Archive for the ‘Finance’ Category

Coins

Summary – Working backward to ensure financial survival

The most common problem with us is that we believe with all our heart that the key to living is to live in the present. I’m not against the idea since I too believe that is the only way to live. But the problem starts when we were so occupied with the present, we prefer to think that the future always stay in the future and we shouldn’t be bothered with it.

WRONG! The future will become a present to us sooner or later. And the only way we can realize that is by checking the present, which is the future of our past. Confused? Don’t be.. There’s more

1) How much cash do you have now?
Take out all your cash in your wallet and start counting. Check also all the balance in your banks. If you have a piggy bank, count those too. In short, if it is cash, count it and put the number on a piece of paper.

2) How much do you have in term of things?
Do you have a house? a car? a stereo? This is going to be more tedious than counting those coins. You will now have to estimate how much your assets worth at present. Forget about the depreciation or appreciation. Just calculate how much cash will you receive if you sell your assets now.

3) Double up everything
If the total cash you have now is about $50K, and you are now 30 years old, simple maths will tell you that by 60 years old you should have $100K.

Yes, I know that there are a lot of other factors should be considered, such as increment in salary, dividend or interest received etc. If you want to work it out, by all means please proceed. You know your finance better than I do. But logic says that unless something change, that should be the minimum you will get if there are no change in the way you manage your finance now.

Now assuming you will live until you are 80 years old. With $100K in saving, you can only survive if you spend $416 per month. I’m not sure what we can even get with $416 in 50 to 60 years time. Pay the rent maybe?

My point is this, irregardless of the inaccuracy of the calculation, we need to save for the future. And that will not happen if we did not check on our current expenditure and lifestyle. We need to change for things to change.

A good way to start is by working backward. Let’s assume we want to retire with $3000 per month. Simple maths will show that we need to have at least $720K to maintain that monthly expenditure. Now figure out how can we get that $720K

– I wonder –
How much would you like to be given monthly after you retire?

———– Personal Note ————-
I still remember my first piggy bank. At the time it was in the shape of an elephant. I had saved quite a lot of money then. It was about $40. How I knew? I knew because one day I accidentally broke a helmet screen. It belong to my father’s friend. So my father ask me to pay him with my own money.

It was a very educating moment. Even though I doubt that the cost to repair the helmet is $40

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Money

For those who might not familiar with impulsive buying, it is when you were walking casually at a shopping mall and suddenly you see a pair of jeans you like. The next thing you know, you were already on your way home with the jeans.

Impulsive buying is actually not a bad thing if you have excess money and you really needed the items. But for those who were on a budget, it will ruin everything. Hence, compiled below are some of tips I would recommend to combat that budget wrecker.

1) Don’t go there
How can you spend money at a mall if you were not there in the first place. I’m not saying we should collect dust at home. I’m just saying, that if there is nothing to do, just relax at home or do other thing productive instead of window shopping at the mall.

I would define Window shopping as the process of convincing yourself that there are things to buy :)

2) Walk away
You’ve been dragged to the mall. It would be unwise to walk with your eyes closed. And now that you’re there be prepared to be tempted by attractive things. But when you did see something you think of buying, just physically walk away.

Make it as if your leg is being remote-controlled by another person. What I personally do is to convince myself that if after a thinking period of ONE DAY, and I still want that item, I will come back and buy it. Most of the time, by the time I’m home, I’ve already lost interest

3) Research first
I make it a rule, that anything with a price tag of 3 digit figure will require some research before buying. This especially applied for electronic items.

Go back and do some research. Check for review and complaints from other users. If the long hour researching doesn’t dampen you desire, the whining complaints will

4) Don’t go to mall after salary
There’s something about how our brain works that when we just received our paycheck, we are more compromising when it come to buying things. “I earned this”, “Money can only have value when spent” – these are some of the persuasive argument that WILL definitely comes to mind

5) No credit card
Thanks to the financial system around the world, we can actually time travel to the future and borrow money from our future us. Using your credit card is like you are receiving your paycheck everyday. The best way is to give it to your spouse. The more frugal the spouse the better :)

6) Minimum cash in wallet
Why do we even need to have $1000 in our wallet? Leave some at home, or better yet save it in the bank. Here’s a more cruel way. Start by only having $100 in your wallet. Maintain this for 2 months. After the 2 months, if you think $100 is definitely not enough. Increase it by $20.

7) Never talk to the sales person
These people are trained to convince you that you will die if you don’t purchase the item now. Not later.. now :) No offense to the sales person reading. You are all so good, it is terrifying

Only talk to them when you know more about the product that them, which generally means.. research research research.

8] Write your dream in a paper
If you want to own a house in 2 years. Put it all in paper. If you can include the price and how much you have saved now, that would be great.

When that impulsive buying gene kicks in, take out that paper and read it out loud (not to the sales person please, that would be embarassing)

9) Video yourself advising
Now that almost all mobilephones are equipped with video camera, why not we record ourselves advising us not to give in to that desire. Make it a 1 minutes video.

I can guarantee you that after watching the video 10 times, you will no longer need the phone to watch. It will be replayed over and over in your head. Annoying but very productive (money wise)

10) Understanding marketing
Do you know why there are so much colorful junk food very near to the cashier counter? Believe me, they are all intentionally. Cashier counter is the one place in the mall where you actually spend several minutes there in line. Bored, you will be looking for something interesting to look at, and what do you know, there’s a lot of colorful junk food there :)

There are a lot more. And when you understand this, you will know what it is you are fighting for. Why else do you think the items used the most almost always at the end of the shop? :)

11) Bring someone
You must know a friend who is very frugal, in other word stingy. This friend is the most useful when you bring along to buy items. Seek advice from them on whether it is necessary to buy or not. Most of the time, they will offer their advice voluntarily. Another “Annoying but very productive” case.

12) Make it rewarding to walk away
It take a lot of effort to see an item you really like and to walk away from it. Reward this. I would recommend giving yourself $1 for everytime you succeed in walking away from impulsive buying. The reward money is a no-guilt money, meaning you can buy anything you want with that money. No question asked.

– I wonder –
Do you have any other tips to combat impulsive buying? Please share

———- Personal Note ———-
There’s a very fine line between being stingy and frugal. It is in my opinion that stingy is when that expenditure is obligatory and still you want to avoid it. A stingy man will not repair his car seat belt in the name of being frugal. While a frugal man will not tolerate safety. He will try to save from other mean.

Suddenly I remembered the classic movie of Haji Bakhil Bin Lebai Kedekut :)

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frugal

I went through my previous post on why students should save money during their study years, and I thought what better entry to complement it if not on how to save money. So this is a compilation of some ideas I have. Feel free to add yours :)

1) Know why you need to save money. One reason is described here

2) Understand that being frugal is not cheapskate. Don’t be ashamed to be frugal. You have to do what you need to do.

3) Never spend more than you have. That’s the only way to lose money

4) Be very careful on the day your loan banked in. It is a vicious cycle. You had finished off your loan and you’re living frugally, but when you received that money.. the chances are you will spend it innocently just for the sake of revenge :)

5) Befriend frugal minded friends. Friends are the closest we had during studying and usually we will do everything together. If your friends like to hang out at Starbuck, then I predict it will be a long way for you to save. :)

6) Avoid debt at all cost. We can never get everything in life, something are never meant for us.

7) Credit card is a no no. The golden rule is if you can’t afford it, you should save another¬†couple of month to buy it.

8] Only buy used text book.

  • Make friends with your seniors, maybe they can give it to you for free
  • Always check with the seniors that had taken the course. Ask them, “Is the book really that important?”
  • Make use of the library. If the text book is not that important, just borrow it from the library

9) Stop for a while when you are at the gadget shop. Seriously, when it comes to gadget, think, rethink and think again. Do you REALLY need it? Hm.. since we are at it, think again at every shop, will you?

10) Shop smart. Shop only when it’s on sale. But of course you must first eye the items to know the price before sale. Some sellers markup their price prior the sale. So it may look like 70% but it is actually only 20%

11) Stop smoking. Just imagine how much you can save if you quit. It’s a hard thing I know. Surf and check tips on how to quit. They may work for you. One friend of mine actually stopped after he had smoked until he puke :)

12) Exercise regularly. A healthy body is less expensive to maintain. And I’m not just talking about your studying years. It will be a lifetime reward.

13) Eat healthy & avoid junkfood. Everyone knows that junk food has no value, but we still ate it. It’s time to stop.. especially when we want to save that cents for our future.

14) Keep yourself busy. Play badminton or futsal, or join martial art. When you are busy, you will have less time to wander around the mall and suddenly come back with 12 bags of clothes

15) Live without motorcycle or car. Unless you live very far from the campus, try to avoid having one. It is convenient, true. But if you can walk or cycle to class, why not? You will be healthier definitely.

  • Carpool is always an excellent idea

16) Be cheap with handphone usage.

  • Downgrade postpaid to prepaid.
  • Only call if you really need to.
  • Two words – SMS and email

17) Cook / Share a meal. I’ve actually done the experiment. Cooking own meal is always cheaper than buying the meal. And I even cooked and bought the same food for accuracy :)

18) Always check for ways to have fun without spending excessively. Instead of going to cybercafe playing online game, maybe you can ask skilled friends to network some computers and play with your friends indoors.

19) Less going out. The more we go out, the more we spend. Period. So maybe instead of going out every weekend to buy several items, combine the whole errand and do one shot once a month

20) Start some business. Maybe you know how to repair computers so put up some advertisement, and just start offering the service. Remember, be very careful choosing the business. We want to make money not lose it :)

21) Do part time job on long holiday. Besides earning a bit extra, you will get a lot of working experience such as networking, business etc

Final Action
So after all that you finally have a few dollars saved, what do you do? It will be a terrible thing if you go out and spend it all. The final action you should do is deposit it in the bank. (22)

– I wonder –
Any other tips you think may be useful?

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shopping

Summary – 5 Shopping Mistakes

Based on my buying-the-laptop the other day, these are some of the mistake I believe we often do when shopping for an item. (You can’t get a more direct introduction than that hehe)

1)Buying at the first shop
Here’s the scenario. There are a lot of shops selling laptop, you approach one and you were given quite a good offer and you take it. This is mistake #1. There will always be better deal at shop #2 :)

2) Buying because you’re tired
Pc Fair or shopping complexes are huge places. Because of this, most of the time, people will buy things at the last stop, just because they’re tired to go back to shop #27. In my opinion, if you’re tired, just take a rest. Buying things when our mind is clouded is a big mistake. We could end up buying a massager chair instead of a laptop :)

Last Friday, there was this one seller who actually use this trick. He clearly said that there will be a mysterious gift waiting if I bought from him, and he said that he will only tell me what the gift is when I come back after my surveying. See… if I did come back, I will be very tired, and those offer will look very tempting

3) Buying because you plan to buy
The scenario: You had actually planned to buy this laptop, and even took a day off just to properly survey. But it turns out the laptop you’re looking for is not available. What would you do? People often do the mistake of thinking he must buy something since he had spent the time. So since the laptop is not available, maybe he bought a new wardrobe.

Never buy for the sake of buying. If the items you’re looking for is not there, postpone the whole shopping until it’s there.

4) Fail to use your buying power
When you have the money, act like you’re having them. Ask question, be demanding and haggle. When you’re actually buying, you will have that power. Use it.. because the seller will be using their power, which is trying to make you part with your money thinking that you are actually making profit out of them

Haggle.. hm I will do another topic specifically on this :)

5) No research
This is the biggest mistake done while shopping. You have to research, irregardless of what you want to buy. You need to know :

  • what you actually want
  • what you actually need
  • what you should expect

You can’t go wrong, Google will be a great way to start

– I wonder –
Any other mistakes you can add in to this list?

———— Personal Note ————-
One thing for sure, shopping is really a great way to enjoy yourself, with that much purchasing power. hm next item on my things to buy would be a house, which probably will be achieved in 4-5 years from now. Hope so… :)

Anybody selling? :)

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