My Mom from the heavens is kind to me. Whenever I had a need money came to me. During my marriage and even for my honeymoon, I did not have to take a loan. I was able to find money to support myself. Now we are going to celebrate our first anniversary. And I can’t wait to travel and celebrate. But instead, we decided to spend our first anniversary by investing.
This was a year ago
After I decided to get married I came across a very good client. I am made some good money in this freelance work. With that, I had some backup to think about my honeymoon after the marriage. I love Bali, Indonesia. I wanted to go there again. But something wasn’t convincing. My heart did not let me book the tickets. I felt I was too afraid of travelling to a new destination. I was scared to explore new currency, people and food. So I decided to do something that was the opposite end of comfort. I decided to travel to Iceland.
Iceland is one of the coldest countries. It’s also one of the costliest. Because of its location, for six months there is always sun. And the main hotels are present only in Reykjavík the city centre. I had to hire a van to travel the entire country. It was a camping van which allowed me to sleep and travel. The tickets, van rental and food accounted for the total expense. Or so I thought. But after going there I realised that I cannot stop my vehicle anywhere I want to sleep or cook. There are designated campsites which charge money and that’s where I am allowed to stay for the night.
These were an additional expense that I never expected. All in all, it was an expensive trip. Honestly speaking I enjoyed the trip. It was a lifetime experience. Would I go back again? Yes definitely. But this time during winter to see the northern lights. Also, I will not use my last penny to travel.
It’s been a year after Iceland and we are going to celebrate our first anniversary. This is a very good excuse for us to travel. But here I have written about how I want to spend my money. I have an enormous loan and to become financially independent I have to finish off my loans. So I am not going to travel for the next three years. I am feeling super sad writing this. Nobody has any idea how big of a deal this is for me. But I have promised myself that I will not spend money without closing my loans. After all, my destiny is to be Financially Independent and Retire Early.
So what am I going to do this anniversary?
Luckily even this time I had some money coming my way when I need to travel. But since I have decided against it I want to invest it. I am following my 6 steps of a complete financial plan. According to it, I have to set up an emergency fund. As the name suggests it can be only used during emergencies. For example, if either of us lose their jobs, or some natural calamities come in and so on.
The emergency fund should contain at least 6 months of monthly expense. This need not include the EMIs we are paying since it’s not going to be forever. Ideally, it should but I not including it. So for instance, if my monthly expense is Rs.25000/- then I need to save Rs.1.5Lac as my emergency fund.
Where do you keep this fund?
A fixed deposit will be a good option. It gives low returns of just over 5% but you can be sure that your capital is safe. After all, the capital has to be safe. It’s for an emergency. I invest in any market risk instruments. I am choosing another option which is better than FD but far less risky than Mutual Funds. These are called as Debt funds. Companies which offer debt funds buy debt bonds of companies. They provide very less returns of 8% or less. But at least we can be sure that our capital won’t be lost.
While choosing a debt fund what do I look for?
I check the exit load, expense ratio, past returns and tax rates. The exit load should be nil. I want to withdraw my money whenever I need. The expense ratio for managing the money should be less so I do not miss on the gains. I want to check the history to see how its performed and if I can trust it. Finally the tax rates on the returns. It should be less or the industry average. By taking a look at all these factors I can zero in on the right choice. I use Groww app to choose the products. The app is easy to use. It even teaches me on new financial instruments and where it would be useful for me.
I am glad I am doing this investment. Because after I travel the guilt that comes with it is just not worth it. Not just that, when I feel stressed about money it is difficult for me to be totally happy.
This is just one step ahead towards completing my financial goals. I want my family to feel secure. The next step will be to take a health insurance. Choosing the right one is going to be even harder. After my experience, I will let you know how to choose one for yourself. I will also share my experience in a post.