Personal Finance

P2P Lending Policy

Ha! This is as formal and official as I can get with a blog title…

You know how life works right?
You want things – you look at the money you have, if you find yourself short, you ask around for help. No, not banks. You go and ask for it from friends, family, fools et al.

I am no different.
I have often asked friends, families, fools and strangers for loans for work. And they’ve been kind enough to offer the loan and extend an infinite payback period – so that’s cool.

Plus, I’ve been on the giving side as well.
However, most of them were not for work!
I am digressing. I will come back to this.

So, when I take a loan, I track it on a document, get obsessed about it and can not get good sleep unless I’ve returned it. As we speak, I have to pay back 3 lakhs (a working capital loan that I took from a friend). Apart from this, I have some sundry payables to vendors and suppliers – these are not really loans but are regular transactions that I need for business, which is ok. Apart from these two categories, I have no debt (no EMIs etc).

I am digressing again. Coming to the point of this post.

Like I said, most times when people ask me for money, it is not for business. It is for personal spends – someone wants to get married, someone wants to fix their car, someone wants to buy an appliance, someone wants to even buy a damn house. You know, personal spends.

Of course, these are wants (not needs) and I can debate for hours to dissuade them from taking a loan to get access to these luxuries. You know, “we buy things we don’t need with money we don’t have to impress people we don’t like”? That! I wish I could tell everyone this. But then, who I am to control how they live their life?

But then these are friends and acquaintances and all that and thus I feel obligated to help! Leave the obligation on the side. I really want to help. That’s the point of why I am alive! You know, my raison d’etre. To help. Enable. A billion people.

Digressing again. Coming back.

So, for some reason, most of the loans that I give out to people (and these are friends and family), they don’t come back. And it has reached this epidemic proportion that I must have given a mini-fortune away and there is no return in sight. And of course, it gets embarrassing to ask for that money after a point. And then I start avoiding meeting these friends. You know what am saying?

And more than the suffering I induce on myself from a financial loss, I feel sad. For I hate to see people around me struggle to manage their wants.

And I feel bad. To have been let down. Let down that people that I care for could not keep their promises.

And I feel bad to have lost trust and faith on the ones that did not return. Of course, these are micro-loans (3K, 10K, 50K et al) and I can live with the loss. I anyway realised long ago that money is merely an object and not the most important thing. Time is.

And the worst part? It has made more difficult for subsequent “want-ers” to borrow money from me. Once bitten twice shy. Plus, because I want to help others and all that, I feel bad (and sad and even miserable) every time someone asks for money and I have to say no.

Well, to be honest, most times I don’t have free cash flow. And the other times when I do have the cash flow, I can no longer bring myself to face disappointment again!

But… but… it’s changing now.

Thanks to my Mastermind group.

In the group, one of the ideas that we discussed was to create a small fund, call it a do-good kitty, and give money out from that fund and that fund only. If it’s empty, you don’t give the money. If it’s full, you dole it out. And every time you give loan to someone, you tell them that they are being given money from this kitty and in case they don’t return it by the promised date, they are affecting your ability to help others in need. And every time someone returns the money, you add it to back to the fund and it stays at great levels. Every time the loan is not returned, the kitty depletes. And depending on your life stage, you add to the kitty (say you get a bonus).

That’s it!

Simple idea.

But counterintuitive to how I would operate. This is one of many tangible changes in my behaviour – thanks to time spent at the Mastermind group. Thanks, guys! You MUST get one!

So, going forward, if you are going to ask for a loan from me, please do note the following.

I do NOT give loan to strangers. So, if we don’t know each other, please do NOT embarrass me by asking for a loan.
If you know me, please read this blog post (if you’ve reached this far, you have read!) Yay!
If I am able to give you a loan, please know that this is coming out from the small kitty that I have reserved for giving loans out. The Do-Good-Fund.
If I do give you a loan, please know that I would want to know a date by which you’d return it. There is no interest, of course. Do not embarrass me by offering to pay the interest.
If you are NOT sure of repaying (you don’t have the intention or you are not sure of your ability to repay), please tell me beforehand. It will not affect my decision or judgement. But it will save both of us heartburn. At least I will be mentally prepared.
If you promise to repay and you do not, please note that you are affecting my ability to help others. And to me, that ability is MORE important than anything else in life! So, please help me! Please help me help more people.
Oh and while you are at it, do read https://seths.blog/2019/05/selling-insurance-to-your-sister/

That’s about it! Good luck to all of us! May all of us live long and prosper!

Saurabh Garg

17 May 2019

PS: Been working on this draft for well over a week. Since I came back from the break, words haven’t been flowing and I can’t seem to concentrate on work at all. With this post, I hope to break the jinx.

The Eco Mode 2

Sometime in August of last year I made these two posts. Each of them is worth revisit. A Thursday and as a result, Eco Mode. To save time, Id summarize things here. In those two posts I said that I was very fucked up with how things were moving so slow in life and I needed to do something about it. And to do something, I needed money. And for money, since my dad is not rich, I needed to save. And to save, I needed to stop spending on frivolous things, and hence the eco mode.

Fast forward to May/June of 2013. About nine months since I first spoke about Eco Mode. Not much has changed. Delhi is hotter. I have lost more hair. I haven’t stopped splurging and I am poorer than what I was back then, blame it on a few capital expenses. Yesterday I met a friend who just joined a startup and he’s getting paid a tiny atomic bomb for his salary. In terms of numbers, he now makes 4 times compared to me. And he and I are classmates. Nothing wrong with it. He probably deserves it more than me. But he did open my eyes to possibilities that exist for me.

So like last time, I have decided that I would get into Eco Mode starting now. And today was a good start. I had to meet a friend and unlike most days when I take my car for any and every meeting, I took the metro. The journey in the metro sucked but it wasnt very tough. I could live with it. Of course I will not do this everyday but its manageable. Idea is to cut down on unnecessary expenses and save as much as I can.

Coming to money, I have just one savings account and just one credit card. I make all my expenses from the credit card, except tolls, parking and other small out of pocket expenses. This ensures that I have a bill for each transaction and I can verify the spends at the end of the month. And of course I get loyalty points that get me free air tickets.

So I want to take a break by the end of the year for a month or so. During that time I want to travel, probably write a book, take it easy. And I have ~~seven~~ six months to go. In the next six months, here are my measurable goals…

Save 40% of my income. From all sources. Right now I have one source of income. I need to increase it. Thats my other goal.
Make money from 3 sources. And predictable income at that.
Get monthly credit card bill to 50% of the average of previous six months’ bills.

Thats about it. If I can manage these three, I think I would be in a comfortable enough position to take a break.

Of course what I do with life and career is entirely different all together. More on it during one of these days in the 1000WADv2.

Personal Finance 101 with Buxfer

As a part of Project rstlf, I decided that I need to get on top of my personal finances. I decided to keep a tab of my spends. So starting Aug 1, I have noted EVERY spend I have made on buxfer.com (affiliate link, if you sign up, I get $1). And here is how the summary looks like…

I will not get into absolute numbers, I dont want to tell the world the miserable and poor life I lead. The key spends are Home (I contribute about 20% to my household spend, rest comes from my dad, even though he’s retired from his work more than a year), Shopping, Auto (Petrol, Parking and Toll) and Food.

Of these, I dont think I can reduce on home. In fact it would go up with time as I try and give a better and more comfortable lifestyle to my parents.

Shopping can be reduced. This month I made a large purchase, a phone. This may not be a recurring purchase and hence this could drastically come down as I have stopped splurging on shoes and am not too fond of clothes anyways.

I can reduce food as well. A large chunk of my money is spent on eating out. This is fancy restaurants, parties etc. Thankfully I dont booze and that saves a lot of money for me. Going forward, I plan to reduce this as much as I can. Eating at home will save me a lot of money. And then, maybe, just maybe it will make me fitter (which is a large part of rstlf).

Surprisingly utility payments was very little. Its part of Others. May be because my dad pays most of those and because the large component of the bills, the electricity bill, comes every two months and we dint get it in August.

So this is about it for the month of August. For next month, Sep 2012, spends could again be an aberration. Because as a part of Project rstlf, I am planning something outrageous and that would mean yet another spike in spends. Lets see how that goes.