Recipe For Financial Freedom

This blog and I started our journey for managing my finances in the beginning of this year. I planned certain goals in January my financial goal for 2007 one would surly come to know that no money management has taken place.

Today I can see that I got digressed from what I had planned originally. My Financial Goal for 2007 is far away from accomplishment. A look at the table below will tell you clearly.

So what is there to be reviewed when I have failed miserably to achieve my goals and that too with a huge margin of more than 50 percent. The review can be done for my existing situation, the mistakes I made during this year and the learning that I should take from this year to the next year.

Existing situation
Though I may have a similar networth as that of the beginning of the year the good news is that I have removed my credit card debt. My total assets have increased and my standard of living has also been improved.

I refer to my improved standard of living because I have accumulated some physical assets. Today I have got my own television, a desktop, a washing machine an iron. All these I have purchased is a preparation for my yet to commence married life.(I have not purchased a double bed yet )

The basic necessities that I don’t have today is a refrigerator, a bed, a sofa, a watch, a good quality phone. I still live in a rented house and I have to buy a car too. To carry out my hobby I have to buy a D-SLR.

Well these are the distant dreams that I have to plan for.

The mistakes I made
I got engaged in spending for items that I was not able to pay for. This was primarily credit card spending which I thought I will repay in time. But certain contingencies soiled my plans. For example my accident gave me a huge bill of Rs. 11000 for bike repairs. The medical expenses and traveling in public transport (auto-rickshaw) also sucked nearly five to six thousand of my money.

Another mistake was of not having insurance. This was an effect of excess spending. I used all the excess money for credit card repayment with no insurance coverage I was stuck with huge medical and repair bills up my throat.

The other mistake I made is a very subjective mistake. I trusted a friend of mine and lent him nearly Rs.20,000 this loan that I gave was unsecured. It became a burden when the friend ditched me and not to be found. I wrote of my loan as a loss to me.

I supported my brother to pay back his education loan by taking a loan. This I consider a mistake as I could have very well avoided taking a loan in the absence of above mistakes. Today I feel that I should not have taken a loan to repay a loan. The EMI that I pay reminds me of my mistake every month.

I purchased high value gifts on birthdays and occasions e.g. television I gave to my cousin on Diwali (a festival in India), iPod (birthday gift to a friend) and apparels to friends at regular intervals). These gifts have removed nearly Rs. 25,000 from my account.

The learning that I should take for the next year

1. Purchase only when I can afford it and not on credit.
2. Have all the necessary insurance
3. Help friends but not with money, no monetary support to get out of bad situation
4. No high value gifts for any occasions.

Now these could form my next year resolutions. I think I will write a separate post on my New Year resolutions.

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