Elevate Your Life: March 2015

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Monday, March 30, 2015

She made her little contribution...Have you?

So often, we are faced with situations in life where our contribution to change things around us seem just so little, so tiny that it seems like a waste of effort. Again, it is about how we look at it. A different perspective can change things around, and give us the motivation, desire and the energy to continue to seek change.

In my teenage days, my mom used to tell me a story of a little bird who saw a house on fire, and decided to do something about it. It started to carry its beak full of water from the nearby pond to throw it on the fire engulfed house - giving its best shot to extinguish the fire. Knowing very well, that it cannot effectively put off the fire, the bird perhaps could have given up. But it did not. It kept trying till its last ounce of energy allowed it to. Whether the fire was finally extinguished or not is not the point here. The point is what drives us, and what are we here for. Of course, you can read details about this story and many other similar stories around it, in the book Happiness Unlimited.

We face similar situations day in and day out in our lives.

Whether we should break the traffic signal like everyone around us seem to be doing - knowing very well that we alone cannot change the mindset of millions around us?

Whether we should throw the litter on the roadside like everyone around us seems to assume as their birth right or should we have the patience and the power to carry the litter home with us, and throw it in the dustbin?

Whether we should plant a few trees every year in spite of the fact that the addition of these few trees is no match to the reckless cutting of trees and human greed?

Whether we should be honest enough to pay the extra change that we received from the shopkeeper by mistake or just enjoy with the extra money?

Whether we should resist and fight corruption knowing very well that it will only give hardships to us and our families, and will effectively not bring any change to the system?

The list is endless. It goes on and on...

Our contribution always seems just so little, so tiny that it is highly unlikely to impact the society as a whole. Still, should we? Should we still take the pain? Should we still go through the struggle?

Yes, we definitely should. We should still go there and make an attempt to change, just like the little bird. And the reason is fairly simple.

We are not here to change others. We are not here to change our neighbor, our friend, our society or our children. They will have to take ownership and change themselves. They will do it at an appropriate time. We cannot 'enforce' change on anyone other than ourselves.

We are here, on this planet, only to transform ourselves. And all these hardships and pain must be taken up for our own transformation. When we transform ourselves, trust me, someone is going to look at us and take the baton forward, and then the next one, and the next one. Social change will come in the real world, as long as we stay focused on our own transformation.

That is how it actually works in the real world - much like the way compounding works in a financial domain. It just does not seem to take off in the first few weeks or months or years. But then you see a little movement, and then a little more, and sooner rather than later, you see an avalanche of interest and money that becomes difficult to handle. This is what we call as Delayed Gratification, and it works in all domains of life.

Recently, I saw a real example of this effort from one of our readers - Ms Rita Cooper from Dubai. She is a marketing director in a big corporate house in Dubai. She saw that people around her are earning well, but still struggling to be happy in life. She saw this as an opportunity to create an impact.
She decided to gift both our books - From the Rat Race to Financial Freedom as well as Happiness Unlimited to her entire staff. This was her "little contribution" to start impacting lives around her. She understands that it may seem too little to change the world around her, but she is doing this to transform herself as a giver, rather than expecting something in return.

When asked, this is what she had to say of her decision:

Seeing stress ridden individuals who have no idea of financial planning (though they believe they have), and the fact that they are completely confused about life and happiness, I took a decision to spread the word by gifting Manoj Arora's books to all my staff. This is my little contribution to increase the happiness content in their lives as well as get them and their families a more financially secure future, so that they can go on to chase their true calling in life.
~ Rita Cooper (Director - Marketing, Emirates Int. Tel. Co., Dubai)

She says she is inspired by me, but again, I believe I am not here to change anyone. I am here to give "my little contribution" to the world around me, and I know there will be people who will pick up the baton and take it forward.

And once someone takes over the baton, that will be 'my little contribution' to change the world around me, just like it was by Rita Cooper.

Whats yours?

Related Posts:

Cheers

Manoj Arora

Freedom can buy you.... what money cannot !!

More on "From the Rat Race to Financial Freedom"

Books to elevate your life

From the Rat Race to Financial Freedom | Happiness Unlimited

Sunday, March 29, 2015

My little contribution

We face this day in and day out in our lives.

Whether we should break the traffic signal like everyone around us seem to be doing - knowing very well that we alone cannot change the mindset of millions around us?

Whether we should plant a few trees every year in spite of the fact that the addition of these few tress is no match to the reckless cutting of trees and human greed?

Whether we should be honest enough to pay the extra change that we received from the shopkeeper by mistake or just enjoy with the extra money?

Whether we should resist corruption knowing very well that it will only give hardships to us and our family and will effectively not bring any change to the system?

The list is endless. It goes on and on...

Yes, we definitely should. We should still go there and make an attempt to change, just like the little bird. And the reason is fairly simple.

We are not here to change others. We are not here to change our neighbor, our friend, our society or our children. They will have to change themselves. We cannot 'enforce' change on anyone other than ourselves.

That is how it actually works in the real world - much like the way compounding works in a financial domain. It just does not seem to take off in the first few weeks or months or years. But then you see a little movement, and then a little more, and sooner rather than later, you see an avalanche of followers. This is what we call as Delayed Gratification, and it works in all domains of life.

Recently, I saw a real example of this effort from one of our readers - Ms Rita Cooper from Dubai. She is a marketing director in a big corporate house in Dubai. She saw that people around her are earning well, but still struggling to be happy in life. She saw this as an opportunity to create an impact.
She decided to gift both the books - From the Rat Race to Financial Freedom as well as Happiness Unlimited to her entire staff. This was her "little contribution" to start impacting lives around her. She understands that it may seem too little to change the world around her, but she is doing this to transform herself as a giver, rather than expecting something in return.

When asked, this is what she had to say of her decision:

She says she is inspired by me, but again, I believe I am not here to change anyone. I am here to give my little contribution to the world around me, and I know there will be people who will pick up the baton and take it forward. And once someone takes over the baton, that will be 'my little contribution' to change the world around me. Whats yours?

Cheers

Manoj Arora

Stay happy.... always !!

More on "Happiness Unlimited"

Books to elevate your life
From the Rat Race to Financial Freedom | Happiness Unlimited

Wednesday, March 18, 2015

Daily Duels of Right Vs Wrong

Stuck in your daily duels between right and wrong, spending time and effort to prove that you are right and other person is not...even if this duel is only within your mind?
It is frustrating you, hurting you, and it is draining off your energy..a lot of energy.
Let me tell you that no one is ever wrong. Yes, this is possible, and this is the truth...read on...

Sukanya Samriddhi Yojana (SSY / SSS) Vs Public Provident Fund (PPF)

Many parents plan to invest in the PPF and fixed deposits for their little one's education or marriage. Things could be changing here, especially if you are blessed with a fairy, rather than a brat :) The Sukanya Samriddhi Yojana (SSY) could just be a better alternative...read on...

Is it celebration time?

The point at which you celebrate the hard work and persistence of your child's effort goes a long way in determining the way your child will think in future, and the level of happiness that he or she would be able to bring to his or her life...read on..

"Tomorrow is my last exam Dad."

"Great, and I can see that you have been studying very hard over the last so many months."

"Yes Dad, but tomorrow, it will all be over. And the result is out in another 10 days. I am really excited."

"You should be!! So, lets go out tomorrow and celebrate once you are done with your last exam."

"Sure, but Dad, result will take another 10 days."

"That's fine. Our celebration has nothing to do with the results."

"What does that mean Dad? I mean, what if I do not get the first rank? Our celebrations can never be the same in that case Dad."

"So what, We we will not be going to celebrate results, we will be going to celebrate your effort dear."

"Celebrate effort? But everyone wants to know the result, not the effort Dad. I mean, it is the result that matters after all. So, why should we not celebrate results, and celebrate the effort instead?"

"Reason is simple dear...You can only control your effort, but the result is in someone else's hand."

"Means?"

"See, when you prepare for an exam, the preparation and effort is in your hands - the way you plan, the way you get organised, the hard work you do for the entire year, the way you execute your plan, the way you strategise - almost everything is in your hands - and if you have prepared well, you have done your part of the role."

"And our result depends on our preparation, isn't it?" She was quick to state.

"Yes definitely, our preparation is one of the inputs that determine our results. But that is all it is...just "one" of the inputs."

"And what are the other inputs?"

"So many of them....the mood of the teacher who sets the examination paper, the mood of the teacher who checks your answer sheets, even to the extent that the level of the student whose exam answer sheet was checked just before yours, and then there are so many other factors which you just do not control dear.."

"Hmmm..."

"Therefore, we should just be satisfied if we had made a good attempt and preparation. Our happiness should never be linked to the result..because our result may not always be a true reflection of our effort, and therefore, our capability."

"You seem to be right Dad."

"So, we are going out tomorrow. I see that you have worked hard, planned and executed well for your exams, and that is what we want to celebrate. You are already a winner in our eyes..results may or may not be in line with that."

"Get your point Dad. We will go tomorrow."

We booked the latest flick in the town. We started 15 minutes before time from our house. Everyone was excited for the movie. The songs were already a great hit. As we were driving towards the cinema hall, As destiny was to have it, we got stuck in a completely unexpected jam on the way. The jam looked bad.

I was getting slightly agitated, but then my daughter kept her hand on my lap and said,

"Dad, that's OK."

"No, but we might miss our movie. We booked it in advance and we were out of our house just at the right time for it."

"I understand Dad. And that's all that matters, isn't it?"

"Means?"

Whether we are able to reach on time or not, whether we miss the movie or not, all that is not really that relevant. We planned it well, and executed it well. The result is not always in our hands anyways - just like the traffic situation here. Isn't it Dad?"

I smiled, and relaxed.

I was stunned, amused but happy that a lesson has been so well learn, so quickly. That's what children can do to you. They can surprise you with the speed at which they can learn new things. These life skills will help them lead much more happier lives in future. It was time for a bigger celebration !!

The book Happiness Unlimited shows you many such lessons to lead a happier, contended life.

Cheers

Manoj Arora

Stay happy.... always !!

More on "Happiness Unlimited"

Books to elevate your life
From the Rat Race to Financial Freedom | Happiness Unlimited

Monday, March 09, 2015

Tax Benefits on Home Loans of an Under Construction Property

[Updated : 17-Dec-2018]
If you have ever taken a home loan, you would have dealt with Equated Monthly Installments (EMIs), and if you have ever been involved in taking a home loan on an under construction property, you have surely dealt with 'pre-EMIs'. Let us clearly understand what separates EMIs and pre-EMIs, both from loan and from taxation perspective.

What are Equated Monthly Installments (EMIs)?

EMI is the repayment you make to your lender every month. It is an unequal combination of your principal repayment and interest payments. To arrive at EMI, your bank will consider several parameters including Principal amount, Repayment period, Rate of interest etc.

Thumb rule to afford an EMI
According to the generally accepted industry thumb rule, EMI should not exceed more than 30% of your total income, considering other liabilities. But this should not be the final deciding criteria. It is always better to do your overall assets, liability, income, expense calculation before arriving at the affordability of the EMI.

What is Amortization?
EMI payments start once the loan has been fully disbursed. A break up of your EMIs over the entire loan term can be found in your amortization schedule. It’s important to go over your amortization schedule regularly to keep a track of any changes in interest rate or loan tenure made by the bank.

Why do people buy under construction properties?
Many home buyers prefer to purchase a property which is under construction as the prices of ready-to-move homes are costlier than an under construction home. The cost-effectiveness makes an under construction property first choice of many, especially when the property is purchased as an investment.

What is Pre-EMI?
When you buy property which is under construction, the EMIs that you pay are termed as Pre-EMIs.

Tax Handling on pre-EMIs
Pre-EMIs too have tax benefits. However, we must be careful with pre-EMI cases. Here are some tips that might help you:
1/ In a Pre-EMI situation, all interest paid prior to construction is deductible from tax, but this cannot be claimed at the time when you actually pay the interest (as a part of your EMI).
2/ All such Pre-EMI interest is added up to the possession date, and then that total amount is divided into five equal installments, to be deducted over the next five years.
3/ This deduction is on the interest component that you have paid to the bank, for the payment that the bank has directly done to the builder.
4/ In any year, this interest deduction, for self-occupied property, is limited to INR 2,00,000/- (Rupees Two Lacs only - under current laws) . This comes out to so, Rs. 40,000 each year for 5 years post possession of the house.
5/ The principal component of your Pre-EMI is not applicable for tax deduction under Section 80 C. The reason is simple. For the principal amount to be tax deductible, the property should be capable of generating income (real or notional) which is chargeable under the head “Income from house property". When a house property is under construction, there is no likelihood of income, and hence under Section 80 C there is no provision for tax rebate on account of principal repayment. Only in the year in which the construction is completed can the principal payment be considered for tax benefit.
6/ Even when the completion Certificate is given by the builder, you cannot claim the Principal Amount paid during the construction years.

Is paying full EMI a better option than pre-EMI?
Even though paying pre-EMI seems more lucrative in the short run, as you have to pay only the interest component, opting for full EMI payment is more beneficial in the long run. This way you start repaying principal amount even before you get possession, reducing total cost by reducing the tenure of home loan.For example, in the case of pre-EMI, if loan tenure is 20 years, and the builder takes 3 years to complete construction, you will actually end up making interest payments for 23 years.

Cheers

Manoj Arora

Official Website

History
17-Dec-2018 : Updated The Interest Tax Exemption Limits
09-Mar-2015 : Original Article

Saturday, March 07, 2015

Challenge Your Beliefs and Break Those Myths

If you think that Sun "actually" rises and sets in a day, think about it again. Does it? Really?
And if that does not tell you enough about the zillions of myths that we are all surrounded with in our day to day life, then please read on....

Four levers that create wealth for you

Most of us feel that increasing our income will make us wealthy, and that is why we focus most of our energy on getting a higher salary or getting more profitability of our organisation. We forget that increasing our income is just one of the levers to wealth creation, and NOT a very significant one. Ignore the other three levers at your own peril...read on...

It was 9 AM right now. Vinay was anxiously waiting for the phone call. His supervisor was supposed to call him up at 11 AM. Today. He made sure that he reached office an hour earlier, out of sheer excitement and curiosity of the upcoming promotion declaration. After 2 hours, he would be the Vice-President of the company - a dream he had cherished over the last few years. His mind started venturing to the kind of hard work that he has been doing over the last 12 months for this promotion. Out station trips to get new contracts, sitting late in office and at client sites to make sure that nothing can go against the deal, working over weekends to stay ahead of his competition, spending time and effort on building a great relationship with his supervisor - in and outside the office. And then, once the promotion goes through, he can spend some time with his family and on his fitness, and all the other important things that he neglected over the last few years. Everything was going as per the plan, he thought.

His train of thoughts were interrupted by the telephone ring. He picked it up with childish excitement. It was his supervisor on the other side. Vinay listened on, as his face played all possible emotions from exuberance to maturity to anger to depression. He kept the phone down after 3 minutes, and kept looking at the telephone instrument for a long time.

Sneha, his colleague in office, had just arrived at her desk. She saw an unusually depressed Vinay and asked him to join her for tea. Vinay obliged. Over tea, Vinay shared the entire event with Sneha, and how depressed he feels right now, after 20 years of hard work with this company.

Sneha consoled him, and said

“Vinay, that is the problem with most of us who are in this race to earn more money and strive for better positions. We think this is the only way to get wealthy.”

“What do you mean? I mean how else can you get wealthy if you don't get promoted and earn more money?”

“I had exactly the same mindset till 6 months back. Then, I met an author in one of the workshops I attended and he explained me something that changed my entire outlook towards wealth building. Let me help you with some of that.”

“Please do that Sneha. I would be so thankful if you can give me some alternatives.”

“Sure, here we go. There are four (4) levers that catapult our wealth in the long run, and increasing our income is just the first of them. Also, this lever, does not have the biggest impact on our wealth.”

“Are you saying that, while staying in a job, I have other ways to increase my wealth than to just focus on increasing my income?”

“Yes Vinay, you are absolutely correct, and those levers are equally powerful, if not more, vis-a-vis just increasing your income. Hold on and let me explain you all the levers”

Vinay was back this childish excitement, as he listened on to Priya.

Lever 1 (Increase your income)

This is where most of us are focussed on. Probably, this is the only lever most of us are aware of. While this is a good lever to increase your wealth, the impact of this lever on your overall wealth is just ‘Medium’. So, while we must pay attention to this lever, but only to its fair share. We should not be burning all our energies on this lever.

Lever 2 (Increase your net income)

Most of us struggle for a 5-10% increment every year and we conveniently forget or ignore the fact that we pay close to 30% of our income to the government via taxes. The money that we take home is far less than what the company gives us. On the top of that, most of us feel that we do whatever we can do about taxes, but the fact is that a vast majority of us do not spend enough time to understand the nuances of smart investing which can save us good amount of our taxes. If we invest some of our time in getting smarter about taxes and how to reduce some of those, it is very easy to contribute the same amount of money to our corpus, as we get in our annual increment. This lever also has a medium impact on our wealth, but needs much lesser effort than Lever 1. It is worth spending a fair portion of our time on this lever.

Lever 3 (Reduce your expenses)

Do not get me wrong here. No where, I am saying that you must lead a saintly life and stop spending money. What I am only saying here is that we should eliminate the unwanted expenses and get wiser about spending. One of the techniques that has worked for me here is tracking my expenses on a daily basis. Did you know that just getting into this habit of spending 2 minutes every evening and tracking your family expenses can reduce your expenses by as much as 15-18%? Yes, this is scientifically proven. And do not underestimate the power of this 15-18%, remember that one rupee saved is equivalent to five rupees earned because typically you save only 20% of your earnings. The contribution of reduced expenses to your wealth corpus can be humongous in the long run, much much more than your increased income. What we need is to inculcate good habits and discipline of tracking our family expenses every day.

Lever 4 (Get your money to work hard for you)

This is where most of us get it wrong. And this lever has the biggest impact on your wealth. Let me explain you. Over the last 20 years, you must have earned and saved a lot of money. Do you know how your saved or invested money has been performing year on year? Don't only consider the real estate that you invested 5 years back and got decent returns on. I am talking about your entire portfolio comprising FDs, RDs, Mutual Funds, Equity Stocks, PPF, EPF, Gold, Real Estate, Insurance and every other investment that you have done until now. Do you have a documented list of how much money is invested where? What is the performance of each of your investment? What are your returns from each of your investments and your overall portfolio last year, and a year before that? If you do not know the answers to all these questions, you are missing out on the biggest lever in your hand. Look at it this way. You are the CEO of your life, and each invested asset is your employee. You got to monitor the performance of each of your employees, and make them work hard for you. If some of them are not giving great results, you must replace them with more productive assets - employees that can get you better returns. All this will happen if you invest some time on this lever, and start tracking the performance. A 2% increase in your portfolio returns by getting smarter about your portfolio can far exceed the impact of 20% increase in annual income.

“So, what do you say Vinay?”

“To be frank Sneha, I had never ever looked beyond Lever 1 in my life. I think you are right. Can you help me get started?”

“Of course I can Vinay. Getting aware of these 4 levers, and getting smarter about using these 4 levers in my life has, in fact, helped me earn back time in my life, while increasing my overall wealth. I have more time now to spend on my relationships and myself. I spend more time with my kids. I know what they study in school. I am also able to spend time on my fitness and health. I also have some time to help you. Lets get on to this today itself.”

Related Posts:

Cheers

Manoj Arora

Freedom can buy you.... what money cannot !!

More on "From the Rat Race to Financial Freedom"

Books to elevate your life

From the Rat Race to Financial Freedom | Happiness Unlimited

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Monday, March 30, 2015

She made her little contribution...Have you?

Sunday, March 29, 2015

My little contribution

Wednesday, March 18, 2015

Daily Duels of Right Vs Wrong

Sunday, March 15, 2015

Sukanya Samriddhi Yojana (SSY / SSS) Vs Public Provident Fund (PPF)

Saturday, March 14, 2015

Is it celebration time?

Monday, March 09, 2015

Tax Benefits on Home Loans of an Under Construction Property

Saturday, March 07, 2015

Challenge Your Beliefs and Break Those Myths

Sunday, March 01, 2015

Four levers that create wealth for you