Debt-free!

I remember the day I signed the papers to my first home. It was a day after my thirty-eighth birthday. As I signed the documents, I felt no joy. I was awash with confusion and dread. I have seen (on social media) people proudly sharing pictures of their new homes, throwing housewarming parties, smiling into the camera, a dream-like depiction of life that social media paints. Yet, I felt nothing but discomfort, like a sharp pain in the chest that shoots up every time you take a deep breath, the kind of claustrophobia you feel every time you are in the dressing room trying on clothes two sizes smaller.

.

As intuitive as it is in hindsight, it looks like I hadn’t done my math well. The dreamy pictures were mostly from people I knew in the US who pay way less interest rates on house mortgages than people in India do. At close to 8.75% compound interest, the numbers had really added up. I could see the dissonance between romanticizing the idea of owning something and the burden of owning it for real. Despite everything that people told me (this is a great investment, you will be getting tax breaks, etc.), I saw this as bondage. I had just started a new job, and with a mortgage to pay for the next two decades, I would not be able to take risks, change jobs or professions if I wanted to, or take a gap year to try something new without keeping my loan in mind.

.

I had no problem in getting a loan. The reputation of my employer helped, and the wiry thin bank manager was happy to have fulfilled his own quarterly target of finding people who needed bank loans. The more he grinned and asked me if I wanted tea, the more irritated I felt. The only thing I could do now was, no, not live with the discomfort of wearing smaller clothes for the next twenty years, but to pay off the loan as soon as possible. And for that, I needed a plan.

.

I was able to pay off that loan in 2020, finally, in about 14 months. It did not go well with the bank manager and he almost threw a tantrum, borderline misbehaving. His fake grin had vanished and this time, there was no offer for tea.

.

There were a few things I learnt in this process of what I call, intentionally managing my money. The income was constant, so I did not have a lot of leeway there. However, the spending was something I intentionally controlled. I did not turn into a penny-pincher, I just got more intentional about where my money goes.

.

For one, I had some savings already, but the interest it was getting me was way less than the interest I was paying on my loan. So I reshuffled some of my savings and put it towards my loan repayment. That was simple. I also spent a month minutely tracking down every expense I made. I already knew where most of my money goes, but putting it on paper made the process more visual (I can only act on things I see and not things that are in my head). I realized that fulfilling a goal became easier when it fed into other related or unrelated goals I had. I was already working on a few other things like getting tenure, losing weight, and reducing the noise in my life, the kind that had created dissonance for a while. All of these nicely fed into each other.

.

For example, I love traveling, but I mindfully decided to only see places I would be visiting for work. This would cover a large proportion of my travel expenses, and conversely, I would be motivated to seek out work that required me to travel. And I did travel. From a conference in Canada to another one in the US, from a travel award that took me to Germany and work trips to Kolkata, Delhi, Mumbai, Bangalore, Hyderabad, Goa, and Rajasthan, I traveled to my heart’s content. Since last year, I don’t remember paying for a single trip, not even my flights to visit my family.

.

I also became more intentional about what I did with my leisure time. I did not have to visit every party I was invited to, especially if they were large and impersonal. I did not have to say yes every time someone wanted to dine out. I intentionally declined attending parties I did not feel like, especially the ones at night (I do not feel very hungry after 7 pm and most parties start at 8 pm). I said no to weddings, these were people I barely knew (I think even they were counting on me to bail out). COVID-19 helped immensely to reset my social life. All the parties and eating outside stopped. I re-learnt to cook and eat at home every day, something that worked wonders for my physical, mental, and financial health. With the newfound free time, I read, watched interesting videos, developed interesting courses, had interesting conversations, and thought of interesting research ideas.

.

I also became more mindful of the resources already available to me. If I wanted to read a book, I’d ask the library to buy it for me. In the US, I regularly hung out at Starbucks, eating and drinking things high on calories. Every time I was at an airport, the smell of coffee lured me into lining up for my favorite iced mocha or Caramel Frappuccino with whipped cream. I barely drink coffee now, but if I am craving it, the faculty lounge has an impressive collection of tea and coffee. I have no paid subscriptions to entertainment channels like Netflix, I stick to YouTube. It is free, doesn’t have everything I want to watch (which keeps me intentional about what I watch) and I have found tons of amazing stuff on YouTube including videos on how to save money. A book, a cup of coffee and a movie here and there is not a lot; I can afford it all, but why do it if you don’t have to?

.

I go to very few parties, those that are small and I know I will love. This gives me more time to do the things I like. I have never had domestic help, which is unusual in India. An average colleague of mine has a cook, a gardener, a driver, and a couple of people to do domestic chores. Instead of paying the domestic help to clean my home and then pay for a gym membership (which I do not enjoy going to), I clean my own home. From dusting to mopping to drying clothes, cutting vegetables, cooking and doing the dishes, it is a full-body workout. I also get to know my home better that way, things that I already have but have forgotten about. Even if I don’t feel like it someday or if my cleaning is not perfect, I don’t lose sleep over it. I don’t need a perfectly manicured garden or sparkling clean floors. My space is mine to manage whichever way I want to.

.

I have incorporated dozens of such small changes in my life, tracking, and if needed, modifying my consumption patterns. This helped me to work efficiently, take care of my health, and save money. Work-wise, this has been one of my more productive years. I published several research papers and taught many new courses during the pandemic. Delayed gratification also left some room for magic when I wanted to buy some things but did not, and later got them either from a sale or free from Buy Nothing. Adding to the magic were some speaking assignments, a small award, and a stimulus check, unexpected things that brought in a little bit of extra pocket money and helped to pay off my loan sooner.

.

Shifting mindsets (from “I do not have enough money” to “I have exactly what I need”) has taken me on newer journeys and helped me become debt-free quicker than I expected. Despite what others say about investments and tax breaks, there is no comfort of living in debt. Now I can continue with my job or change it, change cities, countries, professions, take a break, or do whatever I fancy (including doing nothing). I am likely going to do none, but I have the freedom to. As I reflect on the year that was 2020, going debt-free is one of the more significant events I will remember about it.

 

sunshine

Middle-men ecosystem

In India, one thing I quickly found out is that the ecosystem is built in such a way that unless you do your own thing, you will be bleeding money. Take visa applications for example. All my life, I have done my own visa applications (and I have done it many times, thanks to my foreign student/worker status as well as my love for travel). US visa applications from Kolkata are easy. I have driven to Washington DC at 4 am to reach the German consulate on time. I have driven all day to apply for a German visa in Chicago, struggling with finding parking more than driving. I have traveled for 8 hours in a bus to go to Berlin for a US visa. Long story short, I am used to spending a lot of time to get a visa.

Back in India, I have an upcoming conference in Canada and need to apply for a visa. The travel agent my employer hires assures me that they will take care of everything. That, they do. They do the paperwork and get me appointment dates. They compile the application together, book me a car, and come to my office to give me my file. All this looks great on paper. But here is the catch!

I don’t need a car, I can take an Ola/Uber. Yet, they hire a car for 4 hours that will wait till I submit my visa paperwork and bring me back on campus. It roughly costs 1,500 INR. I could have taken a cab for less than 150 INR round trip. But they do not let me do that.

They tell me that “their man will be waiting in front of the Canada consulate.” I am still not clear what the role of this man was. All he did is take the stairs with me to the second floor office, hold my bag (although I asked him not to), and wait for a few hours till I came back. Yes, I needed a photocopy in the meantime, which I could have totally done on my own. I ask him to go home but he assures me that his travel agent office is next door and he is happy to wait. Till date, I still don’t know what his job was, but he would have taken a commission in the process.

And yes, he put me in some premium waiting lounge without asking me. All that premium lounge does is seclude you from the suffering of the common man. While everyone waits in the common area, only six people get to wait in a special room. They ask you for tea and coffee, which I never needed anyway. They have a bowl of unhealthy chocolates and cookies in front of you to munch on. They assure you with bold letters on that application you signed that up to six sheets of photocopy is free for people in the premier lounge. How much does 6 pages of photocopying need? I am used to carrying 2 extra copies of all documents anyway. I still had to wait there for 2 hours. The man whose role I did not know assured me that I would have had to wait for five hours otherwise. I was half ready to stay there for a few more hours and see if his claims were true. Oh, and they charged me 2,000+ INR for access to the premier lounge I never wanted in the first place.

You might be wondering what a miserly, complaining woman I am. Yes, I am careful about my money, that money came from my grant and I have a limited budget. The visa itself cost me 14,000 INR, but with a car and a middle-man and a premier lounge, I will be shelling close to 5k INR more in my estimate. I watch my money like a hawk, and I am proud of it. And other than money, I also have problems with the lack of transparency. The travel agent I worked with never told me about these add-ons and the amount I have to shell out in the process. If you are not careful, you end up wasting a lot of money. The ecosystem is built in such a way that there will be a middle-man at every node asking for money.

It has been a sharp learning curve for me the past 6 weeks. Surviving and thriving in India takes a different mindset. I am very happy that I am back for many reasons. But I have quickly learned to get my alert radar very active. Every person I do business with, I clearly ask them how much money they will charge and how many people will be getting a share of that money. Talking about money is somewhat of a taboo in our culture, but screw all that. I have quickly learned to unlearn a lot of my prior programming. I know that if I have to survive here for the next 30-35 years, I will be encountering a lot of middle-men after my money. The only way I can deal with it is by keeping my alert radar at high levels all the time and doing as much of my paperwork as I can on my own.

PS: On a different note, I am considering moving away from blogging. I have found other platforms on social media that are way more interactive. The only reason I keep writing here is sheer nostalgia for having owned this space for 13 years now. I started blogging way before I knew of Facebook, LinkedIn, Twitter or Instagram. Now, I have found all those platforms and no longer know what I am doing here.

sunshine

Week 3: Save actively, spend passively

Growing up, no one sat me down and explained how to take care of my financial health. Asking salaries or prices of expensive things were considered rude. I picked up bits and pieces of advice floating around- generic advice like don’t splurge, save for the rainy day, don’t get into debt, and so on. So even though I started earning from age eighteen by tutoring other students, I did not know how to negotiate for salary or manage my money until a long time.

It is only recently that I started watching videos on YouTube about money management and started to pick up useful tips. And the best tip I heard changed the way I look at money. Earlier, I used to spend what I needed and saved the rest. Here, they talk about saving what you need and spending the rest. It looks like a simple case of reversal. But at the core, it forced me to address a very important question- how much do I need or want to save?

By spending first and saving the rest later, spending continues to be the primary and variable factor. So long as I did not get into debt, I knew that I had a large pot of money to spend from. But when savings became the primary and constant factor, I had to account for what I was spending. So, I came up with a simple algorithm.

After every paycheck, I pay off all pending bills from the past cycle (credit card bills, rent, cell phone bill, etc.). Whatever remains, I put half of it in my savings account (I do not touch that money again). The other half, I keep for my expenses until I receive my next paycheck. When I get paid again, I simply add that to my current account, pay off all bills, save fifty percent of whatever remains, and repeat cycle.

Here is an example (all numbers are arbitrary)

First paycheck: $100

Pending bills (credit card bills, rent, cell phone bill, etc.): $40 (somewhat variable every cycle)

What goes in the savings account: Half of remaining: $30

What remains: $30

Expenses: $10

Remaining + Next paycheck: $(100+20): $120

Pending bills (credit card bills, rent, cell phone bill, etc.): $20 (somewhat variable every cycle)

Remaining: $(120-20): $100

What goes in my savings account: Half of remaining: $50

What remains: $50

Repeat cycle.

The basic idea is that every time I get paid, I clear all my pending bills and put half of the remaining money in my savings account (I never touch that account). The important thing is that the savings should be put in a separate account that becomes invisible money. This creates a visual illusion that I don’t have much. When you know your denominator (total available money) is small, you adjust your numerator accordingly.   

Doing this has helped me in many ways.

·       It has made me actively accountable for how much I am saving.

·       It has made me aware of when I am splurging.

·       If there is a large expense coming up, I delay it until I have enough money from the next pay cycle. Delaying things also prevent me from impulsive buying.

·       Rather than spending being an active process and saving being a passive process, saving has become active and spending, passive.

This is a saving algorithm that I have figured out for myself. You can create your own algorithm. If you have smart saving tactics, I would love to hear from you.

sunshine

Money matters

An acquaintance's daughter recently bought her own plane ticket for a holiday trip by paying 2/3rd of the plane fare from her own savings. She is 9 years old!

I felt so proud of her when I learnt this. As a child, although I was never asked to, I would save up all the 10 and 20 rupees I got as birthday gifts from relatives (this was the eighties, so 10 and 20 rupees mattered a lot). Once in a while, you'd see a 6-year old me squatting on the floor and fervently counting my money. Then, my maternal grandpa would visit us, top off my savings and round it off, and buy me savings certificates from the bank and the post office that would double or treble my money after a certain number of years.

Actually let me back up a little bit. I knew my money even before I had learnt my numbers. I was very little when my grandma once left a green 5 rupee note/bill in my hand as she was leaving. I was asleep, and in my sleepy state, I knew that there was money in my hand. Later, my mom took away that money, lest I lose it. When I woke up and asked for it, my mom, unmindful, tucked a red two rupee note in my hand. I threw a tantrum, saying, "I don't want red money, I want green money." This was even before I was number literate. 

When I started tutoring students in my late-teens, it became even easier to save money. My habit of buying savings certificates continued, and so did my habit of counting money. I did not need grandpa's help anymore. Once I was counting the notes when a storm appeared all of a sudden and blew away two 500 rupee notes from the top floor balcony. That was the closest I have come to having a heart attack (I ran downstairs in lightning speed and retrieved them in time though).

The excitement of counting money is gone now, simply because there is no money to see, smell, touch, and count. It is all invisible money that gets deposited in a bank. Even then, paydays are my favorite days, and I excitedly log in to my bank account to see my bank balance increase. As kids, we were never encouraged to save or earn money. Doing odd jobs for money was seen as time wasted, time that could be spent studying and improving grades. As a result, I can afford a dozen trips to Utah now, but will never know the excitement of saving and buying my own travel tickets as a nine year old. 

sunshine