000. Both have Rs 20,000 left at the end of the month. Here controlling of expenses increases the savings. Thus, low debt or zero debt is always better than huge income and huge expense.
    Dr. Paresh B. Gujarati.
    Mechanical Engineer.
    'I'mprovement always begins with 'I'.

  • #630997
    This looks good on paper but not in practice. Is it possible to possess the basic requirement of a house without any loan? The younger generation which is trying to acquire as many necessities as possible at an early age has to go for loans and acquire them. It is not the question of a loan but the purpose is more important. There is nothing wrong if one takes loans for necessities. Everyone wants to be debt free but to acquire a property, it becomes necessary to borrow.
    " Be Good and Do Good "

  • #631306
    A thoughtful thread that would apply to a few families in every neighborhood. Most of us would be content to lead a life based on our earnings, with an EMI for a flat, a compact car and children's educations. These are acceptable because in today's world earning a honest living and taking care of the family would be impossible with loans and EMI.

    Living little beyond our means for mandatory positive needs like the above is acceptable. What is unacceptable is taking this too far and ending up with EMIs double or more than the monthly earnings, all for the sake of having the latest iphone or ipad, the luxury saloon car, a lavish lifestyle. Times changing and when the inappropriate means far outweigh the end, life comes down crashing with debt and insolvency.

    So, having an affordable debt for good reasons(children's education, start-ups, a home) is like an investment for our future. Such people would be happy and at peace which is a sense means being truly rich.

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