Start Saving for Your Next Bike than Getting into Debt

Indian biking industry is going in the right direction. There is more focus on biking as a lifestyle and hobby than just commuting. We can see new bikes in the market which create a sensation every few months.

Every one of us including me and you want to own a bike which satisfies our wants and not just our needs. One need not have imported Yamaha R1s and Hayabusas, but a Ninja 650R or even a Honda CBR 250R would be more than enough. It would give us pride, bring out the boy within us, let us appreciate the awesomeness and overall it can make our life better – if we enjoy every moment with it. Being passionate about something is a form of meditation and it can bring out the best within us.

Having said that, I am also a strong advocate of being frugal, having a low consumption lifestyle, not wasting resources and overall being economical. Most of the people that I know who own such bikes will mostly get a 2 wheeler loan from one of the well known banks and repay the amount in EMIs while enjoying the bike right now.

It is not a good habit to get under debt. We are actually robbing from our future and enjoying it now. At this context you may argue that one cannot survive in this fast paced world without going in debt – I agree. You need to go into debt for certain things – but you also need to be clear what are those.

Debt is for ‘Needs’ and Not ‘Wants’

If you are going to get a loan for your first bike, its all right as long as it is a commuter bike. What I want to say here is that if you need something, get a loan. If you want something, save for it. If you are going to debt for something you want but don’t really need, then you are becoming a slave to the economic system and you can never be on top of your financial life.

Companies create awesome products and banks give us loans without much fuss. It is easy to get it now and enjoy it now and it looks like there is nothing wrong in it but it is not the right path to take. I cannot tell you why because it is beyond the scope of this article. But if my thoughts ring a bell inside you… read on!

Make Monthly Savings a Habit

Instead of getting a loan and repaying it every month save a certain amount of money every month with a future goal/dream of buying a nice bike. For example, you can open a Recurring Deposit account with your bank and start investing a certain amount every month for the next 5 years for the bike which you are going to buy.

I practice what I preach.

I want a nice 250cc bike like a Ninja 250R or CBR 250R but my commuting needs are already being taken care of my Yamaha R15. Apart from just satisfying my needs, it also satisfies some wants.

For my next bike, I have opened a Recurring Deposit account where I invest Rs.3,500 every month for 60 months and by the end of 5 years, it would have matured into 2.67 Lakhs (at 9.25% interest). With the sale of my old bike, I would have more than 3 Lakhs at the least and I can buy myself a nice bike – a bike which is dominating the market in that price segment in 2017.

Investing Rs.3,500 every month is something which does not burn a hole in my pocket considering my present financial situation.  Since it is automatically debited from my savings account every month, I need not conciously take any efforts to invest it every month. Just like other monthly expenses it gets debited and above all it gives a great satisfaction that I am saving for something that I am gonna really enjoy in the near future.

If you want to calculate RD returns, Try this Recurring Deposit Calculator

What do you think about my idea? Will you start saving too?

Deepak Raj
The Investor

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