This article is contributed by Jadelyn, who is a regular contributor of this blog. You can read about her previous job as a Transaction Services Professional here.
I recently shared with KC on my new job. For brief introduction sake, I was previously a Transaction Services professional mainly involved in due diligence exercise during mergers or acquisitions.
Mankind are a unique creation, I realised sometimes we don’t appreciate what we possess. Why do I say so? As I was sharing with KC on my new job it was amazing how he made mentioned what a great job I had. Basically I am paid to give away money! How ironic that KC could describe my job as such.
My new company – Malaysia Debt Venture (MDV) is a venture debt financing company. Venture debt financing are generally investments made by a venture in the form of debt as oppose to equity.
MDV was established as part of the government initiative to finance and develop the information, communication and technology (ICT) and high growth sectors in Malaysia, mainly ICT and biotechnology. Providing innovative financing solutions; nurturing and supporting companies through timely business advice and ongoing cooperation and collaboration; and supporting the Malaysian Government initiatives in achieving its National ICT & Biotechnology Agenda.
Knowing that companies in the ICT and biotech industry are fairly new and without much track record our loan assessment criteria looks not only at financial and collateral risk but management, technical and legal risk of the company and or project. Unlike the many commercial banks no hard collateral are required, key collaterals are assignment of contract proceeds.
We finance equipment and infrastructure, working capital financing and contract/ project finance. Our focus area includes natural product company, medical devices and diagnostic, contract manufacturing organisation, contract research organisations industrial biotech companies, bioinformatics and renewable energy.
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author:
MagicBus
The best money-saving tips and book winners
Lydia gave me three autographed copies of Stretching Your Dollar$ and $ense to giveaway to you. The only requirement to take part is to share your opinion about saving money. At the announcement post, I received more than 80 comments from readers who shared their tricks and tips. I believe that it will benefit you to read through all the sharing.
Here, I short listed some outstanding points to help you save money. All these information is provided by this blog readers’ community.
If you are curious about who will get the book, browse to the end of this post.
Use a High Rebate Credit Card
There are many ways one can save money as some of the others have put it so succinctly (while others fluff about rather than be SPECIFIC) BUT here is ONE tangible specific way anyone (provided they have an income good credit rating) can benefit given its recent introduction into the market.
Open a Standard Chartered Just One Current Account and get the SBC Just One Mastercard too (this is of course subject to card approval) What’s so good about it?
- You earn 5% cash rebate on ALL card spending on Fridays (so any planned purchases can be done on Fridays)
- You earn 2% cash rebate on ALL card spending on all other days
- On top of the above cash rebate, you still earn 1 Reward Pt for every RM2 spent
- You can earn up to 2.38% interest on your Just One Current account if your balance exceeds RM100k (which is HIGHER than FD rates in banks except for the 12mth term period) Even if your balance is as little as RM2k, you still earn at least 1.38% which is way better than some savings accounts out there!
- You can also earn MORE Reward Pts by earning 1 Reward Pt for every RM10 saved (based on your average monthly credit bank balance)
The added sweetener - until July31, when you open the above a/c, you will also get a 1st yr annual fee waiver AND guaranteed 5 000 Reward Points!!! Hence, aside from the other standard credit card benefits like not having to carry physical cash, minimum 21 days interest free period, special tie-ups with merchants, discounts, zero installment plans, balance transfer plans, etc, you can also enjoy the above
TANGIBLE benefits of the Just One Current a/c and Credit Card. Enough said! So when should i expect my FREE autographed copy??? Hahaha!
PS - FYI, I am not a SCB staff BUT i have to take my hat off to them as i now use my newly received SCB Just One card for all my card purchases BUT do note that the maximum rebate claimable is RM600 per year.
Switch Off Electrical Products at the Main When Away
Heres my Top 3 tips
1) Switch off ALL electrical products switches at the mains when I’m away for more than 2 days - not only does it save (as you know, there’s electricity leakages when the mains are on even if the equipment isn’t) but less risk of electrical short circuit too!
2) Instead of cooking everyday, I cook up a big batch of most of my dishes and freeze them in little serving portions. This saves time and electricity / gas and also healthier as it’s just as quick to pop containers of home cooked rice and dishes into the microwave compared to eating out.
3) Go to the park or stay home and watch DVDs instead of going to shopping malls and cinemas. This way, I’m less tempted to buy and also save on the movie ticket.
Cheryl The, who is a Business Consultant & Professional Organizer was interviewed on BFM about how to furnish your home for less. You can listen to her interview here:
(Part 1)
(Part 2)
Don’t just save money, save the Earth too!
1) Consolidate all your household expenses and use the high cash rebate credit card for instance StanChart JustOne Credit Card, where any spending on Friday, you are given 5% cash rebate, along with choice points (reward points) given = Double reward! or to use TravelMoney RHB Credit Card on every 1st weekend for 5% petrol rebate.
2) Never spend time on money-saving more than your time to think of creative idea to be of the service (add value to peoples lives) for others to make more money.
3) Follow straight to budget every month, etc 10% saving, 5% gift (donation) and 10% (education, self-development), minimum 10% for investment of building multiple source of income.
4) Save the earth, for instance, re-use paper, draft, write digitally, car pool, plan properly only drive and do all things at a go so to save the traveling cost (efficiency), get into habit of electric saving (use air-con only when the weather is unbearable, air-con timer to stop few hours before wake up time everyday, energy saving tool, etc)
5) NO WINDOWS SHOPPING. SHOP only during SALES TIME (don’t shop simply because its CHEAP), Shop only within list with budget set priory, while shopping, 1st rule, is it a MUST (URGENT) as against a NEED (IMPORTANT)? Does it help in generating more income? Bulk buying with friends and always ask for discount wherever possible.
6) delay gratification always, such as, to delay for the first buying urge at the 1st encounter even though it seems DIRT CHEAP, believe that there’s always cheaper and better out there. Always compare at least with 3-4 of the same merchant for same products.
Saving Account without ATM card
$$$ SAVE BEFORE USE $$$ The method I use and strongly recommended to every one. When you get your salary, put a fix amount (5 to10%) into a separate saving account.
Use ATM machine to transfer the money or ask the bank to do a standing Instruction. When you do not see the money you will not feel it.
This saving account should not have an ATM card. The money in this account is use for investment or emergency purpose. If you are married, then make that saving account a joint account and without ATM card too. By doing this, it avoid you to withdraw money from it because you and your wife need to go to the bank together to withdraw money.
Then you will see the amount of money keep increasing. You will be motivated to do it every month… ask your partner did he/she bank in money on each month this will become a reminder to both of you. Happy saving.
Don’t be lazy, working moms. Cook!
TIP 1 As a working mum, I take the hard work of waking up early and prepare breakfast lunch for my kids and hubby. Not only it’s healthier (As I control their food intake - the amount of vegetables, fruits, meat the way it’s cooked - preferably steamed, bake), but it really does save us a lot of $$$. For example, a breakfast at kopitiam will normally costs RM4.50 (for kon lau mee) RM1.70 (Ice Milo) = RM6.20 for breakfast; RM6 (lunch) + RM1.70 (cold drinks) = RM7.70; total meal allowance per day would be RM13.90 X 20 working days X 2 (Me hubby) = GRAND TOTAL of RM556.00 per month. This excluded the expensive lunch we might have sometimes (E.g. eat out @ coffee bean, secret recipe etc). Take that calculation X 12 months would be: RM6672.00. (Note: My food prices are based on Kota Kinabalu Kopitiam, it may be more expensive or cheaper in your location). For home made food, your grocery bills would be much lesser than the above! To the other mums, working is not an excuse to not making home-cooked food, as I always find recipes that take less than 30 minutes to prepare! The amount we save allowed us to put as part of our down payment for our property investment! So picture this, saving 2 year of eat-out = approx. RM10000: used as down payment for an apartment RM100000 - 150000 for rental purpose! Isn’t it amazing! The more calculation you did, trust me, you will be willing to wake up much early to prepare! As for me, I plan our food chart for the whole week!
TIP 2 On weekdays, I would drive a company vehicle which has a smaller CC compared to my own vehicle. Driving a smaller CC car (HONDA CITY), for a full tank of fuel, I can drive up to 400km distance. And the maintenance is cheaper compared to my own vehicle.
TIP 3 I only shop once a month in supermarket with a shopping lists (E.g. milk powder, pampers etc). This is to avoid unnecessary trips to the mall which you might end up buying other stuff unneeded from other shops.
TIP 4 During our supermarket visit, I will make sure to make a stop at Toys R Us so the kids can have some fun time. They can spend an hour there without realizing it. And they can try out all new toys. Normally kids get bored after playing with it for a while, so there is no point buying back! As it will end up in one corner of their room unnoticed!
TIP 5 Since my hubby love investing in properties, instead of buying under personal name, we bought it under Sdn. Bhd. This allows us to deduct certain expenses and claim for certain allowance. Not only we pay less tax, but we also owned a company with a profitable return! We have our mission objectives targets to how many property we need to acquire per year! Since the rest about credit cards etc has been mentioned, I don’t think I will say it again! Cheers!
Living in a big family
Stay together in big family instead of having separate mini families. One can enjoy some savings from sharing which is a virtue…
2. car pooling (saving in term of petrol and maybe number of cars purchased)
3. sharing furniture (may need more sofa, tables etc if staying together in one big family, but in overall, it is still less compared to the sum of the total furniture required living separately)
4. electricity (eg. consume same electricity whether watch TV alone or by one big family)
5. meal (makes home-cooking feasible, cheaper compared to dining out)
6. sharing domestic maid
7. buying household items in bigger package that usually come at cheaper unit rate (eg 5 litre detergent vs 2 litre detergent. Small families usually purchase smaller package to avoid wastage due to expiry of the products, particularly food)
8. newspapers, magazines etc
9. Indah water bill, assessment fee, quit rent (bigger total amount if staying in separate houses)
10. gardening (every member can have bigger garden compound with less gardening efforts)
11. Convenience (can ‘tumpang’ other family members in running errand, thus save time, petrol, parking fee etc.)
Economies of scale applies here. The amount of saving whether from one tiem purchase or recurring expenses could be substantial.
Most importantly, the big family can enjoy the merriment of being together is invaluable…
Share, Share, Share
Hello, KC, My favourite (hopefully green) approach is to Share, Share Share where possible: e.g. - share an order of food or drink when its too big for one person (dont order two of the same and waste food that people elsewhere in the world are in need of); - car pool, especially kids going to the same school (save fuel and reduce harmful emissions); - while at home, everyone in the family doing your individual activities together in the same room/space to share lights and air-cond, e.g. eating, playing, studying, sleeping (save on electricity and the resources to generate it); - share clothes with your older kids of same build (e.g. t-shirts); - share a pool of recycled paper for printing drafts or documents for strictly internal office circulation.
Bottomline: Avoid duplicity, triplicity, quadricity, . . . multicity, any-plicity where theres absolutely no need for it. . Look forward to receiving more tips from you.
Thanks very much with best regards, Lil Olde Me, Daniel
Bank Standing Instruction
Hi, would love to win this book. Am an avid saver!!
Anyway, here goes my savings tip :
1. Get an SI to deduct your monthly salary directly into your savings account/FD. Do this as soon as you get your monthly salary.
2. Budgeting is important and staying within your budget is even more crucial.
3. For groceries, Scour the friday papers for coupons, discounts. Or buy at farmers market where its fresher and cheaper. Buy in bulks whenever you can. If you shop frequently and a certain hypermarket, get their members card. You can earn points!!.
4. I got a credit card where the points collected can be used to redeem petrol voucher and ! use them wisely. They can be your best friend or your worst enemy. I use them for most of my transactions solely for the purpose of collecting points and getting discounts at certain outlets. I never spend more than what I have. Never be late in paying and get the ones with no annual fees.
5. I buy items that I know I use a lot in bulk. I save from 20-30% from doing so. Especially milk formula for babies and toddlers. I buy in bulk directly from their supplier agents.
6. Besides the savings that I set aside every month, any amount left in my bank at the end of the month will go either to my savings or investment or splurging myself.
7. Being a saver doesnt mean I dont reward myself. I set aside a certain amount monthly and when it reaches a certain figure, I will reward myself with the cummulated amount.
8. When going for a holiday, we book way ahead to get the best deals.
Keep little money in your pocket
I want the book…
My main method of reducing my expensed is: - I will not keep much money with me. Will only have RM 10 in my pocket for per day expended.
- Will go for shopping alone rather that bring my family members.
- will only top up once a month - RM 30… credit will be for 30 days
- sometimes have to be stingy rather that emotionally spend a lot..
- i have stop hanging around with my friends and attend to most of the function.. can meet them over there as well
- every month I freeze a portion of my salary. So my budget will be based on the rest of my salary… ( therefore my savings are accumulating and will spend less)
- will only use prepaid credit card rather than using normal credit card.
- will never encourage discount vouchers - as it encourages to spend a lot rather that save. I will only use it when it is necessary else give to my friends who are interested. - eg:I may have a voucher for RM 10, but the minimum price of product will be more that RM 100. This only encourages us to spend.
and The BOOK WINNERS are ……
I didn’t tell you that there are in fact three books to be given away. But I really appreciate your active participation although you thought that it is only one book available. I hope that you will comment more on this blog in the future articles. It is the active members of a community that will make this blog a better place to hang around.
I was surfing the web recently and an article in Yahoo finance caught my attention. The article emphasizes the need to curb spending on the miscellaneous things in daily life. These are things that some of us may consider to be a must while others see it as useless or needlessspending.
A person’s spending is influence by a lot of things. Some people spend when they are feeling down and going shopping is one way to brighten their day. Some people spend due to learned habit and it has become a way of life for them. Others may spend because they envy people who have a lot of material things and they crave the same things. Whatever the reason forspending, it is advisable to do so within one’s limits.
The following spending traps are extracted from the article. Check to see whether you have fallen into any of the spending traps.
Fast food or “convenient food”
People are getting lazier to cook and the abundance of food supply everywhere makes it easier to spend money on prepared or ready cooked food. You have the choice of going to coffee shops, restaurants, fast food joints or road side stalls. In the morning, it could be a packet of nasi lemak plus a glass of teh tarik. In the afternoon, you may choose to go to KFC, McDonalds, Secret Recipe or to one of the many food courts. For coffee break, there’s pisang goreng or banana fritters straight from the wok or other delicious snacks. Then before heading home, it is easy to grab some food or “ta pau” from a restaurant or food stall along the way. Do this everyday and you can see that a big chunk of your money is going towards ready cooked food. If you also tend to purchase bottled mineral water and other drinks, this is another frivolous spending. Water or other beverages can easily be brought from home in your own bottle container saving you money and reducing waste.
An obvious way to cut down is by bringing prepared food several times a week from home. It does not take much preparation to bring fried rice, noodles, salads, sandwiches or fresh fruits from home.
Cell phone
There are people who constantly like to upload new ringtones and even games to their cell phones. It may not seem like much each time but once accumulated, it can be considered as frivolous or thoughtlessspending. Changing or swapping cell phones often is also common especially for those who enjoy using or playing with it.
This gadget also has some people addicted to calling and talking or texting excessively. It is so convenient to get in touch with a friend or person anywhere and anytime. If you are one of these people, try to get a good service that does not overcharge you. At the same time, learn to control your usage.
Credit card balance
Paying for interest fees on your credit card balance is like giving away your hard earned money for nothing. It only makes the bank richer while you become poorer. Therefore, clear off your monthly debts to avoid paying for the interest fees.
Gym or health club fees
The idea of being healthy and keeping fit appeals to a lot of people. So, paying for gym membership or health club fees is considered justified. However not many people manage to attend or to show up for all the training sessions and actually end up paying for nothing. It makes more sense to go to the park, playground or beach with the family and workout for free.
One of the biggest impacts the current economic recession has is on people’s spending on food expenses. People are eating out less swapping dining out in restaurants with more home-cooked meals.
In the USA
However, health professionals in the USA are concern about the rise in obesity levels. This is due to the people spending less on healthy and relatively expensive food like fresh fruit, fish and vegetables for cheaper food that tend to be high in sugar and saturated fats. To cut food expenditure to economize may mean eating foods that are high in sugar, saturated fats and refined grains, i.e. empty calories as they are cheaper. The advice is to pay attention to affordable and healthy food as well as a balance diet.
In Malaysia
In Malaysia, with both husbands and wives working, eating out or buying prepared food is normal. The varied choices from coffee shops, food courts, road side stalls, fast food joints and restaurants mean not getting bored with outside food. They also have the choice on how much money to spend depending on the food source. Of course coffee shop food tends to be cheaper compared to the expensive restaurants like Secret Recipe. These foods are seldom healthy compared to home-cooked meals. The good news is that for those who prefer to cook at home, fresh produces are easily available and accessible. One only has to make the choice on whether to cook at home or eat outside food.
In Japan
Japan households are also affected by the current situation. Japan homemakers have been practicing frugality and cutting back or spending less on food. The average salary is about USD2900 a month (about 270,000 yen) and being frugal has some housewives spend only USD108 on food per month. This is accomplished by having a budget, a proper meal plan and also good discipline to follow it through.
My family has not felt a significant impact except for the rising costs of food stuffs due to the fuel price hike previously. The bad thing is that after the fuel price went down, the high price of food remains. My family seldom eats out at expensive restaurants and the children prefer fast food joints but that is limited to once a month only. Having simple mealsat home helps to save money in the long run.
Recent news in Yahoo.com stated that families in the USA, who earned between $57,000 and $99,000, spend roughly $221,000 on child related costs. The figures came from a USDA’s Center for Nutrition Policy and Promotion (United States Department of Agriculture) report recently.
Families who earn less will spend less money whereas families who earn more will tend to spend more on the child up to the age of 17. The numbers calculated do not take into consideration the costs for childbearing and putting your child through college or university.
The amount of $221,000 is the cost for one child, two kids mean $442,000 and three kids come up to $663,000. Factor in the cost of a tertiary education and spending $1 million dollars to raise your kids is not unusual. Raising a child in Malaysia will similarly require high expenses.
Have a financial plan
Hence when it comes to family planning, financial planning is also a must. The three biggest expenses for a family are housing, food and child care and education costs. Early preparation is necessary, meaning you have to start saving money once you join the work force or earn an income.
I have three children to support and the normal expenses are on food, medical fees, school fees or expenditures, transportation fees, tuition fees and insurance fees. In addition, there are also entertainment cost, expenses for clothing or apparels, gifts or presents and money for their education fund.
I have seen big families with five or more children, where due to financial constraints, the children stop schooling after high school or secondary school and start to look for a job. I believe it all depends on the parents to make the proper decision on how they plan to raise the children.
More children=bigger responsibility
Personally, having more children means carrying a bigger responsibility in providing a comfortable life for them. On top of that, parents must also ensure that savings for their old age is well taken care off as we do not want to burden our children later on. On the other hand, parents do not want to raid their retirement or old age fund in order to fund their children through college. Therefore, plan carefully to achieve a proper balance and to make the correct decisions where child care and money is concerned. The message here is do not underestimate the costs related to childcare, raising your children and putting them through school.
Some people are born rich. But most are not. What is the biggest difference other than the money they inherit?
Do you ever wonder why most people failed in starting a business? Some people are brave. They quit their job and start a business. But the business failed a few months later. They lost thousands of dollars and went back to work.
Some people think that the reason they failed is because they don’t have enough capital. Some think that they don’t know enough about the business. Some think that they just don’t have the entrepreneurs mind to succeed.
But the biggest reason they fail is because they don’t have the LIST.
Those who are born rich have an existing list of network inherited. Successful internet marketers have hundred thousands of email subscribers in their list. A successful company has a list of loyal customers. A hot magazine has a list of loyal readers. The superstar artist has a big list of fans. The top salesperson has a list of high net worth clients.
Do you have the list? If you don’t have it now, work on your list. Grow it. Groom it.
I’ve developed a habit to look into my financial statement at least once a month. It reveals that the expenses area keep inflating, year after year. And it makes me wonder how much we are going to spend in our lifetime?
Let’s estimate what the total amount is going to be.
Life is basically divided into four major phases: 1. Childhood (age 0-23) 2. Young Adulthood (age 24-40) 3. Midlife (age 41-60) 4. Elderhood (age 61-??)
To simply estimate how much money we spend, we shall just use the current value of money. In other words, we won’t look at the effect of inflation. Technically, inflation can be offset with the rate of return. Let’s just look at the amount of money in the current economic value. All the number shown is only an estimation based on a medium income family.
Childhood (age 0-24)
During your childhood, you spent your parents’ money. They pay for your milk powder, your toys and the biggest expense of all – your education fees.
Living expenses: RM10,000/yr x 23 = RM230,000 Education fees: RM50,000 Total: RM280,000
Young Adulthood (age 24-40)
You started making money after graduation. You bought at least a car and a house. You are not only paying for your own living expenses. You also give allowances to your children, and your parents.
Living expenses: RM20,000/yr x 16 = RM320,000 Car: RM50,000 House: RM200,000 Total: RM570,000
Midlife (age 41-60)
After years of working experience and networking, your income will be more solid at midlife phase. Most people have a few children still studying in schools and colleges. You might buy a bigger house and a bigger car. The standard of living also increases to include hobby and travelling.
Living expenses: RM30,000/year x 20 = RM600,000 Car: RM150,000 House: RM500,000 Total: RM1.25 million
Elderhood (age 61-80)
At old age, you may spend most of your money on medical fees, nursing care and also some travelling if you are still fit enough to do so.
Living expenses: RM10,000/year x 20 = RM200,000 Medical expenses: RM15,000/year x 20 = RM300,000 Total: RM500,000
Total Lifetime Expenses
So, the total estimation is about RM2.6 million! If you are earning RM50,000 annually, it will take you 52 years to earn RM2.6 million.
Money is good and it can be bad as well depending on how you see it. Money is good because it can afford you a desired lifestyle and help fund each of your life’s goals like getting married and have a family, buying a big house or travelling around the world.
There is no doubt that money has more pros than cons. The bad things associated with money are normally due to men’s greed and misused of it.
Money is bad when for example you have to work hard and spend most of your hours slaving to earn that money. There are people who likes working and are self-professed workaholics. It is a matter of choice here. Others have no choice but to toil hard to earn a living.
What’s your choice?
The question is, given the choice, would you want to work hard and earn lots of money to afford a high-flying lifestyle or kick back a bit and just have enough to enjoy a moderate lifestyle?
Different people will choose differently depending on one’s personal desires or expectations. Your priorities will also dictate the choice that you will make.
I used to wonder why a person, a husband or wife, can choose to work away from home travelling often due to work demands. The immediate impression is of a person who puts work, career and money ahead of the family. I do not make judgments now as I realize that my values and priorities are different from others. I prefer to be able to stay at home and not stray far from the family. I work at a job that does not demand that I travel around. My priorities are having a happy family life and good health, first and foremost.
Fortunately, my spouse has the same viewpoint about work and money. We have enough money to cover for life’s necessities and future funding (by our standards) and at the same time we do not work ourselves to death over money. Of course, we do not get to live a luxurious lifestyle like going on expensive holidays and traveling to exotic places but we do get to enjoy family life together which is our top priority.
Everyone has their own personal methods or style of saving their money. This is understandable as each person’s income and expenses vary and no one is the same.
There are so many ways to save money and you can get an abundant of tips just by reading the information found in this website. Have you ever stop to think back on who taught you to save? Is it a self-learned habit? Perhaps your parents were the one to instill this habit when you were young?
My saving habit is partly self-learned through trial and error. Yep, making mistakes is sometimes necessary in order for us to learn and move on. My parents especially my mother is largely responsible for teaching me aboutsaving money. Her teachings are by example and by recounting her own personal experiences with money. The obvious one that stands out is her account of stretching her meager earnings for dailyexpenses and savings.
My mom’s story
Back in my mother’s younger days, when I was still in diapers, she had RM0.20 to spend on breakfast and lunch. More often that not, it meant foregoing either breakfast or lunch. She would use the money to buy a cup of coffee and a bun (Chinese Pau) for her daytime meal. Out of that 20 cents, she would have 5 cents left to be put away. Part of her earnings also went towards helping to support her younger brother through school and towardssaving for a rainy day.
My own saving habit really started in secondary school where I would jot down my daily spending in a small note book. The purpose is to track where my money was going and how much I had left. To this day, I have maintained the habit of keeping track of my spending which now includes the entire family’s spending.
As you can see, my saving habit rests upon knowing where my money is going. If I can control how I use my money and how much is being spent, this prevents unnecessary spending. Most of my money goes towards necessities or needs instead of wants. Therefore, every month means having a positive cash flow to be put aside for a rainy day.
I did not even use a budget system as this method alone was good enough to ensure money never ran out at the end of each month. Looking at the big picture, controlling your spending is the easiest way to save money. Then invest the money wisely and at the end of the day when you are ready to retire, you will have something to support you.
Credit card debt is the most common consumer debt most people will have trouble with. Since it is so dangerous to carry around a few thousand ringgits when you do your shopping, credit card is the perfect solution in terms of convenience and safety. In other words, you are also bringing with you a huge amount of money to spend. If your credit limit is RM10,000 per card and you have three credit cards, it is like having RM30,000 spare money in your wallet to let you spend instantly.
That’s the reason why most people has trouble controlling their spending habits. If you are one of the victims of this modern financial creation, see if the below tricks are useful to you.
Earn More Money
It is not a bad thing to fall into debt. Look at the positive side, it actually urges you and motivates you to earn more. Your current income is simply not enough to cover your desired lifestyle or needs.
Why I say “needs”? Some people own money not because they like to spend a lot. For example, expensive medical fees demanded by hospital when your old parent is hospitalized may be the cause of maxing out your credit limit.
The most practical and encouraged solution: EARN MORE MONEY. Take up a part time job. Start a business! Increase your productivity! ………..
Just make more money. Period.
Turn Credit Card Debts into Term Loans
Call the banks to seek for alternative. Instead of keep paying the not-so-affordable minimum payment, you can ask to turn the debt into term loans with lower interest charges.
Shred the plastic
To avoid using the card and keep on spending more, cut the credit cards. When it is out of sight, it is out of mind.
Use Debit Cards
I know credit card gives you convenience and safety, especially at petrol station. You can always replace it with debit cards.
Overdraft (OD)
If you have a property, such as your house, you can apply Overdraft facility to settle your credit card debt. OD interest is lower. Moreover, you can always pay it off earlier ,unlike term loan or car loan.
“Relatives-financing”
Be honest. Talk to your relatives and close friends. They will lend you the money if it is not substantial. You can spread the amount to several friends and relatives. Instead of paying 18%credit card debt interest, you can pay them slightly higher interest compared to Fixed Deposit rate.
Cut Expenses
This is the obvious thing to do.
Pay more than the minimum payment required
This sounds simple. But most people won’t realize that they had increased the credit card debt until the day they can’t even afford the minimum payment.
Balance Transfer Program
You can apply new cards that offer you low interest or interest-free period when you transfer balance. Instead of paying many small debts, consolidate them and only focus to settle one debt.
Insurance policy loan
If you have paid insurance premium for a few years, you can take out policy loan to settle your high-interest-debts.
AKPK is debt counselling agency by the federal government to assist you. They may be able to help you negotiate with the banks and solve your problem earlier. Don’t be shy to call them.
Do you realize that when you don’t need money, banks keep calling you to lend you more? But when you desperately need the money, they are somehow reluctant to hand you the cash. This is the reality.
So, how do you settle your credit card debts? Tell us your success stories. Or you can also warn us with a bad example.
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author:
MagicBus
Case Study: Consolidating Personal Loan, Mortgage and Credit Card Debt
First of all, many thanks to you for giving me the free e-book. Its’ worth reading, cause I’m aware of unit trust investment now. As introductory, I’m female, age 33, working in a factory. I’m in debt, honestly. I’m in debt of personal loan, housing loan, credit card loan. However I’m also having passive income, if that’s correct to describe my monthly income from 3 acre land of kelapa sawit. But honestly I’m not a decision maker in financing. Would you please advise me on below problem;
Debt 1;Personal loan with bank rakyat; balance is total RM 35K. mthly is about 568(a bit for get). for another 62mths. Rates 5.75%. If settle now need to pay RM 28K.
Debt 2; housing loan, balance is 12 years, mthly is RM 850, rates(forgot). I’m planning on refinancing my housing loan, which is 71K (plus insurance), for 15 years (rates; 1st ~ 3 yrs: 4.9%, 4th yrs onwards : 5.01 %), mthly will be RM 565.
When I read your ebook, I’m thinking of add another 28K to that amount. So that I can settle the personal loan. So after discuss the bank officer told me, for 28K, for 15 years, mthly repayment is RM 222.
My intention is to reduce the MRI, monthly repayment installment. So instead of paying 1418 ;housing & personal Pay only 787.
But problem is, if the personal loan plus interest total if included in refinancing will be RM 40K. SO I feel confused now. Which way to move on?
MY OPINION: Undeniably, mortgage loan is the cheapest loan available nowadays. Bankers feel secured because your house will likely appreciate in value over time. I agree that it is a wise move to consolidate yourpersonal loan and mortgage. So that the end result is paying only the mortgage of roughly RM99k. Then you will reduce your monthly installment thus providing you more surplus.
However, you mentioned that the total interest will be RM40k, which is true. Refer this file for an estimation of the mortgage amortization table.
Please don’t be confused by the TOTAL interest you will have to pay. In fact, the money will be in “lesser value” relatively, because RM100 now is worth a lot more than RM100 15 years later. That’s the future value of money. If you discount every ringgit you pay down the road, it is not as high as RM40k you might perceive.
The right perception is to think of the money’s worth in today value. The easiest way to compare is the Internal Rate of Return (IRR). Sorry that I don’t want to confuse you with this jargon. In layman terms, just compare the effective annual rate (EAR) of return on where you put the money now. Since the personal loan interest is 5.75%, it is better to consolidate it in your mortgage refinancing which is 4.9%.
In order to provide a case study, further information needed for the analysis:
1. How much is your house worth now? the value is about RM140K.(its SEMI-D (SINGLE STOREY))
2. Can you check through your document to find the mortgage interest rate? 3.99 %(1st year) + 6.80%/ANNUM(2001) , I read thru docs, mentioned that we have ceiling of 9%,(eon bank)
MY OPINION: You really should refinance your mortgage. You will be able to save 1.9% interest charges.
3. You mentioned about credit card debt. Can give more details? I have hongleong master card, I did balance transfer fr hsbc visa & master, at total amount of RM3000. So I’ve committed to pay RM270/mth in order to keep the special rate which is 6.99% within 1 year. Plus I took coc which is cash online credit after that, at amount of RM2900, so I can pay the legal fee for refinancing & get the lowest rates(if non free moving cost, they offer only blr-1.4, if free,the rates is blr-1.7. So I commit for 3 years, mthly I have to pay RM104. MY OPINION: If you are taking the COC for the purpose of getting a better rate on your refinancing, that’ll be not wise at all. The extra 0.3% for zeromoving cost (ZMC) refinancing package, based on RM99k loan is only RM297 saved on the first year. The amount you will save on interest charges will get less year after year. How long do you think you can recoup the RM2900 for the legal fees? 8-10 years? Plus all the interest you paid for COC? You should have taken the ZeroMoving Cost Package which charges slightly higher interest rate of BLR-1.4.
Moreover, is there any penalty to settle your HL master card debt? If not, why not take additional RM3k via your mortgage to settle it. Theinterest rate of 6.99% is 2.09% higher than your new mortgage of 4.9% 4. Do you have any other assets beside the mentioned land? such as life insurance policy, or other form of investment? I have maybank life insurance, which I pay RM112 for 16 years & it will be end in 2015, the sum is RM15K plus bonus.
I also have tabung haji. Monthly I deduct RM 220 fr my salary.
I.m sorry ,but I have another question. Since the factory which I’m working have grouping insurance fr great eastern,I’m thinking about taking the money fr maybanklife insurance to invest in unit trust. If surrender now, I can get 9000. Is it worth doing that?
MY OPINION: Please don’t surrender your policy. It is dumb to do so because you are half wet. Use your saving to invest in unit trust. Don’t use your insurance money. Since you had paid the premium for this Maybank policy for 9 years, it is really worth to continue paying the premium. Now every sen you pay is 100% used for your policy cash value that will generate more bonus.
After you refinance, you will have a better cash flow. Manage your cash flow wisely and do budgeting and frequent monitoring. You shall continue with your tabung haji too.
Overall opinion: 1. Consolidate all your debts (credit card, mortgage, and personal loan) into only one mortgage. Your house value is RM140k and it is enough to finance all your debts.
2. After you consolidate the debt, you will have a better cash flow and surplus. Save regularly. Meanwhile, learn about how to properly invest your savings.
Do you have any advice for this particular case? Please share in the comment.
