My First One Million Pesos

The 4 Steps to Financial Freedom - Aspire * Achieve * Acquire * Allocate

Medical Insurance

June 20, 2009

Some people have argued with me about the importance of buying medical insurance.  A number have declared that they are as healthy as bulls and don’t need this “additional expense” in their lives.

Medical insurance has helped me a lot in the past years.  Since I work in a high pressure type of environment with abnormal sleep hours, there were times when my asthma would bother me and I would have to go see a doctor.  I even got hospitalized before and I am thankful that I only paid P198…the bill was actually about 35k– but of course, the insurance covered it all.

Now that I am employed, my company takes care of my health insurance.  when I was a kid though, my parents bought insurance for us and it really went a long way.  Visits to the ER, dental appointments and even some procedures were done without us having to pay for much.

The advantage of  having health and accident insurance is really big and unfortunately will only be realized by a person when an emergency happens.  Of course, you need to pick a really good insurance provider. One that will really fit your needs.

I’m happy with my current provider, even my dad has been able to use the policy since he is one of my dependents.  I’m also able to help my brother, he’s the other dependent and is apparently only two years old! Kids nowadays get sick of one thing or another and the coverage is really useful for him.

My insurance provider requirement checklist:

1. Covers long term conditions developed after buying the insurance.

2. Covers pre-existing illnesses.

3. Flexible payment terms.

4. Allows for adding dependents.

5. Covers a wide geographical area (great for frequent travelers)

6. The office is easy to contact specially when it’s an emergency case.  (One provider I had before even uses swipe card technology, so that hospitals don’t need to call to verify the card details).

7. Is accepted in many quality hospitals.

8. Covers out-patient  medication (This is rare, even my provider doesn’t do this.)

9. Covers testing procedures (An MRI is very expensive!  Covering it would save you 8k)

When you get a medical insurance provider, ask questions before you sign. Compare with other providers and find the one that will suite your lifestyle.  Make a list of possible concerns you might encounter and ask the provider about how they handle these situations.  Don’t scrimp on this investment, you’ll never know when you’ll need to use it.  You could save a lot of money on trips to the ER or regular check-ups.

Part of saving money is also preserving your health.  Health is wealth and if we stay healthy, we have the capacity to earn more.  An investment in health insurance can go a long way.

It’s BONUS time!

May 22, 2009

Most of us in the Philippines don’t get our bonuses til Christmas season.  Some of us get it quarterly or in the middle of the year.

I work for a company that has paid out bonuses both in the middle and at the end of the year.  They basically split the 13th month bonus (a mandatory gov’t benefit) in half.  The first half is given to the employee at the end of May, so that employees with kids could pay for enrollment and other school fees.  The other half is given on the first payday of December just in time for Christmas shopping.
For people who don’t understand our salary structure here in the Philippines, it’s basically this:

1. 13 month pay - required by the government.  If an employee separates from a company before the year is over, he still gets the pro-rated value of this bonus.  It’s normally factored into a salary as more of a forced-savings kind of thing.  This bonus is non-taxable up to 30k pesos.  Beyond 30k is taxed.
2. 15th and 30th paydays - most companies schedule paydays twice a month.  it’s normally the 15th and 30th of each month.  Other companies have it on the 20th and 5th of each month and others have their own schedules.  This is designed to help people budget their money for 15 days til the next payday comes.
3. Additional bonuses - are really up to the company.  Some companies give a 14th-16th month bonus, quarterly bonus or mid-year bonus.  This is usually dependent on the financial standing and performance/productivity of the company.  It’s not mandated by law so it could be cancelled by the company at any time.

So how do you normally spend your bonus?  Since you’d already know at what time of the year it’s coming, it’s always wise to plot your spending in a chart or list so that you could maximize the benefit of the bonus.

Many people don’t have a plan, that’s why they end up spending all of their bonus without having a chance to save any of it.

Ever since I started becoming financially conscious, I’ve decided to always have a plan of sorts for any money that comes in on top of my current salary.  Even if I am fully aware that my bonus is coming, I still treat it as “extra income”.

My advantage really is that I don’t anyone to send to school.  And the tendency of people like me is basically to buy the newest electronic toy in the market.  As long as you have planned to put your money there, no problem.  Just make sure you are prepared for any other spending you might have to do.

Stick to the essentials before rewarding yourself with a big ticket item.  What do you need now?  Do you need to repair your car or home?  Make a list of what you need to spend on and what you want to spend on.  That way,  you could prioritize.

Guide questions:

1. How much of this bonus should I put into savings? (I’d say answer this first before splurging on anything else.)
2. How much should I use to pay for my debt? (Credit card, loans…etc.)
3. Do I need money for my car or my house? (Unless you have established a separate fund for this, you need to ask yourself that question)
4. Do I have enough to invest in a business?
5. Do I have enough for my kids’/siblings’ school tuition and other fees?

and finally…

What can I reward myself with this money when I’m done allocating it to what I need?

Prioritize your spending specially when you come into a big amount of money.  This way, you will maximize the use of the most important employee you have in your life…MONEY.

Money doesn’t complain…doesn’t charge overtime…doesn’t take breaks and does all the work for you for as long as the price is right.  Make your best employee, money– work for your benefit.

The Objective of Saving Money for a Rainy Day

May 11, 2009

Why did my parents always remind me to save money?  The answer was always: “Save for a rainy day.”

I  always thought it was very simple.   I fell into the trap of thinking that I was only saving for one purpose: retirement.

What are we saving for?  What are those rainy days?  Today I’m going to try my best to detail what those are so that we aware of the “more than one thing” we need to save for aside from our retirement.

The Essentials:

1. Retirement: Everyone knows we need to save for this.  When we get old are are no longer able to work, it would be best to have enough money to spend until the end of our days.
2. Medical Emergencies: If you don’t have medical insurance, it’s time to invest in that as well as set up an emergency medical fund.  It helped that my partner and I had medical insurance and savings specially when we both got very sick at the same time.  We were unable to report for work and were confined to stay at home.  One of our bank accounts dedicated to medical and household expenses surely helped us along the way.  My medical insurance did not cover medication if I stayed at home so we had to spend on that using our emergency fund.  Soon though, we will separate the emergency fund from the other funds to make sure we know exactly how much we have to spare in case of any medical emergencies.
3. Household Maintenance:  Our homes depreciate too.  Every time you need to spend for repairs, it is wise to take it our of a fund that is meant for just that. This has been very useful especially during times after heavy rains or floods.
4. Automobile Maintenance:  Owning a car is like owning a small house.  It is important to spend some money on it’s maintenance so that it’s always in tip top condition.  Cars will last longer if maintained on a regular basis following it’s maintenance schedule.
5. Family Emergencies: If you need to help a family member during a financial crisis, this is a good fund to set up.  Remember, sharing our blessings attracts good karma!
6. Unemployment or Economic Crises: Be prepared for anything and everything related to losing your current job or source of income.  Put away as much money as you can and make sure you have at least a buffer fund that will support your lifestyle for at least 3 months if you are put out of work or if your business does not pan out well.  You will have 3 months to find another source of income and at the same time live comfortably.

The Extras: (rewards when we have some extra money)

1. Travel
2. Sports & Hobbies
3. Other Entertainment

It’s always wise to be prepared for emergencies as well as occassionally reward ourselves when things are going great.  This system also prevents you from over spending on the “Extras” and focusing on the “Essentials.”

Book Review: 12 Steps to Build Wealth on Any Income

April 30, 2009

I was browsing books in National Bookstore when I came across a shelf with an abundance of books on personal finance.  What’s so great about the book market now is that there are a good number of books that tackle personal finance for Filipinos.

There used to be a whole lot of books on personal finance but all of them were written mostly for other countries.  Of coure the basics will always be the basics but what’s nice about local publications is that there are local scenarios being discussed.  So, in short, I CAN RELATE better to local books in terms of managing finances.

I found a book which I eventually bought after browsing through the pages every time I was in National Bookstore.  Every week, I would pick it up and take a look at it to see if it was worth the buy.

Book Details:

Title: 12 Steps to Build Wealth on Any Income
Author: Alvin T. Tabanag
Peso: 300+ (sorry, i took the price tag off)
Availability: National Bookstore
Rating: 4/5

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Review:

Alvin Tabanag’s book deals with the hazards of spending, the joys of saving and the struggle one must go through in the process of balancing ones earnings with his finances.  I am impressed at how much research as well as common sense went into the creation of the book.  He tackles several topics which include:  how to save, making the right investments, saving for retirement, understanding how money grows in a bank, and a great section on credit cards.

The book is written primarily in English but has some excerpts and examples in Filipino.  You don’t have to be an accountant or finance-savvy to understand his book.  He explains personal finance in layman’s terms making the book an easy and very interesting read.
I most especially enjoyed the section on templates where he shares some simple forms on budgeting.  There is also a section with a list of banks, mlm companies, mutual fund companies and other options for investment.

Soon, I will share some of his tips and how those tips have impacted my saving and spending habits.  I highly recommend this book.  So far, I have influenced 3 people into making the investment of buying the book.  It has been a month and they are happy customers!

1/3 in 2/3 more

March 30, 2009

This has been one of the hardest times, really!  Saving money has become difficult specially now that I’m paying for a lot more things than before.  One great thing going on for me is the possibility of really growing my business.  Tomorrow, I’ll be doing my “costing” for my new venture.  I’m gonna start with some small businesses first them see if I have the capacity to grow it a bit more.

My family once owned a large scale dimsum business.  This was closed in the 1980’s to give way to a new venture (which eventually failed).  I am determined to revive a part of that dimsum business to see if it can still survive despite the times.  Some of my family is trying to do their version but the problem is, they’ re not doing so well in terms of pricing and really providing great value to customers.  I intend to change that.  So, i’m doing my own thing.  Some of you guys, if you’re in Makati tomorrow will see me delivering dimsum samples to the steel “jolly jeeps” in Legaspi Village.  Wish me luck!!

***

In other news, I have officially wiped out my credit card debt!  This gives me an extra 5k per month to put in the bank!

My Wundleberry

March 3, 2009

Once upon a time, there were two bunnies, a big bunny and a little bunny who lived in a tiny burrow at the edge of a big cabbage patch. Everyday, both bunnies worked very hard to harvest and sell cabbages in the bunny marketplace at the forest clearing. The big bunny’s job was to harvest the cabbages at night, while the little bunny would hop into a cart to take the cabbages to the market every morning at the break of dawn.

One day, the big bunny got sick and wasn’t able to harvest cabbages. The little bunny harvested and sold the cabbages and became very very tired that she fell sick too.

The bunnies were sick for 3 days, and their food supply was running out but they managed to get better. They realized that the cabbage patch was way too difficult to manage on their own. They worked too hard for too little. During the weekend, the bunnies hopped into the forest to explore new places. Little bunny hopped so high and so fast that she ran into a big bush! Big bunny came after her and saw her sitting among beautiful red berries.

Little bunny was so adventurous that she ate a few berries. Big bunny was worried that they might be poisonous. Hours went by and the little bunny was still fine. The bunnies discovered that the yummy berries were safe to eat. So the big bunny took a bunch and sold it in the market.

No one had ever seen big red berries before! They were so yummy that they sold like wildfire! The bunnies called the berries, Wundleberries!

Soon, everyone had heard of the wonderful wundleberries sold by the big and little bunny. Soon, the two bunnies made a fortune and did not have to work in the cabbage patch again.

The End.

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So I’m going through some turbulent times now. I’m at the brink of going nuts at work but I am still holding on.  Looks like I’m not inheriting the family business. As usual, someone went back on his word and the business is now stuck with some who, I dunno…seems to be running it into the ground. How in the world does this person expect the business to be big if it’s not even registered yet to issue receipts? Business basics? It doesn’t even have a permit to operate in the city it’s operating in. DTI? Where?

It may sound really mean but I’ve decided to put up my own business of a similar nature. It’s falling into place for me right now, the signs are there. The business is a dimsum thing. The cook/baker that worked for my family has resigned and is now asking if I want to hire him. Sure I do! The guy’s a jewel!
I just made a call to one of my good friends and shared a business idea with her.  We’re doing food carts, dimsum food carts.  I can guarantee the production of the food items, we’ll just need a solid plan.  So, we’re meeting on Sunday afternoon to discuss plans for our business.  It will entails an investment but hey, you gotta give some up to get some i, right?  Wish me luck!  This may be my Wundleberry!

February Financial Update

February 10, 2009

Hi everyone!  It’s been a tough January for me and as I write, I am looking at the possibility of doing away with a current endeavor.  I won’t say what it is yet but I am determined to find other means of income!

I can already invest a good amount of money in a small consistent business which I have not found yet.  So far, what’s earning for me are my investments in used car sales.  I have already turned in a profit of 25k out of investing in this.   What I would like to focus on now is to do more sales in terms of a food business, something that involves dimsum

Can anyone help me set up food carts?  I really want to do this.  Food sells specially when the product is very yummy.

I really need help with marketing.  That’s my waterloo.

Right now, I am crossing my fingers at the prospects of writing books since this is one thing I did in the last month.  It was fun but the profits turn in a bit late.  I’ll probably be getting my cheque in June or July.  You see, they’re academic books so I need to wait for the school year to start.

I really need something solid here.  Am getting anxious over the economic situation.

Goodbye PTC Sites!

January 12, 2009

I have officially given up on PTC Sites.

When I started making money, the majority of the sites I used started to change payment options. I personally love Paypal but it seems like Paypal has become stricter with their merchant agreements and no longer approves of transfers from most PTC sites.

My online activities used to pay for my rapidshare account but with all the new changes, I could not wing it anymore.

Time to find more money online….

Here’s to the New Year!

January 5, 2009

2009 seems to be a promising year for me. :)  I was looking at my Chinese zodiac and it seems like this year will be fruitful in terms of finances.

Highlights for 2008:

1. I started earning much better than in previous years
2. My savings account bloomed during this year
3. I was able to buy a car and move to a better apartment
4. I exercised a lot of control over myself when it came to spending
5. I learned how to maximize my earnings by effective budgeting
6. I also learned how to let go of money when I had to for emergencies
7. I made significant investments and started using eBay
8. I made some money out of internet ad placements
9. I made money out of what I love to do (martial arts)
10. I offered a new type of service and was able to help some people who did not have work.

Goals for 2009:

1. Find more freelance work to earn more
2. Close a book writing contract
3. Close another book editing/revision job
4. Manage to open a “Paglingap” time deposit through work
5. Get more involved in sports activities
6. Get more training for professional growth
7. Pay off car (WHEW!)

Now to the actual entry….

Today marks my first workday for 2009!  So far things are quiet at work since it’s only the start of the year.  During the long break, I managed to accomplish a significant number of things.

First, I was able to invest my money in a buy and sell car business.  So far, the first ROI cheque came in on time.  I am expecting two more installments this month.  This business pays me 20% of what I invest in a span of 3 months.  So far, my investment here is at 250k, split in two.

Second, the Chinese deli store that my dad is starting is asking me to sell our famous Tipsy Chicken.  I still don’t know if this business will really fly but so far…the chicken recipe works — it’s just a matter of selling it!

Third, my project with the security agency is still ongoing.  We are resuming classes by the 2nd or 3rd week of January.  This is something we started last October 2008 — my group and I started offering to teach practical self defense and combat skills to security guards.  The security agency got a huge discount from us but since the volume of work is a lot, we are still getting paid pretty well.  I am expecting some payments by February at the latest.

Finally, I started a book project with an academic author.  I revised an academic book on ESL for this person.  Payments though won’t really come in till the start of the school year but I am definitely expecting some good returns.

I am also considering some business options this year.  I was hoping to set-up an admin-services type of outfit like a business center.  It’s just so hard to look for a location!  Ideally, it should be very near a school but there is no more space for me!  If I put it in a mall, I’ll end up spending way too much on the overhead costs.

The baking business went very well last Christmas, we had tons of orders but I personally don’t earn from there.

One thing I really would like to do is get more book projects.  I am working on a personal one now, which is a book about practical self defense but that will be personally funded by me.  I need more book projects from other people that are willing to pay me to edit, revise or even write a book for them.  I wonder if publishing houses would be interested?

On the money side, I was good all Christmas vacation and did not over spend.  Hooray for me!  I followed my budget quite strictly.  Even though I  got sick, I was still able to stabilize my savings and even open a new account for myself in PS Bank.

The reason I’m opening more accounts is not because I have tons of cash but because I am positive that this year, I will be able to max out the PDIC limit on 2 of my bank accounts.  I intend to keep money to a maximum amount of 250k per account so that I am fully insured by PDIC in case the bank runs into some trouble.  Well, I don’t half a million yet but you know what they say: “If you open it (an account), it (money) will come.”

Happy New Year everyone!

News!

September 18, 2008

Hi folks!  I know it’s been a while since I last updated, so let me share what’s been going on.

News #1

I’ve finally been able to grant small loans of 1-2k per month to people who need money to start small businesses.  I have a broker who happens to be my maid (yes, the same one who used to lend my money out at 20% interest).  So far I’ve received1 payment and am receiving another one come end of September.  Sweet.
News #2

I got a pretty good reg package at work.  Nuff said.

News # 3

My partner and I bought a new fridge since our old one was too small for our household.  We got a Condura energy saver fridge.  Good thing is that we didn’t have to dip into our life-savings for this.  We got the money out of our revolving fund.  The old fridge was supposed to be sold but I decided to give it to my loan broker as a gift.
News # 4

I finally bought a car!  I’m selling the old one though so I can use the money to pay off some of the balance.  I went to the car showroom today to place a downpayment of almost 110k.  In the next 3 years, I’ll be making a payment of 15k per month.  I’ve already done calculations and so far, the payments won’t impact my saving capacity much.  At the same time, I’ll be able to spend less on gas.   The car I drive now is a 1.5 litre model with automatic transmission.  It uses up 1 litre of gas every 6-7 kms.  The new model I got is a 1.1 litre (4 cylinder) with manual transmission.  The new baby uses up about 1 litre of gas for every 10-12 kms.  That almost cuts my gas spending in half!  In a month, I spend about 4-5k on gas.  I hope that the new car really does help me save a bit more.  When I looked at the official website, it was listed there that the car can go for up to 20kms per litre of gas!  COOL!

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