12 Easy Ways to Reduce Your Expenses

The output of agricultural products is affected by weird weather and it is costing more just to get the basic items such as wheat, rice, and chili. There is, all the more, a need to trim your household expenses.  Look closely into your spending pattern and adjust your lifestyle to shield the impact of the rising cost of living.   

1. Insurance premiums: Find out if you are over-insured. Avoid paying too much for personal accident coverage because you have many friends who are insurance agents and you just want to oblige them.

2. Children: Are your children working now? If so, let them pay for their own personal expenses. You love your children but they have to be financially independent. 

3. Technology: Do take advantage of the Internet. Use email instead of telephone or cell phone.  Pay your recurring bills online. Make online purchases as far as possible. You save time and save on transport and related costs. You can also read or download books on the Net instead of buying the actual books.

4. Avoid debt: One effective way is to stop getting what you want on credit. Without credit, there is no debt and hefty interest charges.

5. Medical expenses: Apart from getting adequate insurance coverage, the best assurance to avoid medical expenses is to keep fit and be healthy. You don’t have to enroll for a gym membership, Jogging, cycling or brisk walking is even better. Instead of staying indoor, you exercise and at the same time, you breathe in the fresh air.

6. Telecommunication package: Are you able to get your Internet access provider to bundle with free local and outstation calls? You save on calls among fixed-line subscribers while you surf the Net. In Malaysia, Telekom Malaysia Berhad is able to provide packages for Internet access through Streamyx with free calls among fixed lines.

7. Food: Eating at home more often is the surest way to trim food costs. Drink water instead of sugary drinks. Moreover, home- cook food and water are good for your health.

8. Entertainment: You can cancel your subscription to satellite or cable TV. The free channels are more than enough to kill your leisure time. You can even watch movies on the Net.

9. Utilities: The key is to control the wastage of water and electricity. Whenever possible use the fan instead of the air-conditioner.

10. Car maintenance: Can you live with just one vehicle?  You will save a substantial amount on vehicle maintenance. Always inflate tires for optimum performance. I check tire pressure once a week for a better and smoother ride.

11. Shopping: Go shopping with a list and stick to the list. Do it once a week and use coupons for further savings. Buy apparel for durability and comfort and not shop for expensive brands. Do it during sales.  Get a house brand for everyday items to reduce your household expenses.  

12. Avoid bad habits: Can you kick the habits of smoking, drinking, and gambling? Just think of the amount you can save and the benefits of better health to go along with it.

Reducing expenses is to save even more for rainy days. However, it is equally important to open up more income streams. There is a Chinese saying-开源节流. It means you open up more sources and reduce outflow.      

Source: 12 Easy Ways to Reduce Your Expenses

10 Essential Things About Money

Money is a scarce resource; you need to manage it wisely to enjoy financial freedom. These are the ten things to look into to achieve financial independence:  

1.       What’s your financial position now: Are you the true owner of your wealth such as your home and your cars? Or is it the bank? Do a computation of your net worth to see if the bottom line is positive (you are the true owner of your wealth- you own more than you owe) or negative( you are deeply in debt and the banks own your house and motor vehicles). This is the starting point to take the next step – to set meaningful financial goals

2.       Set goals: The first thing you do is to design a budget. The aim is to settle the debt (if you are in debt) as soon as possible and to ensure that at the end of every month there is a surplus fund available for savings and investment. Budgeting is a balancing act. When you allocate too much in one area, say food and household expenses, you may end up not having money left for entertainment. When you try to save more, you may not have sufficient funds for essential items.

 Reduce debt: The most important objective of personal finance is to clear your debts as quickly as possible. If left unattended, interest on interest will snowball the outstanding amount to such a huge sum that you are unable to handle.

3.       

4.       Reduce expenses: At the same time, take a good look at your expenses and see which area you can trim further.  Develop good habits of sticking to your budget and avoid spending on impulse especially on material things that you want but not essential. Be smart in using credit cards.  The key is to avoid credit and debt but to take advantage of credit cards to pay less on purchases made. Settle your credit card bills promptly and fully every month to establish your creditworthiness. Live within your means to avoid debt and incurring interest. Reduce your income taxes by taking advantage of applicable deductions.

5.       Save: The surplus fund that you have saved serve two important areas apart from retirement and children’s education. The first one is the setup of an emergency fund to last three to six month’s living expenses. In case you are out of work, you are still able to maintain your living standard until you find a new job. The other thing is to save and buy big-ticket items that you have in mind like a new TV to replace the set which breaks down frequently. Save and buy is better than buy now and incur debt and interest.

6.       Build wealth: There is a quick and simple way to find out how quickly your money will grow. This is the simple rule of 72. It tells you when your money will double at a given interest rate. At 10 % it will take 7.2 years and at 6% it will take you 12 years. Just divide 72 by the interest rate. Think and consider other vehicles of investment, according to your risk-tolerant, to grow your money. Find out more about bond funds, mutual funds, stocks and shares, and  real estate investment

7.       Fund for retirement: It is easier to set aside money sooner to save and invest for retirement because a smaller amount is needed rather than later.

8.       Fund for children’s higher education: It is also necessary to save early and allow compound interest to accumulate a fund for your children’s tertiary education.

9.       Insurance protection: Life is full of uncertainties. It is a good move to take up a life policy to cushion the blow in the unfortunate event that you are no longer around to look after your spouse and children. The proceeds from the policy allow your family to carry on living without financial difficulties. You also need to consider Insurance protection against disability due to serious accidents and health insurance to cover critical illnesses. It is also necessary to protect your dwelling and its contents again such perils as fire and flood.

10.   Estate planning: Over the years you will have accumulated more  wealth, it is never too early  to draw up a will to allow your estate to be distributed to your loved ones  according to your wish in a hassle-free way,

While you take care of money matters, don’t forget to look after your health, invest in further education, and appreciate what you have in life. Have fun and be happy.

Source: 10 Essential Things About Money

7 Effective Ways to Avoid Bankruptcy

Bankruptcy

According to the president of the Federation of Malaysian Consumers Associations (Fomca), Datuk N. Marimuthu, half of those declared bankrupt because of credit card debts are below the age of 30. How do you avoid being declared bankrupt?

1.      Financial Education: it is essential to start young to learn about personal finance. Getting more information about savings, household budget, net worth, proper use of credit cards, good and bad debt, insurance, and estate planning are necessary to be more knowledgeable about managing money.

2.      Budget: The key is to plan your budget and work your budget diligently.  The main objective is to match your expenses including regular savings, housing, and hire-purchase loans within your take-home pay. The outcome is to avoid overspending and falling into the debt trap.

3.      Emergency Fund: The beauty of an emergency fund is like a first aid kit. It is to address unexpected happenings such as getting retrenched or incurring expenses due to an accident or an illness.  The money will tide you over the critical period to meet all your normal monthly expenses for a couple of months until the situation is back to normal.

4.      Avoid bad habits and more wants in life: Gambling is the fastest route to be bankrupt.  Avoid it at all costs. Do not spend more than what you have. Self-discipline and self- control are required to curb the urge to get more wants. If it is beyond your control, you will get into debt and likely to be bankrupt.

5.      Avoid using credit cards: This is especially true for those young graduates who have just entered the job market. The smart way is to use a debit card to get the feel of using a plastic card. When you use a debit card, the amount that you charge to your card is directly deducted from your bank account. The amount that you can spend on your card is limited by the fund available in your account. There is no way to overspend and get into unmanageable debt.

6.      Pay in cash: Instead of getting a personal loan,   save for the amount to buy big-ticket items you need.

7.     Increase your earning power: When you want to spend more just earn more. Learn and equip yourself with more marketable skills. Utilize your expertise such as writing skills to create part-time earnings. Write articles for newspapers and magazines. Turn your hobby like photography into a source of income as a photographer. Invest wisely and create  passive income streams 

Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.

Source: 7 Effective Ways to Avoid Bankruptcy

Image source: https://www.moneycrashers.com/declare-file-bankruptcy-process/

10 Effective Ways to Establish Your Creditworthiness

Now that America is out of the AAA list, there are only 15 countries in the world with AAA ratings from S and P. Singapore is the only Asian nation with such a prestigious rating. China is only rated AA-. How do you establish a personal rating as good as triple-A? Here are the 10 ways to get it:


 1. A regular source of income: There must be a regular source of income. It means you are holding a job or you are running your own business with a steady income. There must be documentary evidence of your earnings such as your pay-slip or your tax returns.

2. A permanent address: This is the place where you live and you are not moving around frequently. It shows that you are stable and well-established.

 3. Create a credit history: When you do not have a credit history, it is perceived by bankers that you are not trust-worthiness to obtain a loan. Get a small loan and settle the loan in a timely fashion. There you are. You have just created a perfect credit history.

 4. A Current account: Operating a current account is another way to establish your creditworthiness. Keep your record clean by not issuing bounced checks. It is an indication that you are capable of managing your financial affairs.

 5. A Credit card: Having a credit card is an excellent way to build a firm foundation for your credit rating. As long as you always pay on time and pay the full amount, it confirms the trust in you by financial institutions.

 6. Pay bills promptly: Do not delay payments; it affects your credit rating negatively. It is an indication that you are not in full control of your life and finance.

 7. Avoid skipping payments: It is the worst thing you can do to destroy your credit rating. It is a sign that you are in financial problems and you are putting creditors on alert.

 8. Low credit card balances: A high credit card balance means you are spending more and paying less. It is a concern for a creditor.

 9. Keep debt within 30% of your monthly income: Are you building up more and more debt? When you have more debt, it means you have less to spend on your essential items. There is a danger that you may not be able to service your debt.

 10. Budget for it: Your budget should cover all monthly installments payments so that you will pay fully and promptly to protect your creditworthiness.


 Is your credit rating as good as AAA?

Source: 10 Effective Ways to Establish Your Credit Worthiness

22 Things Money Can and Can’t Buy

1. Money can buy you an expensive house,

Money can’t buy you home sweet home.

2. Money can buy you a comfortable bed,

Money can’t buy you a good night’s sleep.

3. Money can buy you a fast car,

Money can’t buy you safety on the road.

4. Money can get an education for your children,

Money can’t buy knowledge for your children.

5. Money can buy material things for your children,

Money can’t buy appreciation from your children.

6. Money can buy you a grand wedding,

Money can’t buy you a lasting marriage.

7. Money can buy you all the books in the world,

      Money can’t buy you intelligence.

8. Money can buy you healthy food,

      Money can’t buy you a healthy lifestyle.

9. Money can get you credit cards,

Money can’t buy you credibility.

10. Money can get you financial security,

Money can’t buy you peace of mind.

11. Money can get you services,

Money can’t buy you friendship.

12. Money can get people to work for you,

Money can’t buy passion and engagement from the worker.

13. Money can buy you a branded watch,

Money can’t buy you more time.

14. Money can buy you advertisement,

Money can’t buy you a trusted brand.

15. Money can buy you the VIP treatment,

Money can’t buy you respect.

16. Money can buy you a compass,

Money can’t buy you the direction to go in life.

17. Money can buy you delicious food,

Money can’t buy you appetite.

18. Money can buy material wealth,

Money can’t buy contentment.

19. Money can buy you a peaceful county mansion,

Money can’t buy you a cool, calm, and collected mind.  

20. Money can buy you excitement and thrill,

Money can’t buy you lasting happiness.

21. Money can buy a surveillance system in the office,

Money can’t buy the honesty of the staff.

22. Money can buy you an air-conditioner

Money can’t buy you a good feeling about yourself

Readers are encouraged to add more items to this list.

Source: 22 Things Money Can and Can’t Buy

Effective Ways to Avoid Debt

According to the general manager (operations), Azman Hasim, of Bank Negara Malaysia’s Credit Counseling and Debt Management, there are three reasons why people over-borrowed – greed, lifestyle, and unavoidable circumstances. How do you take steps to avoid unmanageable debts?

Greed

• Gambling: Gamblers are no winners or else there will be no gaming outlets or they will be out of business. Don’t get involved.

• Get rich quick schemes: There is no way to make a quick and easy gain in a short time with your money. Don’t believe in such schemes. Even a solid business venture needs time and hard work to grow.

• Invest for the short term: The stock market is bullish and you decide to make a killing. You use your savings and even borrow more money from a financial institution. Initially, it looks good but a terrorist attack somewhere in another corner of the earth triggers a market slump. You decide to hold on but it is a downward slide all the way and it is too late to salvage the huge loss. It is a situation of investing too much, too short a time for too quick again and at the wrong time. You are now in debt. Investment is for the long term. 


Lifestyle

• Wants: Your wants are unlimited but your resources are limited. Every day you see new gadgets, new cars, TV in 3D, and many more. Advertisements are luring you to spend and spend and your neighbors are trendsetters. Can you control yourself to spend less than your means? 

• Credit cards: The fastest way to get into debt is to spend on your wants on credit, pay the minimum amount, and incur interest at the highest rate. If this is not enough, get advances from your credit cards to spend even more. Can you manage your credit cards without getting into debt?


Unavoidable circumstances

• Accidents and illnesses: Accidents on the road can be prevented when you drive with care. Illnesses can also be avoided when you look after your fitness and health. You can also take up insurance coverage to cushion the blow of an accident or a critical illness. An emergency fund is more effective to meet such unforeseen circumstances. 

• Jobless: The smart way is to acquire more skills so that you will be more valuable in the workplace. In case of retrenchment, you are the last one to go. In the event that you are jobless, an emergency fund will get you through a difficult period until you get a new job.

The key to avoiding debt effectively is your preparedness and discipline.

Source: Effective Ways to Avoid Debt

7 Effective Ways to Manage Your Debt and Boost Your Creditworthiness

A man in debt is so far a slave. ~Ralph Waldo Emerson 


Standard and Poor's has downgraded the U.S. credit rating for the first time ever from AAA to AA+. S and P said it lowered the rating because the deficit reduction plan Congress passed on Tuesday did not go far enough to stabilize the country's debt situation.


On a personal level, how do you manage your debt and avoid erosion of your credit rating? Here are 7 simple ways to do it:

1. Monthly repayments to be included in your budget: It is imperative to factor in all loan repayments into your monthly budget because it is not an optional item. You have to plan for it and you work on your plan. 

2. Timely payment: Do not be late to make your monthly payments. If you do, it will impact your credit rating negatively. You don’t go to work late, right? 

3. Do not skip a single payment: It is a very serious matter to skip even one payment. You are sending a signal to your creditors that something is not right and you are in financial trouble. It will negatively affect your credit rating even further. It’s like you are missing in action for one day and everyone is worried about you.

4. Avoid incurring more debt: At this critical stage, avoid getting into any more debt than you can possibly manage. The most important thing is to get rid of all debt as soon as possible. Curb your wants. 

5. Cut spending: While you are in debt, go for an austerity drive. Look into your spending pattern and cut unnecessary items such as entertainment. 

6. Look for new income streams: It is also wise to look for additional sources of income. Can you turn your hobby such as photography to be a freelance photographer?

7. Be responsible: The worst thing you can do is to jeopardize your credit rating by not communicating with your creditor when you are unable to meet payments. Go and negotiate with your creditors to reduce the monthly payment, waive a few monthly payments or reach a mutually agreeable solution. 

What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience? ~Adam Smith

Source: 7 Effective Ways to Manage Your Debt and Boost Your Creditworthiness