Stop Bingeing! Get Fitter!
A D.I.E.T Plan for Improved Financial Health.

It is the biggest festive season of the year, a time we all look forward to. It is also the time when many of us indulge mindlessly in Bingeing; Bingeing on Sweets, Entertainment, Shopping, and the list goes on and on. While bingeing can manifest itself in countless ways, one thing is certain: regardless of what we choose to binge on, bingeing is sure to have a debilitating impact on our physical, emotional and financial health. Bingeing, along with excessive Debt, can erode our hard earned savings, weaken the very foundation of our Financial Well-Being and leave us vulnerable to the uncertainties of the future.

In this blog, we talk briefly about the financial impact of bingeing and excessive Debt, and how one can overcome these challenges by following a Financial D.I.E.T Plan. A Financial D.I.E.T focuses on FOUR key areas that demand our immediate attention; these are:

(D) Debt, (I) Income, (E) Expense, (T) Taxes

So here’s how, by focusing on these FOUR key areas, you can cut down on your financial excesses and lay the foundation for an improved financial health.

1. Credit Card Debt / Outstanding: This is probably one of the worst forms of Debt in terms of the exorbitant penal interest rates applicable. Debts like these need to be foreclosed at the earliest opportunity available since they can, in no time, snowball into an unmitigated financial crisis. In case you find it difficult to clear your credit card outstanding at one go, make sure that you convert your outstanding amount into EMIs to at least benefit from a lower rate of interest. While E-Commerce portals and Financial Institutions lure you into occasional festive time splurges, by way of discounts and offers on your Card, it is in your own interest to understand the immediate and long term ramifications of your actions on your overall financial health.

2. Personal Loan: While one might argue that certain financial exigencies might force one to avail a personal loan, it is equally important to understand that the best way to tide over financial emergencies is to have a contingency fund in place; a fund that can comfortably cover at least 6 months of all your non-negotiable expenses. More importantly, given the high interest rates on personal loans, these are best avoided. By the way, for the ones who have already availed these loans, the only good thing to do now would be to foreclose them at the earliest instance possible.

3. Car Loan: A car could mean many things to many people. For some it could be an object of desire. For others it could mean a status symbol. While for a good number of people the decision to buy a car might be driven by peer pressure or other psychological factors, there are an equally good number who might consider buying a car purely for its usefulness in their personal lives. For youngsters though, who may have just kick started their journey towards financial independence, it is important to make sure that the decision to buy a car should be rational, and must necessarily be driven by its utility value and not by any other considerations whatsoever. Secondly, a car, being a depreciating asset, will ultimately go down to scrap value in a matter of time. Hence it is extremely important to make sure that you aren’t taking a loan to fund a depreciating asset like a car. For the ones who have availed a car loan, it’s better to foreclose it as the earliest.

4. Home Loan: Home loans do come with a host of benefits such as competitive interest rates, tax benefits on both principal and interest, income linked subsidies for eligible individuals. These loans when used judiciously can help the customer derive maximum benefits. Thus, any decision to foreclose a home loan should be taken after carefully considering the benefits offered by these loans. An important thing to note though is that, how much ever be the benefits associated with a Home Loan, the fact remains that beyond a point, it is bound to leave a dent in your finances.

While certain types of Debt, at times may be unavoidable, one still needs to exercise caution when availing any form of Debt. With quick and easy money available at the tap of a button, there is a growing propensity among individuals, especially youngsters to fall for the lure of short term splurges, eventually leading them into a Debt Trap. Thus reducing one’s exposure to Debt, or better still, becoming debt free will be a giant leap towards improved financial health.

A balanced D.I.E.T not only reduces your risk of financial collapse, it will, over a period of time, help your savings grow in size. With a consistently growing Savings Kitty, you will be able to deploy a larger chunk of your savings to efficient instruments.

“Financial Planning Standards Board Ltd. (FPSB Ltd.) is the proprietor of the CFP^CM, CERTIFIED FINANCIAL PLANNER^CM and marks outside the United States, including in India, and permits qualified individuals to use these marks to indicate that they have met FPSB Ltd.’s initial and ongoing certification requirements.”