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I have a very interesting fact to share.

My mom, who did not have the opportunity to study beyond Standard 10, manages expenses such that they are well within her budget — happens like clockwork every month. On the other hand, I have a post-graduate degree, yet wage losing battles to keep my expenses within my budget — also happens like clockwork every month.

What about you?

1. Download my Car Loan EMI Calculator Excel workbook.
2. This workbook has six sheets, one each for a loan duration ranging from one year to six years.
3. Select the sheet corresponding to the loan duration you’re thinking of. For example: select the sheet labeled “4 Years” if you’re looking for a car loan that you want to repay in 4 years’ time.
4. You will now find two cells highlighted in yellow — one for the loan amount and the other for the interest rate. You need to provide your inputs in these two cells. Note that changing the data in one sheet will not affect the other sheets.
5. The workbook automatically computes your Car Loan Amortization Schedule.
6. You can now Save/Print this sheet for your reference.

Let me know if you’re facing any difficulty. Drop a comment if you find this calculator useful.

Note: If you have already downloaded my Personal Loan EMI Calculator workbook, you can continue to use the same workbook for your Car Loan calculations as well.

I have made this mistake once before and thought I’d share my experiences. Here’s why I believe you should not opt for a loan from your employer:

• Any loan from your employer ties you to your job. You can’t come out until the loan amount has been cleared in full. You might argue that you can always ask your new employer to bear the loan. But where does that take you? From one chain to the next? Plus, I’m not sure if any employer today would be willing to bear existing loans.

• It’s psychologically debilitating to see your take home salary cut by the EMI (Equated Monthly Installment) amount on the loan even before it’s credited into your salary account. I used to end up getting frustrated when this continued to happen each month, but they served as a good reminder of my mistake and actually motivated me to get out of the situation.

• There’s a hidden cost. Though you do not actually pay any direct interest on the loan amount, the notional interest surfaces as a perquisite in your income tax calculations and adds directly to your taxable income. I didn’t know this fact until I saw my income tax calculations; it was already too late.

With some fanatic fiscal steps, I managed to come out of this situation sooner than I thought it would take. I know I will NEVER repeat this mistake again. Once was good enough a lesson for me.

What do you think? Do you have an experience to share?

Reader Pavan asks,

Can you put some information on various health insurance schemes and which one is relatively best?

To beging with, the idea for having an “independent health insurance cover” was conceived during a discussion I had with a close relative. This relative was also the one who told me about Star Health and Allied Insurance, an exclusive health insurance company.

I did research and speak to other health insurance providers, but here’s why I chose Star Health and Allied Insurance:

• Following my request to be contacted, a branch manager got in touch, came down to my residence, and spent a significant amount of time explaining various policies and options. Another health insurance company I spoke to mentioned that they do not have such options — everything’s online and faceless.

• The branch manager did not behave like a fanatic salesman desperately trying to meet his targets. He acted more like an adviser, giving us information and sharing his thoughts, but allowing us to make the decisions — and that’s how insurance should be sold. The other insurance company I spoke to wanted me to check everything online and use my credit card online then and there! I almost said, “WTF mate?”

• My mother is a senior citizen and she did not have an existing health insurance cover. Star Health offers a great policy tailored to senior citizens. This was a BIG factor in my decision. I didn’t like the policies offered by other health insurers.

• Star Health has a good network of hospitals, some of which are located quite close to my residence. But this is generally true of most health insurance providers.

All said and done, I chose Star Health and Allied Insurance for my independent health insurance policy needs simply because they were willing to interact and connect as humans.

Pavan, I hope this article proves useful to you.

When I put up my definition of financial independence, I said

I should have independent health insurance for myself and for my dependents.

I thought I should clarify the term “independent.” In saying independent health insurance, I am referring to a health insurance cover that is not provided by my employer. Normally, employers provide group health insurance cover for employees and their families. The term “family” has a wide definition — some employers define family as yourself, your spouse, up to two of your children, and your dependent parents; some keep your dependent parents out of the purview of family. In my case, my mother does not qualify as family!

Health insurance provided by your employer is a great benefit to have, but the benefit stops the moment you leave your job. What do you do then — at least until you find your next job? What if your next job does not provide the right health benefits? What if you turn an entrepreneur? Given the increasing levels of health problems and the ever rising levels of medical costs, these are questions that you must answer today. Having an independent health coverage means that you’re not tied to your employer just for the health benefits. It lets you be “free from worry” when you’re out of a job or are thinking about entrepreneurship.

I am a strong advocate for independent health coverage. Get one as soon as you can, because health insurance premiums go up with age.

What do you think?

I hate Mutual Fund ads that harp on completely useless facts and then expect you to invest in them. The latest issue of Outlook Money carries an ad from Sundaram BNP Paribas who tout:

Blah blah blah…

Over a 28-year period, if you missed just the 10 best market days, the number of times your investment multiplied would be down from 137 to 53. If you missed the 40 best days, your investment would have multiplied just 8 times over 28 years!

An investment of Rs 75,000 would have made you a crorepathi now, if you had stayed continuously invested. If you had missed the best 40 days, your Rs 75,000 would now be worth just Rs 6 lac!

Blah blah blah…

WTF mate? Of what use are these nonsensical facts? Or are they meant to be psychologically seductive? Just for the record, 28 years ago, I was only a couple of months old. Maybe I should have somehow signaled to my parents to loan me Rs 75,000.

And lest you forget, past performance may or may not be sustained in the future.

In my financial independence checklist, I mentioned as the first point:

I should not have any credit card debt.

While this is true today, such was not always the case. A long time ago, I had an outstanding debt in six-figures on an American Express credit card and no bank balance to pay it off. The youthful exuberance of having a well paying job straight out of college was the root cause. I bought stuff that I really did not need and worse, on credit.

To further worsen the situation, I took a supposedly “interest free” six-figure loan from my employer to pay the credit card debt. No one told me that the “free interest” component of the loan would appear as perquisite while computing my income tax. It was a BIG mess and one that took a lot of time to get out of. That was when I put in place my credit card usage policy.

My Credit Card Usage Policy

• Have one credit card with no joining and annual fees and a low credit limit. I call this my Main Card.

• Have one credit card with no joining and annual fees and a sufficient credit limit. I call this my Backup Card. Sufficient is a value that you will need to decide looking at your personal situation. In my case, it’s in the five-figures.

• Do not carry either of the credit cards during your daily routine (includes to work, while shopping, going out with friends, and such). It’s true, I don’t carry a credit card in my wallet! I therefore “don’t have to worry” about future bills.

• Look at every other option before opting to purchase with a credit card. I faced this situation recently when I had to purchase a Dell monitor and finally used my Main Card for the purchase.

• If you really need to use a credit card to make a purchase, ensure that you already have adequate balance in your savings account and immediately pay off the card. When I bought the Dell, I paid the balance on the Main Card the very next day although the due date was a full billing cycle away. I don’t care for any “opportunity cost.”

That more or less has been my credit card policy since the meltdown. My first option is to pay with cash for any good or service. I’ve had a stress free experience on this front.

What’s your credit card usage policy? I’d love to know.