Mrs.Geetha Dasaraty is a commerce graduate with a Masters in Business Administration specialising in finance. Her stint with a Coimbatore based company and later with a consulting firm in Chennai has provided her with a decade of experience in project finance and appraisals, accounting and tax laws. She is a freelance writer and money matters are her forte. She is currently pursuing her final course in Company Secretaryship and is doing a course on Vaishnavism. She has a passion for literature and Carnatic music. She is also a violinist.

About the Class - Monthly

Chapter 8 Lesson D - Cost of Living & Housing

Today, the cost of living is at an all time high. It becomes imperative to take steps to analyse all the costs and control them. All aspects like food, clothing, conveyance and medical care require a proper monitoring to reduce the costs.

Easy ways to cut costs.

• Shop around and compare prices at all shops. Comparitive shopping helps you to get the best bargain. Always remember that no compromises should be made on quality.
• Make optimum use of discount and bargain sales.
• Try to buy wholesale and stock up items like pulses, cereals etc. for the whole year.
• While making big purchases go in for products with the best guarantees after sales service.
• Buy products, which have low maintenance costs.
• Save on electricity bills by switching off lights and fans when not in use. Use lights and bulbs, which conserve energy.
• Cut down on telephone bills.
• Be careful and use your credit cards with discretion. Pay them on time to avoid paying high interest rates.
• Reduce the number of credit cards you use.
  
  Purchasing a vehicle.
• While going in for the purchase of a vehicle, keep in mind the following:
• Work out the maximum amount of money that you can afford to pay. Base your decisions on the amount affordable.
• Compare various vehicles in terms of quality and price.
• Check out on the quality of the vehicle you intend to purchase. Read consumer reports on the vehicles and get first hand information on the vehicle from owners.
• Go in for cars that have a better resale value.
• Make a comparative study on the mileage costs of each vehicle.
• As far as possible try to pay by cash instead of going in for credit.
• If you intend buying the car on credit be sure to shop around for the best deal. Compare alternative financing arrangements and choose the best deal.
• Work out the details and make sure that you can meet the monthly payments without any hitch.
• Try to avoid buying a new car every year. It will work out costlier.
• Smaller cars help to save on fuel.
• If you are planning to go in for a used car then buy one, which is not more than three years old. This will help to cut down on operating and maintenance costs.
• While going in for repair check out different estimates for the job.
• Give your vehicle for regular service.

FOOD COSTS
Food costs form a major check of your monthly expenses. A proper and organised planning will help you reduce your food costs to a great extent.

• Jot down all items that require replenishment as and when the stocks decreases. This will help to avoid unnecessary trips to the market.
• Avoid impulsive shopping. As far as possible buy at wholesale shops.
• Avail all discounts given in the shops.
• Avoid shopping for food items when you are hungry.
• Cut down on eating out. Eating out is a very expensive proposition, so reserve them for special occasions.
• While eating out avoid high priced restaurants.
• Make use of economic packages.

CLOTHING COSTS
Clothing is one area where costs can be reduced to a great extent.

• Go in for quality clothes. Low quality only make you land up spending more.
• Here too make optimum use of discount sales.
• Avoid buying at frilled outlets, where the clothes are all fancy priced. You will get the same quality and at reduced prices in other outlets.
• While washing clothes follow instructions given in the label to help make clothes last longer.

HOUSING
Buying a house is the biggest investment one would make. It would be more beneficial

• A house is one of the very few assets whose value appreciates hence it is one of the safest form of investments.
• There are tax deductions available on the purchase of a house property.
• In the long run owning a house works out cheaper than renting.
• The house is a source of pride for the owner.

PRICE OF A HOUSE

• Engage an appraiser or valuer to value the property you intend to purchase.
• Check on the price trends in the neighbourhood. Determine the market rate and be sure that you don't pay more than the market price for the property
• While purchasing a house you should determine how much you could afford to spend on the purchase of a house.
• Generally one should not spend more than 30% of your monthly take home pay in the purchase of a house. The monthly mortgage payment should not exceed this amount.

SELLING A HOUSE
While selling a house keep in mind the following:

• Fix the right price. Avoid over pricing. Compare your house with others in the locality especially those sold recently and then fix a competitive price.
• You can either sell by yourself or through advertisements.
• You can otherwise hire a broker to do the selling. Choose an efficient broker.

Questions on Chapter 8 Lesson C
(a) How does one manage one's borrowings?
(b) What are the various types of loans available?