I have collected my first Google AdSense payment!

At the end of this post is a guide on how I received AdSense payment via Western Union at Pos Malaysia.

The payout amount was USD 240.63, which converted to RM772.

I always feel a bit ashamed to reveal my blog earnings, because it took me 3 years to get USD 240, and it’s probably going to take three more years to get the same amount.

I altered my screen shot somewhat to show the peanuts I’m earning.

I suspect some of you can get this amount in a week.

But how do I feel? My hands were trembling as I took the cash. It is finally in my hands. All those numbers on the screen finally turned into physical money in my pockets!

I feel happy and very satisfied.

What will I do with the money? Most of it will go to BlueHost. Web hosting will cost me around USD 160 for the next two years.

The remaining will help to buy some diapers and milk powder. Not so glamorous eh?

Some of you might ask me how you could also get AdSense income?

My answer is, don’t ask me because obviously I haven’t got it right yet. Ask me again if I earn thousands.

The only things that worked for me are: targeting keywords, strategically placing ads for specific post (instead of display for every post), and generally trying to get search engine referrals.

Some will also ask me if it is easy to earn money blogging. My answer is no. It’s not easy thinking about things to write, and finding the time to do the writing. It’s extremely difficult to get visitors and readers.

And there’s a fine line between writing for your regular readers and writing for search engine visitors. Hard to please both.

I have to thank Vedis for sharing with me the steps to receive Western Union payment.

While she usually does it at her bank, I chose to receive my payment at the post office.

Here are the steps to receive AdSense payment via Western Union at any Pos Malaysia branch:

1. Go to your AdSense – My Account – Account Settings
2. Make sure your payee information (name and address) matches your IC.
3. Under Payment Details, choose Western Union Quick Cash. Make sure the Payee Name matches your IC. You may want to play around with the first name/last name until you get it to look the same.
4. Once you cross the payment threshold, Google will release payment after 30 days.
5. Go to My Account – Payment History.
6. Go to the line where it says Payment Issued, and click the ‘Details’ link.
7. Note down the MTCN number, payment amount in USD, and Google’s address.
   Google Inc.
   1600 Amphitheatre Parkway
   Mountain View CA 94043
   USA
8. Remember to bring your original and photocopy of your IC to the post office
9. Take a Pos Malaysia – Western Union Receipt of Money (Penerimaan Wang) form from the counter. It has a yellow header and the Western Union logo.
10. Get a number for Kaunter Pelbagai (at my post office, it was button B)
11. Fill in your name, address and phone number. The form didn’t have enough boxes to fit my address so I just wrote over the boxes.
12. Then fill in Google’s name and address
13. Fill in the amount in USD, sender country (USA) and the MTCN.
14. Finally, sign the form.
15. Give it to the counter, and if everything is ok you will be paid in cash.

P/S: Outside the post office I was interviewed by a Sin Chew reporter regarding the postage rate increase. See if anything appears in paper tomorrow. Just hope I won’t get flamed for my remarks hehe.

I just got my second Nuffnang cheque in the mailbox!

My earnings this time was RM210.58, which took longer to accumulate compared to my first cheque.

I will use the money to extend my domain adinochang.com for another 5 years.

Thanks Nuffnang, and keep those wonderful campaigns coming!

I’ve finally made the decision to live without Astro TV.

This is a rather major decision, having lived with Astro for almost 8 years.

Some of you may even wonder why I’m taking such a ‘drastic’ move. What would we watch on TV if we didn’t have Astro?

WHY!?!?!?

First of all, why did I come to such a decision?

1. To save money. If I cancel my Astro subscription, I get to save RM600 a year. The money may not be a lot, but it helps to feed another mouth.
2. Rachel is starting to get addicted to TV cartoons. I don’t want her to start learning bad things from the TV.
3. TV programs don’t add much value to my life.
4. The Internet has become a viable alternative.
5. I’ve had several bad experiences with the company. First they allowed complete strangers to re-open an account under my name (and charge me for it), and they send me an SMS each month reminding me to pay my bill, even before the due date!

My Expectations

I’m willing to give this a try because I expect the following improvements:

1. We will have better quality time. Nowadays our evenings and weekends are spent staring at the TV. Not much talking to each other.
2. More time for other activities such as exercise, going for outdoor activities, or just playing board games.
3. Less likely to gain weight from those tempting food commercials
4. Rachel and Daryl to grow up reading books, rather than watch TV
5. No more temptations to upgrade to a HD TV.
6. Fewer late nights staying up to watch TV

Do take a few minutes to check out a blog post by Celestine Chua on 10 reasons to stop watching TV.

I agree with many of the reasons.

I do expect a rather difficult transition period, removing Astro TV from my house.

There are some potential difficulties:

1. Rachel will be bored
2. We will miss live TV events and sports events
3. Poey Chin will miss her evening news
4. Poey Chin will miss her TVB series
5. Visitors will be bored at our home

But the TV won’t be totally gone. We will still have the free channels. We will still have a DVD player and the Nintendo Wii for entertainment purposes.

I just know that this will be for the best.

Action Plan

Here is my plan.

For the month of June, I will start to look for entertainment alternatives, and solutions to address the difficulties I foresee.

In July, we will do a trial run. I will hide the Astro smart card somewhere, and we will see how things are.

If we can live without Astro, I will then cancel my subscription shortly thereafter.

Some of you may be wondering what Poey Chin thinks about my idea. She said okay, but gives me the resigned look she gives me whenever I want to try something crazy.

Help

Do you have any resources for watching TV programs online? Do you have any tips to share?

So is life possible without Astro TV? Stay tuned for updates on my experiment!

Photo By: Thane Works / CC

Last Friday the water heater in my second bathroom failed to work. The power was on, but the heater just didn’t work.

This water heater was inherited from the previous condo owner, so I guess it has to be more than 5 or 6 years old.

It is an Ariston brand water heater, and I assume it lasted so long because it is an imported brand.

My parents adviced me to get a new one because the water heater was so old.

This morning I checked out the prices in the store and a new Panasonic water heater with installation comes up to RM400.

Having recently spent so much money on baby Daryl, I decided to try getting an electrician to come take a look first.

I came home, studied the water heater and I noticed a little Reset button at the top of the heater. I pressed the button, and voila, the heater worked again!

So happy that I managed to delay replacing my water heater, and saving so much money!

Photo By: renaissancechambara

It is always a joy when I find Malaysian personal finance books. I mean, browse the personal finance section in the book store and all you can see are books written by overseas financial gurus.

Nothing wrong about reading books from overseas, but I always find it hard to apply some of the tips they write about in Malaysia.

I came across this new book, Tip-Tip Kewangan Untuk Rakyat Malaysia (Money Tips for Malaysians) because I subscribe to the author KC Lau’s blog.

Mr KC Lau is a veteran in the personal finance business since 2003, and is a leading personal finance blogger in Malaysia.

This book is the Bahasa Malaysia translation of his best selling book Top Money Tips for Malaysians.

Don’t worry, I don’t think you will have any problem reading the Bahasa Malaysia version because it is simple, clear and understandable.

What Is The Book About?

The delivers what it promises on the book title. It is a compilation of 24 personal finance management tips that are 100% applicable to us Malaysians.

The book is divided into four areas:

1. Tip Kewangan Bijak will educate you in the basic areas of personal finance. Discover how the wealthy may not think like you and me, and how they manage their cashflow.

2. Tip Menjana Wang gives you a guide to making more income and how to start investing.

3. Tip Menjimat Wang suggests tips to help you save money in major purchases such as car insurance, unit trusts and mortgages.

4. Tip Melindungi Wang contains tips on protecting our wealth.

Each “tip” is expanded and elaborated in a chapter of its own, so rest assured that each topic is covered in depth.

My Opinions On This Book

First of all, I love how the book is organised. There is a logical flow from changing our financial mindset, to generating more income, to saving more income, and then to protecting our wealth.

I’ve already mentioned how the tips are suited for Malaysian readers. Many (expensive) books we get from overseas authors give us tips we can’t use.

A lot of examples and references are provided to teach us the concepts. When KC Lau suggested we watch videos online instead of subscribing to Astro, he provided 1.5 pages of online video websites!

I think the book is a great value. Some of the money saving tips more than cover the price of the book.

I like how the tips are illustrated with funny comics.

My only wish is there could be even more tips included in the book. If you’re a fast reader like me, you’ll finish the book quickly because you won’t be able to put the book down. I guess I’ll have to wait for the next book to be published!

Why Would I Need This Book?

This book will be great for anyone who is starting to take interest in personal finance. The tips are simple to follow, you won’t need any degree in accounting to understand how to manage your own finance.

If you are like me, then you will love how the tips are applicable to Malaysians. There are tips that talk about EPF, income tax laws, unit trust charges, and insurance in our Malaysian setting.

Finally, this book will make a great gift for someone who is just starting to manage their personal finance.

Where Can I Find the Book?

You can buy the book for RM29.90 at all major bookstores, or you could buy Tip-Tip Kewangan Untuk Rakyat Malaysia online.

Finally, check out (and subscribe to) KC Lau’s website for more financial tips.

Let’s start our day with a nice thought. What would you do if a thousand dollars fell into your hands right now?

I think many of you will be getting your tax refund soon. Some of you may even be waiting for some dividend cheques to come along, since another financial quarter has gone by.

I asked myself this question recently and immediately my first instinct was to think what I could buy with RM1000:

• An iPod Touch
• A nice pair of work clothes
• Get a new TV
• Subscribe to ESPN
• Buy a new wardrobe for children’s clothes

The list goes on. I’m sure you have your own list.

Many times we get some extra money (tax refund, bonuses, commissions, festive seasons, birthdays) and it seems to disappear before we know it.

Today I’m going to share with you an easy tip to handle any extra money that falls into your hands. This tip can be applied to any amount. RM50, RM1000 or even RM1 million if you ever hit a jackpot.

Step 1: Identify Your Savings

The first step is to identify what you want to save money for. Do you want to go for a vacation? Do you want to get an iPad?

I have four things I save for:

• Retirement
• Children Education
• New Car / House / Reduce housing loan
• General Savings (used for emergencies or large purchases)

Step 2: Allocate a Percentage

Assign a percentage to each of the savings categories. It is completely up to you how many percent to assign. It depends on your situation and your financial goals. You can even split it equally if you like.

My percentages are:

• Retirement (20%)
• Children Education (30%)
• New Car / House / Loan (40%)
• General Savings (10%)

Step 3: Divide the Money

When the money comes in, just bank in to the savings account and divide the money accordingly. I use a spreadsheet to track how much money is in each category.

When the amount gets to a certain threshold, I will move the money into an investment vehicle to get more returns.

Easy As 1-2-3

I also use this same method to allocate my savings each month. I find that setting up a ‘system’ makes it easier and automatic.

The only time I don’t follow this system is, if the money is specifically meant for that category. For example, any money given to my children will automatically go into their education fund.

Any dividends from an individual savings category will be put back in the respective category for further re-investment.

So how about you? What would you do if you found RM1000 today?

It’s the most, wonderful time, of the year… for the tax collector, that is.

For the rest of us, it’s mostly a big hassle to gather all our tax documents, receipts and various statements. I hope you’ve kept them all in a safe place so you don’t have to hunt high and low for them.

Since it’s tax season, I have some tips for those of us who are supposed to submit our income tax declaration forms:

1. Keep all tax related documents together in a file.

Throughout the year, we will collect receipts or receive statements that will be used for income tax relief. Keep these together, so it is all accessible when you need them.

2. Don’t listen to rumours

There are emails going around advising you how you can save on income tax. Some of the tips are quite dubious, for example using pharmacy receipts to claim parents medical expenses.

3. Remember, it is year 2009 assessment

Some of the announcements in the 2009 budget regarding income tax will only take effect starting from year 2010 assessment.

4. Do it now

Many will wait for the last minute to submit their taxes, then complain that the website is down. There is no point in waiting. Just spend a few hours to get it done.

As I am writing this post, the e-filing website is already experiencing slow loads, probably due to heavy traffic.

It can only get worse.

Technorati Tags: Income Tax

Photo By: alancleaver / CC BY 2.0

You can’t really avoid advertisements these days. You can even see ads on this blog. Content publishers need revenue, and advertisers want to be seen.

Think of the last time you watched an advertisement on TV or saw an ad on a website.

I don’t know about you, but there are certain advertisements that make me feel like spending a couple thousand of my hard earned cash.

I can can create a hundred excuses and reasons to justify my expense.

Do you know what I’m talking about? Those Apple iPhone ads, those Blackberry ads, Astro b.yond, LCD TV ads, etc.

I have a never-ending list of wants and needs.

Today I’m going to tell you a secret.

The next time you see an attractive ad that captures your attention, or an ad that makes you feel like you need that product, stop.

And think.

You see, most of the time you don’t really need or desire that product. Logically, why would you suddenly need a new product, when you’ve been living well without it all this time?

An effective ad can create that need, and that desire within you.

As you watch the ad, look at the images they depict. Is there an image of fun? Of class and elegance? Does the image play on your fears?

Does it show many people using the product (peer pressure and invoking herd mentality)?

Decipher the ad’s promise. Does it promise happiness? Does it promise acceptance in higher society? Does it promise seduction and pleasure? Does it promise to improve your life?

Does it even play on your guilt, such as not spending time with your parents, not spending time with your family, or not keeping yourself fit?

Once you do that, you can then objectively decide if the product or service is something you really need, or it is something that you want for some other reasons.

I guarantee this will save you thousands of dollars.

Technorati Tags: Advertisements, Money, Spending, Desire

Photo By: barunpatro

We have less than 2 weeks before we celebrate the new year.

This holiday season is a perfect time for us to reflect on the year that has passed, and to plan for the next year.

Today I just want to share with you some tips to ensure that you finish your financial year well.

1. Have You Made Use of Tax Relief?

If you pay income tax, there are certain categories of purchases that can be used to offset your taxable income.

Some examples are medical exam (RM500), books and magazines (RM1000), computer (RM3000), sports equipment (RM300).

Perhaps something to keep in mind when purchasing Christmas presents.

You can quickly deposit money into your child’s SSPN education savings account and get tax relief up to RM3000.

Read here for the complete list of tax relief.

You can also deduct taxable income in the form of donations. Read here for a list of the types of organisations you can donate to.

2. Have you Cancelled Your Credit Cards?

The government is planning to tax RM50 for each credit card (still debating in parliament).

There are suggestions that the government should tax per card holder, but I see this as a good opportunity to get rid of unwanted credit cards.

Read my guide on how to cancel your credit card.

3. Used up your coupons, points or cash vouchers?

Now would be a good time to look through all those coupons, vouchers and gift vouchers you have lying around in your drawers.

Do you have any loyalty card points that will expire at the end of the year?

Take advantage of some of these offers before they are gone for good.

4. Reflect and Plan

Take some time to reflect back on the year. What financial mistakes did you make? What were the things you learned?

Compared to the previous year, have you become richer or poorer?

What would you do differently next year? How can you improve?

Conclusion

I hope you have a great holiday season with your loved ones.

I will not be taking any breaks from blogging, so continue visiting for fresh blog posts.

You can also subscribe to receive my posts by email if that is more convenient for you.

Do you have any tips to add to this list? Discuss in the comments below.

Photo by: Flavio Takemoto

Technorati Tags: Money, Financial, Tax, Year End

In last week’s budget, Prime Minister announced that there will be a RM50 service tax on every credit card, and RM25 for every supplementary card.

One way to avoid this service tax is to cancel your extra credit cards. Many of you are thinking how to cancel your credit cards or charge cards.

This post is a simple guide to cancel your credit card.

The first decision to make is reducing the number of cards you hold to a minimum. This might be one or two credit cards. Which cards do you cancel?

1. Cancel cards that charge you annual fees (or unwilling to waive their annual fees). You can easily get free-for-life credit cards.
2. Cancel cards you hardly use. As in less than two transactions per month.
3. Cancel cards if you don’t use the special discounts or benefits.
4. If you pay bills online, keep the card that allows you to pay all your bills.
5. Those of you who are frequent travelers may want to keep a card from an international bank. I had an experience where my local bank card was not accepted in a store in Hong Kong.
6. Cancel cards from banks with poor service, or don’t offer convenient repayment options

How To Cancel?

Here are four simple steps to cancel your credit cards:

1. Read the terms and conditions of for your credit card. If you can’t find the terms and conditions, check out the bank website. They will tell you how you need to return the card to the bank.
2. Settle any outstanding amount
3. Write a polite letter (refer next section)
4. Destroy your credit cards and dispose. Check out how to securely destroy your credit card in 15 slices. (If you want to return your card to the bank, some banks specify cutting only in half in their terms and conditions)

Update: Some have suggested to me that a phone call will do, but in my experience, banks still want a letter. My theory is, they want to make it as inconvenient as possible.

A Sample Letter

Just copy this into your favorite word processor and fill in your details accordingly. Some other excuses you could use are: not using the card anymore, or you have taken a credit card from another bank.

You may want to attach your destroyed credit card in the letter (personally I feel this is optional).

<BANK CARD CENTRE>
<BANK CARD CENTRE ADDRESS>

<YOUR NAME>
<YOUR ADDRESS>

27 October 2009

Dear Sir/Madam,

RE: CANCELLATION OF CREDIT CARD FACILITIES

I have been using your credit card facilities since 2007, and I am happy with the excellent convenience and benefits.

Unfortunately I have to cancel my credit card because I do not want to pay the credit card service tax <OR PUT ANY OTHER EXCUSE HERE>.

Please cancel the following credit cards effective immediately:

4444 5555 6666 7777 – <Principal Card Name>

4444 5555 6666 8888 – <Supplementary Card Name>

I would appreciate a written confirmation after you have completed the cancellation process.

Thank you.

Best Regards,

<SIGNATURE>

<NAME>
<IC NUMBER>
<EMAIL ADDRESS>
<CONTACT NO>

The Retention Call

A few weeks after mailing your cancellation letter to the bank, you might receive a call from the credit card retention department.

Usually they will offer you some great offer, like a free upgrade to a platinum card, or waive annual fees, or increase your credit limit.

Just decline with a firm but polite reply.

The Confirmation

The bank might send a letter to you to confirm that the credit card has been cancelled.

If not, you may want to give customer service a call.

Once you get the confirmation (preferably in writing), you are done!

Photo By: Sanja Gjenero

Everyone seems to be talking about budgets now. First there’s the big Malaysian Budget 2010. At work we have to prepare our department budget for next year.

I don’t plan on preparing a personal budget for 2010. I’ve thrown my personal budget out the window.

Not literally of course. My budget is on a spreadsheet. I can’t throw it anywhere. But I’ve stopped trying to track down where every single sen went.

Why?

The personal budget was a terrible influence on my life. Felt like I installed a software into my brain that had trojans in it. It did achieve its objective: to see where my money was going. But at what cost?

I had to spend time updating expenses to the various spreadsheets and budget software. I had to crack my head trying to remember what I spent money on (and when I can’t remember I would bug my wife to remember for me).

Then I had to ensure that the numbers matched the actual money I had in my various accounts. Picture me at midnight counting my few pieces of dollars and coins, and then trying to figure out why I was short of RM2.40.

It became a tedious chore for me right from the start.

I became very calculative and stingy. My wife could not stand it. Even my mother could not stand it. Relationships suffered. Arguments over money erupted over a few ringgit.

I became a scrooge. Don’t picture the rich Scrooge McDuck. Picture a man buried still clutching his money with his cold lifeless hands.

I contemplated gathering rain water to flush my toilets. I turned off the lights to save on the power bill and used candles instead.

I bought only one packet of food to share with my wife instead of having one each. I didn’t cut my hair for 3 months.

Freedom

One day I was sitting there updating my spreadsheets and juggling all the receipts flying around, trying yet again to account for some missing money. I just gave up.

I left my budget in cold storage and have not logged in to my budget software since then.

Not having to track every sen feels liberating. I feel lighter, happier and less grouchy. I think my family enjoyed being around me a bit more.

No more arguments over money have come up since. I think if I continued down the scrooge path, my wife would leave me.

I started to open my eyes and my mind. Life wasn’t just about accumulating wealth or controlling expenses. There were things which were equally important.

Money isn’t something you hoard, it’s something you can also use to have a good time.

After all, there were always new things coming up that were not in the budget. Things needed to be repaired. Weddings and birthdays came up.

Still In Control

While I don’t have a a personal budget, it doesn’t mean that I’m spending indiscriminately.

I’m still in control of my finances from a high level.

Instead of a budget, I now live by a spending plan.

I know how much I need to save and invest every month. I know the maximum amount I can spend each week.

The only thing that has changed is, I don’t care about the details.

How I Do It

Even though I’ve abandoned my budget, I still had some basic information to fall back on.

I guess preparing the budget in the first place help me to gather all this information.

I know exactly how much I need each month to pay all the bills. I know how much I need to save each month to achieve my future goals.

I set aside a certain amount of cash each month, and I give myself a weekly allowance.

These can probably be reviewed once every year as income and expenses change.

I still monitor my credit card and bank balances every few weeks to make sure everything is in order.

Conclusion

A budget is just one of the tools that we use to manage personal finance.

I do realize that budgets help many people, including even you.

Countries and companies need budgets because they are held accountable for every sen.

If you’re new to managing your personal finance, budgets may even be the best place for you to start, to see where you stand (or sink).

I think a budget is best used for planning purposes. Use it to allocate your money. Use it to see how you are overspending.

But I would advice you not to restrict your life and quality of life to a budget. Don’t let it imprison you. Be creative to find ways around a budget.

Life is too unpredictable. You never know what will happen tomorrow.

What do you think? Should I get back to my budget? Or was I just doing it wrong from the start? Have you found budgets useful? How do you faithfully keep following your budget?

For example, you want to save enough money for your child’s education in 15 years time. How do you know how much to save?

I have written a simple future value calculator based on the future value formula:

FV = PV(1+i)ⁿ

Where:

FV = Future value of money
PV = Present value of money
i = Percentage of interest per period
n = Period (years or months)

Now, don’t get too worried about the math. Future value of money is the future value of the money you have today.

To calculate future value, we normally use an estimated annual inflation rate in the i column.

If you want to use this calculator to estimate compounded return of investment, you would put the expected annual returns in the i column.

There are quite a few methods for future value calculations, but I find this the simplest.

Future Value Calculator

Present value of money
Interest per period (%)
Period (years or months)
Future value

Warning: Using this calculator can cause stressful and sleepless nights. I bet you didn’t know you needed so much money!

If you wanted to estimate how much your child’s education will cost, you will put in a present value based on the current education cost.

Let’s say a local college degree will cost RM35000 per year. Multiply by three years and you will get RM105000.

Let’s put in a conservative inflation rate of 4.5%, and assume we have 15 years before your child finishes secondary school.

Using the calculator you will see that you need to accumulate RM203,204!

Spreadsheet FV Function

If you are using a spreadsheet program, you can use the FV function to achieve the same.

The Microsoft Excel Future Value Calculation formula is:

=FV(i, n, pmt, PV)

Where:

i = Percentage of interest per period
n = Period (years or months)
pmt = Fixed payment amount. Use zero for future value.
PV = Present value of money

Conclusion

I hope this can help you in your financial planning.

As I have mentioned, you can really get worried looking at the huge numbers.

Don’t worry too much. You should be fine if your savings and investments give you returns that beat the inflation rate.

Note: You are free to embed this calculator on your website as long as you retain a link back to this web page.

Just copy and paste the script below:
<br /> <table width=350 border=0 style="border-width: medium medium medium medium; border-spacing: 1px; border-style: solid solid solid solid; border-collapse: separate;"> <tr> <td width=60%>Present value of money</td> <td width=40%> <input id=pv width=20 maxlength=10 value=0.00 /></td> </tr> <tr> <td>Interest per period (%)</td> <td> <input id=i width=20 maxlength=3 value=0.00 /></td> </tr> <tr> <td>Period (years or months)</td> <td> <input id=n width=20 maxlength=3 value=0 /></td> </tr> <tr> <td><strong>Future value</strong></td> <td> <input id=fv width=20 readonly=true value=0.00 /></td> </tr> <tr> <td colspan=2 align=center> <input type=button value=Calculate onclick="document.getElementById('fv').value = Math.round (document.getElementById('pv').value * Math.pow( (1 + (document.getElementById('i').value/100.00)), document.getElementById('n').value ) * 100) / 100;" /> </p> <input type=button value=Reset onclick="document.getElementById('pv').value='0.00'; document.getElementById('i').value='0.00'; document.getElementById('n').value='0'; document.getElementById('fv').value='0.00'" /></td> </td> </tr> </table> <p><a href="http://www.adinochang.com/archives/future-value-calculator.html">Future Value Calculator</a> by <a href="http://www.adinochang.com">Adino Chang</a>

Technorati Tags: Future Value, Calculator

(Originally published on my frugal blog on June 3 2009)

In my previous post I pointed out to you how we must have financial goals before we even think about investment.

Today I’m going to show you how to set financial goals for your own life.

What Are Your Financial Goals?

Now, you may ask me what goals qualify as financial goals. The answer is: who do you want to be, and where do you want to be in the future?

Do you want to be someone who is financial independant, someone wealthy, sponsor of your children’s education, a philanthropist, someone who retires in Langkawi island?

Then there are several major events in life that will cost a lot of money. Examples are wedding(s), buying property, buying cars, children education, and retirement.

All these should be part of your financial goals.

Setting financial goals is as simple as following the SMART acronym.

SMART

The SMART way to set financial goals (or any goals for that matter) is to define goals that are:

1. Specific
2. Measurable
3. Ambitious
4. Result Oriented
5. Time Bound

Specific

I wrote a bit about being specific in the previous post. To be specific means your financial goal is clear, unambiguous and targeted.

An example of a specific financial goal would be:

Have enough passive income to support me and my wife’s retirement.

Measurable

A measurable financial goal is one which you can measure in terms of amounts, quantities or quality standards.

Adjusting our previous example to become measurable would be:

Have RM8,000 monthly passive income to support me and my wife’s retirement.

This amount is just a number I picked out of the air, of course.

How will you know the exact amount to put in your goals? For example, how will you know how much retirement income you need when it is so many years ahead?

It’s difficult to estimate sometimes. You can use my future value calculator to assist your calculations.

Ambitious

The sky is the limit when it comes to setting financial goals. Try to set goals that are challenging, but at the same time be realistic.

Set a balance between something that is out of our comfort zone, but not so difficult that it becomes demotivating.

Let’s make our sample goal a bit more challenging:

Have RM10,000 monthly passive income to support me and my wife’s retirement.

Result Oriented

Your financial goals should be meaningful and productive to your life and those around you.

Do not set goals that have little or no value.

Time Bound

A time-bound goal means you have to set a deadline for yourself.

This is important, because this will determine how you can plan to achieve those goals.

Having a time-bound financial goal can also help to overcome procrastination.

A final adjustment to our earlier example will be:

Have RM10,000 monthly passive income by the year 2030 to support me and my wife’s retirement.

Your deadline can also be adjusted to be more ambitious.

Milestones

The next thing I like to do after writing down my financial goals is to define milestones for each of those goals.

For example:

2015: RM2,000 monthly passive income

2020: RM4,000 monthly passive income

2025: RM7,000 monthly passive income

2030: RM10,000 monthly passive income

This has two advantages. First, it can help you to check your progress as time goes by. Second, a seemingly impossible task can be broken down into smaller achievable steps.

I like to break it down further into a 5-year plan, a plan for this year and then a quarterly plan.

If you can’t find a way to set milestones for your financial goal, then your goal might have to be revised to become measurable or time-bound.

Review and Adjust

Periodically take a look at your financial goals to see how you have progressed.

If you are on track, imagine how good you will feel! If you are falling behind, perhaps it’s time to make extra effort.

I leave it to your personal preference and creativity to measure your progress and motivate yourself.

Financial goals are not set in stone. There is nothing wrong with changing goals when your life situation changes.

Just make sure you are not changing the financial goal because you are giving up.

Doggy Bag

You have seen how easy it is to create or improve your financial goals the SMART way.

I have even shown you how you can break down your grand master plan into manageable milestones.

Now I leave you to work out your financial goals. It would be best to write them down somewhere instead of keeping it in your head.

Once you have your financial goals in place, THEN you can start to plan how you are going to achieve those goals.

That’s where financial planning and investments come into play.

Photo By: marmit

(Originally published on my frugal blog on June 1 2009)

“Why do I save money? Why do I invest? It’s hard work!”

“Sometimes it is so hard that I just feel like giving up. Why do I have to ‘suffer’ today and live without the things I want?”

“Why do I have to ‘sacrifice’ so many things when others seem to be enjoying life?”

“Am I doing the right thing?”

Do you ever find yourself feeling the same way, or asking the same questions?

You’re not alone!

The simple answer is, we invest and save to achieve our financial goals!

Now let me ask you, what are your financial goals? Do you even have goals?

Financial Goals

Before you even spend a single cent in investments, you must determine what your financial goals are.

A financial goal or a target is simply this. Who and where are you going to be in the future?

Now, many people go on with life without really planning or setting financial goals. If you ask them what their financial goals are, you will probably get these answers:

1. I want to be a millionaire
2. I want to own a house and two cars
3. I want to retire by the age of 45
4. I want financial freedom
5. I want to send my children overseas for their education

What’s wrong with these goals? These are in fact noble and well-intentioned goals.

But these goals are not specific enough!

Being Specific

Imagine if you wanted to start a business, and needed investors to provide some start up capital. When they asked you for a business plan, you reply with:

1. The business will make millions
2. The business will expand to two outlets
3. You will get your money back with a lot of profits

Do you think anyone will invest? No, for the simple reason that you are not specific enough.

How many millions are you talking about? 1 million or 10 million? When will the business expand to two outlets? In 2 years or 20 years? How much profits are you talking about? And what’s the ROE?

Goals and Investment

So what has setting goals got to do with investment? Everything!

(I seem to be using the exclamation mark a lot today!)

You can only invest effectively and wisely once you know what your financial goals are.

Let me use another analogy. If you wanted to go to your neighbour’s house, you will probably walk. If you wanted to go to the city you would drive or take public transportation. If you wanted to go to Hawaii, you would have to fly there.

But if you didn’t know where you wanted to go, how would you know which form of transport to take? Will you choose the most popular, follow what the rich people are using or pick the one that is hot on the news and media?

Different investment vehicles have pros and cons, and which one you use will depend on your specific financial goals.

This is why there can never be one investment that suits everyone.

Taking Goals Seriously

Another aspect about the financial goals is how much priority you give to achieving your goals.

If we don’t take our goals seriously, then we will NEVER achieve them.

How many New Year’s resolutions are broken because there was very low commitment or lack of motivation?

To really achieve your financial goals, you have to first set goals that can motivate you. Make sure these goals are constantly on your mind. Every financial decision you make should reflect these goals.

Financial Planning

After you have set your financial goals, THEN you can start to plan HOW you are going to achieve that goal.

This is where financial planning comes into play.

I will talk more about setting goals in my next post, and more about financial planning in subsequent posts.

Doggy Bag

Today I’m going to introduce a new feature called the doggy bag. Doggy bags are used at restaurants when we can’t eat and digest all the food at once. We take the food home in a ‘doggy bag’.

In today’s post, I will leave you with something to take away.

Think about your financial goals. If you have not seriously put some thought into it, spend some time really thinking or discussing with your spouse.

If you already have financial goals, think about the last time you actually took the goals seriously.

Technorati Tags: Financial Goals, Saving, Investing

Photo By: Svilen Mushkatov

I realized that my financial knowledge is not wide enough. I may know (or I think I know) about interest rates or minimizing debt, but I realize that there is so much more to learn.

From what I have read so far, one of the best investments we can make is investing in our minds. Investing in our financial education will help us make better financial decisions and filter out the scams.

If we are starting out in the world of investment and wealth building, we should ‘invest’ our time and money in financial education before we invest a single ringgit.

It really pays to know what you are doing. If you know what you are doing, investment becomes less risky. You can then maximize returns.

In the course of my reading frenzy, I have discovered that I have made some mistakes in my investments.

All that time wasted (although I didn’t lose money). But my returns could have been better.

It is with this frame of mind that I wish to share some of the wonderful resources that I have found. In the next few weeks I will begin a new series called Personal Finance Education.

I hope to share some important investment concepts that I’ve read about. I will also do some book reviews. Finally I will let you know some frugal ways to increase your personal finance knowledge.

This week’s Frugal Friday tip will show you how to make your own cotton balls from a roll of cotton. Frugal Friday tips are short and easy frugal tips you can pick up as a weekend project.

If you have a baby, you will need to use a lot of cotton balls. Cotton balls come ready-made in stores, but it costs about two times less if you make them yourself.

Making Your Own Cotton Balls:

1. You will need a roll of cotton.

2. Pinch off a small portion of cotton, about the size of your thumb.

3. Roll the cotton into a ball by wrapping it around your finger.

4. Keep cotton balls in a container. You can do this as you’re watching TV or just sitting around.

Conclusion

Now you have plenty of cotton balls to use. The best part is knowing you saved money by making your own cotton balls.

Thanks Poey Chin for the demo!

Technorati Tags: DIY, Cotton Balls, Frugal Tips

(Originally published on my frugal blog on July 9 2008)

The 1 sen rounding mechanism has been implemented in Malaysia without any major issues. However, being a frugal beagle I can’t help but to highlight some problems that I have come across.

I know that a few sen is not worth much, but frugal beagles never let a cent go to waste.

Recently, fellow blogger Paris B fell victim to a petrol station in Jalan Ipoh, where the station allowed a faulty petrol pump to stay in operation, allegedly short changing each customer by1 sen.

But that’s not what I want to highlight today. I noticed problems that occur due to a misunderstanding of the new policy.

1. One Sen Coins Not Accepted

I was shopping at Giant hypermarket a few months back, and I wanted to use up my 1 sen coins. The cashier did not want to accept my coins.

Actually they cannot refuse, because 1 sen coins are still legal tender, according to Bank Negara guidelines. The Central Bank of Malaysia Act 1958 (1994) refers.

The purpose of the rounding mechanism was not to eliminate the 1 sen coin altogether, but to reduce demand so that Bank Negara won’t have to mint new coins anymore.

2. Bills Rounded For All Payment Methods

In my TNB bill, I noticed that the 1 sen coin rounding mechanism is applied, even though I pay via online banking.

Again this is not right, because the Internal Trade and Consumer Affairs Ministry (KPDNHEP) guidelines say that the rounding mechanism applies to over the counter cash payments only.

Conclusion

I know that there’s no point arguing over 1 sen. However, it’s sad to see how policies can cause disadvantage to some parties without clear guidelines and follow-up enforcement.

You should read my post 1 Sen Coin Myths and Facts You Must Know to familiarize yourself with this policy.

Technorati Tags: Malaysia, 1 Sen, Coin

Photo: Dan Shirley

(Originally published on my frugal blog on June 30 2008)

I got these tips from Citibank, my credit card company a couple of weeks ago. I would advise every credit card holder to read through this list prevent credit card fraud.

1. Take Action When Receiving New Cards

When you receive your new credit card or a renewed card:

• Check that the card is in your name, and that the sealed package has not been tampered with. Immediately contact your bank if there is a problem.

• Please destroy your old/expired/unusable card by cutting it into several pieces ensuring that the chip and magnetic stripe portion is completely damaged immediately upon the receipt of your renewal credit card.

• Immediately sign on the signature panel at the back of your card upon receipt

2.Protect Your PIN

When you receive your PIN:

• Check that the sealed envelope has not been tampered with. Immediately call your bank if the seal is broken or opened.

• Memorize your PIN immediately and destroy the PIN envelope. Go to the nearest Branch/ATM to change your PIN.

3. Using your Card at Retail Outlets

When you’re shopping or using your credit card:

• Treat, value and protect your card as if it was cash, keep your card secured and ensure that it is in your possession at all times.

• Check and ensure that the card you received after a transaction at a merchant is yours.

• Ensure that you authorize all use of credit card (face to face or on Phone/Internet).

• Void incorrect charge slips before you sign a new one.

4. Online Usage

When you use your credit card to shop online:

• Give your credit card details only on reliable websites and is from a company you trust. Reputable merchant sites use encryption technologies to protect your card information.

• Avoid using a public computer to shop online. If you do, please remember to log off and quit the browser when you are finished. All it takes is for someone to hit the “back button” to view your personal information.

• Always print and save the confirmation page when completing an online purchase. Record or keep your receipts for all your purchases including online purchases.

5. Managing Your Card Statements

To protect your credit card information, you also need to take steps to protect your credit card statements:

• Secure your letter mailbox, promptly collect your mail and be vigilant for identity theft.

• If you do not receive your credit card statements on time, please report to your bank promptly.

• Shred all documents (charge slip, statement etc) that contains card details before you discard them.

• Promptly check your credit card statement and report immediately if there are any transactions that you do not recognize or unauthorized by you.

6. Stolen or Lost Credit Cards

To prevent fraud when your credit card is lost, do the following:

• Keep the bank phone numbers readily available with you to immediately report any lost or stolen card, failing which you shall be liable in full for any unauthorized transactions affected through the use of your credit card.

• Report to your bank if your card is lost or stolen.

• Check your credit cards periodically to ensure that the cards are not missing from your wallet.

• Sign-up for Card Protection if offered by your bank which helps report all your cards (including those issued by other banks) with just one call if you lose your wallet.

7. Update Your Contact Details

Whenever your move or change phone numbers:

• Notify the bank in advance for any change in address if you move.

• Keep the bank updated with your latest hand-phone number and e-mail address to allow the bank to perform verification of unusual or suspicious transactions.

8. Beware of Scams

• Be suspicious of high-pressure sales tactics such as “SCRATCH & WIN” where they ask for your card details.

• If you received a call from a telemarketer, ask questions. The fewer questions the caller can answer, more likely they are calling from an illegitimate business.

9. Safeguarding Your Card

• Never leave your credit card in an unsecured place, lying around at home or in the office where someone can have access to it. If you do not want to use your card, keep it in a safe and secure place.

• Don’t leave your credit card in your glove compartment of your car to prevent card theft.

• Never sign a blank receipt. When you sign a receipt, draw a line through the blank spaces above the total.

• Do not lend your card to anyone. Your card is not transferable.

10. Safeguarding Your PIN and Personal Information

Here are some pointers for protecting your private details:

• When creating passwords and PINs, do not use anything obvious such as your date of birth, Identity Card no., etc. Do not record those numbers on anything in your wallet.

• Do not carry PIN with your card or disclose it to anyone.

• Never send account information, such as account number or PIN in an e-mail as it may be intercepted.

• Do not reveal personal details or your card details to any unknown party.

• Watch out for impostors that claim to be from the bank and ask to “verify” your account details to make sure you are protected. The bank does not need your account details, it already has it.

11. Safeguarding Your Online Usage

When you use your credit card online:

• Never provide your credit card information on a website that is not a secure site.

• Never provide your card information online unless you are making a purchase.

• Never respond to e-mails that request for your credit card information and don’t ever respond to e-mails that ask you to go to a website to verify personal (and credit card) information.

• Never click on Internet links within e-mails. Instead, type the known URL.

• Be cautious about e-mails that offer credit services. Many unsolicited e-mails are fraudulent.

Conclusion

Please share these tips with people you know, especially those who are new to credit cards or new to online shopping.

It may save them a lot of headache in the future.

Photo: Steve Woods

(Originally published on my frugal blog on January 26 2008)

One of the tag lines of my frugal blog was “living within your means to increase wealth“, and I’ve had a few people coming here looking for more information on that topic.

These are smart people who also realize that the realistic path to wealth is making right financial choices.

In this article I will share with you how you can live within your means. Don’t worry, I won’t ask you to buy anything from me.

What Are My Means?

If you have always wondered what the word “means” means, it is actually another word to describe wealth or income. You could say that a rich man is someone with “impressive means”.

You may hear someone say “I wish I had the means to buy a new house”, which gives you a better understanding of the meaning of the word.

In short, your means describe your wealth. It includes everything you have and your earning power.

How Do I Live Within My Means?

1. Be Aware of Your Means

The first step is to find out where you stand. You need to know your limits before you can plan to live within your means.

What I usually do to be aware of my means are:

1. Take a look at my budget to see what my expenses are and where my income is coming from.
2. Study my savings accounts to see how comfortable or “safe” I am.

After doing these things, I will know exactly how much money I can afford to use without getting into debt or using my savings unnecessarily.

2. Set Financial Boundaries

After I know what my means are, I set financial boundaries for myself.

Some examples of boundaries I may set are like:

1. Eating out 1-3 times a week is fine, but eating out more than that is not allowed
2. Buying a new hand phone below RM500, once every three years is okay but spending RM1000 on the latest phone model is beyond my means.
3. I can afford to buy a second hand car, but buying a new car is not a good idea.

Note that the financial boundaries will be different for everyone. The examples above may not be applicable to your situation.

3. Control Your Spending

After you have set financial boundaries for yourself (and your family), you need to actively monitor your expenses to ensure that you are not spending beyond your means.

If you are not aware of your spending, you will sometimes find out that you have spent more than you intended too.

I once got a shock when I received a RM8000 credit card bill! It was certainly beyond my means at that point in my life. I lived beyond my means just because I had forgotten how the many small purchases I made added up to a huge amount.

If necessary, you need to control your expenses. In short, controlling your expenses involves:

1. Limiting your spending. Predetermine how much money you can use each week or each month
2. Limiting your recurring expenses. Watch out for those monthly payments and subscriptions
3. Avoid impulse shopping

A budget can be so useful tool to help us control our expenses. If you have missed it, you can read up on how to create a budget.

4. Identify Your Needs Versus Wants

It is also important to always identify your needs versus your wants when you are about to purchase something.

A product is usually more expensive because it has more features or functions. Therefore buying an item that has features you don’t really need is not living within your means.

Let me illustrate. If you ever bought a new computer before, you will notice how computers come in different price ranges. The fastest, coolest computers cost up to four times more than a basic model.

In actual fact, most people can make do with the basic model but sometimes they don’t because they are attracted to the higher end models. Sometimes they even end up spending more than they can afford.

Some possible results of not separating your needs and wants are:

1. Buying something that won’t meet your needs
2. Paying for features you won’t use
3. Paying more for a brand name

5. Managing Debt

Another way to live within your means is to manage your debt wisely.

There are two ways to manage your debt.

1. Stay away from it
2. Pay it off as quickly as you can

Staying away from debt is harder that we think. After all, credit cards are offering 0% repayment plans and it is so easy to get a car loan or home loan nowadays.

There’s the temptation of buying something right now, of gratifying ourselves even when we know we can’t afford it yet. If we are not careful, we can end up giving a considerable portion of our income to repay the bank.

For most of us who have to take housing loans, it is the frugal beagle way to pay off the housing loan as quickly as you can. In fact, you should make it a point to pay more than the monthly installment so that you can knock off the loan principal faster.

Living beyond your means will always get you stuck in debt.

6. Consider the Environmental Factors

When you are about to make a major purchase, it is also important to consider environmental factors. Factors like economic situation, changing trends, and even age will impact your financial standing in the future.

If you think that the economy is headed into a recession, then it wouldn’t be very wise to purchase a brand new car. You could lose your job! If you are near retirement or your children are about to go to university, it won’t be smart to purchase a new bungalow and a new car.

If you know that a new product model will be released soon, wait for the price to drop instead of paying full price now.

These factors are important because they can determine if you will still be living within your means in the future.

Conclusion

To summarize, living within your means is possible if you:

• Have awareness
• Control your spending
• Plan
• Practice discipline

I hope that I have helped you understand what it takes to live within your means. Feel free to share any tips and ideas you have in the comments section.

Today I am thinking out loud on the topic of making money with Twitter. Recently I have seen a couple of companies offering ways to get some income by sending sponsored twitter messages.

I have to admit that it is very intriguing and attractive.

How it works is, you sign up with an advertising company, and they will assign messages for you to send out through Twitter. Each time you send a message, you get paid.

The idea is, companies who want to generate online interest in a product or event will use Twitter to quickly create online interest using the power of social connections.

It’s that simple.

Pros

1. It’s quick money. Sign up, wait for assignments and publish a message using your favorite Twitter client.
2. It can supplement your income. Who would decline another way to make money online?
3. It doesn’t violate Twitter terms of service

Cons

1. You might irritate your followers if you keep sending ‘spammy’ messages.
2. You may need to have a large number of followers before getting any well paying assignments.

Will You Make Money?

Personally I think that you can make money if you have a large number of followers.

I don’t see how I can make any significant amount of money because I only have around 20 followers to date (hint hint).

Of course, there is a possibility that the advertising company could be really generous.

Will You Do It?

I better stop thinking aloud. Now it’s your turn to tell me what you think.

Do you think you will do it? Have you tried it? How much have you earned?

I am really tempted to try, but on the other hand I don’t want to end up with zero followers!