Can You Afford to Buy a Car?

According to a news item, Driven to bankruptcy, it is reported that Those who defaulted on car loans continue to top the list of bankrupts, and their numbers are increasing every year. Easy-to-get car loans have driven more Malaysians into bankruptcy, with the numbers soaring, especially in the last six years. Of the more than 100,000 people declared bankrupt between 2005 and September this year (2011), 25 percent comprised those who had defaulted on their car loans.

When you decide to buy a car, consider the following:

1.      Down payment: Do not settle for the minimum amount because the more you make the initial payment the smaller will be the loan amount and the less interest you will pay. Save more for a bigger down payment.  

2.      Monthly installment: Have you factored in the monthly installment payment into your monthly budget? It is going to be featured in your cash outflow for a couple of years. Your take-home pay must be able to accommodate this amount apart from the usual household and other expenses.  

3.      Toll charges, parking, and petrol: These items will be additional expenses and you also need to allocate a fixed amount in your monthly budget.  

4.      Insurance premium and road tax: It happens once a year but you need to save an amount every month so that when it is due in a year’s time you will have enough money to cover these mandatory expenses. 

5.      Regular maintenance: Your car needs to maintain regularly like changing engine oil and oil filter and not to mention other replaceable parts. Again it is prudent to save an amount on a monthly basis to meet such expenses.

6.      Wear and tear: Items like tires and battery may last longer but these major items will need to be replaced one fine day. Can you afford not to save a sum of money to cover such expenditures?

7.      Preserving the value of your car: Your car needs your attention. You need to tidy the interior and wash the body regularly to preserve the shine and glitter. Is your car going to be left outdoor under the scorching sun and the acidic rain? The value of your car will depreciate faster without proper care. You have to drive with care and avoid an accident and getting dented or scratched here and there.   

Do your homework:

Just fill in the chart to see if you have an excess of income over expenses or there is a shortfall of income in meeting your monthly expenses:

MONTHLY BUDGET
	$
INCOME
TAKE HOME PAY
OTHER INCOME
TOTAL (A)
EXPENSES
GROCERY EXPENSES
CHILD ALLOWANCE
INSURANCE
MORTGAGE
ENTERTAINMENT
CAR LOAN
PETROL, PARKING & TOLL
MOTOR VEHICLE RELATED EXPENSES
EMERGENCY FUND
UTILITY BILLS
SAVINGS
OTHER EXPENSES
TOTAL (B)
EXCESS/SHORTFALL OF INCOME OVER EXPENSES (A-B)

Remark:

Motor vehicle-related expenses is an amount to save every month to cover road tax, insurance, maintenance expenses, and other major replacement items       

If your total cash outflow is more than your income, you can forget about getting a car.

Conclusion

A car offers great convenience going places. Maintaining a car is a different story. Consider all expenses involved before driving away from a  car from the showroom. Your excitement can be short-lived and what you actually get is financial burden and misery   

How I Manage Three Credit Cards Without Incurring Debt

Credit cards are different from charge cards like American Express and Diners. For charge cards, you have to pay in full when it is due. For credit cards as the name implies you can get credit by paying a minimum amount of 5% or RM50, whichever is higher, and carry forward the balance to the following month with a finance charge of 18% per annum. However, the danger is that you are incurring interest for the outstanding amount.  When you are not careful, the outstanding amount snowballs with compound interest over time to an amount beyond your means. You may end up as a bankrupt. A credit card is a double-edged sword.   It is useful and yet financially destructive.

I have three cards: CIMB PETRONAS MasterCard, Hong Leong Bank Platinum Visa card, and Hong Leong Bank GSC Visa card. I allocate different usage for each card so that all three cards stay active.

This is how I use the three cards to my advantage:

CIMB PETRONAS MasterCard: It is essentially a cash rebate card. When I pump petrol I charge it to this card. At the end of the month, I am given rebates on the amount spent. To maximize the usage of the card and pay less I charge all my utility bills such as telephone and electricity plus monthly insurance premium to this card. When you pay by cash you pay the full amount.

Hong Leong Bank Platinum Visa card: This is my grocery card. I use it in conjunction with The Store Card. I shop at The Store as it is situated next to my place of work. I charge all my grocery expenses to this card and collect reward points. At the same time, I present The Store Card, which is a membership card also to get points at one point for each Ringgit spent. Over time I redeem points accumulated to exchange for useful items. As for The Store Card, I can redeem for goods or their gift vouchers.         

Hong Leong Bank GSC Visa Card: This is my entertainment or movie card. I get discounts for the purchase of movie tickets. Right now there is a promotion going on for a year; I get a free ticket when I buy tickets on a Thursday to watch a movie on Thursday, Friday, or Saturday. You can take further advantage by joining   Golden Screen Cinemas (GSC) as a member so that during your birthday month you will get two movie tickets free. I also use this card for other purchases and big-ticket items and pay by their zero-interest instalment plan for 12 to 24 months   

Conclusion:

You will see that all the charges are my normal expenses every month. I don’t charge unnecessarily and I settle promptly and fully every month without incurring extra charges. I use my card wisely to reduce my expenses or maximize my spending and not to incur credit and build up debt.  

How many credit cards do you have and how do you manage your cards? Share with us.

10 Wise Quotes About Money

1.      You can be young without money but you can't be old without it.
Tennessee Williams

When you are young, you are fit and strong and you can be gainfully employed. When you are old, you are weak and frail and you cannot work anymore. You need to live with your retirement fund for your golden years.  If you don’t start saving early for your old age, life will be miserable.

2.      Lack of money is no obstacle. Lack of an idea is an obstacle.
Ken Hakuta

All you need in life is a unique idea that others are looking for. It can be in the form of products or services. You give others what they want and you will be able to build your wealth.   

3.      Never spend your money before you have it.
Thomas Jefferson

Living on credit is not a wise thing to do. You pay more than by paying in cash and you may not be able to honor your debt and end up bankrupt.

4.      It's good to have money and the things that money can buy, but it's good, too, to check up once in a while and make sure that you haven't lost the things that money can't buy.
George Horace Lorimer

Do not just think of money, there are other important things in life to take care of such as your health which money cannot buy.

5.      Wealth, like happiness, is never attained when sought after directly. It comes as a by-product of providing a useful service.

Henry Ford

 You don’t look for money directly. How much you can get is proportional to how much you can give to others in the form of services or products.

6.      Money will buy you a bed, but not a good night's sleep, a house but not a home, a companion but not a friend. 

Zig Ziglar

Money can buy you only material things, all other things you have to earn it like your reputation and the trust of others in you.

7.      He who gathers money little by little makes it grow. [Proverbs 13:11].

 Bible

The starting point to build wealth is savings. When it is done regularly over a period of time, compound interest will grow your money.  

8.      The man who does not work for the love of work but only for money is not likely to make money nor find much fun in life.

Charles M. Schwab

 You must like it and enjoy what you do. You are paid for what you can do for others by using your skills and know-how. The more you care about what you do, the better your work will be and the more money you will be able to earn. You can’t get money without putting in an effort to work and give your best.

9.      Money is a good servant but a bad master.  
Aristodemus

When you manage your personal finance effectively, you will grow your wealth. When you cannot discipline yourself and you overspend, you will get into debt. You will be a servant to the lender.

10.  Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like.
 Will Smith

It is prudent to live your own life within your means. Do not compare with others. There will always be others who are richer than you. Be contented, happy, and debt-free.

Source: 10 Wise Quotes About Money

10 Things to Avoid in Money Matters

Money may not buy you happiness but when you are financially independent you have less worry in life. The worst thing in life is not to take financial issues seriously. These are the things to avoid when money is concerned:


1. Not knowing your Net Worth: Not knowing what you own and what you owe means not knowing what to do to improve your financial situation. The most crucial issue is to settle the outstanding debt as soon as possible before it snowballs into a much bigger amount and go beyond your means to pay. 

2. No monthly budget: The purpose of a monthly budget is to spend within your income and to avoid incurring debt. Plan and follow your budget.

3. Do not settle credit card bills fully and promptly: The worst thing about using a credit card is to take the easy way out; that is to pay just the minimum amount. The outstanding amount will attract high-interest charges and the accumulation of more interest. It is very likely that it will lead to bankruptcy. 

4. Satisfy your wants on credit: Avoid spending on impulse to buy what you want on credit because you know very well that it is not within your budget. Exercise self-discipline and self-control to curb unnecessary expenditures.

5. No emergency fund: Not setting aside an amount for rainy days is inviting troubles if you are out of work for a few months. You have to borrow to meet your usual monthly expenses and recurring payments.

6. No insurance cover for disability: Do pass the risks to the insurers to cover yourself in the event that you are involved in an accident or suffering from critical illnesses. So when you are unable to work you can reimburse your medical bills and make claim to cover your disablement to work.

7. Spend more than what you have earned: Incurring debt is the only way to spend more than what you have earned. It is not a prudent thing to do.

8. Do not pay yourself first: Saving regularly is the starting point of financial freedom. Make it easy for you to save by deducting a fixed amount from your pay and deposit the money into a savings account.

9. No priority in money matters: The first priority is to settle outstanding debt. When you are debt-free the next thing is to save and invest and grow your money.

10. No financial planning for children’s further education and your retirement: The best time to start is now if you have not started doing so. Let time and compound interest work for you. Before you know you will have accumulated a substantial amount of money.


Personal financial management requires discipline, restraint, and control. The goal is to achieve financial freedom.

Source: 10 Things to Avoid in Money Matters

How to Maximize Grocery Spending with Your Credit Card

I have a Hong Leong Bank Platinum Visa Card and I treat it as my grocery credit card. I also have The Store Card. It is a membership card. I use both cards to maximize my grocery spending.

This is my tactics:

·         Location: I choose The Store for grocery shopping because it is next to my place of work. I don’t have to spend time and petrol driving to another place to do shopping. The Store is owned by The Store (Malaysia) Sdn. Bhd, a public listed company in Malaysia.

·         Purchases: Each time I shop for grocery I charge it to my Platinum card and I also present The Store Card to collect points at RM1/= per point.

·         Credit card reward points: For each ringgit, I charge to my credit card, I get one point. Over time I can redeem my accumulated points for useful items.

·         The store Card: As a member, I am covered with RM10,000 personal accident insurance. I also enjoy special discounts for many items from time to time. Their point system works the same as the credit card.  You can earn and keep the points and exchange them for grocery items later. However, I opt for their gift vouchers like the one shown here. I prefer to use the vouchers to buy apparel. The card carries an annual fee of RM12/=. My annual spending at the store is much more than enough to offset the fee.

You can also apply for The Store /Pacific Hong Leong Bank MasterCard. You will earn up to 6% cashback when you spend at The Store/Pacific and 0.5% cashback on other retail transactions. You will receive your cash rebate in the form of The Store and Pacific's Gift Vouchers via the Credit Card statement every quarterly.

   I use my credit card to shop for what I need only. I pay the amount as stated in the monthly statement fully and promptly. In this way, I don’t incur extra credit charge charges. If I need to spend on a big-ticket item I    arrange for an interest-free installment plan for 12 or 24 months with the card issuer.    

   How do you maximize or reduce your grocery spending? 

5 Ways to Avoid Money Stress

In times of great stress or adversity, it's always best to keep busy, to plow your anger and your energy into something positive. ~ Lee Iacocca

1.       No financial planning:  You always find yourself running short of money when you do not have a budget and not spending within your means. You have to use your credit cards, get a personal loan, or dip into your savings account or your emergency fund.  It is stressful that you can’t find the money when you need it the most.

Solution: A personal monthly budget is necessary to live within your means. You just can’t go on spending money as you wish because overspending is leading to debt and bankruptcy if a debt is out of control. Plan your spending wisely and challenge yourself to stick to it. The aim is not to overspend and avoid drowning in debt.  

2.       Cannot cope financially: The rising cost of living is eroding your purchasing power and you can’t stretch your every dollar any further. It is stressful when your meager income just can’t cope with the situation.  Being prudent in spending does not seem to work things out.  

Solution:  Getting extra income by doing online business at home or working part-time is what you can do to manage your finance. When your own business is successful you can even do full-time and solve your financial woes once and for all.

3.       In debt: It is stressful when people are knocking on your door and asking for money. You have outstanding grocery bills and other sundry bills. You miss your HP installments and the interest on your credit cards is snowballing.

Solution: When you are in debt, the most important thing is to get out of it. It requires a lot of self-discipline and will-power. The longer you delay the more interest you will have to pay. Be determined to be debt-free.    

4.       Stuck in a rut: Your job is boring and your present position is getting you nowhere. Your salary is also stagnant. Working life is stressful in such a situation.  

Solution: The key is to make changes. Take a bold step and look for something you enjoy doing and go for it. Do not expect a thing to get better when you are doing the same thing day in and day out.  The other important thing is to acquire more marketable skills. You add value to what you can do and increase your earning power.

5.       Financial worries: Worrying too much about your financial future is really stressful. You are thinking about the foreclosure of your home and the repossession of your car. You also worry about the security of your job because the economy is gloomy.

Solution: What can you do about the future? It comes only one day at a time. The best thing in life is to do the best you can now with what you have. Get busy, do the right things, and hope for the best.  

A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life. ~ Suze Orman 

Source: 5 Ways to Avoids Money Stress

The Best Movie Credit Card in the World

I have already had two cards in my possession, CIMB Petronas MasterCard and Hong Leong Bank Platinum Visa Card, but I just can’t help to get one more card, the Hong Leong Bank Golden Screen Cinemas Visa Card.

I enjoy movies because in a cinema hall I get uninterrupted entertainment for two hours to unwind and relax. This particular card complements my lifestyle. 

 

What’s so good about the card?

Upon approval of your application you get:

1 x Complimentary Movie Ticket

1 x Small Popcorn Combo Set

1 x 50% Discount Voucher on Food & Beverage Purchases at GSC's Outlets

5 x Buy-1 Free-1 International Screens Movie Tickets

You also enjoy up to 10% discount on normal ticket purchases when you use your GSC-Hong Leong Credit Card at all GSC Outlets. Here's how:-

Cost Per Ticket	Discount Entitlement
Below RM 10	RM 0.50 per ticket
RM10 and above	RM 1 per ticket
RM 20 and above	RM 2 per ticket
RM 40 and above	RM 4 per ticket
RM 50 and above	RM 5 per ticket
RM 60 and above	RM 6 per ticket

 Incredible Bonus Value Privileges

As a new GSC- Hong Leong Principal Credit Cardholder, Platinum Cardholders will be entitled to RM100, and Gold Cardholders will be entitled to RM60 worth of Bonus Value. You can use this Bonus Value to pay off up to 50% of your ticket purchase. Below is an illustration of a Platinum Cardholder with a Bonus Value of RM100:-

(BV=Bonus Value, Trans=Transaction, B/F=Brought Forward, Amt=Amount, C/F=Carried Forward, Bal=Balance, Disc=Discount)

Priority Ticketing Lane

With your GSC- Hong Leong Credit Card, you can purchase your GSC movie tickets faster and hassle-free through our Priority Ticketing Lane.

However, I don’t have to go to the cinema to purchase tickets; I can stay at home and do the same. Not only that, I normally buy tickets online on a Thursday to watch a movie either on Thursday, Friday or Saturday because I get one ticket free on top of the discount mentioned above. I usually invite my friend for a night out. This is really buying happiness and giving happiness to others.    

You can take further advantage by joining GSC as a member because, during your birthday month, you will get two free movie tickets and 20% off your meal at their Glitters Café.

The card is free for life when you spend at least 12 times on your GSC- Hong Leong Gold or Platinum Card in a year.

Is there a better movie credit card?