My Financial Corner

Four Main Occupations That Unsafe for Us

Bellar — Thu, 01 Oct 2009 12:34:07 +0000

Are you a successful director of one big company, or a dentist with a lot of patient queue every day? Or do you own one success textile factory? Are you a smart investor with a lot of blue chip stocks on your hand? If your answer is YES, then I expect you are thinking that your current occupation is the safest occupation in the world.

A lot of people doesn’t always aware that everything changes fast in hidden, as someone says the only one thing that never change is the changing itself. So, in this article I want to remind again four main occupations that unsafe for all of us.

Those occupations are:

1. Employee

Whether we are just an ordinary staff in small company or competent director of big company, our job is not secure for us. Someday, economic recession can hit our serviced small company and need to cut their budget or even bankrupt. If we just ordinary staff with average performance, we may get into the list of fired employees, and we will lost our job. Or maybe we are a very competent director and economy is getting well, then our company has a merge with other bigger company with other very competent and strong backup director candidate from other merged company, I guess that we must ready to quit our director position.

2. Self Employed

Let’s say about owning one small fast food outlet, with sufficient visitor every day, in the corner of busy road. Then one day, for instance, one 100 meters prohibited parking beacon is placed right in front of our outlet. People who used to visit our outlet are hard to get parked, and we lost our visitor that means lost our income. Another example is a professional doctor, some unintentionally malpractice can be happened, and for sure we lost our job and income.

3. Rich Entrepreneur

Don’t we remember Charles Schwab, Arthur Cotton, Leon Frazier, or other rich persons who got bankrupt because of a lot of reason? They have some golden period of glory, but have to die in poverty.

4. Investor

There are a lot of very smart investors in NYSE, but got stress and bankrupt during recent US stock market crisis. Nobody can expect such crisis, that’s a “Black Swan” (I use terminology popularized by Nassim Nicholas Taleb for unexpected big phenomenon with big effects), and none of investor is safe from this occurrence.

Wauw, in fact those four occupations have encompassed all occupation in the world! Means, there’s no really safe occupation in this world.

So why some rich people still rich after deep recession while others are bankrupt, or why one “nobody” is able to become a rich people just in several years.

The answer is simple:
1. They always prepare for the worst thing in their life, business, or career.
2. They always try to learn something new every day, make some innovation and leading.
3. They do good assets allocation.
4. They have multiple streams of income.

This receipt will make us survive in the heaviest situation, and growing pass through the continuous changing in our life.

Tags: occupation

Personal Finances – Where Are Our Position?

Bellar — Tue, 29 Sep 2009 17:03:38 +0000

Marshall Silver in his book Passion, Profit, & Power, describe fantastic facts about money distribution among all society. These facts are:

50% of world’s money supply is kept by 1% only of world’s population.
90% of world’s money supply is kept by 5% only of world’s population.
95% of all population only keeps 10% of money supply.

He also predicts that if all money supply is equally divided to all population, everyone in this world will be categorized as rich people. But, it will not take any longer time, since within 5 years the composition of money distribution will be back to current composition.

Refer to this fact, I should ask myself about my position, where am I? The sadly answer is, in fact I am categorized as one of 95% of world’s population who own small part of only 10% money supply. How about you?

There are several reasons behind this fact:

Weird thing but its real, that mostly people are feel comfortable to become a part of 95% “unlucky” population, trapped in our own comfort zone and lazy to think, except millions of very poor society among under developed countries who fight and struggle to keep them still alive. Almost of us always say that we don’t have enough money, but deep in our heart we are enjoying this financial game. Let’s take little deep reflections about this argument; don’t you have similar opinion with me?
When hold money, only 5% of population ask the question, “How can this money makes more money for me?” On the other hand, other 95% will ask, “What can I buy with this money?” This difference of financial insight makes Marshall Silver’s prediction seems going to be accurate.
Mostly people is always thinking “in the box”, but few people innovatively thinking “out of the box”.
Not for excuse purpose, current capitalism system has brought wide opportunity gap between rich people (5% of population) and average / poor people (95% of population). Superior people have wide opportunity, but vice versa for inferior people.

I am sure that almost all of you already known this fact. The purpose of this article is just to remind us again, to make self-analysis: where are our position?

And if we have 5 years future life from now on, at which position we want to be?

I already had my own answer. How about you?

Tags: Personal Finance Management

Basic Understanding of Leasing Transaction

Bellar — Mon, 14 Sep 2009 02:59:09 +0000

Even though term of Leasing often used by most of people, but actually only limited people who really understand the definition and role of leasing, especially equipment leasing. Leasing transaction is considered as a quite complex transaction in term of tax and accounting. Even daily practitioner sometimes get into some confuses and cause additional cost for their lessee due to it’s complexity. Moreover, different country usually has different legal and tax regulation related to leasing, so that leasing practice in one country may not be valid in other country.

Even though there are some complexities in practice, but basically leasing has similar nature regardless prevailed regulation in any country. Basically, leasing transaction can be separated into two main categories: financial leases and operating leases. Financial lease represents a longer term lease commitment in which the sum of the rents due will approximate the equipment’s purchase cost plus profit of the lessor (full pay out). Meanwhile, all lease transaction which is not fitting with the financial lease can be put into operating lease category.

Within the two broad categories, are some basic variations. The most popular variation in major Asian countries is leverage lease, beside other service lease and non leveraged lease. These variations are sometimes incorrectly considered to be separate types of leases rather than descriptive forms of the basic types. For example, finance leases can be leveraged leases or non leveraged leases, and service leases can be financial or operating in nature.

This posting will briefly explain three of leasing categories, ie financial lease, operating lease, and leveraged lease.

1. Financial Lease

Financial leases are considered long term leases because the primary lease terms usually run for most of the equipment’s useful life. Typically, the total cash flow over the term—from rents, tax savings, and the end-of-lease equipment (residual) resale or re-lease value—will be sufficient to pay back the lessor’s investment, take care of the administrative expenses, pay off any equipment-related debt obligations and commissions, and provide a profit (full pay out).

Because they are entered into by lessors as long-term financial commitments, finance lessors usually impose a substantial repayment penalty for a lessee’s early lease termination in an amount that will assure the lessor of a return of its investment and a profit, at least up to the date of termination.

Under financial lease, the fundamental ownership responsibilities, such as maintaining and repairing the equipment, paying for the necessary insurance, and taking care of property, use, and sales taxes, are placed on the lessee. So, financial lease can be compared with loan in that the lessor, like a lender, is involved only in asset funding.

In financial lease, lessee bears a major risk of lease item obsolescence, so that common lease item in financial lease are the items which has quite significant resale value compared with it’s brand new price.

2. Operating Lease

When full pay out condition is not fulfilled in lease transaction, the lease is called an operating lease. Operating lease can be span a few months to a few years, although some are as short as a few hours.

Because the lease terms are relatively short, an operating lessor usually cannot earn much of its equipment investment back through the rents from one lease transaction; thus, it must either sell or re-lease the equipment on attractive terms to be profitable.

Their short lease terms and easy cancellation provisions make operating lease attractive to users in several situations, especially if the user has planning to use the lease item in short period only. For this kind of transaction, it seems similar with rental transaction.

Other benefit for using operating lease to lessee is if residual value of item is very much depreciated or the item is related to fast changing technology. By using operating lease, the risk of obsolescence is born by lessor instead of lessee. So that, lease rent of operating lease is usually higher compared with financial lease.

3. Leveraged Lease

Both financial lease and operating lease can use this kind of variation. In a leveraged lease, lessor only cover some major percentage of purchase amount, let say 60% up to 80% of it. This leveraging generally enables lessor to provide a lessee with relatively lower rents while at the same time maintaining its return.

This kind of lease transaction is commonly used in Asian countries. Since the country risk is considered higher compared with other developped countries, lessor only take some portion of financing, and lease term will be set for shorter period (usually 3 years only). As consequence, credit risk will be lower and lease rent doesn’t reduced significantly due to shorter lease term.

There are a lot of variation of lease transactions, but in basic those three lease categories already covered the definision of leasing.

Tags: lease, Leasing

Forget Our Money for Enjoyable Retirement Age

Bellar — Mon, 07 Sep 2009 01:08:47 +0000

I believe that nobody wants to burden their children or family, if they have, when they are getting old and cannot make money anymore, and I also believe that everybody want to have their enjoyable retirement without any worry about their financial life. So, if we now having sufficient active income to cover all monthly household budget and can set aside a part of them into saving, lets calculate the amount to be saved for our retirement age. After calculation, its good if we can fulfill our monthly saving for this purpose, but we have to make efforts to save less amount even though by calculation we find out that too much money have to be saved for financial-free retirement.

Let say our calculation resulted $500 monthly saving, but from our current monthly income, seems that we will only be able to save $100 for our retirement. Don’t let this $100 cancel our intention to the retirement, but just easily start with $100. It will be better instead of surrender then we don’t even do any saving and all will be disappear.

Since saving purpose for retirement age is long-term habit we have to do, the handling of this money a little bit differs from other purpose. I try to give some clues how to handle this kind of saving :

Just start with choose well reputable bank with long experiences as a place to save our money, even though they offer lower interest rate. During uncertain long-term economic situation, a lot of small to medium bank will face difficulties once upon a time, and I think we don’t expect to get into hurry, queued at bank’s teller with other thousand of people, just to get our money back. Long established big reputable banks usually have passed several similar time, and time has proved their ability to overcome hard situation.
If we have found the bank, open one saving account under our name. This will become a special and particular saving account for retirement purpose, separated from others. Don’t to apply for any ATM card which can make us to withdraw the money easily, but just keep the saving book. Save our $100 every month, then forget our money as if we don’t have any saving at all !
Do similar thing every month at the beginning of the month (remember, don’t do it at the end of the month or we will oftenly find that we have nothing to save). If in the future the amount of money we can save is increased (let say become $150), then increase our saving amount, and also forget it for long period.
Slow but sure, we will have significant amount of forgotten money, and bank pays some interest to us. After several years, let check our saving balance and judge whether the amount already sufficient to be converted to time deposit or not. If the amount is sufficient, then convert them to time deposit with monthly roll over (please use monthly roll over instead of semester of yearly roll over, even though under lower interest rate).
We will have one time deposit certificate and one saving book then. Nicely forget our certificate, by place it in our safety box. Start again to save in our saving account from zero balance amount.
Please do it as a habit instead of an obligation for us. Do it for years with discipline, increase monthly saving amount step by step. After more than 10 years, we will have several certificates and one saving book.
If the amount already quite huge, and I expect our age already 45 or 50 years, try to find one good mutual fund, fix income mutual fund is better, and invest our money amount. Let the fund manager manage our money, and just forget it for 10 years. Meanwhile, keep continue our habit to save any amount in our saving account, still; convert them into time deposit when the amount already sufficient.
At the beginning of our pension age, we will have one saving account, several certificates of time deposit, and also mutual fund certificate. It’s a time to use them for our remained whole life. Post them all back to our saving account, and I believe we already had significant money amount for enjoyable retirement age.

This kind of scheme shall be implemented in flexible ways, and for sure we will need financial calculator to review time by time how many amount we have to set aside for securing our pension age.

So, forget our money, and enjoy our retirement age then !

Tags: retirement, saving

One Million EC Contest – List of Sponsors

Bellar — Wed, 02 Sep 2009 03:11:57 +0000

One Million EC contest, one of the the biggest Entrecard contest just started a while ago. As one of the sponsor, I have to attach the list of all sponsor in my posting every month.

So, here is the list. Just enjoy the game to everybody who participate in this contest, both sponsors and participants.

25 $ cash prize from

Business Sphere – Business Advice, Entrepreneurship, Consulting, Real Estate

20 $ cash prize from

My Financial Corner

15 $ cash prize from

10 $ cash prize from

5 $ cash prize from

25.000 EC

EzGreatLife – Family, Fitness and Finances

20.000 EC

15.000 EC

10.000 EC

7.000 EC

5.500 EC

Guilty Pleasures

5.000 EC

4.500 EC

OTHERSIDE of my LIFE

4.000 EC

3.500 EC

3.000 EC

2.500 EC

2.000 EC

1.500 EC

1.001 EC

Time!

1.000 EC

500 EC

125 x 125 ad space (4 months until 31st December)

125 x 125 ad space (3 months)

Text Link ad (3 months)

Better Interpersonal Communication

125 x 125 ad space (2 months)

Text link ad (2 months)

Work At Home (worth $ 50)

Text Link Ad (1 month)

After cancer, now what
Gossip Mom (5 text links!)

468 x 60 ad space (1 month)

The Nexus – Feed your brain

125 x 125 ad space (1 month)

Blogmakeover

Momgen Designs

Blog review (200 – 300 words)

Customized Bloglayout (Blogger-Platform)

my Web-Blog Designs

DOMAIN (1 year)

LAINY’S MUSINGS

5 GB Hosting space (without domain)

angelic-melody.net

My own contribution (if someone beats my contribution, i have to top up ):
25.000 EC + 1 ad space Cornymans Moneypage
25.000 EC + 1 ad space Cornymans Blogreviews
25.000 EC + 1 ad space All about babies and kids
25.000 EC + 1 ad space The One Minute Guide

Tags: EC Contest

Why Retirement Planning is Important ?

Bellar — Tue, 01 Sep 2009 01:22:23 +0000

When we are talking about retirement, a lot of people especially young men will think that this issue doesn’t so important, or even never been in their mind, since we have to talk something far in the future. In nature, people like to live and think for today, instead of thinking about something unclear, moreover if the issue is 25 years ahead from now.

But, on the other hand, all financial advisor always ask us to think and make some personal finances planning for our retirement age. Why this topic is crucial as one of our financial mission ?

For us who still enjoy your 20th years period of our life, we may think that retirement planning is something that can wait. So many thing to do and to think such as social life, romance, entertainment, and other ways of enjoy the life. Then, there’s a time when we get old and start to think about our retirement. At that time, may be the planning is too late and we have to work very hard to achieve our goal.

So, how important is retirement planning for all of us actually?

Let’s find the broad and simple answer. Assume that we started our career at our 25 years of age, then how many years time we have before retired? Up to 55 years old, there will be 30 years. Yes, we have 30 years to prepare. After that, if we can live up to 75 years old, how much time we have to spend without any significant income but just continuous monthly expenditure ? 20 years.

It means, we have 30 years to secure our next 20 years life (2/3 of productive life period). To be emphasized here, 20 years is not a short time, and at that time we will need something to spend for our daily life.

So, begin our retirement planning on 40 years of age is little bit too late unless at that time we have quite huge income to allocate. But, who can grant that our 40 years age will become our financial golden age ?

If we now 25 years old, and have 30 years to prepare our another 20 years life, I think such 20 years is quite important and fair to be included in our life planning. Otherwise, we will burden our children or family when we get retired without sufficient amount of money to spend.

So, just keep invest our money when we are young. If we are still under 20 – 30 years period of our life, we can learn all investment instrument and don’t be scared to take some investment risk. When we are under 40 – 50 years period, please calm down and save conservatively. Just bear in mind, that we will have long 20 years road to walk when our body is too weak to work, our brain is too tired to think, and the most appropriate thing to do just to enjoy our life.

Personal finances is sacrifice something in our current life for our better future life. Just make it as a natural process, enjoy our today’s life but also make a plan for our future life, so we will be able to enjoy our whole lifetime. That’s a dream of every human being, isn’t it ?

So, once again, retirement planning is important just because we all want our whole life become enjoyable and valuable for us.

Tags: Investment, Personal Finance Management, retirement, savings

Personal Finances – Blogs Resume #1st Edition# – August 31,2009

Bellar — Mon, 31 Aug 2009 01:40:31 +0000

The posts are related to personal finances issue :

1. Deposit Accounts presents 5 Ways Credit Unions Beat Banks posted at Deposit Accounts.

2. Jenny presents Stop The Credit Card Madness posted at Stop Spending Money.

3. Billeater presents How To Avoid The Dangers Of Debt Consolidation Loans posted at Billeater.

4. BWL presents Cash for your Old Appliances? posted at Christian Personal Finance.

5. MatthewPaulson presents What to Look for Other Than Interest Rates with an Online Bank posted at American Banking News.

6. MatthewPaulson presents College Debt – Work Study a Unique Solution posted at Fine Tuned Finances.

Please enjoy it !

Tags: Personal Finance Management

Some Tips with Our Credit Card

Bellar — Wed, 26 Aug 2009 23:46:32 +0000

I believe that all of us have more than one credit card issued by several banks. As one of the most flexible way of payment, credit card is widely used in many transactions all over the world. Just swipe our card, no cash money, and we will get what we want !

Then, at the end of the month, some people will become headache because of incoming credit card bills, even bring them to personal bankruptcy. For those who still able to pay minimum payment amount, they can postpone life difficulties because of huge debts, but it’s just another time will come with bigger debt pressure, unless they can well manage utilization of credit card.

For sure, just thrown away our credit cards and not use them anymore is not a proper solution under current less-cash world. What we have to do is a good personal finance management of our credit cards.

Here are some tips that we can do for better utilization of our credit cards, to avoid getting mad because of their bills :

1. Bear in mind that credit card is not a debt facility

A lot of people forgot to use credit card as their main purpose for flexible payment method, but just swipe card for another debt which cannot be fully paid at the end of the month. One underlined mindset in using credit card is, please treat them as a tool of payment only, which has to be paid with your current routine income or future expected income. So, when we see any interesting things to buy or to pay using credit card, think over and over again whether our income can cover that purchasing or not. Implementing this rule effectively, then we will become credit card debt free.

2. Use several cards for different purposes

Lets say we have three credit cards on hand. Just allocate utilization of each credit card for different purposes. For example, credit card A is utilized for monthly household budget which is covered by monthly income. For this credit card, our payment shall be 100% of billing amount, so we don’t have any future obligation or interest paid. We may use credit card B for entertainment and traveling. For this credit card, we can choose whether to pay 100% of monthly billing by our allocated saving or pay a part of billing amount now and settle all obligation when we receive our future expected income (such as yearly bonus, project disbursement income, etc). Credit card C is utilized for purchasing household apparels or electronics, and we can order our bank to switch payment method to 6 months or 1 year installment type. Then, allocate some monthly budget to pay them. Please be careful to make sure our monthly income can cover all installment.

3. Pay more than minimum amount every month

For credit card B, please pay more than minimum amount every month. Since we don’t do traveling or unordinary entertainment every month, in the next month our bill amount will be reduced. If we continuously pay as much as we can more than minimum amount, at the end billing amount will be less significant compared to our budget. In accordance with personal finance management, the best way to do is make some saving for our planned traveling or entertainment, so we can pay 100% of billing amount with your saving.

4. Control our lifestyle

The last but not least, as general rule of thumb in personal finances, please just life with suitable lifestyle which can be fulfilled by our income. Sometimes we forget it and do a mad entertainment, mad shopping, or other mad things. When we have interest to buy clothes, just buy clothes which are match to our income. A lot of entertainment type out there, simply choose one or two type which suitable with our income. So many house apparels and electronic tools with wide range of price, just buy one which is suitable for us. If we want higher lifestyle, then just try to enlarge our income. But, if we cannot enlarge our income yet, then be satisfied with our current lifestyle.

By implementing utilization of our credit cards as mentioned above, we can well manage our expenditure and still on our track of personal finance management.

Tags: Household budget, Personal Finance Management, savings

Financial Game for Our Kids

Bellar — Sat, 22 Aug 2009 18:13:20 +0000

Giving our children the knowledge of financial matters since the beginning of their seventh age is quite crucial point to do. Starting from their sixth age, they joined elementary school, started to think, socialized themselves, and found a lot of new things in their life. At this stage, they also started to deal with little penny of money as their pocket money. Start some financial guides with attractive financial games between parents and their kids will make them to be familiar with personal finances and very useful for kid’s future life.

A lot of game is able to do, but the most easy and simple way is to inure them with management of their pocket money. Usually, we give them some money to spend every day. Why don’t we start to let them manage their money for some longer period of time ?

I am doing such thing with my child.

I have one 8 years old son, and I am dealing for long term financial game with him. Usually, his mother gives him Rp 3.000,- daily pocket money (similar with around $0.3, sufficient amount for our 8 years old kid pocket money in our country). Starting from his 3th grade of his elementary school, we give him pocket money in weekly basis instead of daily basis. The Rp 15.000,- money (5 school days times Rp 3.000,- daily pocket money) is given at the beginning of each week. We give him a freedom to manage and spend his money by himself, and just give him important point that he may not spend more than Rp 15.000,- a week.

We suggest him not to spend all of his weekly money, but set aside some money for weekly saving, which will be saved in his own moneybox. Every weekend, when he sets aside some money, he has to note his saving on one particular book, so he will exactly know the amount of his money in the moneybox. This recording shall be done by time for any saving and withdrawing from his moneybox.

The game is, for the money saved every weekend, my wife will give him additional 10% extra money of his saving amount. So, bigger saving will lead to bigger weekly bonus.

How if during specific week his pocket money doesn’t sufficient (let say, the amount already zero on thursday) ? Of course, he can take another money from his moneybox, but as a consequence, his money amount will be reduced and he will not get any extra money at the weekend.

We are doing it continuously week by week until the end of school year period (end of May). At the end of may, we will count together the amount of his money, and I will give him yearly bonus which is 10 times of his money amount.

I also give him extreme example, in case he doesn’t spend even any penny of his pocket money, his money (including yearly bonus from me) can reach around Rp 9 millions (US$ 900). He will be able to spend all money for his school vacation, buy some toys, clothes, or anything he likes.

This kind of game seems quite interesting for my son, and he always be able to save some money every weekend. The most important thing for us, he enjoys this game !

From this game, I expect several things :

He will be familiar to manage his own weekly money instead of hope some daily money which will be spend out all during the day. Naturally, it will build his insight about money management, important part of his future live when he has some income and shall make periodic household budgeting along his mature period.
This game will make him familiar with financial goals. In this game, he has short term (weekly) goal and long term (yearly) goal. All of the goal is measurable to him. Implementing this game will make him familiar with financial planning activity.
Recording of saving and withdrawing will make him familiar with accountable budgeting. He will be use to note all of his spending and income, and as the future result, he can manage his own money in an organized way.
He can learn about “money make money” rule of thumb. In this game, larger money he can save can generate larger bonus. Similar rule also happened in our real life, when time value of money is happening, our bigger money will cause bigger passive income from some investment.

Of course, in this game I never and will never push him to save as much as possible from his pocket money, but I prefer to let it done by natural way. As long as this game still enjoyable for him, it will be good learning of personal finances, since we are trying to build his way of thinking about money, instead of the amount of money itself.

I believe, implementing some financial games to our children, and do it in natural way, will give a lot of good impact and benefit for their future lives instead of giving them a lot of money, since the art of money management is not built by amount of the money, but more by their pattern of thinking about money.

Tags: Financial Education, household budgeting, Personal Finance Management

Step by Step Easy Tips for Best Auto Financing

Bellar — Sat, 22 Aug 2009 01:57:17 +0000

Buying a new car for personal uses is the thing we usually do periodically, in line with increasing of our income and lifetime period of current car. It’s good if we can buy it by cash, but in most case we have to buy it by using auto financing due to limited cash on our hand.

Instead of get rush going to car dealer and experience unexpected bad things after that, here is some easy step by step tips to do for best auto financing :

1. Set up maximum monthly budget of loan repayment

Setting up a budget is important thing, to ensure our capability in making good loan repayment. Once we have certain amount of fixed budget, then we can start to choose our dreamed car by choosing the one which suitable with our budget. We can do simple simulation using online car loan calculator, compare several different set of car price, down payment, and term of loan. With this kind of simulation, we have one comprehensive picture about the most suitable car to purchase under current budget. Please see this basic budgeting post if you still confused how to set up the budget.

2. Find a good lender

We can find them fast and easy by online. By sending some basic information, we can get offering from some different online lenders just in minutes. Then, make a comparison between them. Two factors should be noticed when choosing a lender. The first is quality of lender, by checking their reputation as a company comparing with other lenders, popularity among other borrowers, and variation of financing program they provide. Second thing is their competitiveness, including offered interest rate and other charged fees. Several things will determine interest rate offered by lenders, but the most dominant factor is our credit score rating.

3. Enjoying car windows shopping before auto financing approval

When we have decided a lender, just send our loan application and waiting for their approval. Usually it needs a couple of days. While waiting for the approval, we can do car shopping by visiting car dealers, collecting offering letter from them, and choose the best dealer. Once our application is approved, then we have decided from where we will buy the car.

4. Ensure that we have loan payment protection insurance

We can’t expect the future anyway. This protection is important to secure our loan repayment in case something happened to us and we cannot continue to perform monthly repayment. Some lenders provide such protection together with their financing package. If our lender doesn’t provide it, go online and find good reputable insurance company easily.

5. Maintain good repayment performance

Yes, we have a new car now. Further important thing to do is to maintain good repayment performance until the end of financing period. It’s necessary to maintain good personal reputation since today is not the end of the world. With good credit score, we can get easy loan approval from good lender for any loan we need in the future, and enjoy lower charged interest rate.

Tags: Auto Financing, Loan

The 8th Habit on Implementing Personal Finances in Daily Life

Bellar — Wed, 19 Aug 2009 13:37:23 +0000

Basically, personal finances can be divided into two broad categories, namely wealth management and household budgeting. As we all are aware about the importance of personal finances in our daily life, below are eight “MUST but DON’T” quotes related to basic personal finances to make it become effective tool in achieving our whole worth life.

Borrowing the term introduced by well known person Stephen F. Covey, I call it “8^th habit on implementing Personal Finances in Daily Life”.

Good personal finances shall consist of following actions :

1. MUST set up definite personal finances goals, but DON’T be unrealistic

Freely defined, personal finances is the way to create well organized financial actions, and to implement such actions, we need some blue print or map. The first thing to do is determining financial goals as a grand platform of all action. Budgeting deals with regular income and expenses, meanwhile wealth management deals with creating assets to financially secure ourselves. We must set our own realistic goals anyway, otherwise the platform will be useless just because too far to be reached out.

2. MUST establish certain timelines, but DON’T be too rigid

Once some future goals already set, for example: having standard house, plan some amount of cash / savings, do some investment, retirement planning, and so on, next step is determine certain timeline of each goal. The sentences may become: having $ 30,000 standard house within 5 years, save for extra fund every month with certain target amount $ 5,000 within 3 years, will make some initial investment in bond / stock amounted $ 4,000 starting from next 8 years, calculate expected fund on hand at pension age (55 years old). With this timelines, we will exactly know what action to do. But, as the future is uncertain including our financial situation, we cannot too rigid stick on that timelines. Periodic review is necessary to re-setting those goals related to future real financial situation.

3. MUST arrange positive monthly household budget, but DON’T be self-imposed

Positive result of monthly household budget is a must condition, means our monthly revenue should exceed our monthly expenses. Its important to list up all current revenues and expenses as a part of personal finances, to have clear financial picture. Once the figure is negative, try to arrange less planned spending. If after arrangement the figure still negative, means we have to create additional revenue, from whatever reasonable way. However, we have to wisely arrange our monthly budget. For instance, too much stressing for unreasonable target of saving amount will lead us to unhappy life to do, and at the worst bring us to stressful life. Be reasonable, life is not only for money.

4. MUST be serious, but DON’T be ambitious

Yes, we have to plan and do it seriously, but use our passion, not our ambition. Make personal finances become some enjoyable process, instead of focusing to ambition. Once again, life is not merely money, don’t be getting trapped.

5. MUST have some investment, but DON’T become a speculator

Investment is important. Please allocate the highest portion in liquid cash/savings which has the lowest risk, after that we can think about investment in house, gold, bonds, mutual funds, stocks, forex. Don’t become a speculator, just put the smallest portion in assets with the highest risk.

6. MUST have a credit card, but DON’T lost control

Credit card is important as a tool of payment, but don’t consider it as loan facility, otherwise we will suffer in debt trap. Make sure we can allocate some significant amount to pay our credit card bill at the end of the month.

7. MUST take some loan facility, but DON’T create bad credit record

If we are worker, quite impossible to buy house by cash, so take loan facility to buy it. Take other loan to buy vehicle. In case we have established certain prospective business, get loan to make it grow faster. But before we take some loan, carefully calculate our capability, since we have to avoid bad credit record. Reputation is important to maintain trust from our society.

8. MUST have life and health insurance, but DON’T forget to keep us fit

Health insurance is important to protect our wealth from elimination caused by unexpected occurrence (hospitalization, medical surgery, etc), and life insurance is quite important for person with dependence (wife, children). We cannot expect our destiny, so we have to secure ourselves and the ones who we love. Anyway, don’t forget to maintain our fitness with regular enjoyable sport.

Life is valuable thing, and personal finances is important pillar to make it enjoy. So, just enjoy our valuable life with good personal finances planning.

Tags: Household budget, Personal Finance Management

Personal Finances is Just Another Game to Play instead of Scary Thing !

Bellar — Mon, 17 Aug 2009 11:09:42 +0000

A lot of people think that implementing personal finances in our daily life will bring us to desperate times because the scary imagination. For many people, thinking about personal finances are quite similar to dealing with rigid budgeting, sacrificing our hobbies, talk too far away of the future, hardly comparing household budget vs income, or even sacrifice our current life.

As a common basic sense, the most preferable thing for all people is a freedom, including freedom to spend our money for anything we like.

Yes, I really agree with this insight!

Just to summarize my basic idea of personal finances, let me back to several previous posts which already published.

First post Basic Personal Finances – Initial Road to be Rich ! emphasizes that definition of financial freedom or getting rich is different between one to another person, because any individual has unique perception about life and how to achieve our happiness, basic purpose of the life. It will take effect to someone’s perception about money and financial related matter.

Second post Start Your Step to Implement Personal Finances repeat the message once again, and then emphasizes to make financial goals based on needs, not desires. In this step, we try to keep ourselves in well-organized financial track rather than let ourselves out of control. Simply say, this way can make our money and assets becoming positive tool to achieve our personal basic purpose.

In other two posts Personal Finances – Let’s Determine Priority ! and Financial Advice – Systematic Personal Finance Budgeting, I tried to explain more about implementation of the first and second posts, and we were dealing with basic idea of household budgeting.

Before continuing with other future postings, I would like to well explain my basic idea about personal finances. In my point of view, personal finances including budgeting, saving, and all of the planning we make is supposed to be one of the way to make us happy, not the one which will hurt our life. Simple lesson of life, the final ultimate goal in our life is to enjoy the life itself. So – for example, too strict budgeting will bring us into suffering and eliminate our freedom to enjoy our meaningful life. The right thing to do is just make personal finance as a game to play, not a rigid guidance to follow.

But, on the other hand we cannot stick our steps on opposite side, spend our money without any planning and controlling. It seems valuable for short term, but in fact we go to another direction of life instead of long term happiness.

Actual fact, we need some personal finance management in our life, as a benchmark to pursue our main goal, but not as a rule which monitor our whole life. So that, personal finances is theoretically rigid, but should be implemented in flexible way to bring best result for our life.

So, how to make personal finances as a game ?

One simple example is about monthly household budgeting. Under some amount of current income, we can generate some amount of saving for short term or long term purposes. The rigid one is, we shall treat very strict saving for our short term, urgent, and important upcoming needs, since neglecting them will make us very suffer. If we cannot do that thing, means hard effort is needed to increase our monthly revenue.

On the other hand, we also have long term goals or purposes. We can be flexible enough with this kind of purpose. For some persons who love to do strict household budgeting, then strict budgeting is the choice. But other persons may be have another opinion regarding the way to enjoy life, so flexibility will make them enjoy.

If strict household budgeting seems hurts our life, we may think to implement flexible budgeting, by putting some month to month budget range. For example, we can averagely save 50 for our long term purpose, so just make a range between 40 to 60 or 35 to 65. May be this month we have some interesting things to do which needs extra budget, and we can allocate 10 or 15 more extra fund for our short term purpose. Next month, when we have less things to do, we can allocate more 60 or 65 budget into saving.

Implementing this way, we will feel personal finances as another interesting game to play, instead of tons of disgusting rule which burden our life.

Finally, just have a nice game !

Tags: Household budget, Personal Finance Management, Saving Money

Financial Advice – Systematic Personal Finances Budgeting

Bellar — Sat, 15 Aug 2009 16:14:51 +0000

Once we already had well organized personal finance management with several short term and long term goals, personal finance budgeting will be another story to do. Whatever our job, whether professional, employee, businessman, usually we get our income in monthly basis. Self employed person may take some portion of daily profit to cover their daily household expenses, but the best method to organize our fund is only by making separation between revenue from business (which is earned every day) and set up our monthly household budget (by set aside some specific amount from business profit once a month).

Let assume we have organized our income to be generated once a month. We have several needs and goals and must allocate our income based on them. Based on their urgency and significance, usually people organize their expenses from very routine ones to un-routine household expenses.

At the first line is regular monthly household expenses, followed by allocation for credit card and other credit payments. Education of children will be on third priority, and after that can be continued by routine entertainment, retirement saving, vacation saving, and so on.

As income and expenses already well estimated before, then we are sure that our monthly income will be able to cover our monthly household expenses including several particular savings. Yes, we have done a good personal finance budgeting !

Now, what we have to do is making some systematic budgeting to implement or personal finances planning. In accordance with that, there is financial advice as described below:

Arrange allocation at the beginning of the month when we just received our monthly income, and make sure that all is balance for incoming month. For this purpose, we have to check our credit card incoming bill and plan the amount of payment for this month. Also scrutinize whether there is un-routine household expenses or not. For instance, child education will need additional expenditure in specific months such as purchasing of new books, two times monthly school fee before school vacation, etc.

Don’t wait to pay all credit installment or credit card bills until their payment due date, but pay them at the beginning of the month when we receive our monthly income.

Make weekly review at the end of every week. Just spend one hour of our valuable time on the week end to check all household expenses. In this part, sometimes we will find too much expenditure of the week compared with planned expenditure. With this review, we assure ourselves that our implementation of budgeting still on their track.

If possible, please keep any receipt of every expenditure transaction. This will help us to trace all expenditure when we do our weekly review. For several not significant amount of regular expenditure, just provide some petty cash in our pocket at the beginning of the month, and we can check remained amount of our petty cash every week.

Make monthly review at the end of the month, check realization of our personal finance budgeting of the month, whether it’s in line with the planning or not. If not, we can mark several unexpected expenditure which increase the budget amount, and find that such expenditure is really important expenditure. If excess expenditure is coming from un-necessary things, take it as a learning for up coming month’s budgeting (I understand that control our lifestyle is not an easy job, but just try to do our best for that).

By implementing this financial advice, we will be able to do systematic personal finance budgeting as a part of general personal finances matter, and as the result we can control the track of our monthly expenditure, to make it as close as possible with our planning.

Tags: financial advice, Household budget, household expenses, Personal Finance Budgeting, Personal Finance Management