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These days, a sum of Rs 1 lac looks like this –
Fixed Deposit for Rs 1 lac @ 9% per annum with monthly interest payout
= Rs 9,000 per annum in interest earned before tax
= Rs 750 per month in interest earned before tax
= Rs 672.75 per month in interest @ 10.3% income tax slab
= Rs 595.50 per month in interest @ 20.6% income tax slab
= Rs 518.25 per month in interest @ 30.9% income tax slab
Since I’m currently in the highest income tax slab, each bundle of Rs 1 lac that I save moves me in the worst case Rs 500+ per month closer to my ere-goal. Save two bundles and I’m suddenly Rs 1,000+ per month closer to my ere-goal.
Psychologically, I think this breakdown into smaller targets seems to have spurred me. Rather than thinking along the lines of “Oh! I still need to save X-gazillion number of rupees and God alone knows when I will get there,” I now have started to think along the lines of “Oh! I only need to save Y bundles and I’m there.” Somehow this line of thinking helps.
Of course, it’s not possible to save a whole new bundle each month but if I can save a good number of bundles per year, all of a sudden that ere-goal doesn’t look all that far away…
Posted on a slow Friday afternoon. And I realize that I am dreadfully overdue on announcing the winner of the September Book Giveaway.
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