Sunday, October 5, 2008

Managing Money Part 3:LTSS

Sharing a thought...

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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