A reader from Bhopal asks, One basic question that has persisted with me ever since I started earning was how much money should you normally keep in your savings bank account? I mean what is the thumb rule or the threshold above which the money should be invested or siphoned. I would be thankful to […]
Here’s something that I happened to read the other day — I am an old man and have known a great many troubles, but most of them never happened. Mark Twain. Leads to some interesting thoughts — How many months [worth of monthly expenses] is too many months in your emergency fund? Should you really […]
They say: With a house things will go wrong. Our house, built through hard work by my dad, is around 30-years old. Except for cosmetic redecoration inside, everything’s generally been the way it always has (shows the quality of construction material used back then). But of late, the roof was beginning to show leaks here […]
Rubber for the Swift and my emergency fund seem to go hand in glove. About a year back, I had to dip into my emergency fund when I had to urgently replace the rear left tyre because a sharp iron rod tore through the tyre wall. A couple of weeks back, I had to dip […]
It’s irresistibly tempting. My head spins non-stop with how-can-I afford-this thoughts. Since the iPhone 4 launched [in India], I’ve had these financially-destructive thoughts: Dip — no, make that dive — into my emergency fund. In a weird way this does count as an emergency because my present phone, a Nokia E52, has had its share […]
The maximum that they can do is to fire me — that’s OK! Recently, I overheard a colleague say this and it’s really stuck in my mind since then. To me, that’s a sign of someone who’s financially well prepared. In fact, very well prepared. The day that you come into work and say this […]
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I sometimes receive queries over email from readers who are in a particular situation with respect to their personal finances and want to know what actions they ought to take in order to move ahead. Some of these queries are generic enough to apply for a broader audience. In the past, I’ve tried publishing these […]
S asks, Suppose you have a loan that you desperately want to close. Is it worth dipping into your emergency fund for this purpose? I can find convincing arguments on both sides. If you take this step, you get an immediate return on your investment (equal to the interest rate on the loan) but you […]
A reader asks, I have an emergency fund that doubles up as a buffer for unforeseen expenses and for the pink slip. I currently have three-months’ worth of expenses in this fund which is lying as a cash balance in my savings account. How can I structure this fund in order to earn a better […]
I guess emergencies come in bunches. First it was the rainwater harvesting project and soon after that the rear left tire on my Swift shredded — I had parked at a friend’s place and while reversing, construction debris in the form of a sharp iron rod tore right through the tire wall . I had […]
A couple of weeks back, I had to dip into my emergency fund for complying with the rainwater harvesting norms (and once the construction/installation was over, the deadline was pushed further — again!). But it had to be done sooner or later and also came as an unexpected — and hence unbudgeted — expense. That […]
A colleague asked, I want to set aside an emergency fund purely to handle any loss of employment situation that I might face. What would you recommend? Here’s what I recommend: First, estimate your monthly expenses (including EMIs, monthly savings for annual expenses, and routine household expenses). Let’s say this amount is M. Structure a […]
There was a recent circular issued by the Central Board for Direct Taxes (CBDT) that reads: The Finance Act, 2005 introduced a levy namely Fringe Benefit Tax (FBT) on the value of certain fringe benefits as contained in Chapter XII-H (sections 115W to 115WL) of Income-tax Act, 1961. By the Finance (No. 2) Act, 2009 […]
I have often heard the argument that the credit limit on a credit card serves the purpose of an emergency fund. This strategy by itself is both myopic and dangerous. However, what can make this strategy both farsighted and safe is if you have a real emergency fund with real cash in a savings account […]
The past one-and-half months have been traumatic as my mother’s health has steadily deteriorated into a critical condition. We’ve given her the best medical care possible — probably that’s what has kept her going this far. I couldn’t have afforded this medical care if it were not for three things: Clearing my debts and keeping […]
That you need a solid emergency fund is a given. There’s really no guarantee for anything today (be it your job, your health, prices, etc.) and therefore it makes sense to build a solid emergency fund for those tough times. I thought a fair bit on how I would like to structure my emergency fund. […]