Saturday, April 25, 2009

going home

My mum called me today. Ammamma is dying.
She's 90 years old. Loves life. Loves to dress up extravagantly in silks she can hardly carry the weight of. Knows how to pout until she gets her way. She taught my brother and me how to play chess. Turned a blind eye every time we cheated to win. She hasn't sun in over 50 years, but she will still lift her eyebrow if she hears one wrong note! We grew up listening to her strident voice as she yelled out "Bala! Apaswaram!" every time my mother goofed up during a song. She still hopes that she can hold on long enough to hold a great-grandson in her arms. She has the humility to acknolwedge that she will not learn everything in her life. That there will be things she will never understand. And yet, she knows how to operate the microwave and the cell phone.
She has probably forgotten more about pain and suffering than the rest of my family put together have ever learnt. And still she smiles.
I just hope I can reach home and say goodbye to Ammamma.
Is it just coincidence that Vizag is 500 miles away from Chennai?

Sunday, April 05, 2009

Income Tax and Opportunity cost...

If you ask anyone in my office about my tax-saving habits, they'll burst out laughing. (If accounts are to be believed, I manage my money worse than George W Bush managed his presidency.) Every single person in my office offers me friendly advice on how to make more or save more or invest more. They think I'm stupid or naive or just misinformed. They are frustrated that I won't learn.

I don't plan my savings. I dont do tax calculations. I don't invest. I don't even send my bills to the office FINANCE department for reimbursement. Supposedly, I lose 1 lakh every year simply because I pay tax for money that should have been in the form of investments or reimursements and hence non-taxable.

I get their point (obviously)! But do they get mine?

My point is this: 40K in one shot is a bigger amount than 50K spread over twelve months because of the nature of our expenditure. And I'm the only guy I know who understand this.

I don't waste time every month trying to find bills so that I get my reimbursement money. I dont keep track of bills. I don't forge reimbursement claims. I don't fudge my tax amounts. I dont account for my investments, because i make no investments that can be accounted. I tell my finance team that I'm not looking to make any investments, so will you please deduct the appropriate tax amount from my salary every month?

Every month from June to December, I am the butt of office jokes on money management. And then the calendar turns over; the financial year-end is a quarter away; and the jokes have dried out.

I'm the only person in my company who draws the full regular salary for the months of Jan and Feb. Everyone else pays massive amounts of income tax (accrued over twelve months) for the investments that they had planned to make but couldn't. To add insult to injury I get extra pay in the month of March after my reimbursement-money has been taxed and the left-over given to me. I'm the only guy in my office who actually has a cash surplus on April 1st.

How much time did i spend thinking about tax-and-reimbursement this last year? Twenty minutes or so I guess, mostly while writing this post. How much time did you spend this last year on tax planning and reimbursements? I spent a lot of energy in ignoring all your advice. That effort was well-spent for me. How much energy did you put into your tax planning? Was it worth it?

It's true that, in reality, I made less money than I should have over the year. But THAT is a cost I'm willing to pay for the oppportunity of spending a mini-fortune every April. It's not how much you earn that counts. It's what use you put your money to.

I'm writing this piece from a beach resort in Mahabalipuram; with a glass of fine Australian wine in hand (I, and not the beach, being the possessor of said wine). Where are you now?
< sarcastic smile; as I plug my earphones back in to indicate the end of the lecture >

Zoom out to the music of GNR's Paradise City: man raises his glass to his lips and his eyes to the horizon.

Cut to credits...