Warren Buffett
As the festive season arrives, the market is decorated with the brightness of new deals and offers. In such a situation, ‘No Cost EMI’ looks attractive for festive shopping. People are choosing EMI schemes up to 24 months to buy new phones, so that they can immediately take expensive phones and pay in monthly installments. Talking about statistics, about 70% of Indians resort to EMI to buy iPhone. At the same time, 93% of people with monthly income less than Rs 50,000 are meeting their needs through credit cards and EMI.
This easy choice has actually become a need of life. The happiness of festivals and the attraction of new gadgets inspires us to buy immediately. But when many EMIs accumulate, interest increases, and we start living on the loan, then the real problem starts. It not only causes financial burden, but also mental stress.
EMI and debt from the eyes of Warren Buffett
If the world’s largest investor Warren Buffett was among us today, then he would first tell us that ‘Do not buy what you want today from tomorrow’s earnings’, they believe that we can never become rich by spending more than our earnings. Taking a loan is not just a financial burden, but also a mental burden which increases gradually.
Their advice is very simple to save first, then spend. That is, it is not right to see savings at the end of the month, but at the beginning of the month, decide how much to save, and spend it accordingly. Even if the savings are small, it makes a big difference by becoming a habit.
EMI looks easy, but it is harmful
It is important to understand EMI. It seems huge to buy a phone of 80,000 rupees, but when it is divided into an installment of Rs 6,000 per month, the pain seems less. But the real price of credit card and EMI is interest. The interest rate of credit card in India reaches 36-40% annually, which makes the debt very expensive.
Schemes like Buy Now, Pay Later have also become risky for many people. Small installments together form a large amount, and gradually a large part of your monthly income gets stuck in installments. In such a situation, if an emergency suddenly comes or the job goes away, then the whole situation can deteriorate.