So that’s a good thing, right? We are reducing our income tax. Yeah, sure. When you’re paying the debt, like the equity monthly installments. Sure. But the amount of money that’s going out of your pocket is never going to come back. Like which amount is more, technically speaking? The amount of interest you paid on which you are getting tax redemption on- say, two lakhs of rupees? Or, 30% tax on that two lakhs of rupees, which you will pay to the government if you are finished off your debt. Which, which amount is higher? Two lakhs or 30% of two lakhs? I definitely can calculate and do basic math and say that it’s 30% of two lakhs. I’d rather pay 30% of my income to the government as tax, than, you know, spend two lakhs of rupees in just paying the interest. Like, do the math dude. It’s that simple.

It’s like the banking, the financial system is designed in a way so that you are always stuck in debt. They have incentivized it in such a way that you keep on keeping your debt or taking in more debt. What is it in your life that you desire so much for which you had to take debt and that over a huge amount?

I understand if you have invested in education. Now, education is something that’s going to pay you over a lifetime. That is understandable. And that’s a good investment, by the way. Any investment in education is always good because it always pays dividends in the long run. But what about house? Sure, if you could save up some money, you could have, like, waited for a few years and bought a house maybe later. So right now, you could have lived in rent.

So I’m not saying that you don’t get a home loan. What I’m saying is, you should save money so that you can at least pay off 50 or 75% of the home loans just by your savings, and the remaining 20% you should take as a loan. Why I’m saying this, because those, that 25% will be something that is not too much weight on your shoulders.

Now you might say that all that could take a long time. I want happiness now. I want to have a home now because that will make me feel secure. For the next 20 or 30 years that you are going to pay your home loan. For the next 20 or 30 years, you will be making decisions around the debt that you have on you.

You’ll not be able to enjoy life as you would have if you didn’t have a debt. Or would you wait for 30 years and then maybe take a decision of buying a house, so that in these 30 years you have made good decisions in your life, saved up enough money and lived wherever you want. You wouldn’t have to be stuck in one place just because you bought a house now.

Now you can rent different places, go for cheaper rent, than your EMIs. Like, you have full freedom. So a lot of people would give up their freedom just to get a house because it gives them some security, stability, social status. You have no idea what you’re signing up for. It’s like a deal with the devil.

It feels like everybody’s doing it. So it’s not unnatural, right? Of course, it’s not unnatural. But the financial systems are designed that way so that they can extract everything out of you. And over 30 years, you are going to pay more interest than you would have spent in buying that house interest fee at one shot after 30 years. That amount of money that you paid in interest- you could have paid in rent and have freedom. Maybe you would have paid more rent. Fine. You can argue with me. More rent. Yeah, sure. But it’s your choice, right?

You can switch to a lower rent or cut down on your living costs, costs, and expenses. You could go minimalist. So your rent will come down. You still have the freedom to design your life in the way you want, because you’re not tied down to debt. You don’t have to make your financial decisions around the debt. And by the time the 30 years are over, you’re finished paying off your debt, you’re like too old to enjoy the things that you could have enjoyed before.

I’d like to conclude this point by a quote from Robert T. Kiyosaki, the famous author of the ‘Rich Dad, Poor Dad’ book. He said – “The reason why the poor and the middle-class struggle is they buy liabilities they think as assets. For an average person, a house is an asset. Nope. A house is a liability because it’s not producing income”. Let that sink in.

So now that we have reached the end of the podcast and like to say something about the background noise that you heard. It’s raining right now. So you might hear some of that noise. So I recorded this podcast in two parts because I was looking for that moment of inspiration. Usually, I record my podcasts during my moments of inspiration.

And so the introduction and the main part of the podcasts are recorded into those times. So any one of the times you might hear the sound of the rain in the background like today. And the other one, you will probably hear some background sound of some celebration and songs being played. So it’s currently, there’s Durga Puja going on. Here in Kolkata, it’s a big festival. It lasts for four-five days and they play songs over mikes in different corners of the street. And you will get to see beautiful idols of the goddess and deity, Durga, worshiped in housings called ‘pandals’. And very creative and very beautiful decorations.

It’s a lovely time to be here in Kolkata.

Update as of 1st November 2021: After releasing this podcast, yesterday I finished paying off my student debt! 😀 4 years of torture of paying more interest than the student debt. Took an education loan of $48000. Paid $60000 with interest. 🤯🥵

Paid off the principal using my savings and salary. Loan tenure was 18 years but it was no point in paying interest for 18 years. Kept paying chunks of the principal with my salary all these years to reduce the interest on my EMI. Never took a moratorium, never skipped payments, never crossed due dates….even if I didn’t have enough money when I was jobless for 7 months. And hence that maintained an excellent credit rating. This is the art of financial planning.

Now I am free! Don’t have to compromise my happiness and choices just because I have a debt to pay. You should pay off yours too using your savings if the interest you are earning from investments is less than the loan interest