Wednesday, October 29, 2008

Dream BIG

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Thought of sharing this video to remind us of our dreams....

Tuesday, October 21, 2008

Managing Money Part 4: EXP

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Malaysia's inflation rate jumped to a 26-year high of 8.5 percent in August 2008, driven by the escalating cost of food and fuel. It is said the cost of food and non-alcoholic drinks rose 11.7 percent in August compared to a year ago.

The August data showed escalating prices in most categories, including transport which jumped 21.8 percent, and restaurants and hotels which rose 6.5 percent.

Malaysia's government hiked the fuel price by 41% in June 2008, in a move to rein in the ballooning cost of subsidies but it has on numerous occasions since then lowered the fuel price from a high of RM2.70 to current price of RM2.30 when the global fuel price has decreased from a high of USD147/barrel to USD69/barrel in October 2008.

The high inflation is already hurting many consumers especially those with fixed income with many Malaysians cutting down on food bills.

In managing our money, it is suggested that one's expenses should be lower than one's income to ensure that there is surplus for other uses eg savings and investment. The recommended amount that one should cap on one's expenses is 55% max.

Some of the suggested ways to ensure that our expenses do not exceed the 55% cap is by preparing a budget and identify our needs from wants. Following a budget requires discipline however, if a person stays focused on his financial goals, the whole process could be easier.

Identifying one's needs and reducing or eliminating one's wants would help tremendously as priorities are set thus reducing wastage of resources and ensure there is a surplus for other usage.

In the event that the situation does not permit one to place a cap on his expense account due to the depleting purchasing power of cash, it is recommended that one should look for another source of income to boost his take home pay.

Sunday, October 5, 2008

Managing Money Part 3:LTSS

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Let's continue with the basic wealth creation lesson...managing money (thought I had forgotten about this huh?).

The 3rd account shared by T Harv Eker is called the Long Term Saving for Spending account (LTSS). This account is created to enable us to fulfill our dreams of owning something in the short to medium term eg notebook (my 12 year old nephew's wish list), house, car, holiday, etc. The recommended amount to set aside is 10% of our net income..... to purchase whatever you desire. However those who have more than 1 item (max 2) in his/her wish list is to halve the required amount (5% x 2). The time taken to save to achieve your dream is dependent on the amount set aside, however, to expedite the process, one of the ways that you could do is to increase your income :) It is still 10% max for this account as we have other uses for the extra cash.

Managing our money is imperative to ensure that we do not spend what we do not have. Do avoid using credit facility if possible unless you are able to repay it promptly or the return for taking the loan is greater than the cost of repaying the loan itself. This is considered a good loan.

A most popular and easily available credit is credit card. Nowadays, many such companies are issuing preapproved cheques to their customers! Credit card if used wisely could be a blessing but if abused, it could be the beginning of your nightmare!

I personally like the use of credit card as it means having to carry lesser cash - for security reason. Furthermore, we are able to redeem the accummulated points against the vast array of products offered by the company free vs cash payment which has no benefits. At times, using credit card enable us to purchase a certain goods/services at special price or via instalment method with zero cost. All these are being offered at no subscription fee at all (it is time to change your credit card if you are paying the annual fee). Moreover, a copy of our monthly expenses transaction is provided by the company enabling us to record our spending and thus facilitating keeping track of our expenses. These are the benefits of using credit cards and it remains to be so as long as we clear the full amount due from us promptly. Please bear in mind that it does not mean paying the minimum amount but the full amount due on the statement. Paying only the minimum amount means you are taking a very expensive credit facility offered by the credit card company (15% - 18%pa) and it could be the beginning of your sleepless night!

Malaysians who are having problem with their credit card payment and need counselling, please refer to Agensi Kauseling dan Pengurusan Kredit ( for assistance.

As mentioned in my previous blog, spending could be fun now but it is wiser to save and invest as much as possible for your future.
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