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Kharcha paani

The perils of using credit cards

Do you know what ‘spending limit’ means, or that you may be using your credit card wrongly? Know the pitfalls.
by Reyna Mathur

Credit cards are both the boon and bane of the last century. The idea of a credit card is so entrancing, anybody would be tempted to opt for it. After all, they facilitate spending when your finances are low, or provide you with emergency cash when you really need it.

But people are injudicious with their credit card spends. The credit cards themselves are not harmful, but people’s indiscriminate use of them is. Most users are not even aware of what banks mean when they speak of a ‘credit limit’ on their card, wrongly assuming that the term implies that they have that much spending power per payment cycle.

For the uninitiated, the term ‘spending limit’ implies a loan from the bank or financial institution that has issued you the card. It is not an upper limit to which you can spend, but the maximum amount of money the company will allow you to borrow on that card.

Here are some other facts you should be aware of:

Destroy your credit card once you cancel it
Destroy your credit card once you cancel it

– Many credit card companies will have telemarketers call up people and offer credit cards at no joining charges and no extra fees. If you are inclined to make a purchase, go through the card documents carefully. You will discover several hidden costs that are never mentioned during the promotional call. Agree to the purchase only when you are satisfied that you are not being promised things which are not true or non-existent.

– Some companies send credit cards to your residence or office despite you informing them that you don’t want one. This is an illegal activity and you should not allow it. The companies will also say that the card is free. Eventually, even if you don’t use the card, you will be billed for it. When you receive a credit card under such circumstances, call up the customer care number for that company, have the card cancelled and cut the card into four pieces before mailing it back to the company.

– Credit card companies are notorious about money recovery. After a couple of polite reminders, their conduct abruptly changes and verbal abuse begins. If you still fail to clear your dues, they send recovery agents to your office and home to intimidate you.

– The most disastrous thing you can do is overspend on your credit card. Even Rs 10 spent over the pre-set limit can invite huge charges from the card company. Try and stay within your limits, and clear any dues immediately before they start piling up.

– Do not be swayed by the ‘minimum balance’ aspect of your credit card. Most people are tempted to carry forward the balance, which keeps on piling. Before you know it, your finances are in the red and you have a big amount to repay.

– Defaulting on your card payments is a whole different issue. Not only do you have to regroup your resources to pay off the money, it reflects badly on your credit rating as well. This has wider implications when you are trying to get a loan; banks examine your credit history and process or reject your loan application based on how healthy your credit rating is.

(Pictures courtesy www.loanwire.co.uk, www.getoutofdebtoptions.com. Images are used for representational purpose only)

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Kharcha paani

How to start a home-based bags business

Try these simple steps to operate a steady and flourishing bags and purses business from the comfort of your home.
by The Editors | editor@themetrognome.in

Many people are fond of bags, and some are extremely fond of making bags for sale. Changing patterns, the introduction of many new blends of fabrics, offbeat styles all combine to make this a very exciting industry indeed.

Here’s how you can get started on your own ‘bags to riches’ journey:

Research your market. With so many established brands already leading the market in sales and design, you don’t want to end up as just one of many others in the business. You will have to do something different to stand out. For this, you will have to take the time to thoroughly research the market that you wish to target, what are the new innovations and what customers look for in a bag or a purse. This research will help you zero in on your line’s USP.

Do not rush this process, and gather as much information as possible. If needed, speak to a person already in the business to gather more inputs.

Select the right name for your products. The name of the product is everything. It must be quirky, memorable and reflective of your personality. After all, you are going to put a lot of yourself in the product’s design and make, so it should define you. Take sufficient time to think about the name of your proposed line of bags. If it is going to have an ethnic theme, you can experiment with a name from an Indian language that embodies your ethos.

Bag componentsScout around for raw material and labour. You must find a vendor who will supply you with raw material for your venture. Make an arrangement to purchase in bulk at wholesale rates. If you are going to venture into the cloth bags category, tie up with a few local tailors who will sell leftover cloth at nominal rates. For a rexine or leather bag business, you must tie up with a tanning company and fix your rates. In the initial days, and if you are adept at patterns and stitching, you could put the bags together yourself. Ideally, you need to find a low-cost vendor who will do this job for you, and he or she should be located near your home so that you save on transport costs. Your job should be to prepare as many designs as possible, and run them past the person who will stitch the bags. Both of you should be on the same page as regards finish, patterns, and design.

Experiment with design. This is a crucial step, because customers are first attracted by a bag’s design before they start looking at details of stitch and functionality. Try for a completely different, never-seen-before design in the niche you are catering to, while keeping the basics intact. For instance, you might design a radical new line of clutches, but you will still have to provide enough space for a wallet, mobile phone and car keys. Also, if you are designing a range of formal office bags and totes, you cannot have very garish colours and childish designs on the product.

Be meticulous about details. Customers are quick to complain if the zips on your bags break quickly, or if the stitches start coming apart after, or if the Making bags at home for a livingclasps don’t work. The big danger is that negative reviews get around very quickly, and you might lose both current and future customers. Instead, test each prototype yourself. If you don’t like the straps of a certain bag, junk them. If you feel the space you created for coins inside a purse is inadequate, create a whole new compartment for loose change. If a clutch tends to change shape after a while, reinforce its base.

Don’t introduce any new product to the market which has not passed your scrutiny.

Price fairly but lower than the competition. Pricing is crucial and mostly instinctive. The basic way to price is to take into account the cost of material, labour, transport and shipping that you bear for each bag, plus your profit margin. While all other factors cannot be changed, you can take a cut on your margin when you launch, so that your products are priced cheaper than your competition’s. The starting days should be about creating a solid customer base, not making profits. Start a points-based customer loyalty programme or have attractive discounts on bulk purchases. When you get more customers, you can increase the prices once a year and even think of shipping out of the city or country.

(Pictures courtesy www.youtube.com, free-stock-illustration.com, www.seasonedhomemaker.com.)

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Kharcha paani

Don’t take a loan to repay a loan

The worst mistake you can make is borrowing money to pay off a loan – a recipe for financial disaster.
by Reyna Mathur

Amit Sethi (name changed) was a happily married businessman in Mumbai, with a small but profitable business. He and his homemaker wife wanted to start a family two years after marriage, but he felt that they should have a permanent home before the children arrived. “I bought a 1 BHK that was close to my office. It was an expensive house and I took a home loan, apart from borrowing money from some friends and relatives.”

The couple moved into their new home and things were wonderful for a while. Then Amit lost a big contract that he had hoped to continue, and suddenly money became an issue. “That contract gave me Rs 2,50,000 a month, which took care of my Rs 65,000 monthly EMI and household expenses comfortably. For a while, I made do with smaller sums of money coming from other quarters, but for two whole years, I did not get a single big contract. Repayment of all the borrowed money became a big issue.”

To tide over the crisis, Amit took a fatal step – he borrowed more money from the market to repay the older loans. To this day, Amit is caught in a never-ending circle of loan repayment and has a big financial crisis on his hands. He sold his house and moved back into a rental accommodation. “My wife sold her jewellery, I even borrowed money from her brother. Now I owe more than Rs 30 lakh in loans and business is sporadically trickling in.”

It’s a trap

LoanAccumulating loans is the worst financial mistake you can make, which can drag you and your family into the deepest recesses of failure. Unfortunately, the pressures this mistakes brings prompts the person to make even bigger mistakes.

Some people respond to the crisis by selling off all their assets to raise immediate capital. This makes sense at the time, but in the long run, they are left with no assets to build on in the future. Imagine, if you sold off your house to pay back your loans, you will be faced with having to raise capital for a new house.

Other ways people adopt are to cashed in on their life insurance policies. They take a loan against the policy to pay off urgent business debts, but this step immediately sets two things in motion – a fresh loan is added to the list, and you also have to pay regular interest on the borrowed principal amount.

What can you do?

When borrowing money from private sources, take smaller amounts from a wide circle of friends and relatives. Instead of borrowing Rs 5,00,000 from one source, break down the amount into smaller amounts such as Rs 1,00,000, Rs 50,000, Rs 30,000, Rs 20,000 and Rs 10,000. Make a list of people who will loan you small amounts of Rs 30,000 to Rs 10,000 and approach them first. They will be willing to loan you these amounts instead of larger amounts, and repaying these small sums will be easier for you, too. Then approach trusted friends and relatives who will loan you the larger sums, and commit to repaying them in a certain time frame. Make sure you approach people who will be prepared to wait for the money and not hound you every week.

People in debt also compound their own misery by purchasing multiple credit cards to pay off the outstanding dues on older credit cards. The simplest way is to try and pay off all outstanding dues, then surrender all credit cards. Instead, maintain a debit card which puts a cap on your spending.

Don’t take a huge home or vehicle loan, where the monthly EMI will take away most of your pay packet. The mistake people make is in paying for their homes entirely from bank-borrowed money. Instead, raise enough capital from personal and private sources, and borrow only the remaining amount from the bank. Remember, your private sources will only fight with you over repayment, but the bank will seize your house.

(Pictures courtesy www.engineeryourfinances.com, www.switchme.in. Images are used for representational purpose only)

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Kharcha paani

6 ways to make a sale

Making a sale is not difficult if you follow certain rules and have good people skills. Follow these 6 steps.
by The Editors | editor@themetrognome.in

The first time you are called upon to sell a product or a service is surely the most daunting one. It is often said that marketing and sales requires a certain kind of work ethic and mindset – either you have them or you don’t. It is a difficult niche to crack in any business, and it requires perseverance and a never-say-die attitude.

However, though most of us are not natural salespeople, there may be a point in our professional lives when we may have to try and sell an idea, a product or a service. It is wise to hire a professional to do this task for you if you are not up to it, however, in the absence of outside help, you may have to do it yourself. Though initially difficult, you can soon get the hang of the process if you follow a few ground rules:

1. Do your research. Find out all you can about the person or business you are approaching with your sales pitch. You must know how big their company is, what are the goods and services they deal with, and the projects they normally associate with. Then step back and analyse what you are trying to offer that company or individual. Ask yourself: if I was in their place, would I be interested in associating with this idea? After doing this, find out the details of the person you will be meeting at that company, and make sure to get his or her name right.

Making a sale2. Prepare a good presentation. This is a tricky one, and your final product will depend largely on how the company prefers to get information. Find out if the company only looks at PowerPoint presentations, or if they are open to reading information from a compiled document as you speak. Some offices ask for audio-visual presentations, so you can make a short creative film to get your point across. The essential thing is to gather and put together all the relevant data in one file or dossier so that the company has all the information it needs in one place. Then you can think of presenting it cleanly and in a way that gets their interest.

3. Be on time for meetings. A sales job requires you to travel to several offices, so you will have to master the knack of winding up earlier meetings and reaching the next one right on time. It is tacky to reach a meeting late, especially if you have requested it. Unless there are extenuating circumstances, like an accident or a terror attack or a transport strike, you have no good excuse to be late for a meeting. When you walk in, make sure you are not sweaty and your face is fresh. Keep a sanitiser in your bag because you will need to shake hands before the meeting starts, and nobody wants to shake an unclean hand.

4. Be polite, firm and confident. Your manner while speaking to a potential client goes a long way in cementing the deal. When making your presentation, be polite, put your point across with as little speech as possible, invite the client to ask as many questions as they want to, and field each query with confidence. Do not ever use the phrase “I am not sure of this” or “I have not thought of the point you are raising” because it just tells the client that your concept and pitch is half-baked. Take some time to rehearse your pitch at home, or hold a mock presentation for your boss or staff and invite suggestions. The better you perfect this step, the more effective your presentation will be.

5. Be consistent, not persistent. You should have enough acumen to gauge in the first meeting if the client is interested in pursuing the idea further or not. You have to set the bar on how much room for negotiation you will allow, and stick to it. When you sense that the company is open to discussing further, set a date for the next meeting at once. Ideally, ask for a meeting not later than three days after the last one, so that the client does not lose interest in the project. When you ask for follow up meetings or make a telephone call to find out what the company is deliberating, don’t grovel or plead to be considered. Also, don’t hound them with emails and calls every single day. Allow them time to revert to you.

6. Be prepared for a long slog. Making a sale is not easy for one primary reason: you are asking an individual or corporation to part with money. Any monetary decision, big or small, takes time to reach a successful conclusion. Be patient and prepared to have a series of meetings to try and convince them that they will gain from associating with you. If it is your first project, be prepared to slash your prices drastically. You might even face a situation where the deal is struck off at the last minute. Don’t take it personally; they are not rejecting you, they simply don’t see the merit of your idea or probably don’t have the wherewithal to come on board. You can approach them with another pitch in the future.

(Pictures courtesy mashable.com, www.thepersonaldevelopmentcompany.com. Images are used for representational purpose only)

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Kharcha paani

5 things to know before working in a start up

A job in a start-up company is often a rollercoaster ride. Know what you are getting into before taking the plunge.
by The Editors | editor@themetrognome.in

These days, several youngsters are opting to intern or even work part-time at start-ups for the work experience. After all, working in a start-up can prepare one for bigger responsibilities in a way nothing else can.

As training grounds go, start-ups can be a valuable space for grooming and shaping young talent to take on responsibility and different roles. But those who are initially daunted are people who join start-ups after working with traditional corporate set-ups, because the work culture challenges all the concepts they are familiar with.

Here are 5 things you should know before you work at a start-up:

1. The pay is low. You can’t expect to be paid as per industry standards because let’s face it, the company will take a while to match itself to industry standards. Besides, start-ups often cannot promise yearly increments, especially in the first two years of consolidating their own business.

For more experienced employees, it is a good idea to negotiate your pay package at the start itself because there will be few revisions at a later stage. Also, don’t expect a huge increment at the end of the year, especially if the company is doing steady business and is not drawing too much revenue.

2. You will work long hours. Any new business puts in long working hours to get ahead. Occasionally, you may have to even work on weekends, but you can put your foot down if you see this becoming a regular routine. Normally, the working hours even out as the days pass, but if you join the company before it officially launches, you are in for very long hours at the office, sometimes for months at a time.

“I interned with a web development company started by four engineers last year,” says Shreyasi Nakwe, a Mumbai-based media student. “I ran errands for them, made copies, typed out endless paperwork, and I was initially unable to cope with working 12-hour days. But I slowly began to understand their work and even enjoy it.”

Working for startups3. There may be no ‘structure’ to your work. Often, the organisation at start-ups is a more ‘horizontal’ one, with about five key employees and one (or more, if there are partners) bosses. Most companies don’t hire too many people to cut down on overheads. The negative here is that often, you might be required to perform several duties at once. A Mumbai based media management start-up two years ago started with just three employees – the owner and two managers. “For the first six months, the three of us would handle all the tasks ourselves – some days I was the CEO as well as the office boy,” laughs Pratesh Doshi, the owner of the business.

If you like to stick to only doing what your role expects of you, do reconsider your decision to work in a start-up, especially if it has very few people on the payroll, or else it might get frustrating for you.

4. You will grow faster. Since most start-ups have a fairly flat structure, with not many bosses to report to, your work is noticed faster and your growth is higher in less time. A small company size ensures that each individual member is being scrutinised closely and his or her efforts are noticed by top management quicker. Hence, it is possible to go from a junior position to a mid-level position fairly quickly, as compared to bigger workplaces.

You must be a team player. “Start-ups thrive on team spirit and team building,” says Rupam Gala, an HR professional who liaises with several start-ups in the country for personnel training purposes. “Employees have to remember that since the company is new, even the owner and CEO are fairly new to the game. In that sense, the entire team is on the journey together.” The company will expect you to pull more than your weight in the initial days of work, and if you have been hired at a senior position, you will be expected to take on a mentoring role. “Everyone has to gel with the team because the nature of the business can change drastically in a single day,” Rupam says.

(Pictures courtesy trak.in, e27.co. Images are used for representational purpose only)

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Kharcha paani

Rs 9,000 cr for Mumbai’s coastal road?

A report studies the proposal to build a coastal road and reveals that it will dishouse hawkers, affect the beaches and ecology.
by Praja Foundation, Mumbai

The often repeated phrase of developing Mumbai into Shanghai, or for that matter, an International Financial Centre (IFC), has been a product of the imagination and aspiration of a lot of people, including citizens and planners, and recently by our Chief Minister, Shri. Devendra Fadnavis. No doubt such ideas and intentions to make Mumbai a world class city are appreciated, but the problem arises when the city is unable to provide even basic amenities such as good roads, affordable housing, mass transit etc.to its citizens, which makes the dream of IFC much more distant. Moreover, such aspirations of creating a world class city always miss out on the question of how to achieve it. The policies and steps to achieve the goal are always absent even in the articulations of the chief minister.

A proposed Western Coastal Road (WCR) (costing Rs 9,000 crore), which will join Nariman Point in the south to Malad-Kandivali areas in the North is expected to be completed in the next two years. The said road is planned to be used for high speed commuting as a part of the development process. It is evident from the proposal that just like the Bandra-Worli sea link this might also become a white elephant for the city from the point of view of the number of people using it.

Moreover, the cost of the project is so high that the amount can be better used for the development of some other means of Public Transport like Railways, Metros or BRTS etc., ensuring efficiency when one compared to the number of people using the present public transport system to Bandra-Worli Sea link. Thankfully, logic prevailed and the other proposed plans as part of the Western Freeway Sea Link Project, including Worli-Haji Ali,Bandra-Versova and Nariman Point-Haji Ali link were scrapped by the Government of Maharashtra. But why replace it with Coastal Road?

One should remember that investment begets investment. Investment in infrastructure inspires investment in construction and property development in the same vicinity. The Western edge of Mumbai is the worst place to encourage new development, because land areas will be scarce and of extremely high value. It will be the development that benefits the very rich and promotes their wellbeing, both for scenic residences and restaurants and fast car movement along the same prosperous Western edge. It will accentuate the divide between the very rich and vast majority of the city’s population, which can be dangerous for the city.

The experience in cities all over the world has been that magnifying the divide between rich and poor in the city is ultimately harmful to both. If we are planning for the growth of Mumbai then there is no doubt it must be eastwards onto the mainland where ample land is available, with a much stronger east-west connection from the Greater Mumbai Peninsula.

Read the entire report here. Read newspaper reports of the proposed coastal road here and here.

(Picture courtesy thehindu.com. The image is an artist’s impression of the proposed coastal road)

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