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Action plan for the next term
Published On , 19 Sep 2019 By TT Connect
ACTION PLAN FOR THE NEXT TERM
You learned in school that there is no point in crying over a spilt milk. Time to apply it to your finances! Here are three homework that you must absolutely do for topping in the next term, regardless of your scores so far.
PAY OFF Debt STEP 1: Curb impulse purchases
To be able to come out of the Debt trap, the least you can do is not fall for a new one. Avoid credit card overuse on impulse purchases.
STEP 2: Consider opting for Debt reduction
Repay your high interest rate loans faster by making additional principal payments. You can also consider taking a personal loan at lower rates to clear off your outstanding credit card loans. Remember, this is not additional Debt. Rather, it is a reduction of Debt since you do away with multiple loans at higher EMIs
STEP 3: Focus on clearing your loans before investing
Investing your money is important. But if you have a large outstanding loan, it is better to channel your Funds towards loan repayment first. In most cases, the interest you pay on the loan is going to be higher than the interest you earn on your investments. So clear your loans as early as possible.
USE PROFESSIONAL ADVICE STEP 1: Seek help from an Expert
Find the right Financial Expert in your area. Approach an Expert after asking your friends and family for recommendations.
STEP 2: Be honest with your Advisor
Give them an accurate description of your financial state. Make sure you tell them your fi nancial strengths and weaknesses with a clear understanding. An Advisor can help you structure a financial plan.
START TAX PLANNING IMMEDIATELY STEP 1: Divide your total Tax-saving investment amount
It is never too late to start investing. Invest in ELSS to save Taxes on investments up to Rs.1.5 Lakh this year. You can still reduce your Tax outgo without putting a strain on your pockets - invest through 6 monthly SIPs rather than making a lumpsum investment of the entire amount.
STEP 2: Invest an additional amount in National Pension Scheme
You can reduce your Taxable income by another Rs.50,000 by investing the amount in NPS. Also, there are other deductions and exemptions available that can help you save Taxes. For example, a home loan.
STEP 3: Review your investments
The most important step: Be it ELSS, NPS or any other investment, you must review them regularly. Do a monthly, quarterly or a half-yearly review based on your situation. From the next financial year, you will also have the option of reviewing your investments annually. Prepare well! All the best!
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