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Following is a summary snippet from a dicsussion with client(Sarath) on Buying a Car (or) Invest for Kids education

Sarath: Mr Ravi, I want you to help me out with rational decision making as im confused in buying a car
Me: Sure, Whats your problem?

Sarath: I want to buy a car, I have 2lacs which I can use for downpayment and remaining 9lacs I want to take car loan and monthly EMI is coming to 9400 approximately
Me: Okay, then whats the problem ?

Sarath: I will not have any surplus if I take this car loan so worried if this is right step, I also want to save for my kids they are currently aged 7years and 4years and till now not saved anything for their higher education and marriage
Me: Okay, I can expect what kind of thoughts you might be undergoing. So tell me why do you want to buy a car?

Sarath: I have a bike and with two kids, it is getting difficult and risky to ride bike with 4 people. So if I have car we all can travel safely compared to bike
Me: Okay, how frequently you travel along with family and would you expect to use car for office commutation ?

Sarath: With family, I would say 3 to 4 times monthly within city. For office, I use my bike or do Work from home so I dont want to use car for office commutation
Me: Okay, so the cost of car you are planning to purchase is 11lacs and how much do you think you will have to spend on fuel(petro/diesel) monthly?

Sarath: That will be around Rs 3000 to 4000 monthly
Me: Okay, so coming to kids higher education and marriage. How important are these for you compared to Car

Sarath: Both are important
Me: Okay, Can you prioritize them

Sarath: Priority1- Car, Priority2- Kids education, marriage
Me: Okay, so buy car with downpayment and take loan. We will discuss about your kids education and marriage when you have surplus money

Sarath: Err…Stracthing head, in low voice…..I want to plan for kids also now
Me: Do you have surplus money after allocating Rs 9000 to car emi?

Sarath: No
Me: Then how can you plan when you dont have money?

Sarath: So no other option?
Me: Do you think you can use Uber/Ola and if you use how much would it cost in a month of 3 to 4 travel trips?

Sarath: It depends upon travel trips and distance, minimum 1000 to max 4000 monthly
Me: So this means if you buy a car or not, you will spend on average Rs 2000-3000 (for fuel or for uber)

Sarath: Yes
Me: Okay, So dont you think that instead of buying car, you can use Uber/Ola and invest monthly Rs 9000 for kids education and marriage?

CAR is a LUXURY and kid’s education is a NECESSITY. Though many people argue with me that CAR has become a necessity, but its still a LUXURY

Make sure you are not buying WANTS and LUXURIES at the cost of NECESSITIES and NEEDS

My objective during conversation with clients is to ask RIGHT questions so people can realize and take informed and RIGHT decisions than decisions driven by emotions and sentiments and at the end I will always leave the decision making choice to client because they have every right to do what they want to do with their money

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