I love buying new gadgets. If the latest phone or tablet or headphone has been launched, I have to buy it. My friends know me as the ‘gadget guru’ and I have a reputation to maintain. I have been doing this over the last few years without a care in the world.
However, last year I realised that I owed around Rs 2.5 lakhs as credit card debt. This was primarily because I would only pay the minimum amount due. Due to my lack of understanding about personal finance, I kept wondering how come this happened.
Once I started reading up, I realised that by paying the minimum amount due, I was helping the credit card company charge interest on my pending outstanding which snowballed into a huge amount over a period of time. My parents were considerate and helped me to arrange 50% of the amount. I sold some of my old gadgets and took an advance from my employer to arrange for the remaining funds. In September 2018, I paid off my credit card debts completely and then started focusing on creating savings.
My father explained the importance of investing in mutual funds and I realised that they offer attractive returns over a longer term. I have started investing 60% of my savings in mutual funds since then and I am happy to note that I am in the right path towards attaining financial independence.