When I say parents put kids in EMI traps, I mean the guys (my age!) born in the 1950s, 60s whose children have started earning and sadly turn to their parents for advice.
Well it happens like this...
A guy born in the late ‘80s starts earning. He first goes and buys a nice motorbike—and for that he is happily paying an EMI. Age 24 to age 27 years and the boy is happy about his purchase. But when he gets the confirmation letter, the pressure starts. “You are earning so well, why do you not get married?”. And at age 28 that pressure translates to marriage—arranged by elders, or sometimes by the youngsters themselves.
Now the EMI pressure starts “Will you take your wife with all that silk saree and jewellery in your bike?”. To this, the father-in-law offers “Yes yes... When we were young, such good EMIs for cars were not available and I had to wait for the company car. It came at my age of 39” or something along those lines. I am not even saying that the boy did not want the car, but this nudge from the parent is just what the doctor ordered! So now the second EMI starts.
If the boy does not really want a car, well, the pressure then turns to blackmail when the girl gets pregnant. That is the last straw. He HAS to buy a car. So another EMI starts. Then the collective ego of the whole society takes over. There is pressure to buy a house. Why should he buy a house? Because his father, father-in-law, and every uncle, aunt, will feel good. So suddenly the wife will also (brainwashed by ‘society’) say “When our kid is born, the kid should come to our own house”.
He is lucky, because some girls will get married only to a guy who has his own house. Luckily for the girls there is no such pressure—they need not own a house in such a hurry, but some of them do buy a house! So now one more EMI has got added on. If he protests, the father will say ‘I will put in Rs 2,00,000 for the down payments.” So a Rs 75,00,000 house has been committed to. Down payment Rs 7,50,000—dad pays partly, Husband and Wife clean out all their accounts and the ‘house’ has been bought. EMI? Rs 67,000.
The guy’s income of Rs 1,34,000 is now eaten up 50 per cent by the housing EMI, Rs 12,700 car EMI, society charges, etc, etc. The monthly surplus is about Rs 1,348.and the wife’s take home is about Rs 65,000—which can be used for all other expenses!
The wife having connived with her parents (for the kid), and her in-laws (for the house) is ecstatic that they now have a baby on the way, a new car (it is so hot, how can people travel by bus and train, OMG), a new house). She goes to the gynaec—and he says, “It is better that you take rest, you are having complications”—this happens regularly, tell my doctor friends. She comes back and asks her husband very sweetly “Can I leave my job?”. LOL. The guy has been had. He cannot even think of taking sick leave.
If he takes one day off, he cannot pay all his EMIs.
PV subramanyam writes at www.subramoney.com and has authored the best seller ‘Retire Rich - Invest C 40 a day’
(Views are personal)