Money Saved is Money Earned

Money saved is money earned, how true it is and what can be a better time to act on this.

A friend of mine, rock solid engineer from a prestigious institute works on complex industrial projects, leads a large cross cultural team across the globe and is razor sharp with numbers. A few years back he bought an apartment in the suburbs of Mumbai with a loan from a bank where he has his salary account. Being the busy person he is, he did not get into the details of the product, he thought all financial products would cost more or less the same. Like a typical Mumbaikar, where life always keeps you busy, he did not get enough time to check on EMIs, did not calculate how much was the principal pending and how much interest he has paid so far. He understands the importance of credit score, he made sure there is enough balance in the bank account to pay the EMIs on time. Story is good so far.

The company he works for has also been a victim of COVID, slow and unpredictable business led to furloughs and salary cuts. When he was some of his colleagues facing financial problems, he thought of checking his own financial position and also understand the terms and conditions of the loans he has taken. To his surprise, he was paying more interest on the home loan than the best deal available in the market. He is well paid and has a good credit score, he thought why to settle anything for less. He immediately approached another bank where he got a deal which could reduce his EMI by almost 20%, the outstanding loan amount and the remaining period of the loan remaining the same. He quickly calculated the penalties towards prepayment of the loan and the cost like processing fees, mortgage registration etc., associated with the loan from another bank which was offering the best rate. While with this action, he will save on his future interest rates but he missed an opportunity to save more. The lesson to be learnt, please be careful while buying a financial product, understand all the terms and conditions, compare the products and choose wisely.