Why I Pay in Cash and Not with Credit Card

Consider this scenario.

You're in a posh hotel cafe hanging out with your friends. You call the waiter to get your bill. He comes back -- 260 pesos for a cup of extra thick hot chocolate served in fine china. You hand out your Visa.

Admit it. In that kind of setting, it's sexier to pay with plastic instead of some paper with a dead president on it.

If that was me, though, I would have paid with cash, be it as crisp as chicharon or as soggy as old pechay. Less trouble for me.

Here are four reasons why I prefer cash over card.
(By cash, I mean cash I earned and not loaned. By "paying in cash", I mean purchases in malls, markets, bargain shops, etc., and does not include huge things like cars, houses, and other things you normally pay for on installment.)

1. I lose the tendency to overspend by limiting my purchases with what I have in my wallet. This is especially useful when grocery shopping. I mean, we all do have that urge to get things not in the list, but with just the right amount of cash in the pocket and some will, I don't. Besides, it will be too much of a hassle to find the nearest ATM machine (of my bank, take note, to avoid transaction charges) just to buy those stuff not needed.

2. Unplanned purchases are avoided. I won't be able to buy those yummy-looking pumps if I only have "taxi money" in my wallet, will I?

3. I can "feel" my purchases. Yes, card purchases are quite "numbing". You won't feel how much you have spent on something until the time you see the monthly bill. More often than not, when you see it, it hurts. Especially if you have not kept track.

4. Discipline. Yes, discipline. With just having enough, I am are forced to discipline myself regarding my spending habits.

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Note: I do use my card on some things like airplane tickets and hotel rooms. However, I avoid using it on things I don't need and I pay on time.

Models, China, and the Struggling Dollar

This article from SPIEGEL ONLINE says a lot about the dollar's state. I won't even elaborate anymore.

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SPIEGEL ONLINE - November 13, 2007, 02:18 PM URL: http://www.spiegel.de/international/world/0,1518,517060,00.html

WEST WING

A Pearl Harbor without War
By Gabor Steingart in Washington, D.C.

The dollar crisis has politicians alarmed worldwide. The US currency has lost 24 percent of its value since the introduction of the euro, and now there is even a chance that China could abandon its policy of pegging its currency to the dollar -- a problem the United States should take very seriously.

Patricia Bündchen, the twin sister and manager of the world's top model, announced that Gisele now prefers to be paid in euros rather than dollars. Almost simultaneously, the Chinese central bank predicted that the dollar is likely to lose its status as the world's leading currency.

One could easily overlook a supermodel's currency preferences, but China is a different story. It's the beast breathing down America's neck.

The most important country in the world for the United States isn't Great Britain, Germany, Saudi Arabia, Russia or Iraq. China holds that dubious distinction, because it is also the country the US can least do without. Without its willingness to buy an almost unlimited supply of US treasury bonds, there would be no American spending miracle. Without a spending miracle there would be no economic growth. In other words, without China the US superpower would lose a significant share of its economic clout.

Great Christmas Shopping Tips

'Tis the season to be jolly... and shop for gifts.

It's fun to shop, but I must admit, Christmas shopping can be really stressful.

Here are my tips for stress-free shopping.

1. Set your budget. Before I actually make my Christmas list, I first decide on how much money I can afford letting go.

2. Make your gift list. Almost all of us do this, I think. My list would be separated into four categories. (a) Family - mom, dad, sister, brothers; (b) extended family - lolo, lola, cousins, titos, titas; (c) Best friends - friends I often see; (d) Acquaintances - officemates, etc.

3. Set an amount per gift. Beside every name or group in this list, I put the estimate amount of my gifts. Then after that, I add everything and see if the total amount fits my set budget (see No. 1).

4. Assign possible gift options. Before I hit the stores, I put possible gift items that I can get for each person which will be within the amount that I have set (see No. 3).

5. Buy in bulk. Bulk items are cheaper. 'Nuff said.

6. Personalize. I get creative when giving gifts for let's say, officemates. I would sometimes make desserts and ribbon them. Or buy bulk cookies, candies or something. Repack them and put colorful ribbons.

7. Schedule your shopping. This saves you both money and time. Set a shopping day. Find out sale schedules and bazaar schedules that interests you. Also, being early eases some of the stress.

8. Hunt for the best deals.

9. Give. Always give something for the less-fortunate. It feels great for both you and them.

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Here are Christmas shopping tips I got from the Philippine Daily Inquirer, Take Charge of Your Money.

The Rule of 72: What is it?

I learned this when I was 25 years old.

This rule was never taught in elementary, or even highschool math. Yet, this very useful tool is so easy to understand.

Simply put, the Rule of 72 should determine how long it would take for an investment to double its amount given a fixed annual interest .

For example, Php 100 invested at 10% would take 7.2 years to become Php200. Easy, right?

Here's the Formula: No. of years = rate / 72.

So now, how do we use this rule?

Here, look. Let's say you put that extra hundred in your pocket in a regular savings account. If you let it sit there and forget about it, will take you approximately 72 years for your hundred to turn into Php200! (I'm assuming savings gives us 1% rate of return.) That's a long, long, long, time.

But here's what I learned in Investopedia.com. Apparently, the Rule of 72 is only fairly accurate for low rates of return. As the rate gets higher, the rule gets less precise.

But then again, we can always use the future value formula if we want accuracy.

The Money Paradox by Efren Ll. Cruz

Funny, I haven't thought about this until Sir Efren posted this in our yahoogroups.

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Money	High Price/Return	Low Price/Return
Spending	with warranty	without warranty
Investing	not guaranteed	guaranteed

by Efren Ll. Cruz, RFP

Are you an impulse buyer?

I’m sure you are, if you got to read this far.

I must admit, there were times when I considered myself an impulse buyer.

When I was in college, my favorite weekend past time was to visit my favorite bookstores (plural, mind you). I’d stay there and browse every aisle. Eventually, when I leave the place, after hours of immersing myself in “literature”, I’d have bought myself a book. Did I need the book?

No.

Same goes for those cute pairs of slippers at 50% off. Those one-of-a-kind dangling earrings in the little shop around the corner. That new mp3 player… And the list goes on.
So I found this article by Marshall Loeb and I’d like to share it with you.

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Six ways to curb impulse spending

By Marshall Loeb, MarketWatch
Last Update: 12:01 AM ET Oct 23, 2007

NEW YORK (MarketWatch) — Is impulse buying taking a heavy toll on your budget? Here are six ways to get a handle on your spending:

1. Identify your triggers. Many people use shopping as an emotional outlet. But letting your emotions dictate your spending is nearly always a bad idea. To break yourself of the habit, try to determine what prompts you to spend unwisely and take steps to change your behavior.

2. Avoid temptation. If you’re inclined to overspend, consider a self-imposed ban on window shopping, casual browsing and unnecessary trips to the mall. Hint: If you know you’re going to be in a situation where you’re likely to be tempted, leave your credit card at home and only bring as much cash as you absolutely need.

3. Be a cautious consumer. You may think you’re immune to advertising, but even the savviest shoppers fall prey to marketing tactics now and again. Next time you find yourself eyeing a “new and improved” product, ask yourself why you feel compelled to buy it. Will that new golf club/razor/skin cream substantially improve your life or just deplete your bank account?

4. Take a time-out. If you stumble on a “must have” item, don’t get caught up in the excitement, advises MSN Money columnist Liz Pulliam Weston. Take a deep breath and walk away. Give yourself anywhere from a few days to a few weeks to figure out if this is something that you can afford and really need. After the cool-down period, if you can truthfully answer yes to both questions, go ahead and splurge.

5. Remember long-term goals. Before you buy, ask yourself if you’ll get more long-term satisfaction out of owning this item, paying down your debt or putting money toward that dream vacation. You may get a temporary boost from buying that scarf, but that doesn’t mean it’s the best use of your money.

6. Check you balance. If you find yourself standing in the checkout line, ready to buy something you’re not sure you can afford, hold off, suggests Weston. Go to your local bank or log on to your bank account online. Once you’ve viewed your balance, the purchase may appear far less enticing.

Marshall Loeb, former editor of Fortune, Money, and the Columbia Journalism Review, writes for MarketWatch.

Pacquiao's Paycheck

$7 million or 308 million pesos.

That's how much money Manny the Pacman made after his fight with Antonio Barrera last Sunday. (Inquirer story here.)

Not bad for a day in the ring, eh?

I just hope he won't hurt his body too much.