No Udhari Fund helps you in day to day life to avoid borrowing money from friends, relatives, colleagues, banks. It may require to pay EMI, purchase of household item, Medical emergency in family, Vehicle repair work, Shopping for function at home etc. We borrow this money because we are just managing our routine monthly expenditure from our income and this is something additional, for which we were not ready. Many a time this amount is less but we have no other choice but to borrow as we cannot ignore these items. We generally manage to payback this borrowed money in next couple of months.
But actually what happen after some time, when you are at the verge of paying your borrowed money, some other thing pop-up, for which you need to borrow again. When this happen, your life sucks. You feel so low on energy and think, what is happening in your life? Why things are not in your control?
I share one real story of one of my contact, he was a bachelor and working in private company. As he was involved in field work, so he decided to have bike. He purchased bike on finance. After some time, he lost his job and was not able to pay bike’s EMIs. Later he got another job and life was smooth again. After few year, he was preparing for marriage. As he was not having money back-up so he took personal loan from bank to bear marriage expenditure. After marriage, he settle with wife at job location managing to repay his personal loan on EMIs. After some time, he decided to take bike, it was the same time when he was about to pay his last EMI of personal loan. He purchased the bike again on EMIs, when I meet him last time, his wife ask him for refrigerator, it’s again at same time when he was at the verge of paying his last EMI of bike loan!
Actually EMIs give us power to have things before even we really become capable! Is it true? No, it actually makes us weak financially, we cannot invest our money because we are not left with any spare amount after paying these EMIs. Then question arises, should we not fulfil our basic need even by borrowing money i.e. what is the harm to buy a bike or a refrigerator on EMIs in day to day life? I leave it to you now, which life you prefer ; one with constant pressure to pay the EMIs / Debt or Other one having so such pressure but a life with financial abundance.
How to come out of this Debt/EMI trap in life? Is it really possible to run the life without borrowing? Good news is it is very well possible if you follow certain discipline. The solution for this problem is “No Udhari Fund”.
What is “No Udhari Fund (NUF) & How to Create it?
No Udhari Fund is basically one liquid money reserve, which you can use in any of above situation without borrowing from others. For this we need to keep aside some money from our earnings, such that net sum are sufficient enough to run your 3-6 month period. This call for a high level of discipline. Initially you can plan for 3 month. Work-out how much money you require if you didn’t receive any money for 3 month, then start keeping aside specific amount every month for this purpose. This cycle may take 6 to 12 months, but believe me after these 6 or 12 months your life will be much easy.
Now let’s understand further discipline on this fund, e.g. You have decide Rs. 100K as your No Udhari Fund, and suddenly any of the above situation arise like medical emergency in family costing you Rs. 30K. You have decide to use your NUF & now net balance amount is Rs. 70K. Here come the secret, now it’s your responsibility to refill it to back to Rs. 100K. If you missed this discipline, there will not be any amount balance in this fund. If there is no amount, means you have to borrow again.
People struggle to create this fund, but it is quite easy if you start with step by step. Once you decide your amount & when you receive money, put X amount (may be 5 or 10%) aside and forget that. If some more surplus is there, add that in this fund. Keep on adding until you achieve your target.
This fund, should not be at easily accessible location. There must be some restriction to use this fund otherwise it will act as a surplus money available for expenditure. You can set some rule with one of your family member like when both of you agree then only this fund will be used and once it’s used, it will be refill again in a stipulated time frame.
This fund works at all level, only amount varies depending on peoples class of living. People generally keep Minimum 3 months back-up, maximum 6 months to 12 months back. You can share this practice with your children. They can start by keeping aside some amount regularly in their piggy bank (Gullak). After some time you will realise that it is all about habit as personal finance is 80 percent behaviour and only 20 percent head knowledge. If you establish habit of not borrowing money and pass that to your children, then your life & your children’s will be much easy with respect to finance.
Brian Tracy, motivational speaker, says, “What does it take to succeed on a big scale? A tremendous God-given talent? Inherited wealth? A decade of postgraduate education? Connections? Fortunately for most of us, what it takes is something very simple and accessible: clear, written goals.” According to Brian Tracy, a study of Harvard graduates found that after two years, the 3 percent who had written goals achieved more financially than the other 97 percent combined!