Sunday, May 18, 2008

Financial Intelligence - Part V

钱不够用 Money No Enough!
(A Singapore movie by Jack Neo)

知己知彼 Know Thyself, Know Thy Enemy
百战百胜 A Hundred Battles, A Hundred Victories

(In the book “The Art of War” by Sun Tzu)

It’s a jungle out there, someone remarked to me once. As I reflect on this, I realize that true enough; it really is a concrete jungle out there!

Just like the jungle world, we have the human equivalents of jackals, hyenas, tigers, panthers, cougars, falcons, eagles, piranhas, sharks and all other manners of fierce and ferocious beasts ready to pounce at our every mistake. One wrong (financial) step could be your last!

And what do I mean when I by the above? Simple, whereas in the past: past predators were after your flesh (i.e. food), nowadays you have HUMAN PREDATORS (AND CORPORATE SHARKS) that are after one thing: YOUR MONEY!

If there is one phrase that most adequately describes the financial status of most of the working people like you and me, it would be the phrase below:
钱不够用 Money No Enough!

Are you:
• Finding it difficult to make ends meet?
• Not saving enough for your retirement fund?
• Not saving enough for your children’s education?
• Not having enough money to pay your bank/car/house/[insert item here] loans?
• Being chased by your banks (aka your friendly corporate money lenders) to pay just the interest on your credit card loans?
• Being chased by Ah Longs (aka your friendly neighborhood money lenders) to pay up your debts?

No? Phew! Lucky you! Ok, scram and get out of here! You probably have enough money, so you don’t meet the criteria: Money No Enough! :)

Yes! How did I get myself into this mess, you ask? Then read on:

Example: Credit Card Loans
So, just how did you get yourself into this mess? If you are just like the average Ah Beng, remember the time…

You were in college minding your own business when suddenly… two very pretty girls approached you…

“Sir, sir,…are you interested in credit card? Right now, carry cash very inconvenient. Pre-approved already, you only need your parents as a guarantor. Can go out on a date with girlfriend, no worries!”

Cannot lose face in front of pretty girls-mah, right? So, you went to your Old Man (aka Dad) and ask him to sign but that he refuse. Luckily, Ah Mah (aka Mother) agree to be your guarantor after you beg her…. Free credit up to RM10K from SHARKS BANK BERHAD. Every month you spend over the limit and use your allowance to pay off interest.

I am sure your Old Man is so proud of you. Before you even graduate you already so lucky, you got confirmed job offer already. You have maxed out your credit card and have a RM10K loan owing to the bank. Although you have yet to earn your first dollar, you devil you: already spend RM10K first using the banks’ money.

Yay, you are now officially an employee of SHARKS BANK BERHAD even before graduation. Every month you have to pay loan interest of RM1,800 a year (RM10K * 18% interest) to SHARKS BANK BERHAD. Hmmm…not bad (for the BANK), that’s about a months’ salary.

Later, you come and tell me: 钱不够用 Money No Enough!

My answer: [Highlight the area below]
Ar but den?
[Translation: Well, if you have a credit card loan even before you started working, what do you expect? Of course, you won’t have enough money to spend if you have to spend all your SALARY just to service the debt. What about the Principal? Of course you won’t have enough money, you silly boy!]

The Solution:
知己知彼 Know Thyself, Know Thy Enemy
百战百胜 A Hundred Battles, A Hundred Victories

If you find yourself having insufficient money, then it’s time for you to track your monthly income and expenses. You need the discipline to do this for at least three months.

Just like the proverb above, you need to obtain sufficient information about your income and spending habits. This information will give you sufficient knowledge about your strengths and weaknesses when it comes to earning and spending money. Only then, can you start to formulate a plan to reduce your expenses and start saving more for your future.

Do you feel like the guinea pig in the cage? You keep running on the exercise wheel but end up nowhere, financially? Then it’s time for you to keep a detailed record of your financial income and expenses. As to the income, I’m sure you have no problems.

For your expenses, I don’t care how you do it. Jot it down in your 888 notepad, your PDA, your mobile or your BlackBerry. JUST DO IT for three months and you are already on the road to Financial Freedom.



Nice sharing. Indeed is a very good guide for finical intelligence.


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