What's your saving habit?

Every person has their way of keeping money. Here's mine.

1. I pay myself first.

I set aside a minimum of 20% of my paycheck (gross). The moment it is credited to my employee account, I take a mental note of how much 20% is and round it up to the nearest hundred. I set this aside (mentally) and discipline myself not to touch it.

2. I have my biweekly allowance.

Since my paycheck arrives biweekly (ours is every 10th and 25th of the month), I automatically get a fixed amount which goes into my wallet. This amount is based on a budget I made that will supposedly cover my daily expenses, like food, transportation, leisure, etc. How much this is, I won't disclose. ;-)

3. Plow back extra money into my savings.

At the end of the two week period, any extra money that I have goes into my savings. This is after I have paid any bills, loans, and whatnots.

4. Create a separate account for emergency fund.

This I still have to follow religiously. I created a separate account where I can put my emergency fund. Part of my savings goes here.

5. Finally, I spend wisely.

I shop around before I buy. Every major purchase I make is made with a decision. I'm allergic to impulse buying.

Mama's Advice on Buying a Property

Two weeks ago, my mother and I had this conversation over the telephone.

me: Ma, my stay with our company dormitory will expire January next year (2008), I have to look for a place as early as now.

mama: So what are your plans, anak?

me: Well, I was thinking maybe, if I can afford it, I'll buy a house or a condo somewhere near my work.

mama: Do you really think you need to purchase a property? You're still young, anak, and still mobile.

me: Sayang kasi ang rent money, ma. Maybe if I could get a place with a rent to own scheme? What do you think? Should I rent or buy?

And here's what my mama told me:

Ask yourself these first: What will be my purpose for the place? How long do I think I will stay there? Do I see myself moving in a few years? Months?

Now, should you decide in acquiring a place you should ask yourself these questions:

1. Will it or does it serve your purpose?
2. What is it's business potential? Will it be easy to sell or rent out when the time comes that you won't need it anymore?
3. Is the location good? Does it have any hazards? How are the surroundings? Will it be prone to flooding during the rainy season?
4. How about the price of the property? Do you think it is undervalued or overvalued? What were the materials used? Did it use high quality building materials?
5. Who are the builders of the place (if it is new)? Who were the previous owners (if pre-owned)?
6. What are the financing schemes? What are the terms of payment? Is it reasonable? Do you think you will be able to afford the mortgage?

me: Ma, so will I buy now rent first?

mama: Assess your cash outflow. Can you afford the monthly amortizations? Will you be able to handle the maintenance costs of your house? Or if you buy a condo, will it still fit your budget if you include the association fees, etc.? You must first assess your capacity to pay or else your property will eat up your salary.

me: Oh, ok. I will ma.

Then, our conversation shifted to something else...

After some thought about the matter, here's my conclusion. Maybe it's wiser for me to rent first and wait for the time that I will be able to really afford my own place. (Which I hope will be soon.)

PAG-IBIG Lowers Interest Rate

26th of June 2007, Wednesday

Good news for those planning to acquire their homes through Pag-ibig.

Here's an Inquirer report (by Cynthia Balana) that caught my eye:

Pag-IBIG Fund lowers loan rates

InquirerLast updated 06:58am (Mla time) 06/27/2007
MANILA, Philippines -- The Home Development Mutual Fund, popularly known as the Pag-IBIG Fund, has further lowered the interest rate on housing loans between P300,000 and P750,000 to seven percent, Vice President Noli de Castro said Tuesday.

The time Pag-IBIG cut interest rates on its housing loans was in November 2006.

De Castro, chair of the Housing and Urban Development Coordinating Council, said the rate reduction was meant to make housing truly affordable and accessible to ordinary workers.

He said the latest cut in interest rates targeted members in the middle-income bracket or those earning P16,000 to P20,000 per month.

He said this group constituted 23 percent of the labor force based on the statistics of the National Statistics Office.

“This is the next logical step to take. Remember that in November 2006, we already addressed the affordability issue of the lower income brackets, or 77 percent of the work force, when we reduced the rate from nine to only six percent per annum for a P300,000 housing loan,” De Castro said.

At seven percent, the monthly amortization, including principal and interest, is now down to P4,990 from P6,860 previously for housing loans of P500,000 to P750,000.

De Castro stressed, however, that carrying out “an honest to goodness interest reduction scheme” should also be complemented by streamlined loan requirements.

He directed Pag-IBIG Fund officials to look into the requirements of banks to see how the institution could further improve in this area.

Cynthia D. Balana

Link to the inquirer.net.

Give up Starbucks?

The cost of Starbucks.

I two close friends working at this call center in Makati.
At the end of the week, I would sometimes drop by their office right before they start their night shift.

Starbucks is right beside their building and I can't help but notice that the place is always full of call center agents. Some would be having coffee right before they go to work while some would bring their mochaccinos up to their stations.

Now, a thought just came to me. It is safe to assume that one of these agents would have bought at least one Starbucks coffee every single work day. Being a personal finance addict, I cringe at the thought. I can already imagine how much money is wasted from their paycheck!

So here, I will try to run the numbers and see how much one can save sans the tall frapuccino.

Let's assume that one tall frap is Php120 and an agent works 5 days a week.
So that's Php600 as week. Multiply by 4, that's Php2400. Hmmm... so assuming, just assuming, this agent gets paid Php15000 a month. Then, the daily caffeine fix would have eaten up a whopping 16% percent of this agent's total monthly income!

Had this person refrained from buying the green coffee, and instead dunked the Php2400 to his savings. This would have earned him yearly savings of Php28800.

Hmm... Now if this was invested in an instrument, let's say, a very good mutual fund... The results would have been better... But I don't have my calculator right now. So I'll skip this.

Maybe in my next entry I will continue this Starbucks story.

The one who says, "Own the Internet"

A few months ago (around February of March?) a friend sent me an email about a web company called Agloco. Well, I checked it out.

Agloco is just short for A Global Community. It's tag line says "Own the Internet".

Here's what I took from their site:

What is AGLOCO™ all about?

AGLOCO™ is the first Internet based economic network, which enables you
as a Member to Get your share of the Internet. Advertiser's, search
companies, online merchants and other businesses currently pay lots of
companies to deliver people like you to them for attention and commerce.
With AGLOCO™ they will be paying YOUR company. AGLOCO™ is also a global
community of Internet users whose active Members can paid for all their
online activity. By downloading our proprietary Viewbar™ technology, members
benefit from engaging content tailored to their interests. AGLOCO™ also pays
its members to refer their friends to the community (and for those friends
to refer more friends through four levels of extended referrals.

After reading, I told myself: Why not give it a shot? Right?

So maybe you can check it out too.

Here's the link to my agloco. :-)

http://www.agloco.com/r/BBCZ1508

How does the Filipino spend?

I stumbled upon a fact sheet released by the Senate Economic Planning Office which highlights the final results of the National Statistic Office (NSO) 2003 Family Income and Expenditure Survey (FIES).

Here are the bits and pieces that caught my attention:

1. The average family income increased by 2.5% from 2000 to 2003.
Take inflation in, it actually declined by 10%.

2. Lower-income families spent more than they earned.

3. Income of the richest 10% is 20 times more than that of the poorest 10%.

4. Food takes up almost half of the total family expenses.

5. By 2003, the family tends to eat out more than in 2000.

6. Spending on transportation and communication increased.

This data of course is a bit outdated but we can somehow see where our money goes. I wonder what the numbers would be in 2007.

The Beginning

The idea of having a blog came to me yesterday while I doing a monthly summary of my personal expenses.Before that, I was reading the Moneysmarts blog of Salve Duplito which led me to entrepinoys.blogspot.com by Eu-Leh and so on.

To cut it short, I was inspired.


So here it is. Investopinoy begins.