New Age thinking (Part 2) - Do we follow our traditions in changing times?

Culture and traditions are the identity of ones own self. These age old traditions are devised with a purpose in mind. If the actual purpose was spelt out hardly people follow these traditions and hence every traditions and customs we follow has a religious connect, so that these are followed without any deviations.

Along with the changing times these traditional practices get a beating and we tweak them to our own comfort. We feel that we oblige by just following the devised practices but the core purpose of the tradition gets defeated as it is tweaked to our comfort. This came as an eye opener to me when my ever curious daughter posted me that question. Let me narrate the chain of instances in the below article.

It was in the month of December. I was enjoying my Christmas holiday with a week long vacation. Being a holiday , I was late from bed. Like any typical south Indian even I would like to wake up with the aroma of filter coffee invading my senses. My typical morning starts with a coffee in one hand and "The Hindu"(our National daily newspaper) in other hand. Both of these make my mornings more blissful.

I normally don't like anybody intervening me during this blissful period but my daughter is always an exception. She wakes up early along with her mother and her typical day starts by getting around the house and observe things around her. We as a part of Indian Hindu tradition follow drawing Kolams (An art form consisting floral designs and follows a pattern) in front of our house. This becomes bigger and even more special in the month of December (Margazhi month as per Tamil Calendar).

On that chilly December morning my wife was busy drawing kolams in front of our house. My daughter was accompanying her all along the process. The more time she spent over there her curiosity meter shot up and she had reserved her questions for me. She was waiting for me to up from my bed. Once I settled in my couch to sink in my blissfulness she came running to me.

She is smart enough to start her interactions with pleasantries once our discussion picked moment her curiosity meter starts ticking. The first question of the morning was "Dad, why do we draw kolams in front of our house every day morning?". She saved my day, as I had an answer for this question.

I started my reply stating " Kolams are drawn with grounded rice . When we draw this on the floor in front of our house this forms as a feed for the insects like ants around the house. This helps us in feeding the insects and maintaining the bio diversity which is important for our survival". I continued my answer saying " This practice is followed as an age old tradition with a belief that drawing such kolams in the morning brings prosperity to the house. This traditional belief makes us draw kolams every day in the morning"

This time I was a proud father as I managed to answer her question in detail with both the traditional and scientific touch. To my surprise rather than accepting my answer , she fired the next question.If that being the case "Why do we draw Kolams with Chalk(made out of limestone) rather than rice flour which insects cannot feed in?"

It was an eye opener to me  and made me realize that how our convenience factor defeats the core purpose of the tradition as drawing Kolam in Chalk is easier compared to rice flour. Since then we started using only rice flour for drawing kolams.

Our kids always has the New Age Thinking which enlightens parents at times. So do not stop your kids from asking questions.

How to make your home loan cheaper - 4 must to know points

Building a dream home lingers in every person's mind. The very thought of thinking about the finance which is required to built it, stop us from taking further steps. Many people won't proceed and bury the thoughts in their dream land. These days there a lot of banking institutions and NBFC (Non Banking Financial institutions) ready to offer loans. The world is running at knot speed and the financial institutions who understood the lack of time of a potential customer started offering instant loans (These days loan sanctions are faster than coffee preparations :-))

Everybody acknowledge the fact that the loans reach them faster with less hassles. In the process of getting a smoother service during loan process we fail to understand our home loan better. Many amongst us fail to understand on how to negotiate on our home loan. This article deals about the 4 must to know points about your home loans.

Source of funds:

In order to have a better bargain we need to know the source of funds. There are 2 channels , the first being banks eg: ICICI bank, Indian Bank, Corporation Bank, AXIS bank etc.. governed by RBI and the second being Housing Finance Corporations(HFC) eg : LIC Housing Finance Limited, HDFC Ltd etc.. governed by National Housing Bank.

Interest Rates:

Effective July 1st 2010, RBI issued guidelines to make loan offerings based on Base Rates. This was done keeping in mind the interest of people(especially the existing borrowers who payed more compare to new borrowers). Since then banks follow the base rate to offer loans.

Effective 1st April 2016, RBI suggested to offer loans based on MCLR(Marginal Cost of funds based Lending Rate).MCLR is the average cost of funds for a bank. Bank should be replacing the Base Rate system with MCLR. SBI was the first bank to introduce MCLR based home loans for new borrowings. The advantage of this system ensures that the home loan is not increased immediately once the Repo rate is increased by RBI.

Housing Finance corporations (HFC) follow the BPLR or RPLR to offer loans . This is called Benchmark Prime Lending Rate(BPLR) or Retail Prime lending Rate(RPLR)

Repo Rates:

The rate at which RBI lends bank for short term is called Repo Purchase Rate. If RBI borrows money from the bank the rate at which it borrows is called Reverse Repo Rate. If the repo purchase rate is increased by RBI then the cost of borrowing becomes costlier, whereas if this rate gets reduced then loan becomes cheaper due to lower cost of funds. Hence repo rate plays an important role in rate of Interest at which loans are offered.

Spread: 

Spread is an important term in fixing your home loan rate of interest. It is the difference between the Base Rate or RPLR and your actual rate of interest. Banks call this difference as  "Mark Up"  and HFC call it as "Discount". For example ABC bank offers home loan at 10.75% ( Base rate/MCLR 9.75% and mark up of 1%) & HFC offers home loan at 10.75% ( RPLR @ 16.5% and discount at 5.75%). 

As we know that repo rate has direct impact on the home loan rate of interest, let us assume an example, give the above scenario the repo rate is reduced by RBI by 0.25%. Then ABC bank will  offer home loan at 10.5%( Base rate/MCLR 9.5% with a mark up of 1%). HFC will offer at 10.5% (RPLR @ 16.25% and discount at 5.75%)

At  every change in repo rate the bank or HFC does not instantly change their base rate or RPLR. Also the spread varies from one customer to other. This is the prime reason for difference in rate of interest between 2 customers of the same bank or even with other banks. 

Steps to do:

You need to understand your spread for the home loan offered.Negotiate with your financial institution to have a lower spread. A better negotiation will help you lower rate of interest. After all , home loans are long term commitments and even a minor change in the interest rate will help us save a lot.

Go Ahead, Negotiate your Spread & Reduce your Burden !!!!

3 C’s preventing your next job change

All salaried person, however depressed they are, feel the most happiest on the day of receipt of their monthly pay check. The job one hold guarantees regular flow of income. The very thought of stifling the money flow due to the job switch will make one feel breathless. Thanks to all the EMI’s which adds to the pains. This makes one perform the monotonous task which he/she dread to do.

If you are the one who got bored with your regular daily routines, less attracted with the job you perform, lack of avenues to learn at work and not doing what your heart says, then you are not alone. You belong to majority of the current breed of job goers who feel so. In spite of all these effects you may stick on to your job because of “FEAR OF CHANGE”.

Let us evaluate the 3 C’s which holds you from change:

CASH:

Many people stay on the same job decades together; perform the same role with an organic increase in their CTC year after year. At one fine point the pay they get will not match the designation. This imbalance will create a lack of motivation to move out as the change will not fetch them the expected hike.

Some brave the odds and start floating their CVs in the job market. All may go well in the interview and one may get shortlisted. The HR round becomes the next show stopper. The salary negotiated may not fit the bill of the Recruiter. An orthodox candidate would be too ambitious and a conservative one will negotiate to meet the industry standard. The negotiation will never materialize due to the imbalance between current salary and designation.

Way out: 

If the change lands you in your dream job then don’t be stubborn on the “Cash” (Compensation) factor. The best of an individual comes out, when he/she does what they like the most. This leads to productivity and efficiency improvement. Enhanced performance will scale up the compensation.

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DO WHAT YOU LOVE THE MOST

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CAREER:

Most of us do not work in the area of our educational specialization. As we have mastered the domain we work there is a new found love towards it. On the pretext of making big in the domain we refuse to move. Let us agree the fact that the corporate ladder is narrow at the top. Not every person gets the opportunity and even if one gets a chance, the survival requires the development of relevant competencies. A good example would be, being a bad negotiator cannot make a best Procurement Manager.

The way organization operates keep changing. Every company looks for constant up gradation to keep abreast with the latest trends. This reflects in the employees who work over there. They are expected to know about the upcoming events. Stereotyped work is no longer preferred and employees are expected to be flexible.

Way out: 

Choose a field or a domain which suits your competency & skill sets, else develop those skill sets which is required for your domain expertise. Constantly work on your skill sets to equip yourself for staying at the top. Diversify your knowledge in different domains to keep yourself versatile. Upgrade your knowledge with the latest trends

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KEEP YOURSELF UPDATED, ELSE YOU BECOME OUTDATED

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COMFORT:

In spite of the mundane stuff which we perform at work, there lies some underlying comfort which prevents our change. Few factors like shorter commute to office, home town location, less stressful, lack of challenges, work timings, domain expertise play a vital role in creating the comfort factor. This may lead us to a trap. The more the comfort we get into, the chances become remote to our exit.

The world is wide open and lot of new things happen every day. Sitting on ones comfort zone will hinder the knowledge enhancement and growth in corporate life. A ship is safer in the harbour but that is not it is intended for. Hence venture out in the rough seas to greener pastures.

Way out: 

Break the shackles and come out of your comfort zone. Initial few days may give you a “CAST AWAY” effect. Later you get acclimatized to the change. Explore new things. Try something which do not suit your comfort. The change will bring the best out of you to make the new environment suit your needs

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BREAK SHACKLES, DO MIRACLES

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Cash, Career & Comfort are the 3 C’s which prevent one from making the next change. There is “Way out” for each of these. Hence kill the fear and get ready for your next change because

“Change is the only constant”

Calculate your BMI (Body Mass Index) without the help of internet

Adolphe Quetelet a Belgian statistician in the early 19^th century developed a statistic for arriving “Body Mass” which is the combination of bones, tissues, muscle, fat etc in human body. The value arrived is referred as “Body Mass Index”. A person should be aware of their height & weight to evaluate their BMI index. Body Mass Index helps an individual to assess whether they are weak, healthy or obese.

This formula stays the same for men, women and children. The only exception for children being it is compared against percentile for children with same gender and age rather than comparing with existing threshold.

BMI Calculation:

Standard or Metric measures for BMI:

Weight should be in Kilo grams (Kg); Height should be in Meters (M)

Formula: Weight / (Height) ^2 (Weight in kilo grams divided by height in meters squared)

Example 1: Weight – 78kgs; Height- 1.8m

BMI Index = 78/ (1.8) ^2 = 24.07

If weight is available in Pounds (lbs) and height in Inches (in) then a conversion factor to be used.

Formula: Weight / (Height) ^2 *703 (Weight in pounds divided by height in inches squared * Conversion factor)

Example 2: Weight – 171.961 lb (Pounds); Height -70.86 in (Inches)

BMI Index = 171.961/ (70.86) ^ 2 * 703=24.07

BMI Table:

The value arrived should be compared with the BMI table below to identify under which category an individual stands. The below table is the standard one and there is a slight change on the thresholds in few countries. There are variants to BMI and it is called BMI prime but this is not exhaustively used.

	BMI Index
BMI Category	From	To
Severely Underweight	Less than 16
Underweight	16	18.5
Healthy Weight	18.5	25
Overweight	25	30
Moderately Obese	30	35
Severely Obese	Greater than 35

Even though BMI methodology has its own limitations, it is currently accepted globally .The BMI serves as an indicator and this gives the individual a glimpse on what should be their future course of action(Either to increase or decrease weight).

Limitations to BMI Calculator:

There are few BMI calculator’s which can be easily browsed through the net. The common issue faced is the conversion factor due to change in metric values. The below conversion may come in handy for the commonly used variables for height & weight.

1 kilo grams = 2.20462262 pounds

1 pound = 0.45359237 kilo grams

1 foot = 0.3048 meters

1 foot = 12 Inches

1 inches = 0.0254 meters

1 centimeter = 0.01 meter

Easy way to calculate BMI in smart phone without Internet (3 step process):

Open your calculator

Step 1: Enter weight (value in kilo grams)

Step 2: Divide by height (value in meters)

Step 3: Again divide the resultant value with height and you get your BMI

Note:  If the values available are in pounds and inches then multiply again by conversion factor (703)

 Doesn’t that sound easy? Why to wait, open your smart phone and calculate your BMI today.

5 effective ways to become richer with your credit card

There is always a myth which spreads around that credit card financially burdens an individual. It’s never seen as a boon rather treated as a bane. I would like to bring in a different perspective to this opinion, as I always treat credit card as a blessing in disguise. The plastic money (credit card) never burdens the individual, rather it’s the individual’s financial mismanagement which disrupts the fame which the credit card suppose to carry.

In the article below, I would like to cover on the key things to know about credit cards and the financial discipline that one need to follow

Things to know about your card:

1. Card Features: A credit card offered by any financial institution comes with different variants. Based on the individual ability to repay the credit limit will be fixed. The rate of interest will also vary based on cards offered. Also the rewards procedures differ from one card to another.

Financial discipline: Before signing on the dotted lines of the credit card application form, an individual need to understand the terms and conditions which applies to the credit card to be owned by the individual. The individual should spend some time on reading the disclosures statements to understand his/her credit card better.

2. Billing & Payment dates: The billing cycle start & end date and the payment due date are the 3 important dates to know about a credit card. The billing cycle is normally a monthly cycle and purchases during this time frame will be sent out in a statement for payment to be made by the credit card user. “Payment due date” is the date by which the card holder should make his/her payment for the previous billing cycle.

Financial Discipline: Knowing the billing cycle should help one to plan all their expenses especially during the first week of the billing cycle. This gives the card holder a credit period on an average of 30 - 40 days. Remembering the Payment Due date will help one plan their finances to pay the outstanding amount shown on the credit card statement.

It is always advisable to pay the total outstanding in full. Any partial payment will attract interest for the residual amount. We need to bear in mind that credit card interest rate is the highest lending rate amongst all financial instruments available. So due care to be taken while settling the bills.

3. EMI Options: Any purchase made can be converted into EMI’s. These days an immediate notification from the bank pops up on the feasibility to convert an outstanding amount into an EMI. If this conversion does not attract higher interest rates and the expenditure made is the need of the hour then it will be a good idea to opt for EMI.

Financial Discipline: A card holder should know ones monthly expenditure capability. Any spend made should take into consideration the EMI factor and spend to be planned for the remaining capacity. For example if an individual had a monthly capability of up to Rs.10,000 and out of which a pre existing EMI runs for Rs.2,000 , then the card holder should restrict the expenditure for the billing cycle within Rs.8,000

4. Credit card statement: Generally the credit card statement is generated on a monthly basis and this will be a reflection of all the expenditure made & payments done during the previous billing cycle.

Financial Discipline: On receipt of the monthly statement perform reconciliation on all the entries to cross verify whether whatever expended is getting reflected. Any payment made during the past billing cycle should be duly deducted. EMI pertaining to the specified period only to be displayed. In case of any discrepancies reach out to Customer Care before making the payment

5. Reward Points: Most financial institutions which offer credit cards provide rewards for the usage of their cards. These rewards are converted into points and displayed cumulatively in the credit card statement.

Financial Discipline: Never let these points go unattended. The points accumulated can be redeemed against products or services as per the catalog of rewards offered by the financial institution. Once sizeable points have been accumulated and if it can be redeemed against a product or service of our choice then the decision should not be delayed and immediately acted upon.

The financial discipline listed above helps one to lead an organized credit life. Debt will be completely avoided and even if arises, it is carefully charted out, so that it never becomes an undue burden. Careful planning of expenditure will have an elongated credit period on our cards. Managing funds through credit cards helps one to have the money retained in their own account for a longer period and in turn helps gain interest. Hope the article would have changed your view on credit card management and help you effectively manage them going forward.

Efficiently manage credit health, sufficiently increase financial wealth !!!!

5 simple gifting ideas to impress your father on Father’s day

Father’s day is celebrated on 3^rd Sunday of June month and this year it falls on 19^th. This day is celebrated to remember and recognize the thankless contribution which all fathers make in the life of their children. Father’s love and affection to their children are boundless and there is no better gift in this world to honour their contribution. In this article I have just listed few simple gifts which we can get as a token of gratitude to bring smile in your father’s face.

Resting chair:  If your father is a peace loving person and love to stay indoors enjoying his retirement life then “Resting chair” will be an ideal choice. Be meticulous in choice of the furniture which you pick, starting from the make (wood, steel etc..) to fabric ( Cloth, cushion etc..) which he would like the most. If your dad has choice of colours then pick one which would impress him the most.

Music CD: A music loving father would be excited to receive a gift with a collection of songs which he likes the most especially in his younger days. Based on your interactions with your father hand pick songs which actually drives him down the memory lane.

Delicious Dinner: Foodaholic Fathers will love this present. Take him to his favourite restaurant where he would like to dine in. Treat him with a special drink of his choice. Else surprise him with an online order to get it delivered at home with delicacies which he loves the most.

Coffee Mug memorabilia: Your father would have passed through a lot of milestones or cherished a moment wherein he has done a great achievement in his career. Browse through your old album to get this picture. Get a coffee mug memorabilia with the picture embedded on it. This gift will give him a high as you bring back some golden memories.

Photo frame: Pick a picture from your photo album where your father poses with you as a kid. Frame the picture with a nice quote on the top which says how much important he was in your life. This one is the closest to my heart as I gifted my dad a photo frame last year.

The picture was a old black & white picture, where he stood and posed the camera lifting me in his hand. The quote which I left in the photograph was “THE LIFT WHICH HELD ME HIGH IN MY LIFE, THANK YOU DAD”. He was dumb stuck and had a sparkle on his eyes which still lingers my memory.

The simplest of all gifts which will have a lasting impact “Just hug your dad and say I LOVE YOU”

Dedicated to all sons and daughters who love their father!!!

Krishi Kalyan - A birth of new tax effective 1st June

Krishi Kalyan is a cess which came into existence effective 1st June. This will be levied on all taxable services and with the advent of Krishi Kalyan the overall taxes on services will be levied hence forth at 15%.

About Krishi Kalyan:

A cess will be levied only on services and not on income of individuals and amount collected will be spent only for that purpose and will not be utilized for a different one.

Krishi Kalyan was announced by our Finance Minister during the recent budget session of 2016. This will be levied at 0.5% on Service Tax. This is introduced for developing and promoting agriculture initiatives. Due to this increase some of the regular services which we use like Broadband bills, Telephone bills, Hotel bills etc will become dearer effective 1st June. As Swachh Bharat Cess is also being levied at 0.5% , the overall taxes on services will be levied at 15%. 

Assuming if we get a bill of Rs.1000 for the telephone services used in the month of May, the new billing structure will appear as below:

Telephone Charges 1000 Service Tax @ 14%   140 Swachh Bharat Cess @ 0.5%       5 Krishi Kalyan Cess @ 0.5%       5 Total Bill Amount 1150

This cess will be applicable even if the services is availed prior to 1st June but the services bill is generated after the implementation date. There may also be instances wherein the bill also be generated before 1st June but if the payment is made after the implementation date still it attracts Krishi Kalyan cess.

Even though the new cess benefits the agriculture which is the backbone of our economy , this new tax actually eats up into common man earnings. Whilst we welcome the new initiative, our government can give a thought to reduce the service tax which has scaled upto 14%. This will help to strike a balance between developing agriculture and taking care of the welfare of the common man.

World Environment day - Lets do our bit to save it

June 5th is celebrated as World Environment day in order to save Earth where we live in. United Nations Environment Programme (UNEP) runs this initiative every year. The scientific advancement has helped in our development but needless to say, it has also equally contributed to the degradation of our environment. There's a lot of initiatives happening around the world to have a sustainable environment around us. Even if we cannot be a part of it, lets do our bit by sitting at home.

Segregation of Garbage:

The common concern faced by any government is the garbage menace. Even though we cannot reduce the garbage created by us, let us be responsible to segregate our garbage as degradable and Non-degradable at source , so that it becomes easy to dispose. 

E-Waste disposal:

E-waste is another concern, wherein the disposal is not done efficiently. The most common among E-Waste are computer accessories, followed by telecommunication appliances.Only few manufactures has take back option. Out of these HCL & Wipro are doing good. If your computer appliances are in working condition you may donate it to the needy. If the appliances are not in usable condition then dispose it responsibly. There are government authorized E-Waste Recycler/Dismantler. Find the one nearest to you and hand it over to them List of registered E-waste Recycler/Dismantler

Save energy:

Let us save energy by using appliances which are energy efficient. Take the first step of replacing all our bulbs from incandescent to LED which consumes less energy. Let us create our own energy by installing solar panels. Our government has come up with subsidies for better implementation. The most important being to switch off any electrical appliances which we are not in need.

Avoid Plastic carry bags:

Plastic is one of the 20th century discovery which is both boon and a bane. Even though it has enormous usage,as it is non degradable we need to find alternatives to plastic in every walk of our life. To start with, let us vow today to carry our own cloth/jute bag when we go to the nearest super market starting today.

Recent Innovations for plastic alternatives or recycling:-

• Bakey's came with a break through innovation in 2011 and now they are scaling up in edible cutlery. Let us avoid using plastic spoons and change to edible cutlery which is an healthy alternative. 
• One professor has patented his innovation for using recycled plastic for laying roads . The roads are more durable and turning out to be a cost effective alternative.

The mantra now being Reduce, Reuse, Recycle. There are lot of ideas for recycling available in the net . Let implement whichever is possible from our side. On this World Environment Day, let us do our bit to save mother nature and give it back to the environment. I just started by writing this blog and sharing my ideas. Need your support to have sustainable environment. Will you?

Details you must know about your Provident Fund Account

Employees Provident fund is a social security for all salaried employees who works in an organisation which falls within the ambit of Employees Provident Fund Organisation (EPFO). An equal contribution is given by the employer and the employee to this account. This blog speaks about the finer details about the contribution and the recent updates.

The statutory contribution by the employer to this account is 12% of basic salary and an equal deduction is done from the employee salary and contributed to the PF's account on a monthly basis. Whilst the employee's contribution goes in full, the employer contribution is split into PF fund and Employee Pension Fund. A sum equal to 8.33% of Basic salary up to Rs.15000 (Rs.1250) is contributed from the employer's contribution to Employee Pension fund.

Example : If the basic salary of the employee is Rs.24000, then a maximum of Rs.1250 will go to pension fund and the remaining Rs.1630 will go to PF fund. As explained above the entire employee contribution of 12% basic (Rs.2880) will go to Pension fund.

Basic Salary	Rs.24000
12% Basic	Rs.2880
	PF Fund	Pension Fund
Employer	1630	1250
Employee	2880
Monthly Contribution	4510	1250

Provident Fund gives the best returns amongst all the financial instruments. The current ROI for the  year 2016-17 is fixed at 8.75% and this is revised from the previous ROI of 8.8% . Our Honorable Union Labour Minister has hinted that this is only a interim change and employee's can expect a hike in the near future. 

Apart from the best returns PF also gives tax savings options. The annual contribution to PF by the employee is exempted from tax under Sec 80C. The amount accumulated will be paid to the employee either at the time of retirement or at the time of leaving the company. However recently a cap has been placed  for withdrawing PF amount only to the extent of employee contribution, if the employee leaves the company considering the employee social security at the time of retirement. Such withdrawal will attract taxes.

An employee is eligible to take loans against PF after a specified period. Based on the need, the tenure and percentage of amount which can be availed as loan from the accumulated contribution is decided. The employee may reach out to the PF office or the company HR contact to know more details about his/her loan eligibility.

The employee while shifting jobs should ensure that 2 forms (One for PF and other pension Fund) is filled in and submitted at PF office or to the HR contact of the relieving company to get the amount transfered to the new employer or to withdraw the amount. In most cases, the transfer to the new account doesn't happen properly and this leads to a lot of unclaimed PF amount. This was due to every company having a separate PF account created for its employee.

In order to avoid this confusion, the government has come up with an initiative of providing a single common PF account number to every salaried employee and this number doesn't change when an employee change his job. In this era of job hopping this comes as a boon to the GEN X & GEN Y employees. The single common PF account number is known as UAN (Universal Account Number). Slowly this UAN will replace the existing PF account number. 

The employee can get his/her UAN number known from his employer. Get this number activated in the UAN Portal Activation Link for UAN. One mobile number can be used for one registration only. This helps one to print their UAN card, view PF account balance, file and view transfer claims.

Thanks to the Digital India Initiative and now we can have online access to our own PF accounts. PF is no more an unknown area. So why to wait ? Get your UAN activated soon and have complete control of your PF account.