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Tax savings season is here! No, not for those who integrate tax-planning with goal-based investing and invest throughout the year. This is the season when millions of investors who are not interested in holistic money management, buy random products based on random advice at the last minute.

Much of this random advice stems from the media, online magazines and blogs that often carry a PPF vs ELSS or NPS vs ELSS comparison this time of year (post-Diwali to March).

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Use this home loan transfer calculator to determine if it is worth refinancing your mortgage, that is, transfer your home loan to a new bank or new loan scheme. When a new home loan offer at a lower interest rate appears, it is tempting to want to shift an existing home loan, because the EMI will decrease for the same duration.

However, this involves costs – exit fees  and processing fees. Also, a lower EMI implies, lesser tax savings.  This is because the interest component decreases, while  the principal component increases, resulting in a net saving after accounting for the extra tax to be paid.

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Go to a bank or post office and you can locate a board that lists typical transaction times. Here is how long each basic step in financial planning will take.

Assumptions:

  • You know that equity investing is necessary to combat inflation.
  • You recognise the bad investments in your folio and have decided what to do about them. If not, spend a couple of hours over a weekend to sort this out.
  • You dont have any debt except a home-loan. If you do, perform steps 1-8 below, clear your debt and then resume.
  • You do not ask for product solutions in Asan Ideas for Wealth. Do that and the decision-making time will at least triple.

1) Scrounge around for extra cash to set up an emergency fund. – 10 mins  to think about it and less than a few hours to implement it.

2) Follow it up by allocating at least 10% of your salary each month to this emergency fund until it grows to a decent size – 10 mins  to automate this process

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Dear young earner, what do you wish to optimise? Your money? Or your time?

Would you rather dig deeper and deeper into money management and learn "best" ways to "optimise" money management? Or would you rather spend some mandatory time in getting your finances in order and let it run in auto-pilot with periodic maintenance and use the rest  of your spare time in doing what you love?

If money management is your passion, for eg. finding 'good' business to co-own as a shareholder,  then this choice obviously disappears. And perhaps there maybe some hybrid choices in between the two - I don't care.

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Here is a personal financial self-evaluation checklist that can be used by beginners and veterans alike.  It has been developed from how to Conduct a Personal Financial Audit and my own audits which are done each December. Here are the links to my 20152014 and 2013 personal finance audits.

If you like the checklist, you can attempt answering and act on them – a few each week. A pdf version is available for download at the end of the post.

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