BOOBYTRAP or BOON?
By Ravi Garg
The real answer came to me on the hospital bed in July of 2019 and I have not forgotten it. I had met with a car accident. There were injuries and pain. People around me were being kind, as I lay there doing something I am surely not really proud of. I was feeling mentally drained by going through my loan-payment ‘excel’ statements instead of heeding my family’s advice.
There were two home loans, two personal loans, a car loan, a gold loan and recurring credit card payments with compound interest amounts. The doctors extolled it would take at least three months before I could resume my job.
I remember staring at the ceiling and thinking with clarity that frightened me - the EMIs would not know I was injured or how long my health would bounce back.
I want to say this plainly because I think somebody reading this now needs to hear it from a person who has been there. My financial pain was far bigger than my physical pain. The body was healing but not my finances!
Years later, as I now sit across people who work in mammoth multinational companies earning far more than I did then. I listen to my own story coming back to me in their voices.
So before I say anything harsh about the EMIs, let me be fair. Few of us will ever have eighty lakh sitting idle in the bank account. The home loan is what turns a 20-year dream into a thing you can decide on this year, and for a young family that is not indulgent - when there’s a roof and a school nearby and a certain kind of peace. It builds something you actually keep. And there is a discipline hidden inside it - an odd one. I have met people who could never save a rupee on purpose and yet have not missed a single EMI in eleven years. However, if handled with care, it could be a boon. The trouble is that in most modern MNCs, it is not usually handled with care. It is handled with ease.
Your salary lands on the same date every month, without drama, without fail, and that dependability is precisely why the lenders find you so attractive. You are approved for loans before you have wanted anything. The offer reaches your phone before the desires did.
And then the increment happens and here is the part almost nobody notices happening to them: instead of buying you freedom, it quietly becomes the down payment on the next purchase, a bigger house. The holiday, on no-cost EMI, which is a phrase that I wish somebody would examine honestly.
Rajesh was a senior, well regarded, and eighty percent of his salary was going into EMIs. It took us close to three years, going asset by asset, and he is debt free now. Not because I sold him something cleverly, but because he stopped adding and started subtracting!
Sujata was doing it entirely alone, no family money behind her, no one to fall back on. She had assets she was not even using. We sold what did not serve her. What she got back was not really the money. It was sleep.
Peter came to me about his debt, and we ended up repairing a marriage as the fights for want of money at home had stopped.
Different people same situation. So here is what I would ask of you tonight, and it takes four minutes. Add up every EMI you pay. Divide it by what actually reaches your bank account. If below 30 per cent you are using the loan. Above if fifty per cent, I would say the loan is using you.
Most people have never done this simple math. When they finally do, the shock rarely is about how big the number is. It is about having lived so long without looking at the outcome.
So is it a boon or boobytrap? How I wish I had done the arithmetic earlier while sitting at my office desk and not on the hospital bed.
