The Unexpected Financial Mess

28-May-2024

The simplest and starting lesson given to a person who starts earning is that please spend within your limits. You can only spend to the maximum you make and, if you don't control your needs, you will end up in a disaster for sure. Still, a lot of people continue to make mistakes as they can't see the worse. 

Last week I spent like understanding the financial mess my brother has created. He had to switch jobs for better options but those didn't work out and he ended up without a job in haste which I will attribute to his ego and over-confidence. Six months of job lessness drained his cashflows and resources. How long you can live on loans and money taken from friends? His situation gone from bad to worse and ultimately resulted in a huge debt mess. 

This mess is not one day or six months' work, it was in the making for years. Joblessness just give it the trigger. He spent off his limits, and it remained hidden but keep piling upon as he has job to cover some of it. Either way, with job and without job, it would have ended in the same result. He has an aggregated a debt of around 87.35 lacs rupees. Many people don't even earn this much during their lifetime, or it takes decades of work to save this much of money. It's a complete disaster now and if he is serious about resolving it, it will take 5-8 years even to stabilize assuming he gets a job soon. It is my worst nightmare. 

Last Sunday, the family gathered to understand the gravity of the situation and see what all can be done to save him. He probably ends up selling his gold and house if there is no job. This is such a big amount for anyone to simply pay off. He was earning a decent salary, so I am not sure how and where he lost control. He has no savings, and all his savings (if any) will now be gone. I probably will end up spending 15 lacs rupees saving him from selling his house in the hope that someday I will get this back. 

It gives me a lot of pain to see him like this. We supported him since his education, during initial jobs, marriage and building his first and only house. He is not a young kid anymore where you have time to recover. At 43, you are an experienced and wiser person with a family to support. Anything you do bad, will end up impacting your wife and kids the most. 

 Frankly, I didn't see it coming. I anticipated that he may have debt of 10-15 lakhs, but debt of this scale was never in my thoughts. It will take years to come out of this problem fully and everyone has to stay positive and patient. Nitin and his family have to do lots of sacrifices in the coming years and they will have to have a tight control in expenses till the time the debt is not paid off. I am sure Nitin hasn't thought through this fully when he was busy creating this problem. Some debt is good if you can manage it and it's not a free loan. The best is to avoid it. 

Let's hope he get his senses back and can think objectively and rationally. 

vA