June 2008 Archives

If you were to put a peso figure on “your entire life” what would it be? Watch this heartbroken Australian who decided to auction his entire life on eBay, which includes his three-bedroom house, a 19-year old Mazda car, jet ski, motorcycle, parachuting gear and – get this – his lifestyle, an introduction to all his friends and a two-week try out for his job as rug salesman. Click here to see the video: http://news.bbc.co.uk/1/hi/world/asia He sold everything for almost 192,000 pounds ($383,121 and P17.2 million). Good enough for your life?

It’s pure pain to watch someone suffer from losing all his investments due to a falling market. What to do? It’s too easy to say, just hold on because markets recover all the time. Curious Capitalist over at Time.com points that the best response is no response, but active investors know that once you lose all the bets, you waste so much of the capital that you can’t get in when real opportunities come up. Last week, I spoke with several investment guys who espouse peso-cost averaging. The moneysmarts definition of that is “pikit-mata” investing, where you keep setting aside the same amount of money regularly -- monthly or quarterly -- whether the market is up or down. The idea is you buy more when the market is down. While you buy fewer shares with the same amount of money as the market rises, those who promote this investing style says it all bunches out in the end to your favor. Meaning the average cost is lower than if you buy everything all in one go. This is conventional wisdom that you’ll find in most investing books. But there are critics that say it’s not what it’s trumped up to be. If you got a big whopper of cash, for example, and the market is starting to come up from a downturn, why do you have to chop it all up to buy P5,000 worth of stocks each month? They also say its just a sales strategy to ferret out money from people that would rather not buy because the market is down. Mathematically, peso-cost averaging doesn’t make sense when the market is going up. If you buy a big load of shares just before it goes up, naturally, you’ll make more money. Juanis Barredo, vice-president of CitisecOnline.com, pointed out that what you’ll have in this scenario is a big jackpot. The problem is that striking gold is not as easy as it sounds. Barredo says for passive investors, peso-cost averaging works. MoneySmarts says if it gets you to invest money you would end up spending on restaurant dinners and shoes and whatnots, then why not? Of course, this assumes you fully understand the nature of investing in stocks -- earnings are never guaranteed and the higher returns are matched by equally high risks of loss. Feast your eyes on this illustration on what happens with peso-cost averaging. Then watch out for my full-blown article next Monday in the Philippine Daily Inquirer.

Gotcha! Here’s a snappy secret from publishers. Use words like “how to get rich in ten simple steps” or “secrets of wealthy people” in title and promotional materials. Never use “retirement.” Malayo sa bituka. (Far from the gut). Like everyone else on this planet, Filipinos don’t like to think about the future. But think of this: it wasn’t too long ago when Bill Gates was a young upstart who started Microsoft in his garage at 17 years old. Yesterday, he clocked in his last full day of work at the office after 33 years of building that icon of technology. Makes me wonder what I can show for 33 years of work. Hmm. Lots of bloopers and nasty comments on this blog, for sure :-). Here’s a spoof of Bill auditioning for -– and getting turned down –- by Bono, Steven Spielberg, Hillary Clinton, and Obama. When Bill started asking Jon Stewart if he can co-host of The Daily Show, I couldn’t stop shaking with laughter. Economy Roundup this week is all gloom and doom. Oil looks like it’s on its way to a record $150 per barrel. Getting smaller cars, commuting and telecommuting is now a matter of time and not of choice. This is going to cause economic planners much grief. Public outcry is getting pretty shrill already. A photo of a Filipino activist throwing a plastic bag filled with paint at the Petron oil company office here made its way to International Herald Tribune today. What’s the difference between a forecast and a projection and a target? The numbercrunchers have been busy this week trying to guess the future. When the government issues a statement, watch closely whether the figures being presented are forecasts or projections, or is it a target? The International Monetary Fund, for example, is now looking at 5.2 percent gross domestic product for the Philippines in 2008, as opposed to 5.2 percent earlier. That slowdown is very much expected under the present scenario, and credit rating firm Standard & Poor’s projection is not far away at 5.5 percent. Another rating agency, Fitch, affirmed the country’s sovereign ratings and said it was keeping the outlook stable, meaning it sees no big downward adjustment in the coming months. HSBC joined the chorus, saying the Philippines is now the weakest Asian economy after Vietnam. I always take these projections with a grain of salt. I trust local economists more especially those who do their homework well and have an objective eye. Many visiting experts from the IMF and these credit rating companies have been known to, well, base their projections on less than thorough interviews and research. The central bank’s public statement that it was expecting a 68 percent drop in net portfolio investments –- stocks, bonds and bank products -- this year, however, is something that should command a more than cursory glance. Normally, the government would shy away from saying anything that would scare the market further. Could it mean the outlook is worse than we think? Financial products: Medium- to long-term bonds have fallen out of favor these days with rising inflation and there is no letup yet seen in the stock market. Government will be issuing around P85 billion in bills and bonds in the third quarter. Shares are very much in the flatzone that news on getting help from the New York Stock Exchange on new opportunities in trading system architecture and technology, exchange-traded products, market-participant connectivity and market data management almost made traders stop twiddling their thumbs. The PSE’s system is now the most backward in Asia and has been the cause of much frustration among market participants. The market downturn, however, has not deterred Sultan Mining and Energy Development Corp. in going ahead with its IPO but moved it to the latter part of July. Agri-Nurture Inc. is also one of the brave companies that will try to raise money from the market, an agriculture company that challenges local farmers to become a millionaire in a year. I was a bit skeptical, but if you think about it, if ANI can make a farmer a millionaire in a year through the use of its post-harvest facilities, processing plants, logistics solutions and its planned agricultural estates, then the owners will be an instant billionaire. Makes sense. Tell you more about that next week. With bonds and stocks out, where to invest now? Two banks thought tier-2 notes would be good alternatives. Metropolitan Bank and Trust Corp., the country’s biggest bank in terms of assets has announced a P10 billion offering, while Philippine National Bank said its offering raised P6 billion from the public. Coupon was at 8.5 percent. Lower tier-2 notes are interesting-bearing notes with limited tenor (mostly five years) and are subordinated to the claims of bank depositors and senior creditors. Meanwhile, pre-need sales went down a whopping 21.8 percent in the first five months of the year. Filipinos are not buying as much of pension and education plans these days. Thank the doofuses that made such a mess out of companies like College Assurance Plans. Personal Finance Habits: Sometimes, improving spending habits can only go so far. The other side of the equation – raising income – also becomes a necessity. Our MoneySense article last Monday talked about direct selling and how to do it well. Either go for popular brands or niche products that already have a following, writer Raymond Calbay said. Another part of raising income is making sure you’re not underpaid. This article Are you paid what you’re worth? says you can try looking at classified ads for clues on whether you’re getting the right pay. Click on the link for more tips. From personal finance bloggers, I found FrugalPinoy’s post on 5 Money Lessons I’ve Learned from Freelancing very enlightening especially the part about making sure you don’t sell yourself too low. This is a common problem among freelancers – how to charge for your services. if you're trying to improve your spending habits, ask BoneMD how he stopped himself from buying something he had been drooling over for the longest time. Congratulations for being money-smart, BoneMD! Consider yourself P17,000 richer :-) Till next week! Have a great weekend, guys.

Pacita U. Juan, owner of Figaro Coffee, said her secret to cutting her electric bill in half is the humble power strip. Admit it, its such a chore to unplug all devices. So, use the power strip with a switch. Even that telephone charger that hardly gets removed from the socket consumes power and your television set which is always turned on by remote may not be showing images on screen but still consuming electricity. Agree? Disagree?

If you think your stock portfolio has been beaten to a pulp, wait till you hear what technical analysts have to say about whether we’ve already seen the worst. “Has the PSEi reached the bottom? Hell, no,” said Fitz Aclan, head of investment strategy of the trust department of Banco de Oro. Fitz gave his inter-market analysis and fearless forecast at the Chart Analysis Forum Tuesday night at the PSE trading floor in Ortigas. Fitz is one of the founders of Absolute Traders, the group that organized the forum. Three hours seemed quite a long time to digest his two-word answer to the burning question of the night. The CAF wrapped up at 11 p.m., but the crowd remained somber and thoughtful until the very end and a side comment from a young trader was all too revealing. “Cut your losses,” he said. That probably means some traders were likely pinned down by the current market plunge. For an active investor, especially a technical analyst who prides himself with being able to see the signs early on, that’s like an obstetrician-gynecologist who misses the normal delivery date by a month. The chart looked like someone’s going down the staircase of doom (Snorting at myself here. Don’t ask me what a head and shoulder formation means). If technical analysts are to be believed, things are still bound to get worse before they get better. “There are still downward pressures…Oil is still trending up. When oil starts to show a reversal, that can be the trigger that we should be watching out for,” Fitz said. Fitz, Bonner Dytoc and Danny Go who started AT along with technical wiz Arnold Diaz, encouraged traders to look at the market on a long-term perspective. They say those who want to make a quick buck are easily disheartened. The serious ones are those who stay and use the lull to sharpen the saw. “Now is the time to educate ourselves, to practice and to look at the broader picture,” said Danny Go. Booming stock markets attract aggressive traders and Buffett-wannabes. In 2007, when the market rose 40 percent, everyone wanted a slice of the action. Someone said the PSEi would go up to 4400 in 2008, which sparked a lot of interest in stocks. Just when the herd was coming in, the bear came lumbering out and the herd scattered. Alcuin Papa, a member of AT, and a Philippine Daily Inquirer reporter, said Absolute Traders peaked at 80 to 100. My rough estimate was 60 in attendance Tuesday night. If you fancy yourself as an active investor, AT said keep in mind that the bears are out and the strategy should be to stay in the sidelines and keep exposure to a minimum. If you see a buying opportunity, use money that you can afford to lose and preserve your capital so you can play another day. And pray that the real bottom is not too far away.

UPDATE: Editor's note: Added video of Abby Sarmiento taken by INQUIRER.net business editor Ma. Salve Duplito. Filipinos spend too much on staying connected. When you don’t text, you’re not a good friend. When you don’t call, you’re a bad daughter. Husbands know full well the wrath of a woman untexted. These days, cutting costs will have to include taking a second look at alternatives to the high cost of getting connected. In our household, only my 7-year old and the toddler don’t incur costs. There are six mobile phones in our household (two for the hubby), a landline and a DSL service. This should be interesting for financial voyeurs . On a monthly basis, this is what we pay telcos : Hubby Line 1 – P1,800 (postpaid) Hubbly Line 2 - P3,000 (Blackberry service paid by employer) Salve – P2,500 (Blackberry service) Danielle – P240 Maid 1 – P60 Maid 2 – P150 DSL service – P2,727.27 Landline – P700 Total: P11,177.27 Annualized: P134,127.24 Less company support: P74,127.24 Ouch. To put expenses in proper perspective, annualize them. Multiply the daily cost of texting for prepaid plans, for example, and find out how much it would cost in a year. My daughter does not think a P20 unlimited texting fee is too much, until she realized she is actually spending P2,880 a year just to text. That’s deducted from her allowance, so she tries to be more careful. By the way, you can use this tip also for other expenses, like restaurant dinners, taxi rides – just about almost anything. If you eat out two times a week and spend P500 each time, you are spending P1,000 weekly, P4,000 monthly, and P48,000 annually. That's already tuition for Junior. Awareness is the first step in cutting down the cost of getting connected. These things are expensive. Trimming the down without losing the connection may be possible with some discipline. Use the landline more instead of texting. Try instant messenger and email instead of calling overseas. Skype works for many of my friends. Cut costs but stay connected. Hermits are lonely. For businesses that need to call overseas regularly, try VOIP phones. One of our editors in the office, Dennis Maliwanag, tried PLDT’s wireless landline. He’s P700 richer every month after he disconnected his landline service, with a new one that can also receive text messages. (Model: Feliza Cana, INQUIRER.net) Sweethearts and business partners Franco Mesina and Abby Sarmiento learned that staying glamorous with a small and hip mobile phone is not as good as being smart using their big portable landline. They have cut down business costs by getting a wireless landline and even bringing the clunky apparatus with them when they go to places as busy as the grocery. Here's a video I took of Sarmiento. Franco says Bayantel charges P699 for the wireless landline service (it an also send out and receive short text messages.) PLDT has a P600 per month service but limits the calls to 10 hours. After that, you pay P1 per minute. Franco and Abby runs a water purifying business and need to be on the go and yet accessible to their people. They swear the wireless landline has cut their telephone bill significantly. How about you? How much do you spend on getting connected? Annually?

My half-finished survey of mommies in the Metro are coping with the rising food and oil prices by buying more goodies at the wet market instead of at the grocery. They swear that they get hundreds off their market-day budget. My previous post on Wet market versus grocery showed that wet market won hands down among MoneySmart readers. I go to both and compare prices when I have the time. However, I have also been known to be in so much frenzy that I can get seven bags of grocery items chosen and paid for in 30 minutes. Nope, no comparison shopping there! If I did, the last time, though, I would have missed this steal. Freshly squeezed kalamansi juice is a staple in the Duplito household. I usually buy five kilos of the little green stuff every week. Its price at the wet market last Saturday: P80 per kilo. That would have been P400. In SM Supermarket: P60 per kilo. Total price: P300. Better quality, too. Makes me wonder how many more bargains can be found in unlikely places. Lesson learned: always compare prices.

When “El Kapitan” was buying the government’s stake in Philippine National Bank more than 10 years ago, my teammates and I (in another publication) wrote a special report on him. While doing my research, I must have read truckloads of literature about the man -– from urban legends to PR-ish articles. Sadly, most of those publications are not available by Googling. He has been painted as the best rags to riches story this side of the planet, to the most “well-connected” tycoon and everything in between. Lucio Tan is an enigmatic figure. The fact that he is one of Asia’s richest billionaire is not as interesting as how he got his billions. I would have loved to a one-on-one interview 10 years ago, if only to ask him how he could remain unscathed after every Philippine president he has been closely linked to went down in political flames. But of course, we all know the answer to that. Besides, I didn’t speak Chinese. In today’s paper, there's an article on El Kapitan as a father. The stories from daughter Vivienne Tan are revealing:

“It was a freezing day in Tokyo. I was a skinny seven-year-old wearing my favorite pullover with an apple on it…We were outdoors and my sister and I were freezing, our teeth chattering, once in a while playing smoke rings and warming our hands in our pockets. My dad slowly approached us, sat down, smiled and softly said, “Just think it is not cold.” My younger sister and I just looked at each other with a puzzled look unable to comprehend how he could even say such a thing, when it was downright cold. I thought that maybe the cold had started to get to his brain. Perhaps sensing our skepticism, my dad persisted and said, “Relax, close your eyes and imagine. Think of the color green, imagine grass, think of the color yellow, imagine the sun, think of sunflower … imagine the colorful butterflies … imagine hearing the birds chirping … imagine the weather … it is summer, it is hot ...” Then, as if under a magic spell, I felt my body slowly stop shivering, my teeth stopped jittering. When I opened my eyes, I was actually still with my father, who was now smiling. Then he said: “See? It is all in the mind. Just believe.”

Learn from the Lucio Tan art of war: It is all in the mind. When you are broke or trying to get out of a mountain of debt, learn how to discipline your mind into thinking sunny days will soon come. It can help you hang in there.

“Ten years later, my first year in the US to me was a turning point…On my second term, my friends started getting to me. Like some schoolmates, I started to cut classes, go to parties, shop, hang out. I knew I was not doing the right thing but why can’t my friends and schoolmates see anything wrong? How can they use their tuition funds, given to them by their parents, to buy cars and other things? I felt so lost. I felt so confused. One time, I came home from spring break… my dad was there. He was carrying a piece of paper. I was shocked to see that it was actually my grade report! Up to this day, I never asked how it got to him. Full of shame—I remember I didn’t want to look up. Instead of getting scolded, he used his gentle voice and asked: “How can your grades of As and Bs deteriorate to Cs and even Ds?” I was burning with guilt. I wished he just scolded or yelled at me. But no. He didn’t. He continued by saying: “I can buy you everything you want but I cannot buy you knowledge. The best I can do is to give you everything you need to acquire that knowledge. And that, I have given you. The rest is up to you.”

The young man who started his billions with a scrap business has got to value education. This was foremost in my mind this morning when my I noticed my 13-year old daughter’s pea-sized enthusiasm for studying. Whether or not I like Lucio Tan, that little line “the rest is up to you” turned her inattention to self-awareness. Knowledge and education has got to be one of the biggest foundations of life, not just personal finance and financial literacy.

“Four years later, in 1991, I was fortunate enough to graduate from the University of San Francisco with a double degree in Math & Computer Science. Being a computer science graduate from the US in the ’90s, I could have actually commanded a handsome salary. True enough I had good job offers with great salaries from the best multinational companies. My dad who had just flown in at that time asked me which offer I had decided to take. I boastfully replied that as a computer science grad I was entitled to wait for the highest bid, which would surely come along. He paused and then wisely said, “Be humble. Don’t look at the money, but rather, look at what you really want to do and the amount of learning and growth you would get.” He further added, “In fact, you should pay tuition to the company for giving you the training you need.”

Here, I’m a bit ambivalent. What if Vivienne wanted to be a scrap businesswoman? Would he support it because it’s her passion? What do you tell your children when its time to choose careers? Do you ask them to consider careers that are in demand and have the best pay? Or do you honest-to-goodness tell them to follow the desires of their hearts? My daughter’s career choices are wild, to say the least. Once, she said she dreamed of being a rock star. Yeah. Can you imagine a SHY rock star? Then she wanted to be a singing marine biologist. She changes her mind the way Frank the typhoon did. It’s well and good to follow your passion, but while young, include in choices a, b, c and d the careers that would at least pay the bills! Life according to Lucio Tan. Twisted, but interesting.

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I wrote a full-length article on “Sneaky tips that take pain out of budgeting” for the Philippine Daily Inquirer and you can read it here. Yes, guys, I have been asked to send my personal finance articles over to the print version on a weekly basis. It’s the age of convergence, finally. Here’s an excerpt:

“If your heart does flip-flops over numbers, budgeting the traditional way will be easy: jot down every expense the moment you make it, figure out how much you really spend and where your money goes on a monthly basis, set a limit for each item and stay glued to your ideal budget. But the numbers game is not an easy one for most and not even rising oil and food prices can turn busy parents into budget freaks. Romelia Neri, an economist and a mother of three children, could hurdle sophisticated calculations but she finds it very hard to budget the conventional way. “They say budgeting is the foundation of good money management but I find it too time-consuming. I would rather read to my child,” Neri says. On the contrary, Neri’s sister who is also a mother has mastered the art of budgeting. “She records all her daily expenses at the end of the day in her Starbucks calendar book,” Neri says. Higher prices of gas, food and almost everything else are hitting Filipino homes hard this year. Budgeting could stretch incomes by helping Filipinos to avoid spending on things they don’t really need, like DVDs, restaurant meals and toys. The problem is that only very few take the time to make a budget, and fewer still stick to it. Budgeting sounds and feels painful; overdoing it can cause spending binges, says Pascual M. Garcia III, president of Philippine Savings Bank.”

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Roundup In the blogosphere, Benson Te asks whether global financial markets survive high oil prices and says that pinning your hopes on the recovery of oil seems specious. Speaking of stock markets, I will be at an Absolute Trader event tomorrow at the Philippine Stock Exchange where market participants will bang the table on whether the PSEi has reached bottom or not. Abangan. Parttimeinvestor says stocks are still the best bet against inflation, especially shares of companies that use oil efficiently. You’ll remember that in a previous post, experts have recommended shares in food companies, banks, energy, mining, utility and infrastructure stocks like telcos and water companies. DextersLab says SeaOil’s fuel prepaid card is a good example of the application of a hedge fund in business. Interesting! Jeff Gonzales has an analysis here of why it pays to have a long-term investment horizon. All in all, keep your minds sharp and believing, appreciate knowledge and education, include only smart options in the roster, budget well but don’t whip yourself in the process. Thanks for visiting MoneySmarts today. Until next time.

Vote: a) Of course not! Subsidies are baaad. b) It’s a source of corruption. Mark my words! c) It’s a band-aid solution, but a few pesos are better than nothing. d) Everybody’s doing it. The US and other countries are giving subsidies. Sige na nga, pwede na (It’s okay). e) Hey, let’s not look a gift horse in the mouth! A lot has been said about the government’s decision to give out cash transfers or subsidies to the poor. Comments range from the totally absurd to pure wisdom. There have been three forms of subsidies thus far: the P500 cash transfer to households that consume at most 100 kilowatt hours a month which will cost government P2 billion, a P2-per-liter discount for drivers of jeepneys and other public utility vehicles, and a P300 subsidy for every child that goes to school. There is no official tally on the total cost, says Amando Doronila. He points out that these subsidies are on top of the P6.9 billion the government shelled out for the National Food Authority’s cheap rice as of May and the fertilizer subsidy to increase rice production amounting to P43.5 billion (P1,500 per farmer). All across Asia -- in Indonesia, Malaysia and Taiwan – governments are giving out subsidies. The Philippine Daily Inquirer’s editorial “Money for nothing” says the region is extremely tense. Now, whether the subsidies are being given to help the poor or to keep them from being a pain in the neck is anyone’s guess. We can talk till our throats are hoarse, but even the intelligentsia who figure it out will still have to deal with whether subsidies really work. Presidential aspirant Senator Manuel Villar wants the administration to continue collecting value-added tax on oil and give the proceeds to the poor in the form of subsidies. Jaro Iloilo Archibishop Angel Lagdameo says giving subsidies is like putting money in a basket with a hole in the middle. Bicol region Governor Joey Salceda says subsidies can stimulate the economy. There’s more on this discussion over at Manolo Quezon’s blog The Daily Dose. Government subsidies are matters of public policy, but there are certain personal finance principles that come to mind. Giving somebody in the pits a leg up is not bad, as long as you can afford it and it doesn’t turn him into a dependent sycophant. Even on a personal level, whether you are the receiver or the giver, accepting or giving cash is a tricky situation. Receiving inheritance, for example, is well and good, but when my friend told me she didn’t have to save much money because she has an inheritance waiting for her, it triggered all sorts of warning signals in my head. The League of Corporate Foundations (LCF) believes there is a better way to alleviate our people’s suffering than outright cash subsidies. During a press conference yesterday, Bill Luz of Ayala Foundation for example said government could spend that P500 on compact fluorescent lamps (CFLs) and ask low-income households to exchange their incandescent lightbulbs with CFLs. “That P500 will be gone after a month but a CFL can help that family for the lifetime of that bulb. I think teaching them to lower their electricity consumption is much better than giving them cash for their electric bills,” Luz said. Good point. In Day two of the CSR Conference on July 16 to 18, CSR Conference chairman Roberto Calingo said the LCF will challenge companies to find ways to lower consumption of electricity, gas and other commodities which are getting more expensive by the hour. These days, who doesn’t need a leg up? Whether financial, spiritual, emotional or mental, there is a point in everyone’s life where he becomes a beggar. Giving that help may turn out to be a good immediate solution (think first-aid before rushing to the hospital), but we might have to think harder on finding the right way to give.

Stephanie (not her real name) looked a bit like a lost little girl, no different from her eight-year old daughter who transferred to my son’s school. Turns out that it was her first time to attend a school activity. She has been at sea on cruise ships for the last 15 years, going home only once a year – one of 230,000 sea-based Filipinos working abroad. We had a lengthy and very interesting discussion about what it was like at sea for the past 15 years, starting from when she was a fresh graduate of Hotel and Restaurant Management from a reputable school here in Metro Manila, up until she decided to get pregnant (but not get married) and now that she is waiting for her call to join the crew of another cruise ship. Stephanie’s story amazed me, although it was not the first time I had heard of the challenges and experiences of Filipino sea-based workers. She told me how Filipinos earn anywhere from $2,000 to $4,000 a month, bulk of which come from tips from passengers. She also described how Filipinos burn their money buying clothes, bags, laptops that they never get to use, mobile phones and other techie gadgets from different ports even when these could also be bought in the country at the same price or even cheaper. Since Stephanie is an old hand on deck, she said she had seen how Filipino men were second only to the Japanese in generosity when they like women and would buy them anything they want – from diamond rings to laptops – whether or not they were married to someone else back in the Philippines. She also admitted that Filipinas win hands down when it comes to using their charm to get their hands inside men’s wallets, whether or not these were their husbands or boyfriends. It seemed like a cruel world, but reality is reality. It was an eye-opener about the lives and sacrifices of our sea-based countrymen and their families. I have heard this kind of story told again and again by those who have resigned themselves to the fate of an OFW out at sea. “Do you think your Filipino crewmates save money?” I asked her. “They don’t. That’s why they come back year after year. When some of my younger relatives tell me that they want to follow me in my line of work, I don’t allow them. If you are not strong enough, this occupation will destroy you,” she said. Stephanie says she has been saving money consistently recently, longing for the time when she can come home and attend more parent-teacher conferences and just spend time with her daughter. But she knows that it will be hard to find a job that will pay as much, so she is preparing to start a manning agency with her sister. There may be others in this line of work whose experiences are different from Stephanie’s. I hope theirs is a story that can prove Stephanie and others like her wrong. Doris Dumlao wrote an article in the Philippine Daily Inquirer entitled “More OFW families save, invest money sent to them” and said that nearly half of households supported by overseas Filipino remittances are now investing for the future.

Based on the second quarter consumer survey of the Bangko Sentral ng Pilipinas (the Philippine central bank), the number of overseas Filipino-supported households that allotted part of their remittances for various types of financial investments more than doubled to 48.6 percent from 21.9 percent in the first quarter. One out of three households earmarked money for bank savings--also twice as big as the previous ratio. This percentage rose to 31.4 percent in the second quarter from 14 percent in the first quarter and 15.7 percent in the same quarter a year ago.

Here are some of the other highlights of that article: 14.3% -- now set aside money to buy a house, up from 6.1% in the previous quarter and 2.5% a year ago. 3% -- of families now buy financial instruments, up from 1.8% in the previous quarter but lower than 4.5% in the same period last year. 5.1% -- families that are saving for a motor vehicle, up from 1.6% a quarter ago and 3.5% a year ago. The numbers are still very low. Who can tell when something is a trend or if they are just a string of numbers? Will the economist determine trends, or will the families themselves? Save more, spend less, stay grounded and focused. That’s the battlecry that would turn three months of growth in savings and financial consciousness into a trend. Good luck to us all.

(This post is written by Bianca for Money Makeover) May you live in interesting times, is one Chinese saying, or curse, whichever way you want to look at it. We do live in interesting times. Just when we thought that we are probably getting it right, calamity struck. Our car was taken. It was not insured. A little background. The hubby drives a 9-year-old truck that was the apple of his eyes. His brother handed it down to us four years ago. We paid the balance whenever we could and had already given a total of P90,000, the last installment just very recently. There is, of course, the cost of maintaining it which ran up to some P200,000 over the years. He had dreams of “dressing” it up – in March, he bought it a P20,000 set of wheels filled with nitrogen. He wanted it “lifted”, repainted, made into a macho monster truck. It was a constant companion when we moved furniture, or people, from here to there, and a comfort in the many times that my much-older car has broken down or was being repaired. He never wanted a new one. He was content and happy, my boo. Then it rained. Literally. At 6:30 in the evening, torrential rains blotted out the sun. It was a typical downpour, in a typical day of May, and the hubby went about his business. He stepped outside of his office; saw his truck getting bathed by the onslaught of rain. He crossed the street to somewhere and thirty minutes or so after, just when the rain was slowing to a trickle, there in the parking spot, was a vast emptiness. He scratched his head, refusing to believe what he could not see, thought “oh maybe I parked it somewhere else”, ran here and there, his hands inside his jeans pocket, feeling the set of keys which he knows belong to the car, heart hammering, finally letting himself realize the obvious – his car was carnapped. He had a sinking feeling that he will never see it again. We never did. It did not help that the people at the government agency tasked to help victims of carnapping are an incompetent, insensitive bunch, ignoring us like this was nothing consequential, requiring a gazillion documents before the loss could be reported to national – wherever or whoever or whatever that is. We had never felt so helpless and so incensed, and…. Oh yeah -- it was not insured. We are still reeling and are still trying to let go. Memories are traitorous at this time, especially for the hubby. Whenever we see a truck similar in look and in color, we jump from our seats. He still tastes bitterness in his mouth and asks me frequently why life is unfair. I try to make him see the light but sometimes, it is difficult for me to answer the questions. And we are only talking about a P400,000 car here. Bad things can happen. Certain things, like death, will happen. That truth hit home, and hard. So we got life insurance, fire insurance, health insurance and I’m still trying to find out what other insurance there could be. However, my14-year-old car is no longer insurable. Some things, I guess, should be left to fate. Now, for the lifelong lessons: we did not know that cars could be insured for up to 12 years; that when you have a hard time opening or closing your car (which happened to us but which we attributed to old age and rust), someone could have tampered with it (placed something inside so that the owner will not be able to close it) and that we should have taken it to the mechanic; that a car could be replaced; that it was a blessing for the hubby not to have witnessed the carnapping because if that happened, we could have lost something much more important than the car. So now we hold on to our material things, but not too much, get safeguards and checks in place so we can sleep soundly at night, and try to extract whatever happiness we can with what material comforts we have. But mostly, we realize that we must invest in those that are far more important – each other and our daughter, in people and relationships, in great memories. While a car can be replaced, these, once lost, could be lost forever.

I can spot them 50 feet away -- mommies with not a single strand of hair out of place, carrying tiny handbags, and with fingernails done to perfection. Mommies who are slim, trim, and confident. Sometimes, I wonder if I decided too early to be a work-at-home mom. Think big, bulky, baby bags and endless trips to the pediatrician. Gone are the regular trips to the parlor for hair spa and I have long since traded my strappy sandals for comfy ToeBerries. While interviewing Education Secretary Jesli Lapus at the sidelines of a conference last year with the World Bank senior guy looking on, I saw him eyeing my notebook suspiciously after I turned a page to take down notes. The entire spread was full of scribbles made by my two-year old son. Using a big-point permanent marker, I might add. “My two-year old loves to draw,” I said in a feeble, embarrassed voice. “I thought those were your scribbles,” the secretary said. He didn’t look amused. Welcome to my world. I’ve been an editorial consultant for almost eight years, now. I smiled a little lopsided smile when Noe Ravalo said in his most recent column:

Be careful that you do not get confused with labels: consulting is often more time consuming than a regular 9-to-5 job. The upside is that you can do part of the work at home (addressing your concern with the children) while continuing to stimulate your mind.

I work at home a few feet away from my toddler, true. And it’s one of the best things that happened to me in my writing career -– to be working for a company whose out-of-the-box thinking allows mommies and daddies to wow the world with their writing and organization skills wherever they are, as long as they have a laptop or PC, Internet connection and a mind that’s capable of separating domestic and professional chores 24x7. That can be at the office, in an Internet café, at home or wherever they find themselves. But if you think this means shorter working hours, you are dead wrong. Still, a lot of parents I meet long for this arrangement. It’s not difficult to understand why but Noe said it best:

In this age of streaming information, 24 hours is never enough to get things done. Double-income is “convenient” but in the process our children are thrust into a 24/7 double-income-but-not-enough-time environment.

One mother I interviewed wondered why despite all the hard work and long hours, things don’t seem any better. You start the year thinking it will be better this year but before you realize it, you and your husband had been working five long years and are still in that same hard spot in between the utilities and the credit card bills? In the meantime, the children are growing with the house help and the only time you get to play with them, I mean really be in that moment with them is during school Family Days. Once a year. Are you one of those longing to give up your job to play with the children? Whether you want to be the rich supermom or the wealthy wonderdad, letting go of a career and embracing a life with lower income and less benefits is a move that can save families in many cases. Obviously, this move is not for all. Only you will really know if its for you -– no judgment here. But if you’re raring to jump into being housemom or housedad superhero-ish status, whether on a full-time basis or on a work-at-home scheme, make sure your expectations are not over the top. I will try to bring you back to earth a little bit, so you can prepare yourself.

1. Plan ahead for the immediate drop in family income and how to meet the bills that are hard to downsize, like tuition, utilities, medical bills and debt obligations. Do a trial run. Try to live on single income for a while and save one parent’s income in a separate bank account. Don’t jump in on a whim or you might get a head shock.
2. Do a tally sheet of company benefits you will be giving up and determine whether you can live without them. Retirement plans, health plans, car plans, salary loans and others are all part of the difficult process of weighing and deciding.
3. Determine whether the parent who will be keeping her job is happy where she is and whether she has a good alternative plan if things turn bad at the office.
4. How are you going to attack the tax issue? Consultants are subject to a 12.0 percent value-added tax or a 3.0 percent percentage tax. Other companies may be more creative. You will need to engage an accountant.
5. If you are going to work at home, you will be paying for your own airconditioning, Internet connection, and incidental expenses like meetings outside the office. See if you can negotiate with your company to shoulder part of the cost.
6. This is not a financial consideration but a crucial one: do you have the discipline? Some work-at-home parents are undone by the sounds of Playhouse Disney or Cartoon Network in the background. The kitchen, the refrigerator and all its delicious smells are perennial temptations. It takes a lot of discipline to work at home and separate yourself from domestic distractions. You will find that the pangs of guilt you felt leaving the house in the morning when you worked at the office will be repeated a dozen times in a day when you have to tell your kid you can’t play because your deadline is coming up.

The best way to handle domestic distractions is to separate your working space and avoid the fluffy slippers when you work. Clock in the way you do at the office whether its at 3 a.m. or 8 a.m., and wear your strappy sandals if you have to. Patiently let the young ones understand that when mommy or daddy is working, he has to work too. Break times are designated in advance and that’s when cuddles are best done –- when you can give him your full attention. My 7-year old son once barged in before break time and was talking behind my office chair at a pace of 10 words per second, excited about the first day of school. I patiently explained to him again the situation and instead of the usual protests and long face, he said: “Okay, see you on Monday!” It WAS Monday. That was the birth of our secret mommy-working-time code. It is a magical code, because it always gets me a smile and hug.

We answered this question in our personal finance feature today:

Question: I am one of the thousands of people who live in Quezon City but work in Makati City. That means I drive some 20 kilometers to work every day, and that's just one way. I tried commuting but it's impossible during rush hour. With the price of gasoline going up, travel to and from work makes a huge dent in my budget. Is there any relief in sight for us? – Josephine P.

We all will have to deal with the rising cost of gas, whether or not we are from Quezon City, Bulacan, Cavite, Cebu or Davao. The most terrible forecast I have heard so far is for a full tank to cost P30,000. That’s almost the take-home pay of senior call center agents. Full tank at P30,000? Goodbye car, hello MRT for many middle-class families. I see a lot of them in the MRT, even now. You can sense which MRT commuters used to bring a car to work. Pretty soon, Josephine’s “impossible” may turn to “no other choice.” I like the sneaky tricks to save on gas:

1. Lighten up the trunk. More weight in your car trunk will make your car work harder, using up more gas.
2. At the gas pump, don’t top off the tank. The excess gas may spill and will amount to waste. Just stop filling at the automatic level.
3. When parking, choose a shady spot to prevent gas from evaporating under the heat.
4. Fill up your tank in the morning or evening when the air is cooler. At midday, gas may expand due to the heat and you will end up getting a lesser amount of gas.

One oil company has seen an opportunity in this crisis. Seaoil is offering a price lock prepaid card at P1,070 for 20 liters, or P53.30 per liter. They are selling the card only from June 10 to 16.

Good or bad deal?

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My article entitled “Inflation, your nest egg’s silent assassin” came out in the Philippine Daily Inquirer (print version) yesterday. It has a link where you can download the retirement worksheet from Augustus J.V. Ferreria.

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For those who are interested in learning about investing in the stock market, the Philippine Stock Exchange has a seminar called “Demystifying the Stock Market” on June 19, 2008, 6:00 to 10:00 PM, at the Trading Floor of the PSE Centre, Exchange Road, Ortigas Center, Pasig City. For more information please call the PSE Senior Specialist/Project Head at 6887537 or 9130054.

Almost everyone wants to be told what to do. Put P10,000, P100,000, P1 million here, here and here. Choose this company, dump that one. Buy now, sell in three years. Sell Glutathione while it’s hot… Attend a seminar to find your life-partner. Write your dreams, send your thoughts out to the cosmos at four in the morning everyday so that the universe can respond to your desires and one day you will wake up a multi-millionaire with a house in Ayala, Alabang. It’s one thing to wake up early in the morning daily to work on those goals – whether it’s a sick-pack abs or a six-figure salary -- by actually doing crunches or learning how to speak fluently in Mandarin. It’s another to think you can do it without working hard, sans discipline and determination. Times are hard. People are desperate for solutions. They are looking for answers. What I don’t get is how some people can feed on this desperation by telling others all they have to do is visualize and attract wealth with their minds in a twisted version of Rhonda Byrne’s bestselling book “The Secret.” Believe me, the loyal flock is getting bigger and paying through the nose for these magic formulas. Sounds familiar? Walk away quickly. Nothing beats paying yourself first, saving money consistently every month, living simply, getting out of debt even if it means no new clothes for a year, and burning the midnight oil learning about bonds, warrants and stocks, among others, just like this guy did. Studying, making mistakes sometimes and crawling back up doesn’t sound as easy as merely visualizing your new vacation home in Tagaytay Highlands. But it sure is a lot more measurable. Boring, yes, but tested and true.

Inflation clocked in at 9.6 percent in May, a 9-year high, says our banner article today. Citigroup expects inflation to reach 8.3 percent for the entire year. At the core of this economic indicator are two basic things: prices are skyrocketing and our savings and investments are getting squeezed. Should you be worried? What does a 9.6 percent figure mean? First, it’s just a hair’s breadth away from double-digit inflation and is the highest since January 1999. Second, 9.6 percent refers to the increase in prices of a basket of basic commodities consumed by the average Filipino family. If you are in the middle or higher class, your inflation is more likely higher, says the National Statistics Office. Third, 9.6 percent refers to the inflation pinch we felt last month. That’s in the past. The thing is, we are planning for the future. If this future you’re worried about is your retirement 15 or, say, 20 years down the road, or when your small kids finally get to college, then you should be worried even more. Fourth, based on the Bangko Sentral ng Pilipinas website, the most common savings and investment options right now in the Philippines do not beat inflation. Money in time deposit accounts earn around 3.0 percent, special deposit accounts for seven days get a little over 5.0 percent, 364-day Treasury bills give a 6.846 percent yield, and a 7-year fixed-rate Treasury bond gives an 8.375 percent yield (all annualized). Even dividends earned from insurance companies are currently around 7.0 percent to 8.0 percent. Bottomline: inflation eats up every bit of earnings coming from our savings. Everything that we consume gets more expensive by the hour –- that includes gas, electricity, food, movie tickets, medicine and all that. That means our little stockpile of savings’ will buy less and less of these things. If we do nothing with our savings, inflation becomes the silent assassin that might send us all back to our children to live in their houses when we are all wrinkled and grey. (Shudder) What to do?

1. Tweak our portfolio to enhance earnings. Johnny Noe Ravalo says this may still result to losses but doing nothing will guarantee those losses.
2. Mon Tejero, head for research and portfolio strategy of Citicorp Financial Services, recommends equities which are traditionally viewed as one of the best hedges to inflation because businesses can pass on rising costs to consumers. Real estate, infrastructure assets and commodities such as gold, oil and agriculture can also protect you from inflation.
3. Alijeffty Gonzales, president of ACG Advisors, recommends going short-term to take advantage of higher interest rates and avoiding medium- to long-term bonds. If buying stocks, he recommends picking inflation-proof stocks like food companies and banks. Jeff, however, says overall, inflation should have been factored in the financial plan and should not be a big worry for savers.
4. Augustus J.V. Ferreria, senior executive vice-president of Generali Pilipinas, believes that cutting back on spending and saving more will protect people from inflation more than chasing after higher returns.A worksheet created by Maiko Diaz de Revera of Generali shows that even a person with P100 million in the bank earning 6.0 percent interest and faced with 10.0 percent inflation will lose all of his money on the 14th year if he spends all of his interest income year after year.Even if he moves his money to an investment instrument that would give him 12.0 percent, all other things remaining the same, he would still lose his money by the 12th year. Things get interesting when we assume that this guy decides to save 10.0 percent of his interest income. Even if his P100 million earns only 6.0 percent per annum, he would be able to stretches his retirement fund by two years. Raising that savings rate to 40.0 percent can extends the fund by eight more years.

(Email me at lightdream (at) gmail (dot) com if you want a copy of the worksheet, which Ferreria is giving out for free. Look for my article in the Philippine Daily Inquirer on Monday for more details and explanations on this topic.) Whatever you do, whether it is to cut back on spending as many Filipinos are already doing according to AC Nielsen, or go after higher returns, stay away from scams offering returns that are too good to be true. Inflation, as Ravalo says in his column the other week, really is the silent assassin that can wreak havoc on our savings, but scams can be even more harmful.

Reader DB responded to my request for tips on how to get 50.0 percent to 75.0 percent off 5-star hotels and resorts and she responded with this comment. Sharing with you here so that it’s easier to find:

I go by the following: 1. Research and compare -- Farecast.com tracks fares on given periods. I also use Quikbook.com, Kayak.com, and other travel search engines. Check hotel or airline websites for deals and promotions. For hotels, call the local hotel, and compare with the online price and the price given via their 1-800 (central office) — yes, these rates may be different. For US business travels, I use Hotwire.com and Priceline.com (sometimes Hotels.com) — I get the best rates from them including car rentals. 2. Travel during off-peak season and book off-peak days (Tuesday to Thursday), it depends on the type of hotel. Some hotels geared for business travelers/conferences actually charge premium during midweek. 3. Reserve as early as you can. 4. Add-on services -- factor in free breakfast and other freebies into the rates and always ask if there will be additional charges (e.g., parking, Internet access) 5. Avail of packages that may include trave/hotel/food -- for Disney, check out Mousesavers.com 6. Ask for a discount and inquire about promos -- discounts are given, just ask. 7. Friends/relatives -- some people who own timeshares may be willing to let you use theirs at a discount. I have older friends who own three timeshares but have used them once in the last three years. A couple owns one luxury collection-type hotel and two RCIs that that their only son does not want to inherit because 1) he does not want to also inherit the monthly maintenance fees 2) it will be another 5 years before his kids are at the age when they can appreciate it and 3) he noted RCI hotels are more “dated” and he can get better ones 4) the additional expense attributed to staying at a luxury hotel cannot yet be covered by his pre-retirement income. 8. Affiliations/memberships -- for every affiliation, always inquire about members perks (deals/promotions). The association handling my retirement fund invests in some luxury collection hotels although only a few members who check the annual reports are aware of it. As a perk, members who ask get rooms for $99-$125/night. Friends and relatives can also avail of the rates (two rooms at a time), but members must be there at check in to brandish IDs. I ordered dessert in one of the hotels, and when it arrived, the presentation was worthy of a Pritzker, alas, the edible portion was also the size of a stamp. Because in my youth, I had been preconditioned to seeing mega-bigao of bibingka, my big mouth overrode my little brain, and blurted,”This is it?” much to my embarrassment. Minutes later, the server arrived, saying, “Compliments of the chef,” and gently laid a large plate of their premium dessert arranged in Stonehenge fashion with subtle splashes of color. The experience is all about the impeccable service. You get what you pay for, but sometimes, if you do it right, you also get lucky and get more than you pay for. For those whose version of 5-star hotel is staying with relatives abroad for a vacation, please make your presence light (i.e., look after your needs). There is nothing more exasperating for a host than to come home tired from work to cook for you, drive for you, and then look for your toddler’s missing shoes. It’s hard enough living without help so that hosts juggle their schedule, rooms, and budget to accommodate guests. Most Filipino hosts are trained to be hospitable, but guests must be sensitive to the host’s needs. Do not overstay.