One of my goals for 2010 is to become debt free.
Finally I was able achieve 70% of my goal for 2010. I preclosed one of my major loans (house loan) with all the outstanding prinicipal. This removes one loan from my debt list the remaining loans account only 30% more so they are all very short ones which I will close in the coming days.
The concept of taking a home loan to save your income tax is totally misleading one.
For example if you pay 7oK as interest towards your home loan then you may probably end up saving 30K from your tax. You can rather pay that 30K tax and still be able to save 40K of money.
On the contrary if you suddenly need some huge money but does have a periodic repayment capacity, then this is a good option.
Few things you need to be very sure
Learn about Amortization Schedule before you purchase your loan.
Make your budget tighter once you take a loan, dont spend the way you used to do it before you took the loan. Think you owe someone so much of money and live frugal.
Always set aside some money apart from your EMI to preclose the prinicipal.
Make atleast 5 principal prepayments in the first 4 years. This will reduce the interest portion greatly.
The moment you close your home loan, start using the EMI money for savings like RD, SIP, Pension Scheme, ELSS or for other investment options.
Live Life Debt Free!!! I can say this more loudly when close that other 30%
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