Personal or family budgeting is very simple, yet majority find it difficult to do. It is so simple that the only mathematical function that one may use are the addition (+) and subtraction (-). Multiplication or division is seldom used. Finding the square root or those advanced functions are never ever been useful in preparing your personal or family budget.
People find it difficult to follow not because they do not know how to add or subtract, nor they do not have the calculator. The main reason therein is that when speaking of the subject about money and spending, a great deal of emotion is involved.
Imagine for a moment that you receive from your employer a news that on or before the christmas eve you will receive a bonus equivalent to 200% of your salary. What do you think are the things that your mind will be processing? Think deeply and do this exercise for a few moment before you proceed to the succeeding paragraph...
...done with the exercise? I know it is difficult to imagine at this point of time of crisis as bonus are hardly given by every employer. But for the sake of this discussion, I am giving you a chance to really imagine and think seriously what really want to do with this bonus received?
More often than not, when people received a news like this the things that they will immediately think are new stuffs like camera, laptop, cellphone, clothes, and other items to spend for. Seldom people think of setting aside major portion of the amount for savings. Worst is that very less likely people think to set aside for giving.
Whether you agree with me or not, that is a fact. A very sad fact at that.
Everywhere you go commercial advertisements are abounding. Billboards on the streets, on the newspapers, televisions, radio stations, and every other medium these intelligent marketers could think of are being utilized. Some taxi cabs in Al Ain City are now being attached with an advertising board at the back and top.
These things that we continually see and hear every where gets into our subconciousness. Little did we know, our emotions are being hyped up to think of stuffs whenever we are anticipating receipt of any monetary value.
The emotion stirred up by this daily dose of commercial advertisements around us is the main reason why we could not even start to prepare and follow a personal or family budget. As simple as addition and subtraction are even so difficult to do when it is overshadowed by the emotions.
Overcome this emotions by being content. For Paul in his epistle to Timothy wrote that "contentment with godliness is great gain."
Tuesday, December 22, 2009
Tuesday, December 15, 2009
Saving for the Rainy Days
Last weekend, the United Arab Emirates (UAE) experienced the heaviest downpour in its history. It rained for almost three consecutive days, though on and off.
The heavy downpour resulted in flooding of the main thoroughfares. The streets and most of the places were flooded and the waters will take days or even a week or two before it subsides, for the drainage system is not designed to accommodate so much volume of water as rain is a luxury in this place of the world.
Even most of the villas experienced leaks over its roof for these were not tested for water leaks when it was constructed. It seldom rains in this part of the world. Rain in this part of the world would only visit the place one to three times a year, in so far as I had been experiencing for the last five years. And it was not so heavy as, it was lately.
Who would have thought such a thing would happen? So you may ask or say. But, it happened.
Let me now drive to the importance of having an emergency fund set aside, using the recent event in the UAE that was just narrated in the preceding paragraphs as an analogy.
Even if rain seldom visits the desert, but still it will eventually visit. The same is true with our own lives. Bad things will eventually happen as long as your heart still beats. As long as you are still walking consciously, it is inevitable that one of these days there will come some emergency. From a breakdown of your car, home appliances to a sickness or death of loved ones.
As UAE has not provided enough provision for its drainage system, once it rained for a few minutes, streets are easily flooded and water would subside turtle pace. A heavy downpour that was just experienced recently made the municipality of Al Ain deploy trucks to siphon out water on the major thouroughfares, so that it would still be passable by motorists. If you had not set aside an emergency fund, and a heavy rain would visit you, then you are forced to take out of the ordinary course of actions like using your credit card or borrowing just to make your way out of the flood caused by the rain.
Finally, as a result of deploying those trucks on the streets posed dangers to motorist as it is blocking the way. So if you are using your credit card for emergency payments, then you are at risk of not paying it off for it is now blocking off some of the portions of your income. In other words, it caused a heavy strained on your budget.
If you already have set aside an emergency fund, it is suggested that you review it and see to it that the amount is approximately three to six months of your living expenses. Most financial advisers recommend that this amount is a comfortable level of emergency fund. And this fund should not be tied up in any other investment, where it is not readily available as cash when neeeded.
Now for those who do not have one as yet, this is the best time for you to meditate on its importance as laid down above. It is up to you to heed this advise for you to set up one. Like in my previous article, it is suggested as your first baby step to set up a 1,000 dirhams and build on this month after month until you reach your targeted amount.
As it rained heavily in the desert, so will come in your life too. Start saving for the rainy days.
The heavy downpour resulted in flooding of the main thoroughfares. The streets and most of the places were flooded and the waters will take days or even a week or two before it subsides, for the drainage system is not designed to accommodate so much volume of water as rain is a luxury in this place of the world.
Even most of the villas experienced leaks over its roof for these were not tested for water leaks when it was constructed. It seldom rains in this part of the world. Rain in this part of the world would only visit the place one to three times a year, in so far as I had been experiencing for the last five years. And it was not so heavy as, it was lately.
Who would have thought such a thing would happen? So you may ask or say. But, it happened.
Let me now drive to the importance of having an emergency fund set aside, using the recent event in the UAE that was just narrated in the preceding paragraphs as an analogy.
Even if rain seldom visits the desert, but still it will eventually visit. The same is true with our own lives. Bad things will eventually happen as long as your heart still beats. As long as you are still walking consciously, it is inevitable that one of these days there will come some emergency. From a breakdown of your car, home appliances to a sickness or death of loved ones.
As UAE has not provided enough provision for its drainage system, once it rained for a few minutes, streets are easily flooded and water would subside turtle pace. A heavy downpour that was just experienced recently made the municipality of Al Ain deploy trucks to siphon out water on the major thouroughfares, so that it would still be passable by motorists. If you had not set aside an emergency fund, and a heavy rain would visit you, then you are forced to take out of the ordinary course of actions like using your credit card or borrowing just to make your way out of the flood caused by the rain.
Finally, as a result of deploying those trucks on the streets posed dangers to motorist as it is blocking the way. So if you are using your credit card for emergency payments, then you are at risk of not paying it off for it is now blocking off some of the portions of your income. In other words, it caused a heavy strained on your budget.
If you already have set aside an emergency fund, it is suggested that you review it and see to it that the amount is approximately three to six months of your living expenses. Most financial advisers recommend that this amount is a comfortable level of emergency fund. And this fund should not be tied up in any other investment, where it is not readily available as cash when neeeded.
Now for those who do not have one as yet, this is the best time for you to meditate on its importance as laid down above. It is up to you to heed this advise for you to set up one. Like in my previous article, it is suggested as your first baby step to set up a 1,000 dirhams and build on this month after month until you reach your targeted amount.
As it rained heavily in the desert, so will come in your life too. Start saving for the rainy days.
Tuesday, December 8, 2009
Make It Simple and Cut Those Plastics in Two
The past couple of weeks, the word "simple" keeps on bogging my head once in a while especially on my devotional time. It was confirmed last night with the illustration of Pastor Edward Barcial during his exhortation at our midweek service.
When he related to us one of the email messages he received from a friend, I recalled that sometime March 2009, I also received from my sister the same email message, though a Cebuano version. The story speaks of the simplicity of life for all that were born in the 1950's, 60's, 70's, and early 80's. It was such a detailed narration of how we, as I am one of those born during those years lived our life very simply without the inventions and innovations enjoyed by kids these days like internet, playstation, xbox, iphone, cellphones and other gadgets that most kids are enjoying in this new millennium.
To add to that simplicity of life, I could vividly recall that my parents and grandparents were living life without credit cards. My fraternal grandfather, to whom I consider as my first mentor in personal finance did not even have any form of major borrowing from any financial institutions as he vehemently discourages resorting to any form of borrowing.
Without credit cards or borrowing, I am proud to say that my grandfather acquired properties and other stuffs so precious in the 1970's such as television, refrigerator, or even a car. His main secret is save, save, and save. And the simple formula is to spend lesser than what you earn.
Let me now stress on one of those innovations that has been introduced to give convenience to the consuming public, the credit card. Major credit card providers are marketing this product to provide convenience as one can purchase cashless, easy payments, deferment of payments, and many other perks and rewards system. Behind those convenience and comfort, are the evils that it carries and are not disclosed. For this, everyone fairly knows what I am trying to say.
In the previous article, I made mention that my little gold cards have already undergone plastic surgery. I just decided to make my life simple, especially in the area of spending. Simply put, my family and I will only be spending on things that are on budget and on cash basis.
Aside from the fact that in 2010 the bank that issued my credit cards will start to impose a AED10 ($2.50 approximately) per month as charges, where it was marketed as free of membership and annual fees for life, I decided to cut these in order to show an example to my children. I am now walking my talk as I kept on reminding them the dangers of spending on credit cards and borrowing.
The following are the dangers of using credit cards:
If your answer is not, good luck to a complicated life.
When he related to us one of the email messages he received from a friend, I recalled that sometime March 2009, I also received from my sister the same email message, though a Cebuano version. The story speaks of the simplicity of life for all that were born in the 1950's, 60's, 70's, and early 80's. It was such a detailed narration of how we, as I am one of those born during those years lived our life very simply without the inventions and innovations enjoyed by kids these days like internet, playstation, xbox, iphone, cellphones and other gadgets that most kids are enjoying in this new millennium.
To add to that simplicity of life, I could vividly recall that my parents and grandparents were living life without credit cards. My fraternal grandfather, to whom I consider as my first mentor in personal finance did not even have any form of major borrowing from any financial institutions as he vehemently discourages resorting to any form of borrowing.
Without credit cards or borrowing, I am proud to say that my grandfather acquired properties and other stuffs so precious in the 1970's such as television, refrigerator, or even a car. His main secret is save, save, and save. And the simple formula is to spend lesser than what you earn.
Let me now stress on one of those innovations that has been introduced to give convenience to the consuming public, the credit card. Major credit card providers are marketing this product to provide convenience as one can purchase cashless, easy payments, deferment of payments, and many other perks and rewards system. Behind those convenience and comfort, are the evils that it carries and are not disclosed. For this, everyone fairly knows what I am trying to say.
In the previous article, I made mention that my little gold cards have already undergone plastic surgery. I just decided to make my life simple, especially in the area of spending. Simply put, my family and I will only be spending on things that are on budget and on cash basis.
Aside from the fact that in 2010 the bank that issued my credit cards will start to impose a AED10 ($2.50 approximately) per month as charges, where it was marketed as free of membership and annual fees for life, I decided to cut these in order to show an example to my children. I am now walking my talk as I kept on reminding them the dangers of spending on credit cards and borrowing.
The following are the dangers of using credit cards:
- There is a tendency to spend more than paying your purchases and other spending by cash. Swiping those plastics in lieu of cash takes away that physical sign that will signal you to stop spending. Spending now depends on the credit limit rather than the available cash.
- Swiping those plastic money also tends you to pay more. Some establishments are adding up a percentage of amount billed, like the gasoline stations when paying with your credit card. And if your total spending exceeds your available cash, you may not be able to pay for the total amount billed, hence paying additional interest and other finance charges.
- Depending on your credit card as a mode of payment, your purchasing decision is based on a synthetic value, rather than the true value of the item. Decision is now based on whether you can afford the monthly installment rather than the total value of the item.
- It is very difficult for you to trace your spending and purchases if you are dependent of the plastic money. You will just be surprised one day, upon receipt of the monthly statement how much you had spent, and mostly on unnecessary items. Hence, your budget is already ruined.
If your answer is not, good luck to a complicated life.
Tuesday, December 1, 2009
A Tool in Danger of Transcending To become Your Master
"Debt is often necessary and useful tool..." a quote from an article entitled "Manage debt before it hurts you" by Richard Hextall and published in the Gulf News on November 28, 2009 under the "your money section" of the said daily newspaper. I am in agreement with all the statements and arguments presented in this article, but this one.
Before proceeding further on, let me make this clear. This piece is not a criticism, be it constructive or otherwise to the aforesaid Gulf News article. In fact, I admire the whole article that I find so insightful. I am just disturbed in the quoted statement, and this I am just presenting my own argument, why I am not accepting this statement as is.
Based on personal experience, readings (both the bible and other secular materials on personal finance), and learning from various preachings and seminars attended to, debt should not just be used indiscriminately as a handy tool to purchase on just anything, even including a car or a house. I should then say that it is not necessary and useful that one should often resort to.
I should be a hypocrite if I say I had not resorted to borrowing. I did. However, my wife and I vowed not to resort to borrowing, as best we could. We are in the process of pre-terminating our car loan soon. Credit cards were already cut-off and had already performed plastic surgery to my credit card, after receiving a letter from the provider that in 2010 a service fee will be collected. I just took the card for they promised a lifetime free dues and administrative charges (as opposed to financial charges and penalties). A detailed write-up on the reasons why a credit card should be cut-off will be published in the succeeding weeks.
God's warning in Proverbs 22:7 which expressly states that a borrower is a slave to the lender made a very great impact to the way I am handling my finances. For as for me and my household we want to serve the Lord as long as we live. And how can one serve the Lord if one is not financially free. I just want to be slave to the Lord and not the Lender.
The danger then, when one consider debt as a necessary and useful tool is its transcendental effect where the tool may later on becomes the master. One may wake up one day and realize that more and more time is now spent thinking and working for ways just to keep up with the payment of the loans. Quality time with the love ones, fellowship with the brethren, or the prayer and devotional time is now in danger of being compromised.
Ever wonder why people in a highly urbanized areas are always in a hurry? These people are always short of the 24 hours and are living a fast paced life. This is one evident effect that the world is controlling them. Most of these people are now becoming slave to earning more to pay off amortizations left and right.
And even if you are not living in the metropolis, but you are spending more and more time with extra work to earn extra income to payoff your monthly amortizations, you are in the brink of becoming a slave to the lender.
As a parting statement, let me quote Thomas Jefferson, the third president of the United States of America saying "do not spend your money until you have it." In this way, you will not have any chance of availing a loan.
Before proceeding further on, let me make this clear. This piece is not a criticism, be it constructive or otherwise to the aforesaid Gulf News article. In fact, I admire the whole article that I find so insightful. I am just disturbed in the quoted statement, and this I am just presenting my own argument, why I am not accepting this statement as is.
Based on personal experience, readings (both the bible and other secular materials on personal finance), and learning from various preachings and seminars attended to, debt should not just be used indiscriminately as a handy tool to purchase on just anything, even including a car or a house. I should then say that it is not necessary and useful that one should often resort to.
I should be a hypocrite if I say I had not resorted to borrowing. I did. However, my wife and I vowed not to resort to borrowing, as best we could. We are in the process of pre-terminating our car loan soon. Credit cards were already cut-off and had already performed plastic surgery to my credit card, after receiving a letter from the provider that in 2010 a service fee will be collected. I just took the card for they promised a lifetime free dues and administrative charges (as opposed to financial charges and penalties). A detailed write-up on the reasons why a credit card should be cut-off will be published in the succeeding weeks.
God's warning in Proverbs 22:7 which expressly states that a borrower is a slave to the lender made a very great impact to the way I am handling my finances. For as for me and my household we want to serve the Lord as long as we live. And how can one serve the Lord if one is not financially free. I just want to be slave to the Lord and not the Lender.
The danger then, when one consider debt as a necessary and useful tool is its transcendental effect where the tool may later on becomes the master. One may wake up one day and realize that more and more time is now spent thinking and working for ways just to keep up with the payment of the loans. Quality time with the love ones, fellowship with the brethren, or the prayer and devotional time is now in danger of being compromised.
Ever wonder why people in a highly urbanized areas are always in a hurry? These people are always short of the 24 hours and are living a fast paced life. This is one evident effect that the world is controlling them. Most of these people are now becoming slave to earning more to pay off amortizations left and right.
And even if you are not living in the metropolis, but you are spending more and more time with extra work to earn extra income to payoff your monthly amortizations, you are in the brink of becoming a slave to the lender.
As a parting statement, let me quote Thomas Jefferson, the third president of the United States of America saying "do not spend your money until you have it." In this way, you will not have any chance of availing a loan.
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