A LESSON FROM LEHMAN BROTHER

A LESSON FROM LEHMAN BROTHER, the company behind the US Financial Crisis.

This is an interesting article … By going through it, let's change our Life Style

LATELY, I have been thinking a lot about the Lehman crisis. Spending Money that they didn't have and going beyond their means is one of the
Main reasons for their situation today. In fact that is the cause for The current economic crisis in the US .

When I see all this happening, I can only remember the good old days Then, ‘karz’ was bad. People looked down upon those who took loans.
Parents would not give their daughter's hand in marriage to a man with Loans.

But of course, the times have changed now. Everyone I know has a loan The buzz word is EMI (equated monthly installment) . Today, you can
Buy everything on EMI - a house, a television, an I-Pod. In fact I Know of someone who just bought a fancy BMW 3 series on EMI, instead
Of buying a cheaper car outright with cash. I mostly prefer to take Publictransport, but then I am an old man with old thoughts!

Anyway, coming back to what caused the crisis:

Imagine having Rs. 2-lakh in your bank account, no regular income, yet Buying a house worth Rs. 65-lakh, in the hope of selling it for a
Higher price.Even if the price of the house fell by just 5 per cent (that is Rs. 3-lakh), you will go bankrupt!!!

This is what Lehman Brothers did- with around USD 20 billion they went And bought assets worth over USD 600 billion. Isn't it suicidal and
Simply foolish?

I am sure things would have been different, had I been the head of Lehman brothers. But who wants an old conservative man like me to head
A complex financial institution.

But there are a few lessons that we Can learn:

1. Live a balanced life and avoid overspending.

2. Don't buy things we don't need.

3. Don't buy Branded goods.

4. Don't buy excess Food, Cloths, Cosmetics, Footwear, electronics and
Fashion accuracies just think before you buy (Tip: World still has a
Lot of growth ahead and the future holds immense opportunities for us.
Let us make the most of it and save and invest it wisely instead of
Wasting our precious little on things we don't need).

5. Try to balance life with work; no one is happy in their profession.

6.. Don't stress out your self, after work try to do some extra
Activities like swimming, yoga, walking, running where you can divert
Your mind from stress. A thumb rule: Health is more important than
Money.

7. Try to understand each other (wife and husband) in financial
Matters and help each other (Tip: As soon as you get your monthly
Salary, set aside a fixed amount, usually 35 per cent, for insurance,
Savings and investmentsand may spend the rest).

8. Not all loans are bad. Loans that are 'need-based' (home loans,
Education loans) can always find a place in your finances against
Those that are largely 'want-based' (credit cards, personal loans, car
Loans).

9. Borrow only if repayment is financially comfortable. A thumb rule:
Keep EMIs within 35 to 45 per cent of your monthly income.

In that respect, there is one American who I really respect- WARREN
BUFFET. He has lived in the same ordinary house for over three
Decades, drives his own medium sized car and leads an extremely
Regular 'middle class' life. If that's all it takes for the richest
Person on earth to be happy, why do all of us need to take extra
Stress just so that we can get things which aren't even essential?


Thanks and Regards