Life Lessons

A lot of people have lost their jobs in the past month, in most cases not for any mistake of their own. There are valuable life lessons on offer, for everyone to takeaway:

  • Never take the current state of affairs to be perpetual
  • Never take people for granted
  • Never think something bad won’t happen to you
  • Be always prepared for the worst in good times, and do not loose hope of better days in Bad times.
  • Work is something you do for your life, it isn’t life itself.
  • Always have good support system in place. Friends/Family to lighten your burden. They are your true assets.

I see many young people caught in a vortex of mortgage payments that they can’t keep up. In India, a cabal of politicians and real-estate mafia ran up a madness where real-estate prices raised by 10-12 times for land and almost 3-4times for built-up space. Lot of people discounted their future cashflow, and mortgaged it with banks. Banks lent an unhealthy 80-90% of the value of property (in some cases above 100%!).Young people, barely into their careers, made decisions to go into mortgages, which took away half their salaries. They didn’t have anything else to fall back on, other than hope of perpetual income.Here is what they should never have done:

  • Choosing a house that is too expensive for their income. The house shouldn’t cost more than your 2-3 year income.
  • Taking on a loan that is larger than prudent. If you can’t pay 50% of the house cost, then wait till you can.
  • Putting all their eggs into one basket – House. We ought to Balance our portfolio. If all the money you can save  is enough to meet your mortgage, then you’ll be in trouble sometime or the other.
  • Buying Cars that suck up more than 5% of their monthly take home.

If these lessons are imbibed then this crisis would’ve been of some use.