Saving Hacks

Posted on March 16, 2012 by donbagsit in Saving Money | 1 Comment

Want to speed up filling your savings basket? “When you are out during the day, don’t spend money you get as change. Then, after you come home and are ready to make contributions to your basket/account, be sure to include all of those unspent money along with your coins.

These are called “hacks.” Here are some of money-making and saving hacks to help you save more or spend less.

Saving More
Take your discipline completely out of the equation by automating your savings. Save before you see the money by transferring it automatically from every paycheck into savings. Instead of trying to find the money every month, you set it once and watch the money pile up. Saving automatically is more efficient and more effective. If you take the traditional approach—waiting until you’ve paid all your bills before saving what’s left—there’s often nothing left to save. There’s a reason “pay yourself first” has been the mantra of the money-enlightened for decades: It works.

Paying Your Bills on Time
Most banks offer automated bill payment you can set up online. Utilities and other companies offer this service too, and might waive convenience fees or offer discounts for the right to suck money directly from your account. If your monthly bills include debt payments, automatically pay more than the minimum to work off debts faster. Minimum payments are for losers.

Create a Budget
Traditional budget worksheets are a thing from the past. It’s time to throw out the paper and pencil and let your computer or phone do the heavy lifting. Use a free service like web saving softwares/apps to establish goals and automatically track your spending. For even more convenience, look to the dozens of apps—many free—that can put your computerized budget into the palm of your hand.

While tracking and analyzing your expenses is the only way to know if there’s really any money hiding in your budget, the time-honored technique of using a change jar is a low-tech and simple way to save. When you come home, simply empty your pockets or purse of change. Start doing this and the amount you’ll save might surprise you. Try it.

Things You Should Stop Paying/Buying

Got a tight budget? Start using coupons, search for discounts or buy items you typically purchase at lower-cost. But if you really want to get big savings, consider cutting out products and services you really don’t need.

A lot of things can be eliminated, and you can do it without sacrificing convenience and your quality of living. Here are some basic things you can stop buying just to give you an idea;

Coffee Visits
Buying a cup of coffee every day can burn quite a lot in your wallet depending on what coffee you drink. A small cup of brewed coffee from Starbucks costs around Php 100, which equals Php 500 a week if you buy one cup a day or Php 1000 if you buy two cups a day.

A better alternative is to brew your own. You can buy cheap ground coffee at your local market for about Php300 (depending on where you buy it, cheaper in Batangas though =) ), and that brews about 200 6-oz. cups (or 400 12-oz. cups).

Landline Phones
You could make calls on your cellphone, or take advantage of free calling services. For instance, Skype provides free calls to other Skype users and free video calling (in which you talk face-to-face with live video).

Incandescent Light Bulbs
It’s “greener” to switch to energy-efficient light bulbs and can also save you money on your electric bill in the long run. Although it will cost you a few more up front, replacing one incandescent bulb with a CFL bulb will save Php 1000 or more over the lifetime of the bulb, and changing five bulbs will save Php 5000 or more over the lifetime of the bulb. What’s more, CFL light bulbs last at least six times longer than traditional incandescent bulbs.

Disposable Water Bottles
Whether you’re heading out to the gym or packing your lunch, it’s easy to just bring a disposable water bottle in your bag. But those water bottles can really add up, even if you buy them in bulk. To save money, skip the disposable bottles and buy a reusable water bottle.

Baggage Fees
These days checking-in a bag for a flight can cost a some money. If you’re a frequent flyer, avoid the fee by packing your things in a carry-on, or consider sharing a check-in bag—and splitting the fee—with someone you might be traveling with.

You could also choose to fly with an airline that does not charge for checked bags. Some airlines accept the first two checked-in bags for free, as long as they’ll not exceed their free limit for each.

Things You Shouldn’t Do With Your Money

Posted on February 22, 2012 by donbagsit in Spending Money | 2 Comments

Borrowing From Your Retirement Fund

The money you take out of your retirement fund is pre-tax, but when you pay it back it will be with money you already have paid tax on. And when you withdraw the money in retirement you’ll again be taxed.
There is a risk if you lay-off, or switch jobs, you typically must pay the loan within a few months. If you fail to do that, the loan is treated like an early withdrawal.

Being a co-maker

If someone asked you to co-sign on his loan, you are agreeing to be the payer of second resort. If the borrower failed to pay, the lender has every legal right to come after you for the money.

Who ever the borrower is, you can’t afford to be an accomplice to someone else decisions.

Getting a Long-Term Bond Fund Investment

Direct investment in an individual bond that you can hold to maturity and be assured that you’ll get your principal back, a fund has no finite maturity date and most funds are actively traded.

Around today is a risky time to invest in bond funds that hold long-term bonds. With low interest rates, we all know that sometime in the future rates must go up. When interest rates go up the maturity of a bond will take longer and the bigger the decline in its price. Bond prices move in the opposite direction of yields. When yields rise, prices will drop.

If you own an individual bond you can make the decision to hold on until it matures and receive all your principal back. But a bond fund may sell bonds at those lower prices, resulting to principal loss.

Your Child as a Life Insurance Beneficiary

Benefits cannot be paid to minors. Make this mistake and your heirs will end up in court and have a judge ultimately oversee how the funds are disbursed. It’s easy to make sure this doesn’t happen: Set up a revocable living trust and make the trust the beneficiary of your life insurance. In the same trust you will spell out that the proceeds are to be used for the benefit of your child.

Forget About the Four Essential Documents

Don’t forget to always have this;

A Will
A Revocable Living Trust
An Advance Directive spelling out your wishes for medical intervention if you are ever unable to express those wishes yourself, along with a Durable Power of Attorney for Health Care in which you designate who will advocate on your behalf according to what you lay out in the Advance Directive.
A Power of Attorney for financial matters that includes an incapacity clause. This will allow the person you choose to step in and make financial decisions on your behalf in the event you become incapacitated.

Overcoming Obstacles

Posted on February 10, 2012 by donbagsit in Building Your Asset | Leave a comment

There are five reasons why even a financially literate person can’t still develop an abundant asset column and not succeed:

Overcoming the fear of losing money. The fear of losing money is real and everyone has it. Fear is not the problem but how to handle fear and how to handle failure. Failure can make you stronger and smarter by turning this failure into an opportunity. Failure inspires winners and failure defeats losers, winning means being unafraid to lose. If you want to be rich you must be focused, not balanced. Balanced people go nowhere and they stay in one spot. Put a lot of eggs in a few baskets. Most people diversify and put their few eggs in a lot of baskets.

Overcoming cynicism. Our doubts always paralyze us and do nothing. We fail to move forward maybe even just move. We always want to stay safe, even let opportunities pass. Cynics criticize and winners analyze. It takes courage to overcome our critics.

Overcoming laziness. Busy people are often the laziest. They’re too busy that they make it an excuse to avoid something they do not want to do. That’s the most common form of laziness. Saying “I can’t afford it” is a form of laziness, saying “how can I afford it?” motivates.

Overcoming bad habits. Our life is a reflection of our habits. Have a habit to save for yourself first before paying your bills. If you don’t have enough funds to pay your bills, make it as your motivation to find ways to increase your funds.

Overcoming arrogance. Arrogance is ego plus ignorance. Stop doing what you’re doing. Assess what is working and what is not. Stop what is not working and look for something new to do.

Two Types of Investors

Posted on February 6, 2012 by donbagsit in Building Your Asset | 2 Comments

There are two types of investors.

The most common type is an investor who buys a packaged investment. They call a retail outlet such as real estate company or a stock broker and buy something. (From the small-scale food carts to franchising big brands like Jollibee).
The second type of investor creates investments. This investor assembles the deal. If you want to be this kind of investor, you first need to develop these three skills;

Find an opportunity that everyone else has missed. You see with your mind what others miss with their eyes.
Learn how to raise capital other than from a bank.
Associate with smart people. Work with or hire people more intelligent than you.

Financial Intelligence

Posted on January 17, 2012 by donbagsit in Building Your Asset | Leave a comment

Saving money every month is a very good idea, the problem is it blinds the person to what is happening. You’re too focused on saving that you let opportunities pass. It causes them to miss these great chances for a much more significant growth of their money other than just saving.

A good investor knows when there is an opportunity.

When the economy is bad, people are in panic, they sell items almost giving it away just to make sure that they have the money to survive. Because people were giving things and properties away at a small price this is your chance to buy, a perfect time not to save but the best way to invest.

It is the very best opportunity to invest when the economy is terrible, every one is selling with very good and some impossible deals.

Investment opportunities come and go. The economy and the market goes up and comes down. It crashes and will eventually improve. The world is always giving us opportunities everyday of our lives, but all too often we fail to see them.

If people lack financial intelligence then they must just follow what other people do, which is to play safe, diversify and only invest in secure investments. The problem with “secure” investments is that they are often made to be safe that the gains are minimal. As what we have posted before about saving money in the bank and how little it will grow, it is safe but the gains are almost negligible.

The greater your financial intelligence, the easier it is for you to know whether a deal is good. It’s this intelligence that can spot bad deals or better yet, make a bad deal good. It is not gambling if you know what you are doing. It is gambling if you are just throwing away money into a deal and praying for luck for you to win, just like in the casinos.

Every “gamble” has a risk. It is your financial intelligence that will help you manage that risk and improve the odds. For what is risky for you may not be risky for your friend or from other people.

The main reason that most people are not rich is because they are terrified of losing money. Winners are not afraid to lose, losers do. Failure is part of the process of success. People who avoid risk and failure also avoid success.