Are You Waiting For The Alarm Bell To Ring

Updated: Jul 25 2004, 06:31am hrs
Watching a health programme on TV, I heard a panel of doctors talk about how people usually come to them once their medical problem is out of hand. People, said the doctors panel, ignore the symptoms for as long as possible and then when the body fails to fire fight, they panic and are usually willing to do what it takes to get better. The doctors felt that the costs, both financial and mental, would be less, had they listened to their bodies earlier and scaled down on stress, work, alcohol, fat or got more exercise.

This reminds me of people with financial problems and a couple I met a year ago. Film makers both, their financial lives were a tangle, with uncertain income flows, high school fees for their three kids, impulse purchases when the money came in spurts and credit card debt. They were steadily moving towards the cliff-end but were ignoring the symptoms.

Then six months ago, when some money they were expecting did not turn up and the goons from the credit card company began to seriously threaten, they took a U-turn on their earlier life-style.

The wife took up a regular paying job, husband continued to earn the jam with the film-making, they began to pay off their debt and took a view on life that was longer than a fortnight.

Serious financial decisions are usually taken when faced with serious events. Nobody wakes up one morning and says: today I will plan my financial life.

It sometimes takes a catastrophe to clean up a financial mess and sometimes that disaster leaves one with no choices or elbow room. A friend who went to work in a low paying job, while he had actually wanted to study engineering after school, remembers doing so because his father had passed away leaving no insurance and a family with no income.

Money offers choices in life. A disaster can take these choices away. Leading a financially fit life allows you to extend the range of choices for yourself and your family.

It is like physical fitness - you need to eat in moderation, get enough sleep, exercise and stay off to much alcohol and fats, similarly, to be financially fit, you need to spend in moderation, save for the future goals, set up an emergency fund and work a bit every week to stay on course with your plan.

Are you near a financial cliff-end and will you go under if disaster decides to call out your number next If you answer 'yes' to more then half of these, then these are the symptoms that you need to visit a financial doctor or take the scalpel yourself:

Your debt payouts take up more than 75 per cent of your disposable income

You use more than two credit cards and all of them are maxed out

You've taken a personal loan to pay off a credit card loan

You ask your work place regularly for an advance on your salary

You dip into your provident fund or long term savings to meet current expenses

The person on whom you depend financially has no valid will

You do not have emergency money of at least two or three months salary in a near-cash form

The person you depend on financially is uninsured or inadequately insured

The person on whom you depend financially had taken loans that are unprotected

You have no idea where the important papers and ownership certificates are kept and in the ownership of these investments.

The author is an Associate Financial Planner and can be contacted at