How to Handle Finances Right After Marriage?

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Youngsters before marriage find themselves perplexed when finances are being spoken of.

There is an absence of savings or a very much required emergency fund. Since their money management habits are haywire,it becomes essential that they get improved and systematic after marriage.

If the financial loopholes are not taken care of , then these become one of the biggest obstacles for both the individuals.

We would want to talk about some simple yet essential measures that can help you out during this phase of your life, Hence,we have jotted down some significant points of financial management after marriage. Have a look.
Some ways to handle finances after marriage:-

  • 1. Plan for the uncertainties: – Even if you are stable in your careers and have a good salary, you both need to have a structured financial element in mind. Emergency won’t knock the door and come. Couples today are not really equipped to combat these emergencies, and are under constant stress. Unexpected illnesses, accidents, layoffs can cause a great deal of pain, and hence it is advisable to save a share of your salary over a period of time. This certainty helps to deal with the uncertainty in a much better way.
  • 2. Smart Spending and Smarter Investing : When you are married, you both need to be accountable for what you spend and invest. Spending is inevitable, as it is the simplest answer to both necessities and wants. You cannot blame the other person for the spending. The bottomline is both of you spend, but on different things, and hence there is a need to set a budget.It is required that both of you get on the same page, and focus clearly on the lines of investment. Be it Investing for next year or for retirement , investment planning is the need of the hour. There are many ways of investment for long and short run both. Seeking professional advise also helps.
  • 3. Set achievable financial goals: Having a foresight helps. Deviate from your monotonous life for once, and give considerable thoughts to life after 5 , 10 or 20 years. Anybody can earn money. But judicious usage of money is an art to learn. You just don’t want to walk on a path, there has to be set destinations.
    You should chart out your career dreams, lifelong goals, financial expectations together and set time to achieve and fulfil them. Summarising the important and less important ones and then prioritising them is the right course of action.
  • 4. Combining or Not combining accounts: So while planning finances, the question of having a joint account or a separate one arises.Both the options are working models. Let’s talk about them in detail.a)Separate accounts: – When you keep money totally separate, everything(rent, mortgages, necessities etc) has to be split . Also you need to evaluate what you spend, be careful of not spending too extravagantly, as the entire monetary responsibility shifts its weight towards your partner. Also, you need to plan to spend from each account to gain the tax benefits on Home loans, EMI, Investment Proof etc.

    b)Joint Account – In this case, you would put money in a single basket, and use it to pay off and spend. However this requires financial coordination and a mutual agreement on expenditures. You need to get to the common grounds of spending, because if there is a lot of deviation in spending patterns, then there is a lot of room for monetary imbalance and arguments.

  • 5. Checking Financial history – It is important for you to discuss financial history with your spouse and vice versa. Being aware of the financial history, such as the use and number of credit cards, credit scores, way of spending paints a clearer financial picture. So in case one of you has a poor credit score, then having a joint account becomes is not a smooth decision to make. So decision making is highly influenced by financial arrangement of both individuals.Managing Debts and Saving: It is good to combine accounts when the debts are cleared off in single or both accounts.Saving after the wedding is definitely a good idea, but saving before is essential too. We suggest you to open up a savings account before marriage for setting money goals beforehand and having a vision of future expenses. Both the individuals should invest a portion of their combined income after marriage, and let the account grow.
    I hope we have helped you in making better decisions. Happy Wedding !
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Wise Investment

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Investing your hard earned savings seems a difficult task , but in reality it is not. You you don’t have to be rich to start investing. The key principle is to Start small and start early.

If we focus on the right path to investment, then we would be amused to see the amount that we save in a very short time. It is mind-boggling to see everyone around me spending a considerable time before buying a mobile phone, car or even grocery. But when It comes to investment , the most significant decision of our lives(financially), we just go about it without giving much thought to it.

Hence we want to talk about how investment can be prioritised in the right fashion, and we have the following to explain just that.

7 pillars to build a wise long term investment portfolio:-

  • 1. Put up a road map together: and answer two significant questions:
    a) How long do want to remain invested for?
    b) What’s your risk appetite?
  • 2. Diversify your investments: The investors falling in the category of high risk takers, also plan investment by diversifying their portfolio. This is important not to invest everything into a single basket or instrument class.
  • 3. It is imperative to Plan for long term and avoid the temptation of short term gains.
  • 4. Never invest in something that you do not fully/partially understand. Research well to understand and then invest accordingly.
  • 5. Invest to save tax : You can save tax by investing under section 80 C. The maximum amount that can be invested is 1.50 lakh, and this means your income gets reduced by this investment amount. So you are exempted to pay tax on this amount. Also the invested amount increases in a period of time. So it is a win-win situation for you.
  • 6. Investment should be your first priority, and it should begin with the initial sum of money, and not with the leftover amount. Practicing this as a habit will help you clearly evaluate the difference, and you will be surprised to see the funds that are actually available for you to spend.
  • 7. Every Rupee costs: don’t let go off a single rupee. Do not fall fall pray to exotic schemes and keep your portfolio very simple. Try to look for the extra yield that many banks offer such as the superior returns on saving as compared to others that don’t.
    Saving is as simple as spending. If you intend to do it then just follow it like you follow your daily rituals.

We are listing down some wise saving options for the young working population:

ELSS: (Equity Linked Savings Scheme) is a diversified equity mutual fund which is qualified for tax exemption under section 80C of the Income Tax Act. ELSS is a good option to invest in, because the investor has the opportunity to invest in equity markets as well apart from getting benefits of tax deduction.
Also, ELSS has the shortest lock- in period of three years as compared to other tax saving options.

Mutual Funds: Mutual funds are diverse in nature.. They are broadly divided into Equities, Debts and Balance funds. Here the money is pooled in by investors in many bonds, stocks and other types of investment. It also gives you the access to investment professionals who expertise to manage your funds in the best way possible
So owning shares in a mutual fund instead of owning individual stocks or bonds the risks get spread out.
Diversification ensures that a loss in a particular investment gets nullified by gain in another

ULIP’s: ULIP or Unit Linked insurance plan is a life insurance product that provides the risk cover to the policy holder accompanied by the option to invest for long term.
Recurring Deposit : The concept is fairly simple. You can allocate a fixed amount of money every month as deposit with a bank for a period that you specify. This will push you to save and invest on regular basis thus securing your future.

PPF :- The Public Provident Fund has been established by the central government.
Any individual can open a PPF account with any nationalised bank or its branches that handle PPF accounts.
The minimum amount to be deposited in this account is Rs 500 per year. The maximum amount you can deposit every year is Rs 100,000.
The entire balance can be withdrawn upon maturity i.e after 15 years of the close of financial year . The rate of interest is decided upon the government every year. Currently the rate of interest and principle is exempted from tax at the time of deposit and withdrawal.

We hope that this article helps you out in thinking better and planning wisely. Happy Investing!

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How do I allocate my Salary?

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Being at the point of time in our lives, where we finally feel financially able is enthralling. However, it is imperative to not go overboard on spending, and channelize our monetary resources.

We make numerous mistakes during this phase of our lives like we spend more than we earn.
This pushes us in a deep pit of financial fixes.
Hence, a steady income needs a steady management.

Striking the right balance between what we earn and what we save impacts our future positively and reduces the possibility of cash crunches.

But the most common question is “ How do we go about it it? How to distribute our salary for expenses and save?”
So having a financial plan in picture is a always a good sign. Below is one such plan that can help us in resolving the issue.

The Boon of Budgetary Planning: –

Having a well-schemed budget is as necessary as breathing and it is just the half battle won.
Our pockets empty faster than they fill. They forever bear the “Low on cash” Tag

This efficacy of the plan lies in how we divide our expenditure into duties, obligations and splurges.
At the end of the day, we earn to spend but we need to spend right.

So we should draw a plan that broadly classifies our division of expenditure into the following: –

Savings:-
Having a foresight for the future helps us guard our money better.
The maestros of investment suggest that “Do not save what is left after spending, but spend what is left after saving”

We should dedicate 20 percent of our salary towards investments for future.
Also savings should not be just confined to the walls of emergencies, savings can also be for planning our future better. This holds true, especially when the tax rates surge higher with passing time.We do not want to be like the sitting ducks to the taxing alligators. Regular and planned investment, eases the financial burden over a period of time, Gradually with this scheme of action, you won’t even realize the substantial chunk of funds that are left in your kitty.

Routine lifestyle expenses: –

Allot a good 50 percent towards your household finances. These finances are unavoidable and necessary. From rent to electricity bill, timely payment is essential. Plan your lifestyle in a way such that the expenses towards it do not surpass the allotted percentage.

For example: – Going overboard with the usage of electrical appliances or unnecessary wastage of power can render mammoth sized bills. So it is advisable to monitor and regulate the use.

Food and Clothing

Both of these fall in the “can’t live without category”, so we cannot really compromise. However what is in our hands is wise spending.

If we invest cautiously , we can have a good share of funds to choose from our favourite brand of garments.

Debt/Loans

Repayment should be one of your top priorities. Dilly-dallying the repayment, will only increase the burden on your shoulders and make them droop to the monetary pressure. Also, it spoils the credit score which in turn reduces your chance of accessing loan in the future.

The debts and dues need to be dutifully cleared. So a 25 percent should be allotted for this.

Recreational Purposes:-

Now you will still be left with some money, you can pamper yourself with some shopping sprees , binge eating and partying.

Because who wants a life filled with blues and greys . We believe “Jab jeb ho full toh Life Colourful”

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What is Personal Loan Default: Understand the Legal Action Against loan

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Authored article by Akshay Mehrotra, Co-Founder & CEO, Fibe.in

Default on a loan can severely affect your credit history and may dramatically reduce your chance of getting any credit.

Sometimes when we are young we choose not paying credit card for various reasons. Sometimes we just don’t have the money, sometime, the utility of the benefit accrued from the loan is long gone and other priorities calls for money ahead of repayment or Sometimes, we are just outright lazy and keep doing late payments while knowing the consequences.

The fact is if once a delinquent, always a delinquent customer, Banks and other financial Institutions treat you with caution. It is necessary to understand how Financial Institutions look at your repayment track record and what are these credit bureaus. In 2005, CICRA (Credit Information Companies (Regulations) Act) came which paved way for specialized institutions for monitoring and recording all loans taken from Banks and other Financial Institutions. These companies (known as CICs) collect, process and present information about each borrower and assign a credit score. Today, there are four CICs in India, CIBIL, Equifax, Experian and CRIF High Mark. Hence, A credit history of every customer submitted to all four bureaus, which allows Financial Institutions to dive into and judge whether a customer applying is worthy to give loan or not.

Credit information by definition could means any information relating to :—

  • The amounts and the nature of loans, amounts outstanding by a credit institution to any borrower;
  • The nature of security provided by borrower;
  • The guarantee furnished;

Does giving guarantee for someone else’s Loan also impact Scores? – The answer in short is yes. The financial institutions send the guarantor details to CICs, in addition to a person taking loans. Hence it is important to understand that the role of a guarantor is crucial. If the borrower defaults, then you as the guarantor will suffer too as you too will be in the “defaulter” basket. Thus, Think hard before becoming a guarantor.

Not performing on loans and credit products severely impacts your credit score; a credit score basically is a system that enables a credit institution to assess the creditworthiness and capacity of a borrower to repay his/her loan and advance. While it is subjective and depends on Institutions’ internal policies, but according to my understanding a late payment on a credit card will severely impact one’s chance of getting a personal loan or Home loan.

Hence, taking a loan from one bank and thinking no other bank will know the credit history, is a fool’s paradise. If you are not repaying your credit, the information will be accessed by the financial institution who can lend to you and it will affect their decision.

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How to Come out of Debt Trap?

Acknowledging that you are over-leveraged is critical in escaping a debt trap. However, to get out of this situation, you first need to understand what is a debt trap. It is a circumstance where one is compelled to take out more loans to pay off existing loans, thereby creating a cycle of debt. 

Over time, clearing debt becomes more challenging due to increased costs, restricted finances, or other reasons. Thankfully, you can get out of this cycle by understanding your debt and finances. Having this information will enable you to manage them better and become debt-free. 

Read on to learn how to manage your existing dues and how to be free from debt.

Understand Your Debt

To understand your debt, consider these four categories to see where your loan fits: 

  • Revolver 

It is a high-cost debt usually linked to credit card spending or cash loans where interest rates are too high and not paying on time results in a multiplier effect on the outstanding balance.

  • Live Life Debt 

These are EMI loans linked to buying products or going on holidays. This type of debt is usually not visible as it gets camouflaged under subvention or supplier funding.

These are long-term loans for purchasing cars and homes.

  • Liquid Class Debt 

It allows you to use asset-class products to take a loan. Some common examples include a gold loan and a loan against property.

Also Read: Debt Consolidation With Instant Loans

5 Tips to get out of a debt trap

If you are wondering how to clear debt fast, then it is important to remember that there are no shortcuts or overnight solutions to becoming debt-free. 

Here are some solutions you can try to reduce your debt burden:

Opt for a Balance Transfer

Financial institutions offer the balance transfer facility to people with sizeable outstanding dues from one credit card to another. You can opt for a fixed-duration balance transfer, where the interest rates are usually lower, depending on your bank. 

Convert Outstanding Balance to EMIs

If the net outstanding across credit cards is too high, it is advisable that you take a small personal loan and repay your credit cards. This is because a personal loan interest rate can start at 12% per annum or lower in some cases. On the other hand, credit card debt comes above 2% interest per month (36% – 46% per annum) and also attracts service charges. 

Negotiate Lower Interest Rates with the Existing Lenders

Most institutions allow some negotiation, usually linked to a bullet payment. By lowering your interest rates, you can reduce your overall debt from that specific lender and give yourself the flexibility to repay the loan without stretching your finances.

Pay Credit Card Outstanding Balance by Opting for a Salary Advance

Usually, you can manage credit card outstanding by paying over two salary cycles and managing funds better. Payday or bridge salary loans can help you cover this cost easily.

Avail of Loan Against FDs or a Gold Loan 

Loan against assets comes at a much lower interest. Usually, loans against FDs come at interest rates that are lower than some other financing options. Gold loans also come with attractive interest rates that are generally lower than those levied for unsecured loans. Thus, such options can be a good way to reduce debt burden.

In addition to the above solutions, remember these thumb rules when taking a loan:

  • Your loan amount should be at most 8X your annual salary.
  • Revolver loans should always be at most 50% of your monthly salary.
  • Total EMIs should be at most 50% of salary.

A simple life rule to manage finances is to save 30% of your salary. However, if you still have a debt cycle, you can use a low-interest Instant Personal Loan from Fibe to pay off existing dues. You can rely on Fibe to get a loan in just a few minutes.

Our Instant cash Loan offers funds of up to ₹5 lakhs to clear your dues easily. With simple terms and competitive interest rates, you can easily pay off your existing debt. Download our Instant Loan App or log in to our website to get hassle-free loans. 

FAQs on How to Come Out of the Debt Trap

How can I clear my debt without money?

If you are wondering how to come out of debt trap, you can get a personal loan to secure the required funds. You can also explore other options like consolidation of debt to streamline your repayments and clear your dues.

How can I clear my ₹20 lakhs debt?

There are various strategies you can use to clear your ₹20 lakhs debt. For instance, you must clear your high-cost debt first. To get out of a debt trap, you also need to prioritise your essential expenses. In addition, you can take a personal loan at lower interest rates to pay off your existing loan and continue repaying the EMIs of new loans at lower costs. 

What is the best payment method for debt?

You can use three different methods to repay your existing loans. The first is the debt avalanche method, where you pay the largest debt first and then pay the minimum due on smaller loans. On the other hand, you can also opt for debt snowball, where you pay the smaller loans first and clear larger loans later on. 

In addition, there is a debt consolidation method, where you can combine all existing loans into a single loan account with a lower interest rate.

Is EMI a trap?

With Equated Monthly Instalments (EMIs), you can repay your debt in small instalments due every month. While the fixed component of EMIs remains the same, the interest component changes depending on how you make the payment. This can potentially push you into a debt cycle. However, if you can manage the EMI and borrow as per your finances, you can avoid getting into a debt cycle.

Can I just ignore debt?

No, if you ignore debt and do not make repayments, the lending institution can pursue legal actions as per the terms. Moreover, non-repayment also affects your credit score negatively. This will make it difficult for you to take a loan in the future. So, be sure to repay on time and negotiate with the lender if needed.

Save Your Neck, Save Your Tax

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Often it happens that salaried people end up paying more tax than actually needed. This happens mostly because of lack of knowledge about tax saving.
If you feel that you have a similar story and are figuring a way out to reduce the tax burden, then this article is for YOU…
Indeed, there are many ways; you can save tax while you are earning your salary. Here are 5 simple and legal tips to save tax.

Continue reading “Save Your Neck, Save Your Tax”

Factors Affecting Your CIBIL Score and Their Impact

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Nothing is worse than having a bad credit score, as it can tarnish your social image. How do I improve my credit score, what are the factors which hit your CIBIL score hard and what should we do to avoid them, are some of the common difficulties, most of the people go through but they lack awareness or ignore it. This ignorance is the cause of the diminishing CIBIL score.    Many people are stuck with a bad credit score due to their poor credit behavior of the borrowers or the lender’s mistakes. Having a good CIBIL score can help you get personal loans easily.

Below highlighted are some common mistakes which should not be ignored.

Continue reading “Factors Affecting Your CIBIL Score and Their Impact”