Economy Meltdown ; (Youngsters Please read)

[lovedesire]

Dear All

This is an interesting article which I came across on
Lehman Brother crisis.
Please do go through and make your views on the same
The last para on Warren Buffet his highly inspirational
and we should all try to emulate the similar lifestyle and
stay away from financial problems in our own life.

It's an interesting article by leading economist Mr Yogesh Chhabria


LATELY, I have been thinking a lot about the Lehman crisis.
Spending money that they didn't have and going beyond
their means is one of the main reasons for their situation
today. In fact that is the cause for the current economic
crisis in the US.

When I see all this happening, I can only remember the
good old days. Then, karz was bad. People looked down
upon those who took loans. Parents would not give their
daughter's hand in marriage to a man with loans.

But of course, the times have changed now. Everyone I
know has a loan. The buzz word is EMI (equated monthly instalment).

Today, you can buy everything on EMI - a house, a television,
even an i-Pod. In fact I know of someone who just bought a
fancy BMW 3 series on EMI, instead of buying a cheaper car
outright with cash. I mostly prefer to take public transport,
but then I am an old man with old thoughts!

Anyway, coming back to what caused the crisis.

Imagine having Rs 2 lakh in your bank account, no regular
income, yet buying a house worth Rs 65 lakh, in the hope
of selling it for a higher price. Even if the price of the house
fell by just 5 per cent (that is Rs 3 lakh), you will go bankrupt.
This is what Lehman Brothers did; with around USD 20 billion
they went and bought assets worth over USD 600 billion.
Isn't it suicidal and simply foolish?

I am sure things would have been different, had I been the
head of Lehman brothers. But who wants an old conservative
man like me to head a complex financial institution.

But there are a few lessons that we can learn:

Live a balanced life and avoid overspending.
Don't buy things we don't need.
Don't buy Branded goods.
Don't buy excess Food, Cloths, Cosmetics, Footwear,
electronics and Fashion accuracies just think before you buy.

Tip: World still has a lot of growth ahead and the future
holds immense opportunities for us. Let us make the most
of it and save and invest it wisely instead of wasting our
precious little on things we don't need.

Try to balance life with work (No one is happy to work in their professions).

Don't stress out yourself, after work try to do some extra
activities like swimming, yoga, walking, running where you
can divert your mind from stress.

A thumb rule: Health is more important than money.

Try to understand each other (Wife and Husband) in financial
matters and help each other. Tip: As soon as you get your
monthly salary, set aside a fixed amount, usually 35 per cent,
for insurance, savings and investments. You can then spend the rest.

Not all loans are bad. Loans that are 'need based' (home loans,
education loans) can always find a place in your finances against
those that are largely 'want based' (Credit cards, personal loans,
car loans).

Borrow only if repayment is financially comfortable.
A thumb rule: Keep EMIs within 35 to 45 per cent of your
monthly income

In that respect, there is one American who I really respect -
Warren Buffet. He has lived in the same ordinary house for
over three decades, drives his own medium sized car and
leads an extremely regular 'middle class' life. If that's all it
takes for the richest person on earth to be happy, why do
all of us need to take extra stress just so that we can get
things which aren't even essential?