July 29, 2009

Beating the Recession

Posted in obstacles, planning, saving tips, Uncategorized at 2:48 pm by kimsan23

A few months ago, a friend of mine heard a guy in a convenience store ranting about how the recession only affects “rich” people.  The comment was basically like this:

Recession?  We normal people won’t get affected by that!  It’s a problem for rich people!

I am surprised at how uninformed (or in denial) many people are when it comes to the ongoing recession in the USA.  Of course, analysts are saying that the market is picking up and getting better but you see, try not to get your hopes us too high!  25 years of making financial mistakes won’t be repaired in a year…thankfully, it won’t take another 25 years as well.  Give or take 5 years and hopefully, the economy experiences a full turnaround in favor of the consumer.

In the US, people are spending less to battle the economic situation.   They taking steps to ensure financial stability on an individual level.  Just because the recession has made a direct hit on the US market, doesn’t mean that we are not affected.

For the call center and BPO industry, it could go up or down.  US based clients may outsource more given the tight budget they currently have or may close down some business which may result to outsourced projects being canceled.  I myself have heard of a number of small business BPOs that have shut down Philippine operations because of account/client cancellation.  So you see, no matter how far away the US is from us, we are also directly affected by the economic crisis.

The US economic situation affects everyone involved in global business no matter how big or small…from the owner of the business down to the laborer.  this is a reality that many people are not accepting and non-acceptance leads to being complacent and carelessness.

Even when one is seemingly unaffected by the economic crisis, it is always advisable to be ready for any financial emergency.  Fuel prices are rising again (it just went up by 2 pesos) and normally, consumer good prices would rise as well.  Services will also become less cost efficient and many people will have to exert extra effort to maintain their lifestyles.

Beating the recession is not an easy lifestyle change but IT CAN BE DONE.

Many of things I’ve written in my blog lead basically to achieving financial freedom.  Now it takes on another role, gaining financial security amd preparedness.

1. Don’t cut down on savings, cut down on spending.  Prices have gone up but I still manage  to save the same amount of money I used to save even before the recession hit.  Remember, savings first before spending!

2. Cut down on leisurely activities or downgrade.  Instead of eating out 3 times a week, reduce it to once…etc.

3. Plan for meals at home and packed meals to save on food bills.

4. Unplug electrical appliances when not in use.  Put your airconditioner on timer settings if you must use it when you go to bed.  It saves on electric bills.

5. Try your best to reduce habits like smoking and alcohol.  These are expensive habits that could cost you a lot of money lost in the long run, not to mention they’re quite unhealthy as well.

6. Don’t invest your heard-earned money in get rich quick schemes, you may just lose it!  (Been there, done that and learned!)

7. If you are in debt, start getting out of it NOW.  Try these tips on becoming DEBT FREE.

If all of make a conscious effort to battle the recession by cutting down on spending without cutting it out  completely (which is impossible and if done, the market will definitely crash!), it would be easier for us to prepare for many financial emergencies that could affect our way of life.

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July 14, 2008

Buying a Car

Posted in financial decisions, obstacles at 1:55 pm by kimsan23

Fuel prices have gone up pretty fast since March of this year.  I currently drive an automatic gas guzzler which costs me an arm and a leg to gas up every week.

Crazy thing is I’ve decided to buy a car.   This is going to affect my savings but I think it needs to be done.  Currently, my car runs at 5-6 kms. per liter of unleaded gas.  I’ve decided to get a car that will run at 17 kms. per liter. I save a lot in the long run plus I get a new machine.

I did all my computations and found out that this transaction will not cut out my saving habit too much.   I just need to buy a car that will fall under the 300-350k range.

This is a big decisoon for me since I still am racing to get my 1 million.

April 16, 2008

Impulse Buying

Posted in debt, obstacles at 4:29 am by kimsan23

“Today I bought a 5MP Polaroid Camera at 1 peso shy of 5k…

To be perfectly honest, this is one of the worst bad habits I have in my book. I am terrible when it comes to controlling myself. It’s so effortless really; the way I could just whip out my credit card and buy something just because my credit limit allows me to do so. What kills me is really what happens next when I realize that I had bought something without alloting resources or planning for it. I’ve learned through time that I can only impulse-buy if I really do have the money for it — on hand. Most of the time though it gets very tempting to buy something you know you want at the very moment you see it. But you see, if you’re on a budget, do you really want to jeopardize your spending plan? What can you do when you feel the strong urge to buy something? Here’s my two cents worth.

If it’s something you can actually afford but don’t need, leave it at the display window and walk around the area a bit. See if you can shake off that intense “I-want-you” feeling. If it rubs off within an hour, you’re fine. If not, then I guess we all know what’s next.

However, if you actually are falling in love with an uber-expensive item — think.  Why not give yourself time to really assess whether you really want it or not. If you do not have the money for it but you want it, make it a planned expense.  For that, you’ll need to allot money in intervals. Give yourself a chance to save for it first. Once you have the money, decide if you still want it or not. If you want it, get it since it has just become part of your actual budget. If you don’t, then you end up with a hefty amount for savings!

Always pay with money you have. If you wanna use your credit card, try to see if you can get a no-interest scheme payment plan or pay in full when the card bill comes. This will help eliminate finance charges, not  mention give you rewards points on your card (only if your card has a gimmick like that).

One way I discipline myself is to first fill out my financial template.  Second, put money in separate labelled envelopes that match the item entries in my finance template, And lastly, see if I can allot any extra money I might have to a fund for the item that I want.

Always think well before deciding to buy something you want. Ask yourself some guide questions:

1. Do you need it?
2. What is it’s benefit to you?
3. How long will the benefit last?
4. What other needs can you fill with the amount you’d like to spend?

Of course, the hardest is part is answering your own questions where you will, most of the time see, that whatever you want to buy has great potential of hurting your on-hand cash as well as your budget.

Give youself time to decide. You know what they say: “If it’s meant to be, it’s meant for me.”

…thank god it was a planned expense!”

April 8, 2008

Dealing with Debt

Posted in debt, obstacles at 10:40 am by kimsan23

The truth is, AVOID DEBT.  If you can, don’t borrow money.

However, if upon reading this, you have already accumulated a debt…read on.

I once had this huge debt of 70K (on my credit cards) — I was making 24K per month, most of which went to rent (5.5K), food (5K), phone (1k) gas (4K), parking (2.5K), laundry (1K), weekend fund (2K) and the debt.  I hardly had money for clothes or shoes — even for home stuff.  I was clearly deep in my knees in debt.  Every month, I had to pay a minimum balance of 3K — that was pretty much was was left of my salary.

I had to do something to help myself!  What were the steps I took?

1. Kept my job! If you’re in debt and you don’t have a job– GET ONE.  You need a source of income!

2. Analyzed my budget.  I asked myself these questions.

– What are the things I can do without?
– What lifestyle changes must I make to lessen my expenditures?

3. Came up with answers.

– “I can do without a car for a while.” I just used public transport. And instead of spending 220 pesos per day on transportation including parking fees, I ended up spending just 100!
– I had to wake up earlier and walk a bit more but it was worth it! I slashed my transportation expenses by more than half which gave me a savings of 120 pesos per day which translated into 2.4K per month.  

– I also slashed by food allowance by 30%. I decided to bring home-cooked meals to work instead of buying at work which just cleaned up the daily allowance I gave myself.

– I made my cellphone bill go down too by 200-300 pesos per month by minimizing calls and texts.

4. Looked for other sources of income. No, I didn’t gamble but I did a lot of things (refer to my post on Adding To Your Income).

5. While all this paying off the debt was happening, I actually was able to save a miniscule 200 pesos per month.

6. I also put all the bonus money I received from work into paying the debt.

7. I even called the bank to ask for a special installment plan…and yes, they gave me one.

With all these things– I was able to clean up my entire debt in 8 months. 40K from all the payments I made, and the rest was from the bonus money I got from work.

It was a lot of work but there is no feeling greater than that sigh of relief from being DEBT FREE.

Credit Card Smarts

Posted in debt, obstacles at 5:45 am by kimsan23

Do you really need a credit card? Credit cards or plastic money is definitely an avenue to numerous spending temptations. You pay using plastic, you initially do not feel the strain on your budget. A few years back, I was deep in credit card debt. I didn’t know how to use it all too well and I ended up using one half of what I earned (which wasn’t much at that time) to pay off my card debts. Luckily for me, I always paid on time and had an excellent credit standing. Still, the hassle of having to pay a debt every month, the pressure of having to earn enough to pay a debt and the need to provide other basic necessities just made me go nuts at a certain point.

Define the purpose of you having a credit card:

1. My primary purpose in having a credit card is to keep myself from carrying a lot of cash on my person. It’s dangerous to have lots of money at one time.

2. I want to establish a good credit ranking with my bank so that if I would need to take out any loans, I’d get a speedy approval.

3. I would have the capacity to buy things online.

4. I can also buy things on installment, and most of the time– with zero interest as long as I pay on time.

5. I can use my credit billing and payment record to apply for my own phone line, cable, internet and other services you may need or want to avail.

6. I have something to use in case of spending emergencies like hospital ER bills etc.

As soon as I cleaned out my old credit card debt (taking side jobs here and there as well as making lifestyle changes read Dealing With Debt) — I’ve decided to follow some simple credit card spending rules.

1. Assign fixed expenses to your card like utility bills, groceries and other constant spends. This will help you to put aside money for these predicted expenses so that you can pay for them in full when the card bill is due.  This is also a great way to earn credit card rewards points!

2. For big purchases, always check your financial record to see if you can afford to put them on installment through your credit card. Check for interest and other payment plans before buying. Make sure that you have the income to pay for the installments.  Zero interest is the best!

3. Always PAY ON TIME to avoid late fees.

Do not:

1. …spend money that you do not, and will not have in the next 3 months.

2. …buy compulsively.

3. …always pay the minimum balance.  This will ruin your cash flow because interest charges will pile up.

4. …max out your card on shopping sprees if you do not intend to pay it all off immediately or in big chunks.  You might need emergency credit and not be able to use it.

And if you owe money to a card company. DO NOT HIDE.  Hiding will get you into trouble, but being transparent and striking a deal with them will help you pay your debts.  Hiding will result in your having a bad credit record.  When you apply for a new card or for a loan — you just might get denied.

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