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Monday, July 29, 2013
There are few reasons that I don't feel comfortable; the first being not accumulated enough invest able cash and investment assets in which can generates the amount of cash that I need to have my current lifestyle. Another reason is I'm still aiming for property and still paying for my property; in which will increase my expenses. So, I look into the advice of Mr. Money Mustache and learn something; though I cannot emulate him 100%, I'm sure there are some key learning from him.
The article is as follows:-
Meet Mr. Money Mustache. Hundreds of thousands of readers follow his bold advice on his self-titled blog — and for good reason. He has cracked the retirement code while many of us were struggling with student loans. At 23 years old he began working and saving…and saving some more. By age 30, he’d amassed some $800,000 in cash and investments, and then entered early retirement.
How, exactly? I flew to his home in Longmont, Colorado, where the now 38-year-old lives with Mrs. Money Mustache and Mustache Junior, for the scoop.
The Rule of 70%
While a popular rule of thumb is to try to save 10% of your income every month, in the race to retirement Mr. Money Mustache saved and invested close to 70% of each paycheck until he had about $800,000 racked up. At that point he felt comfortable quitting his job, as the dividends from his stock portfolio and income from a rental property were finally enough to support his family’s lifestyle. “I just figured based on a 4% withdrawal rate of your savings, if you have $800,000 saved, you could draw an income of $32,000 a year from that. Our needs are less than that, so we actually don’t need $800,000 in savings.”
But wait. How does the family live on less than $30,000 a year with a child? “It’s by cutting out stuff, the invisible stuff, that’s most expensive. I kept the headline items, like a house, trip to Australia and good friends and good food, but I cut out stuff like spending $50 on coffee a week or having a brand new car every few years,” he says. “We do a lot of stuff ourselves. We go to parks. We do music together. We ride our bikes, go to the library. Kids love it. Costs almost nothing to do.”
Treat Debt Like Your Hair Is on Fire
We should mention that Mr. Money Mustache graduated without any student loans. He never really had any credit card debt and advises his readers, who aim to retire early like him, to treat debt like a scary emergency, as if their hair is literally on fire. “If you have credit card debt, you don’t make little payments on it. You don’t go to the movies and put $10 on the credit card. You stay home, you earn as much money as possible, you eat the cheapest food possible and get that emergency solved,” he says.
The Mustaches intentionally live in a town with a relatively low cost of living. Their property taxes in Longmont are only $200 per month, and the home’s solar design and insulation keep energy bills to under $40 per month.
Who Needs a Car?
Longmont is also a bike-friendly town, which encourages even more saving. By biking to most places, Mr. Money Mustache figures it helps the family save roughly $10,000 a year on transportation costs. “I kind of have a rule: You do not drive the car for trips within the city, because you don’t need to. The bike will do it just as fast, and it’ll be better for you,” he says.
Monday, July 22, 2013
There are few reasons I settled the PTPTN loan, the main reason definitely to enjoy the 20% discount, although some might argue that if the Opposition take over, we might get it waive 100%, in which I will not want to go to that. In my opinion and my second reason to settle the loan, I would think that we should repay the institution what we have borrowed, so that our children will continue to have the benefit of getting low interest loan for education; which again many will argue we should be getting education for free - again, I will not go into that.
Well, for those who intended to enjoy the 20% discount and to settle the PTPTN loan once and for all, the following is the step by step on how to do so.
1. Go this website: http://eform.ptptn.gov.my/borang-digital/sahbaki.cfm. After obtain the form, attach and and email to the one of the department in PTPTN email@example.com. stating your name and identification number and the loan reference number to get the balance as of the email date with the intention of full settlement of the PTPTN loan according to Budget 2013 to enjoy the 20% discount; and within the next working day, one should be receiving the email from a representatives from PTPTN regarding the balance as of the email date, as well as the full settlement amount with the 20% discount.
|Example of the attachment regarding the full settlement with 20% discount|
2. Print out the attachment with the PTPTN full settlement details; it is a PDF file - the naming convention of the PDF supposedly be something like USERNAME
2. Go to any of the bank and issue a bank draft or banker's cheque with the stated amount. (It's just unfortunate that the PTPTN offices will not be accepting credit card as payment, else, I can give this step a go)
|Bank draft/banker's cheque sample|
3. Go to any of the nearest PTPTN office and give the bank draft or the banker's cheque together with the printed attachment and pass everything to the officer and the officer will do the rest.
4. Wait a while for the full settlement letter to be issued by the officer to you and voila, you have just settled the PTPTN loan. When you check the loan balance online, you might still see the 20%, but it will be totally removed after 7-14 working days.
|Full settlement letter|
Saturday, July 20, 2013
Thursday, July 18, 2013
Here is the thing that we encounter most often...."income not enough?"
A lot of people have criticize the Gen-Y for not knowing how to appreciate the jobs that they have or the opportunities given....it is true to a certain extend but what Gen-Y is complaining have its' valid points...ask most of the Gen-Y and they will tell you that their current companies are no good, income not enough etc.
Well, let us do some simple calculations shall we? Here is a simple calculation....
The average rate for a rented apartment in the Klang Valley costs between RM800 – RM1000 per month depending on location. Car loan repayments are somewhere between RM600 to RM1000 a month, while monthly fuel expenditure is RM 250 – 300 a month; exlcuding tolls. Food tallies up to about RM800, if you eat out everyday three times a day, averaging at RM10 per meal. Add other costs like cigarettes, entertainment, internet and telephone bills and all of that rounds off to about RM3000 – RM3500 a month. Well, if we try to minus off the entertainment, it will still account to about RM3000...or maybe we got a room instead, another 500 lower so about RM2500...how about taking LRT and not getting a car...so that will help our spending to be about RM2000....
And how much are the fresh graduates earning? Anything from RM1.8k to RM2.8k....so, is it logical that one complained about income not enough? I think it has its validity to a certain extend. Then, when marriage comes, one have to start thinking about more savings...buying houses, etc. Of course, the initial stage, it could be even easier when the couple get to halves the expenses....carpool, stay together, eat in etc. Some even stay with the in-laws but what happens next? Babies? Do we still consider 50/50 on the expenses? Things become an entirely different issue when that happen. What we see nowadays are a trend of getting dual income....working from home, people giving tuitions, online business and others. Are those choices come willingly? No, I don't think so. I have seen friends who took up teaching because they have to.
Income is definitely not that enough to cover for all that expenses...of course, not all is lost. If you are not earning that high amount, try to think of solution...those extra incomes could be of good use. Instead of driving, taking the LRT is not bad especially if you work somewhere in KLCC, Pavillion etc. The surroundings there are good for taking LRT and you could even save on gym since you'll be having your daily walks every morning and evening. The truth is ugly but if you are not earning enough, it's either think of ways to increase earnings or cut expenses.
Saturday, July 6, 2013
#1 - Spend Less Than You Earn
#2 - Earn More
#3 - Never Depend On Single Income
The rule of personal financial management #4 is more on the mistake that most people made when deciding on the insurance premium that suit them, and most of the time people either over-insure themselves or pay an excessive premium for insurance because they do not know how to optimize their money. For example, consider two insurance products for a person at age 35: term insurance for RM500,000 will cost RM1,625 per annum, whereas a whole life policy will cost RM14,225 per annum.
We have to understand that the idea of getting insurance cover to protect our loved ones from financial hardship in case of an untoward event; which is the reason why we should go for the lowest possible premium and then investing the difference between the two premiums to optimize our money.
Many have chosen the wrong premium mainly due to greed, as well as lack of knowledge in the insurance product that they were about to purchase. While the objective is clear which is to protect the loved ones from financial hardship in case of something bad happen, but many will treat insurance as part of the investment.
Overall, insurance cover is needed to protect our loved ones from financial hardship, should something bad happen to us. Having said so, one should truly understand the policy before signing up for the policy and most importantly not to over insured or paying too much in insurance premiums because eventually insurance will just serve as a type of protection.
Thursday, July 4, 2013
We all know, innately, how the rich get richer. Money begets money. But how does that actually happen, aside from compounding interest and purely financial factors?
You could take the cynic's view that the game is rigged. But the more accurate answer, backed by research, is that the rich get richer because of great parenting. How rich you become over your lifetime is directly related to how early you capture the basic truths of finance and investing.
You have seen the exception that proves the rule, the rich kid who blows his family's wealth in a generation through poor decisions. Chalk that up to absentee parents. Truly, teaching is the missing link.
According to a report in Time magazine:
In a paper unveiled a few months ago, researchers led by Annamaria Lusardi, professor of economics at George Washington University, found that an early understanding of financial concepts accounts for as much as half of the wealth gap between the affluent and those with low incomes . Lusardi also found an exponential effect: Those who acquire financial understanding early tend to accumulate assets faster and those with more assets tend to keep learning about personal finance because they have more at stake. (Emphasis added)
There are two powerful forces at work here, in terms of how the rich get richer. Let's tease them out so that you can benefit from the knowledge.
First and foremost, how the rich get richer has a lot to do with picking the right parents. Kidding aside, being born into a developed-country household, availing yourself of a quality education at a low relative cost, enjoying the benefits of a healthy diet and a safe childhood, all of these things give a person automatic advantages.
Yet there are people born into good circumstances who nevertheless seem to just "get by." They see the rich get richer and, quite rightly, question their own choices.
Instead, they should question, or at least examine, their parents' choices. Kids don't listen to what their parents say. They do what their parents do. A parent who saves diligently and consumes moderately is setting a very good, lifelong example for his or her children. A parent who constantly overspends and lives in debt does not.
How the rich get richer: They start early
But the kicker here is learning by doing: Teaching by example is great, but a child learns the power of saving and investing not only by seeing it done by others but by doing it themselves. Practice is how the rich get richer.
Once a young person gets a little bit of capital set aside, they begin to think more conservatively about money: How can I protect and grow that wealth? What are the risks to my plan?
How the rich get richer is by passing on simple lessons about compound interest, about risk and reward, and about the role of money in a healthy, happy life. Rich parents don't fear money; they consider it a useful tool. Those attitudes pass on, compounding in value with each succeeding generation.
Working hard at getting an education is a great base. The simple act of periodic, automatic saving is another excellent lesson. Prudent, effective investing is yet another.
Great fortunes are often built not on chance events but on steady, risk-controlled investment plans that take into account the best practices of generations.