Understanding your true net worth!

An accurate understanding of one's financial well being is of utmost importance at every stage of life. So, whether you are a student, fresher into the job market or a veteran - assessment of personal financial health is important in order to make good financial decisions. For example, even if are purchasing a car, purchasing a home, taking a student loan, liquidating an investment or making a risky investment  - all these decisions can be made only if you know your financial status well.
An individual's financial health is computed by means of his personal net worth. In simple terms, personal net worth is the net asset value of an individual. Personal net worth is calculated as follows:
[Total Assets] less [Total Liabilities]
One must assess his / her net personal worth on a regular basis. This is because corrective measures can be taken in time if the net personal worth starts declining. It is much easier to recover at early stages than once you find yourself in deep financial crisis. Your net personal worth will also give you an idea about how financial institutions perceive you as a borrower.  For example, Deepak, an IT consultant with a software company wants to purchase a car. He has set his eyes on the Toyota Corolla. The car dealer informs him that the on road price of the car will come to Rs.11.25 L.  If he takes a car loan, he will have to pay a monthly EMI of Rs. 15,000 towards repayment of the car loan and pay an amount of Rs. 1.0 L as down payment. Deepak's monthly salary is Rs.0.9L and the EMI as well as the down payment seems easily affordable. However, Deepak should assess whether he can afford to buy this car at present by considering all his liabilities and assets. His personal net worth should give him a fair idea of his current financial status and whether he can afford to buy the car.
Computation of Deepak's personal net worth

Assets	Rupees in '000
Current Market Value of his apartment	5000
Market Value of his TVS Scooty (two - wheeler)	10
Value of Fixed Deposits	500
Market Value of shares held by him	200
Market Value of Mutual Funds owned by him	500
Market Value of Jewellery	300
Value of NSCs	5
Amount in PPF	10
Cash in bank and in hand	100
Total Assets (A)	6625
Liabilities
Outstanding home loan	4500
Outstanding loan on TVS Scooty	2
Outstanding student loan	200
Outstanding credit card bills	50
Total Liabilities (B)	4752
Personal Net worth (A-B)	1873

Assuming that Deepak's monthly outflow towards EMIs of outstanding loans is Rs. 35,000/- and looking at his personal net worth, a corolla is a viable option. This is because he has a positive net worth of Rs.18.73 L. Further he is able to make payments of EMIs with ease considering his current income and should also be able to pay the EMI on the new car loan.
Note that knowledge of current personal net worth is essential to make financial decisions. It is important to reevaluate personal net worth while making any important financial decision as the value of assets and liabilities is likely to change. Also, net worth should not be considered in isolation. It is a good idea to consider factors like current and future income levels, future liabilities etc. For example, if Deepak has to bear the expenses of his sister's wedding which costs him approximately Rs. 9 L and he has to sell off some of his investment to meet the wedding expenses, his personal net worth will look different. Further, if the market value of assets declines, his personal net worth will also take a hit. Let us take a look:
Deepak's Personal Net worth if he has to bear his sister's wedding expenses and if the economy takes a down turn:

Assets	Rupees in '000
Current Market Value of his apartment	3000
Market Value of his TVS Scooty (two - wheeler)	10
Value of Fixed Deposits	0
Market Value of shares held by him	100
Market Value of Mutual Funds owned by him	200
Market Value of Jewellery	100
Value of NSCs	5
Amount in PPF	10
Cash in bank and in hand	0
Total Assets (A)	3425
Liabilities
Outstanding home loan	4500
Outstanding loan on TVS Scooty	2
Outstanding student loan	200
Outstanding credit card bills	50
Total Liabilities (B)	4752
Personal Net worth (A-B)	(1327)

Clearly, in the above situation, Deepak should not purchase a car at present and should concentrate on improving his personal net worth.
By BankBazaar.com - an online marketplace for your personal loan and home loan needs.

Buying a second-hand car? Here's some GREAT advice

Age and the kilometres driven are important price determinants.

Experts say that one should try and zero-in on a car which has not been driven for more than 50,000 kilometres.

However, if you are looking at buying a second-hand car only for 1-2 years and for basic usage then you can even consider a vehicle which has been run for up to 70,000 kilometres.

But anything over and above that is a clear 'avoid' because most cars have a running life of around 100,000 kilometres, beyond that they live on borrowed time

Your checklist should also entail a thorough check of the car's condition. Also, try and look for a car which is feature-rich.

Apart from this, previous ownership of the car also affects the price. This means that if a car would have had been used as a taxi earlier, then its price significantly comes down.

Also, the demand for a car also affects the pricing.

A test drive accompanied by a mechanic should be a must on your list.

Watch out for obvious signs, like a fresh coat of paint. This may be to mask an accident. Also, make time for research on the car model that you have zeroed-in on and its market response so far. Find out if any defects or problems have been encountered with that particular model so far.

Make sure you are in possession of all the necessary documents before you take off with your new, used set of wheels.

Key documents include: copy of insurance, original car sale document, warranty cards, maintenance copies, etc.

As a seller, in order to get a good deal, you should try and furnish all required details about the car. All information about the condition, history and ownership of the vehicle should be made available to the buyer.

The right price, the right place

Earlier the options available for buying a used car were limited to the neighbourhood mechanic. But now, there are more avenues that can be explored. This helps avoid the problem as well.

Companies such as Maruti, Tata Motors, General Motors have dedicated showrooms for used cars

After taking back the vehicle, they are serviced and are also put through a long checklist before being put out on sale.

Though these company showrooms may command a higher price of anywhere between 10-15 per cent, they come with some peace of mind. They are most likely to be in a better state and generally come with freebies such as three free servicings, etc.

Another option can be big car dealers. They can give you a clear picture about the condition of the car and if need arises, then can also repair and renovate it as per your demands.

However, both the seller and the buyer will have to pay a commission of up to 2 per cent.

You can choose the car based on your location, model, kilometres driven, etc.

It is possible that someone may offer you a slightly lower price. Don't fall for just the price until you are convinced about the condition of the car. Else instead of saving money on a second-hand car, it may turn out to be expensive!

Experts say that one should ideally not pay more than 50 per cent of the value of the car, if it is more than three years old. This amount should also cover up the expenses you will incur on servicing and renovation.

NEW INVENTIONS

NEW INVENTIONS

Zenn Car

With concerns about energy consumption and pollution, recent inventions (see Air Pod) that can reduce transportation costs are extremely popular.
The award winning Zenn (Zero-Emmissions-No-Noise) is one of those inventions that is gaining in popularity, especially in the United States and Europe.
The car operates on electricity and plugs into a regular wall socket for charging. It costs an average of 35 cents to fully charge the vehicle.

See Related Article Low Car Insurance

It has zero emissions, no noise (no exaggeration - you'll hear more noise in a library) and costs pennies per mile to operate.

The car is built on an aluminum-alloy chassis with ABS plastic exterior panels that are rustproof and dent resistant. There is minimal maintenance because there are minimal parts.
The three-door hatchback comes with air conditioning, power windows, power locks, remote key-less entry, wipers, defrost, heater, sunroof and 13 cubic feet of storage space.
Source: zenncars.com

Trident Iceni

Eco-friendly and really fast.
Hailed as the future of high performance cars, this sleek two-seater sports car invented by Phil Bevan is powered by a 550 horsepower bio diesel engine.
Top speed is 230 mph, 0-60 mph in under 4 seconds. But the Iconic is incredibly economical on fuel, which is virtually unheard of in a car of this speed.
At a constant speed of 70 mph, you get 68.9 mpg. A fully fueled tank will give you a cruising range of about 2000 miles.
It’s like having a Lamborghini without the cost or the damage to the environment. Approximately five hundred will be available for sale next year.
Source: http://www.trident-vehicles.co.uk/

Sky car - Drive and Fly

Gilo Cardozo, a self-taught aviation engineer, inventor and founder of British-based Para jet has created a two-seat flying car.
A modified 1000cc, four cylinder, 140hp, ethanol burning, Yamaha R1 super bike engine with a lightweight automatic CVT (continuously variable transmission) gearbox power the Sky car.
It has independent four wheel suspension and rear wheel drive. Road acceleration is 0-60 mph in 4.5 seconds with a top speed of 110 mph.
To convert to flight mode, the driver unfolds a Para-foil wing from the trunk (boot) and attaches it to the rear of the car. He then flips a switch to change the transmission from road mode, which powers the wheels, to flight mode, which powers the rear fan.
Converting from “road mode” to “fly mode” and visa-versa takes about three minutes thanks to the flexible wing technology invented by Mike Campbell Jones, of Para mania Power gliders.

See Related Article Flying Jet Pack

The fan’s thrust propels the car forward, providing lift for the wing as the car reaches a takeoff speed of 35 mph.
Once airborne, foot pedals move cables attached to the Para foil to direct the flight path.
Top air speed is 100 mph at altitudes of 2000 to 3000 feet. Maximum altitude is 15,000 ft. with a range of 180 miles.
The Sky car is also equipped with a roof-mounted ballistic parachute for emergencies.
Potential buyers will require a powered parachute license, rather than a pilot’s license, to fly a Sky car and the British government has approved the vehicle as street legal.
Source: skycarexpedition.com

Flying Saucers

One of Dr. Paul Moller's recent inventions is a two-seat flying saucer that can reach speeds of 75 miles an hour.
The M200G "personal recreation craft" is a vertical-takeoff-and-landing aircraft (VTOL).
It uses a propulsion system to lift and stabilize itself in the air. There are eight small directional ducted fans each powered by a rotary engine.
Using multiple inertial sensors and accelerometers, a computer monitors and adjusts thrust in each fan as often as 400 times per second to maintain stability and flight.
The craft is limited to flying below 10 feet to eliminate the need for pilot certification.
Source: moller.com

Gen H-4 Copter

The next time you hop into your car, you might consider flying this recent invention. Gennai Yanagisawa has invented the world's smallest one-man helicopter.
The GEN H-4 is a 75 kg (165 lbs) aluminum-framed copter with twin rotors powered by two 10hp engines.
Each engine has independent ignition, a carburetor, starter and clutch. It can fly with just one engine so the probability of total engine failure is remote. But for added safety, it also comes with a ballistic parachute.
To fly the copter, you take a seat and grab the control bar that is positioned in front of you. The handle bar displays a tachometer, starter and throttle lever.
To fly forward you pull the handle bar towards you. To go backwards you push the handle forward. Move the handle left to fly right and right to fly left. The throttle lever controls the rise and descent. The maximum flight speed is 50 kilometers per hour (31 mph).
Yanagisawa is planning a trip to Italy to fly his new invention. It is to honor the inventor Leonardo da Vinci who was the first person to envision the invention of helicopters.
Source: gen-corp.jp

Undersea Resort

L Bruce Jones is a submarine inventor who designs and sells private luxury submarines.
Following in the footsteps of his rocket scientist father, and his grandfather who invented self-elevating jack-up rigs and created the world's first containerized shipping company; one of Bruce's recent inventions is the world's first undersea resort.
Accessible by two elevators from the surface, the resort is being built on the seabed surrounding a private Fiji island in the South Pacific.
The underwater facilities will include 24 luxury state rooms, a restaurant and bar, library, conference room, wedding chapel, underwater spa, and the ultra-luxury Nautilus Suite with stunning undersea views.
Source: poseidonresorts.com