Investing - Chapter 4

In the last 3 chapters you read about two friends life. They had similar IQ but completely different financial success. And one's success at school did not guarantee success in life. To be successful you need street smartness or simply have GUTS! Ram goes to Ashwin's home to discuss further about his trouble and possible solution. He is expecting his friend to give him an tablet which will cure his financial illness. He is in for a big surprise. They have a coffee and talk.

Ram - "Let me come to the point, how could I get out of this financial trouble quickly?"

Ashwin - "Its going to be a slow and steady process.. could take years to get there. But its definitely worth it"

Ram - "Wow, years..?? I thought you will help me get better within days"

Ashwub - "There is no shortcut to success. I don't have any tablet which will cure your illness. But if you want to try, I will give you a solution"

Ram - "I am listening, pls proceed"

Ashwin - "How much is your total debt now?"

Ram - "30 lacs. I have paid back rest after selling the home"

Ashwin - "Ok. How much assets do you have? Car, jewellery, FD's,.. anything that can be sold or has a value?"

Ram - "About 10-15 lacs. If I sell all the jewels and take money out of everything"

Ashwin - "Excellent. Sell everything. And repay as much debt as possible. Do it quick, start from tomorrow."

Ram - "But.. those are my family property. I will never be able to show my face to family. They will think am a looser."

Ashwin - "Ahh ah, Most are trapped here. They believe its good to carry debt and assets in parallel. Thats not a good idea. Trust me, sell everything and close your debt asap"

Ram - "But my bank deposits pay 8% interest.. am I not earning money there?"

Ashwin - "Haha.. What's interest on your debt? 11-12%?"

Ram - "12%, floating rate"

Ashwin - "You earn 8% and pay 12%.. thats not smart?"

Ram - "I never did that maths."

Ashwin - "Now if you repay 10 lacs, quickly. You will save Rs 10,000 per month at 12% interest."

Ram - "Makes sense.. How come I bought this debt is still a mystery."

Ashwin - "We humans like stories. When you see an advertisement with a happy family in a beautiful home. We aspire that story. Markerters are great story tellers. They don't show what happens to someone who takes big debt, most sink in the real life!"

Ram - "True.. they said I am making a good decision taking a big home loan."

Ashwin - "Haha.. well, they made good decision by making you pay them monthly."

Ram - "Correct. Okay, Of 30 lacs debt, I will repay 10 lacs quickly within a 10-15 days. What next?"

Ashwin - "Great, after that you will have an extra cash flow of Rs 10,000 per month. Let discuss further that."

Ram - "I will take one step at a time. Thanks for your insight. I hope that I will get better than before"

Ashwin - "Hope is a good thing probably the best thing to carry with you. And no good things dies forever. You will be better, soon."

They agree to meet in a weeks time after Ram repays his debt partially. He still has a long way to go. Lets see soon what happens to him.