The curious case of Murli’s free-for-all purchase plan

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SummaryFinancial planning is an amazing profession because you seldom have a similar situation repeating.

Financial planning is an amazing profession because you seldom have a similar situation repeating. Each time I meet a new family there is something new, something unique and there are always unique challenges to address. To this extent it can be quite like astrology. Every person’s situation is quite unique. Just like the astrologer has a different destiny to predict for each person there is never a case where two persons or families have a similar solution despite having a similar situation.

Each person has his or her own unique style of planning and a unique perspective to managing money. Whether it is effective or not is not really the issue. The style and methodology is what is intriguing.

Once I met one Mr. Murli. There are two things that Mr. Murli always wants to do whenever he considered any financial decision having a cost value of above Rs 20,000. Here are the two conditions that must be fulfilled before he buys anything.

He would only spend if he had amount in cash. Now it does not matter if he is buying a car or house or diamonds or gold jewellery or TV or just about anything. He will only spend if he has the money to buy it in cash. This is quite normal as many people do not like loans so there is no big deal about this. But his second condition is something that most people would never imagine.

For Mr Murli, whatever he spends above Rs 20,000 should be for free or let’s say practically free over a period of time.

It is baffling to hear this at first. Some might say Murli is weird and how on earth will that happen?

Imagine you purchase a plasma TV for Rs 1 lakh and over time you get your money back. You buy a Rs 10 lakh Skoda and over time you get your money back. You buy a house for Rs 40 lakh and over time its free again.

Ok, here’s what Murli does to make this happen. Read this very carefully. He budgets for 10 per cent more of whatever he is going to buy. So if he and his wife plan to buy say gold and diamond jewellery worth Rs 80,000 he calculates that he would need to have Rs 88,000 first. Now he would go ahead and spend Rs 80,000 and almost simultaneous he invests the balance

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