Tax Saver Loans: rent receivables

If you own a residential/commercial property that has no debt on it and earns a steady rental income then read ahead.

Current Indian income tax rules promote tax savvy individuals to take on bank loans. However most individuals are in so much hurry to pre-pay their mortgages that they miss out on this opportunity.

Firstly government allows individuals to get tax rebate on 1.5 half lakh rupees of interest expense on home loan. So that is a cool saving of 50,000/- per annum in tax.

Secondly as per the current income tax laws, an individual has to pay income tax on the rental income. 15% of the income can be offset as maintenance. However if one takes a small loan against that property, then its interest expense can be deducted from the rental income and save tax.

One can get home loan for 8.25% p.a. and save tax using the above mentioned procedure, then effective interest rate would be 5.45% p.a. (tax rate of 33%). One can use this loan to clear the higher interest rate debt or reinvesting the money received in tax (and risk) free securities that earn a higher return one can save tax.

E.g.: post office PPF generates 8% per annum tax free returns.

PS: I am not an authorized tax consultant. So please check with your financial/tax planner before taking out such a loan.

The Little I

Little Lights in the sky
Little stars twinkle my eye
Little moon above so high
Little eyes can see so high.

Little wings of the butterfly
Little rain drops falling by
Little chirp of the bird that fly
Little cloud in the sky.

Little sound the wind with fly
Little grasshopper jump so high
Little nut of squirrel shy
Little rabbit runs so why .

Little sound and the train go by
Little dog to catch insect try.
Little cat on tree so high
Little plane up in sky.

Little cow chew and mow
Little seeds the farmer sow
Little egg the chicken lay
Little frogs croak to say

Little leaf on the ground fall
Little tree will grow so tall
Little dew on rose so small
Little sound of church toll.

Little little the world so all
Little little I will know it all
Little little I see with my eye
Little little learns the Little I .

Too good to be true

Guilt and quest for a clear conscious is a very powerful emotional drive which can make even the biggest of the sacrifice look small. Different people have different ways to live guilt free again. Some people overcompensate, while others rationalize their thoughts and actions.

Today at the cafeteria table that probably this would be the origin of the term “too good to be true.” A husband who showers his wife with gifts and flowers and is being extra nice is probably because it’s his way of apologizing to his spouse.

I surprised to discover that few of the most religious men were also one of the cruelest men on earth and many of them ill treated and owned several slaves. Some of them rationalized their actions by claiming that they were only doing the God’s work by purging the world of evil and blasphemous. Others rationalized ill treating the slaves by considering them sub-humans. They even went over-board by claiming that enslaving Africa was a “White mans burden (duty)” and by doing so they were civilizing this Dark Continent. These arguments might looks totally stupid today, but they served their purpose and allowed these men to sleep worry-free.

The Two of Me

There are moments in our life where we stare at defeat and difficult times.
We are at the crossroads – we do not know what to do.
At these times, our inner self seems divided in two – our I and You.

We stop , listen to both and we think……….
Then
Some of us follow the I
and
Some of us follow the You.

Two of Me

The Me – I

A fear hides in the heart
That dreams would die only as dreams
Unfulfilled ambitions yet
And soul would depart
Body would lay satisfied
But wanting soul would still scream.

Even then ,
No more dreams now I strive to pure
No new dimensions I try to explore
Too many constrains the free will found
It killed the dreams, I lived to bound

Past boundaries have punctured the heart
More failures may rip it apart
So I live now this vegetative life
Daily chores and no delight
No excitement in life for sure
But at least pain I bear No More !

The Me – You

You may fear to die,
You may not – I cannot say
But you fear to live
One by one you kill each day

Intense pain is better
Slow pain to death – Never!
Dormant life is sin for sure
So precious life is
Vegetation is no cure .

Attempt and action
Coulld bring joy
Could bring sorrow
But they bring an alive tomorrow
Dream and decision
May give pain
May give gain
But they make you live again.
Inaction is state of defeated mind.
A champion lives each moment
All the time.

Today you vegetate
By taming your soul
Tomorrow the body
With age will tame you old
Before you decay
Yourself you cure
One life, Do More !

How to clean your watchstrap

A daily-wear watch is exposed to all the sweat, dust and dirt that one can imagine, its links and joints collect the dead skin and sweat making it a breeding ground for germs and it rests on the bare skin of one’s wrist. Yet most people hardly ever take the pains to clean it. The tip given below is only for watches with a metal strap. Directly wiping with a disinfectant is recommended for leather/rubber straps.

I found that before disinfecting the watch, the best way to clean it is by pouring a few drops of petrol/gasoline on it. This solvent is able to dissolve the grease and dirt from deep within the watch’s surface. After thoroughly scrubbing the strap with an old and dry toothbrush, you can wipe it with a cloth and leave it to dry. If your strap has a lot of metal-metal links, then you will be surprised by the quantity of dirt that was hiding in your watch. Repeat the process if you see too much dirt on your cloth.

Best part about petrol is that it completely evaporates within seconds hence there is no risk of rusting or water damage frequent with soapy water cleaning. However still it won’t be advisable to soak the dial/watch mechanism in petrol.

PS: Petrol might dissolve the glue used to stick some gems/crystals on the watch strap. Also test in a small patch if you suspect that the paint/coating on your metal watch might be damaged in the solvent.

Do you need personal loans?

Note: This article is meant for people with a steady source of regular income and a salaried bank account. Also the person is able to save more than 20-30% of his salary.

The top five reasons why Indians take a personal loan are:

  1. Medical emergency,
  2. Travel,
  3. Wedding,
  4. Investment (esp. stock market and speculative property investments),
  5. Helping a relatives and family.

And debt consolidation: Some people also use it to refinance their Credit Card dues or loans from informal sources. But in that case, one would realize sooner if not later that it was an expensive decision.

Most personal loans have 3 clauses -

  1. A regular EMI for the entire duration of the loan 6-24 months
  2. Processing fee from 2-4%
  3. Restrictions on prepayment. I.e. one cannot prepay in the first 3-6 months and not more than 50% of the loan balance outstanding in one payment.

These Terms and conditions often don’t match with the optimal debt repayment schedule for the individual. Hence given a choice, I always discourage people from taking a personal loan.

Alternatives

1. Bank overdraft: This is the easiest and the cheapest option for short term credit. If you have a salaried account, then just ask your bank and they would be more than willing to give you a generous 1-2L line of credit which you can repay at ease. Charges like account opening charges, commitment fee (0.25-0.5% of the line of credit) may look like a lot, but due to flexibility in repayment, the overall interest expense is much lower.

2. Credit Card: If you search the archives of enagar, you will find reference to an older article which tells you how one can draw money equal to the credit limit (which is higher than the cash limit) for 50 days at a cost of 3% (paid upfront) and 1.8% for subsequent months.

3. CrowdSourcing: Why do to an institution in the first place. Go online, dial a friend and fund yourself. P2P loans are cheaper, faster and simpler than most bank loans.

The Full Cycle

Mari – Have you ever ridden a cycle in your life?
Sam – Yes
Mari – Do you still ride a cycle?
Sam – No

If we reflect upon our life and try to recollect the most cherished moments that we have experienced so far in our journey, we would discover that the majority of these moments were part of our childhood phase. Those indeed were the good old days! And if we dig a bit more into the cherished moments of our childhood, we would, without doubt find that a few of these incidents have a bicycle embedded in it.

The cycle and its cousins have a very special relationship with us. They touch and shape every stage of our life.

We might not realize, but the cycle; in its various forms influences us in so many ways——-

When we are born, a distance relative of the cycle – The Cradle surrounds us with its protection. The Cradle helps us to journey around the world even before our legs take up that responsibility.

With the passage of time, we grow out of the cradle and climb on the Tricycle. It is our first independent vehicle. It is we who control where to take it and with what speed to drive it. It is a friend which helps us explore the world, a friend which rides with us through impossible curvy and crooked places, a friend which takes many a falls with us but a friend which always is ready to go wherever our infant imagination wants to take us.

As we grow up a bit more, the tricycle becomes a thing of the past and out comes the Bicycle. The Bicycle is a big step in our life. When we dash on our bicycle, it gives us a taste of the speed, which is required by us to move ahead in life. When we fall down from our bicycle, it gives us a taste of the pains that life has to offer. When we complete our first bicycle ride without anyone’s support, it gives us a taste of thrill, freedom and confidence required to live.
Then as we grow up even more, we abandon the cycle and its relatives for the more comfortable means of commutation. The Cycle, from being a tool of discovery ends up being just a piece of decoration. And with time, the piece of decoration decays into a piece of debris for us.

Bicycle

We abandon the Cycle and throw it out of our house and out of our life. But the cycle, which was our best friend, is not able to come to terms with the fact that we have given up on the friendship. It desperately tries to come back to us, albeit in the form of a exercise equipment in the gym but there also it hardly gets any extended attention from us.

With time the Cycle realizes that it is not wanted anymore. It then waits patiently and watches us live our life. It watches and sees that the day has come when life has caught up with us, it sees the day has come when our limbs have began begin to fail us.

At this lonely stage of our life, when not many people want to talk to us, we can but only  sit down and reflect on our past days and realize that one friend is still waiting for us in the junkyard outside the house – Our old Bicycle.

But alas, when we could, we deserted it .Now, even though we want to, we cannot cycle anymore. Our body no longer has the strength to do so .We can only think about the time when we cycled and take pleasure in the vicarious thrills.

Our eternal buddy, the Cycle realizes our state. It stays aloof, as it is angry with us for we deserted it for years together. But eventually , for the sake of friendship it decides to come back to us and free us of our loneliness and helplessness — The Wheel Chair helps us to journey around the world even after our legs have given up that responsibility.

Mari – Have you ever ridden a cycle in your life?
Sam – Yes
Mari – Do you still ride a cycle?
Sam – No
Mari – Would you ride it in the future?
Sam –  I ………………