Archive for the ‘Finance’ Category

snowball

Summary – Yesterday it’s big to small.. Today it’s small to big

Today I’m going to prove to you that there are always two ways or more to see at things and both of them can be correct. Yesterday, I highlighted that we should always finish the biggest task to motivate us. Apparently there is another concept I just found while reading in the internet that describe it the other way around.

That concept simply urge us to finish the smallest to motivate us. See… Exactly the opposite but still true. Let me explain this concept.

It is called snowballing and it is a widely used methods to clear debt. An example will illustrate better.One man had 4 debt to settle, house loan, car loan, credit card and study loan. According to Snowballing Concept, the man need to figure out what is the minimum amount he can pay for each loan. He will then have to figure out which loan is the lowest amount.

In this specific case, his credit card is the lowest at about RM3000, so what he should do is to pay all other loans at the minimum amount. And the remaining money is used to pay off the credit card. For example, after deducting all the minimum payment to other loans, he still have RM500 cash. That money must be used entirely to pay off his credit card. In about 6 months he will finish paying the credit card.

Then he moved to the next loan with the lowest amount, let say study loan. Previously he pay a minimum of RM200 per month, now he must snowball the payment and use the extra money from not paying credit card (RM500) and pay the study loan at RM700 / month (Snowball). This goes on until he finished all his debt.

I actually think that this make sense. To finish all debt the lowest ones first. Now compare this entry and the entry yesterday. Both of them emphasis exactly the opposite things and yet both of them is correct.

What do you think? Is this snowballing strategy practical?

————–Personal Note————-

I still have long way to go to finish my loans. And when those loans are settled, I’m very sure I will start with my house loan. So it’s really a never ending story :)One thing for sure, when we owe someone, we have to pay them. Even one cents. I’m very particular with this, because it will be very disappointing when somebody owe me money and he didn’t even bother to pay me back. He even look at me as if I’m the one who owe him money. And that is why, I stop lending people money except for family of course. Come be my family huhu

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Summary – The formation of “Baju Raya Recycling Club”

I was chatting with uncleJ about jokingly forming a recycling club. Not to recycle waste, but to recycle the old “baju raya”. It would be a great club with so many activities don’t you think? Just imagine the cash we save.

So then I started thinking of other ways we can reduce the expenditure of this year’s Hari Raya. I know for certain you guys must have more brilliant ideas on how to further save money on Hari Raya, please share ya… maybe this club can be realized after all 🙂

Please note that wearing brand new clothes to celebrate Hari Raya is actually a “sunat”. I’m just suggesting recycling if the old clothes is still in good condition or maybe we are on a tight budget. Please correct me if I’m wrong.

Well here’s what I can come up so far

1) Plan your travelling
Back home, we always buy ice and newspaper after Solat Aidulfitri, this way we don’t need to waste the fuel just to get ice or newspaper on separate occasion. Similarly, plan your visit to your friends’ houses. Going to Sungai Petani then Alor Setar and again to Sungai Petani is really poor planning. 🙂

2) Buy auctioned kuih raya
Kuih raya is the essence of Hari Raya, so I will never suggest not buying / making them. But for those who buy cake or kuih raya (kuih tunjuk), maybe we can buy them as late as possible. Every year, my family will be excited to go buy those “kuih tunjuk” at midnight of the last day of fasting. It is said that everything will be auctioned off at ridiculously low price. However, almost every year, my family will give up and prefer going to bed early hehe 🙂 (talk only)

3) Reduce or stop buying firecrackers
This is again a sensitive matter. Hari Raya is actually meant for children. They are the ones that enjoy it the most. And what I enjoyed when I was one of them was playing firecrackers. Back then we had millions (exaggerating) of types. So this it totally up to you. Today there’s already one case of firecrackers exploding the fingers of two children (Berita Harian 1st Oct).

My suggestion if you really must play, is to reduce the amount drastically. It is better if we don’t play it at all. Those children with the finger hurt surely don’t want the accident to happen, but it did happened to them. So there’s no reason to let our children have the same risk. Preferably I suggest to not buy.. they’re just not worth it.

/end list

Hari Raya is one of the most awaited day for us muslim. And most of the time, the celebration is supposed to be grand and better every year. This is where it is wrong. The whole idea of Aidilfitri is not about celebrating the end of Ramadhan (where we can take revenge on inhibiting our desire and go on a shopping spree). I’ll try to elaborate on that in my coming Ramadhan Tribute Series

I now opened the club for registeration. Anybody can join in but in order to join, you have to each pay me RM10 (joking). No la…. To join, just share with us how else can we save during this Hari Raya.

————–Personal Note————-
Let me be the first to wish you all Selamat Hari Raya.. Maaf Zahir Batin. Since I can’t send all of you personal “kad raya”, this will be it 🙂 Please forgive me if there is anything I wrote that may offend you. In the end, I’m here to make friends… and I am grateful to Allah for introducing me to you. so again, may everyone has the best Raya ever!!Aidilfitri mood is in the air!!!

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Ferrari

Summary – Happy Sunday everyone! 🙂

A man walks into a bank in New York City and asks for the loan officer.

He tells the loan officer that he is going to China on business for two weeks and needs to borrow USD $5,000. The bank officer tells him that the bank will need some form of security for the loan, so the man hands over the keys to a new Ferrari parked on the street in front of the bank. He produces the title and everything checks out. The loan officer agrees to accept the car as collateral for the loan.

The bank’s president and its officers all enjoy a good laugh at the for using a USD $250,000 Ferrari as collateral against a USD $5,000 loan. An employee of the bank then drives the Ferrari into the bank’s underground
garage and parks it there. Two weeks later….

Two weeks later, the man returns, repays the USD $5,000 and the interest, which comes to $15.41. The loan officer says, “Sir, we are very happy to have had your business, and this transaction has worked out very nicely, but we are a little puzzled. While you were away, we checked you out and found that you are a multi-millionaire. What puzzles us is, why would you bother to borrow USD $5,000?”

The man replies: “Where else in New York City can I park my car for 2 weeks for only USD$15.41 and expect it to be there when I return?”

/end story

This story has had so many version, the first one I read it’s about Phua Chu Kang parking car in Singapore 🙂 Anyway I wonder if we can really do this? Kuala Lumpur is getting more expensive to park a car in.

————–Personal Note————-
Sometimes I always wish that the Doraemon technology exist, where we can shrink our car and put it in the pocket. Now it really is getting harder to find a parking spot in KL. Things is not getting any better I assure you.

How else do you think we can solve this problem?

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Summary – Some people change new cars every 5 years, how did they do it?

Today I went to the bank with a friend of mine. He is one of the main supplier for the mill and I know him way back when I’m still in Johor.

He is driving a new Hilux (very expensive and new). I remembered only few years back he was driving another branded new car (I’m not sure what the car was but it is definitely quite new)

When I asked him, he said it is his practice to change a new car every 5 years and this will be practised until he died.

According to him, he had fixed a monthly payment of RM800 just for his car. When the car is 5 years of age, he will trade that in when it is still high in value for a newer car. However the monthly payment shouldn’t be more than RM800. Meaning, he will pay RM800 every month for the rest of his life.

According to him, this is better than maintaining an old car because –

  • He will be able to drive any car he wanted
  • People will see him as a successful businessman
  • Almost no maintenance cost
  • The money forked out for maintenance for old cars usually just as much as buying new car
  • He does not have to worry a bit about maintenance of the car and its reliability. It’s brand new..
  • Some cars come with free bonus such as free roadtax and maintenance for couple of years.
  • Almost everyone suffer from debt through out their life, why not enjoy from it.

These are his reasons, I am totally in disagree with him of course. But the idea is really there and it is quite interesting.

One thing for sure he is a non-muslim. We muslim, were raised to try to avoid or settle all debt at all cost. If for example, we die with some debt unsettled, the debt will be a burden for us in the afterlife.

I am actually not very sure how other religion view debt unsettled, is it accepted?

For us muslim, what do you think of the idea? Agree / Disagree? 🙂

————— Personal Note ————————–
When will I finish paying all my debt. Sometimes, it feels like it is a never ending juggling. One debt settle, another waiting. After I’m done with my car, I’m hoping to straight away use that allocation of money to buy a house.

Are debt really becoming part of our life already? How do you guys manage your debt?

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