April 2009 Archives

And so, after 490-or-so articles over the course of roughly two years, I am saying goodbye to MoneySmarts. It’s a bittersweet spot to be in. I feel like I am letting go of a child that I have nourished and nurtured for quite a while. Although I feel comforted that she will be in good hands and that we will continue to stay in touch, I will sorely miss the great conversations here (especially those hateful comments haha!). Many are asking why. There’s a time to let go, you know? Moving on has a personal finance as well as an emotional cost. Yet even when the cost can be high, there is reason to raise our glasses and be grateful because much of the growing up that we do over the course of our lives has to do with how well we handle transitions. In MoneySmarts, I’ve gained friends, earned trust and learned humility, advanced professionally, learned oodles of money tricks, discovered the high finance of parenting, and a lot more. More importantly, I had so much fun. Yes, frugality and delaying gratification can sound like wet summer when you’re raring to get tanned, but you get to like doing them when you develop the proper frame of mind. I also learned that it’s not all about the math. It’s more about the attitude, the ability to laugh when you make a financial mistake and to pick yourself up again and again. More valuable are the lessons on forgiving a loved one who has turned a money problem into disaster, or the need for creativity and in-the-moment involvement in teaching finance to a child or a teenager. Solutions to the side stories are not found in the scores of articles and scholarly books on investing and money management that I have read and written, but are more valuable in the end. The math you can learn. The emotional maze tied to personal finance can take a lifetime to conquer. How did I get here? Coming from a poor Bicolano family, a single-parent household, and eventually finding myself in UP Diliman to study Journalism on a budget that felt like a bungee jumper’s rope cut extremely short provided me with a rude awakening to the rough transitions that life sometimes brings. I praise God now for that rude awakening, though I questioned Him about it when I was younger. Then I found myself working in a business newspaper and learned the trade of writing and reporting about business. In the late 90s, OFWs and their role in the economy were more or less ignored by the government and the media. I thought that pretty soon, they would be a force to reckon with, and they needed to learn about how to manage their money. I was no stranger to the financial problems their families got into despite the increased flow of cash; I was related to many OFWs and a witness to the sad stories. Unfortunately, financial services companies then wouldn’t touch them with a ten-foot pole. That’s how it all began—my writing about personal finance. It’s a service and an advocacy, and not really a job. All these—my personal journey and the world out there--made me realize early on that life is hard. It’s not fair. But if you try to make the most of it, learning to laugh when you sometimes fail, you’ll be alright. What’s true with life is also true with personal finance. So, goodbye. But I’m pretty sure we’ll “see” each other again. I’ll watch out for you, in the Internet, somewhere out there. Feel free to drop me a line anytime at lightdream (at) gmail (dot) com. Here’s the best of personal finance articles in MoneySmarts that I hope you’ll find timeless and useful (some are guest posts): Frugality

1. Peso-pinching tips
2. 10 tipid tips to make the most of your vacation
3. Frugal shopping money-smart destinations
4. How are you dealing with the crisis?
5. The high cost of staying connected
6. Bargains in surprising places
7. Sneaky gas-saving tips
8. Recycle
9. Get an HMO
10. Fix broken stuff
11. Manage your magazine subscriptions
12. Wet market vs grocery
13. Misers and money

Spending habits

1. Wants vs needs
2. Aching for a plasma TV
3. Do you trust the bar code?
4. The psychology of spending
5. Bad packaging meets irate shopper
6. The SM Advantage rip-off
7. Decoding your grocery receipts
8. Don’t go shopping when…
9. Money mood swings
10. Lessons learned from an unscheduled, expensive vacation
11. Lifestyle and money
12. Grocery shopping errors you think you’re too smart to make
13. How to shop without feeling guilty

Dealing with debt

1. Paying for the debt of the dead
2. When mom and dad are in debt trouble
3. Don’t borrow and forget
4. The thing with GSIS member loans
5. Good story on bad credit
6. 5 stupid ATM and credit card mistakes
7. Desperate email from a reader: my creditors are after me!
8. Why you need to pay your credit card balance in full
9. Credit card fraud: who foots the bill?
10. Demystifying finance charge computations on your credit card

Saving and Investing

1. No one can afford not to save
2. Selected Philippine time deposit rates
3. What to do with P50M
4. 11 common mistakes in investing
5. How did you make your first million?
6. Are you a millionaire in the making?
7. The first million is the hardest
8. Stock market investing for beginners
9. How safe are Philippine banks
10. Bank fees you don’t have to pay
11. How to trick yourself into saving
12. Minimum placements in Philippine financial instruments
13. Investing during tough times
14. What to do with losing investments
15. How much to invest for the long-term
16. Investing urban legend
17. Hidden cost of VULs
18. Understanding VULs (Sunlife’s reply to Chris)
19. Yield and return: are they the same?
20. Retail corporate bonds, anyone?
21. Pre-need companies with seal of good housekeeping from SEC
22. Guide through the maze of pre-need plan failures
23. Guide for depositors of closed banks
24. Is SSS financially viable?
25. The PERA Bill at its core
26. Decoding the PERA Bill rules (Part 1)
27. Who can open a PERA and how? (Part 2)
28. Where to invest your PERA (Part 3)
29. Tax breaks under PERA rules (Part 4)
30. Painless way to increase your savings
31. Why do Filipinos bet on lotto?
32. Special deposit accounts as alternative to time deposits
33. How to choose an online stock broker
34. Where to put your Christmas bonus
35. Looking for a mutual fund you can count on
36. How to read the mutual fund table

Retirement

1. 51, and not yet ready for retirement
2. Middle-class, working Filipinos worried about bleak retirement
3. Do you really want to retire early?

Scams

1. The anatomy of a perfect scam
2. Tales of woe from Legacy scam victim
3. The scam that rattled high society
4. Confessions of a scam magnet
5. BSP warns against online investment scams and HYIPs
6. New scams, same old tune

Career

1. Speak well, earn more?
2. Are you getting the right salary

Quizzes atbp What is your money personality The risk test Migrate vs stay The cost of having a baby On my Christmas wish-list: a new house Money and math Surviving Christmas consumerism Know yourself: the first baby step to financial security Checklist for interviewing a financial planner How not to live from paycheck to paycheck The science and art of making your first million The millionaires around us

FOR THOSE of you who made it your New Year’s resolution to spend less and save more, how are you in the compliance department? I know it’s not easy to do so, but really, as simple as it sounds, that’s how you can have more money left at the end of the month or year. I’ve shared my own peso pinching tips to friends: 1. Look for a beauty salon that charges less. I’ve decided to give up some perks (free iced tea or coffee and a quiet ambiance) and go for a salon that gives the same service (without the perks) at half the cost. 2. Plan trips. Save gas, time, parking fees, transport fare, and energy by scheduling all your trips to one area at one time. 3. Eat more at home. Not only will you hone your cooking skills, you will be healthier physically and financially too. 4. Use up freebies. Those ketchup, sugar and cream sachets you get from fast-food outlets can be put to good use. 5. Try cheaper alternatives. Need your caffeine fix? Avoid the daily trip to the chic coffee shop and settle for the vending machine or bring your own coffee to work. 6. Pay attention to items on sale. Something you really need might just be on sale, so look at the sale items first. Also, check out secondhand bookstores for books that cost a fraction of the cost of new ones. 7. Go local. Help the economy and save your money as well; oftentimes, locally produced goods are cheaper than imported ones. My friend Migs Cruz, a doctor, shared that he has become more frugal now that he has two kids. Here are some specific steps he has taken to stretch that peso a bit more: 1. Use freebies as gifts. Med reps give tons of gifts to doctors, from pens and notepads to bags, clocks, and so much more. Migs gives these away to his staff and other personnel in his place of work and this saves him the cost of buying new gifts for Christmas. 2. Get a hand-me-down. Migs’ bike was stolen from his garage, so he asked around in the hospital if anyone had a spare mountain bike he could buy. One of the residents did, and sold it to Migs for P1,000 and a secondhand DVD player. He had it repaired for P500 and now it runs like new. A new bike would have cost him P4,000 to P5,000. 3. Recycle old clothes. Those old long pants are cut off just above the knee for P30 and still look great as pambahay. 4. Avoid the casa for car repairs and maintenance. Migs says, “My car aircon compressor got broken and the casa was charging me P40k for replacement to be done in 2-3 days. I went to Banaue Street in Quezon City and got the compressor replaced brand new at P17k. The service took only 6 hours.” Also, a 60-km checkup at the casa would have cost him about P10k, but he had it done at another auto shop at just P2,500 after the mechanic determined no additional repairs were needed. 5. Reuse stuff. Migs’ old Rayban sunglasses were already falling apart although the lenses were still OK. So he just bought a new pair of eyeglass frames and paid only P500 to transfer the old lenses to the new frame. A brand new pair of the same brand would have cost him P5K and up. Little steps like these count in stretching your pesos. :-) (Karen Galarpe)

IT’S TAX season once again, and with the deadline tomorrow, expect long lines at accredited banks and tax filing centers. Doing this year’s ITR, one will notice the increase in exemptions effective July 6, 2008. Computing for exemptions for the year 2008 should thus follow this table:

Personal Exemption	Jan. 1 to July 5, 2008	July 6 to Dec. 31, 2008	Total
Single	P10,000	P25,000	P35,000
Head of the Family	P12,500	P25,000	P37,500
Married	P16,500	P25,000	P41,000

For each dependent child, a deduction of P4,000 can be claimed for the first half of the year, and P12,500 for the second half of the year. For each child then, total additional exemption is P16,500. This is only for the first four children. For those earning from the practice of a business or a profession, they may choose the itemized deduction to arrive at their taxable income, or the optional standard deduction. With the itemized deduction, each expense is accounted for. For those choosing the optional standard deduction, the old rate, 10 percent of gross income, is applied to income earned from January 1 to June 30. The new rate, 40 percent, is applied to income earned from July 1 to December 31. And for those earning a gross income for the year of not more than P250,000, you are entitled to claim a deduction of P2,400 to cover premium payments on health and/or hospitalization insurance. Have you done and filed your ITR? Do it now to avoid surcharges and penalties. (Karen Galarpe)

THESE DAYS when quizzes of all kinds make it to Facebook amusing and not amusing one’s network of friends (recent quizzes include "Are you UP material?" "Anong university ang bagay sa ‘yo?" and True Age Test), a money personality test would really come in handy. A quiz like this would confirm your fears that you are a spendthrift needing help, or would give you cause for a victory dance if you’re really money smart. A quiz I took today showed that I am a balanced person. The result said: “People who exhibit a balanced money personality style enjoy making and managing money. They may view budgeting and investing as a game of sorts. Money is viewed as a tool that is used to achieve one’s goals. While they often have a budget, Balanced persons do not become overly uncomfortable with the occasional unforeseen expense or in purchasing the occasional luxury item. Balanced persons often feel that diligence, research and effort will reward them in the end. If they invest, Balanced persons tend to have balanced portfolios and are often comfortable seeking advice from financial managers.” Now that’s cool! My siblings have always ribbed me for being “kuripot” to the point that I write down every expense I incur every day but my mom comes to the rescue, saying I do spend for the things that are worthwhile. One of my goals is to make money every year, and so I am careful to spend within my limits. At yearend, I tally all my income and expenses and see if I really made money (net income). I think it is a sad thing if at the end of a year spent working, one finds net loss instead of net income in a personal income statement. So what’s your money personality? Take the quiz and post your result here. (Karen Galarpe)

By Karen Galarpe With school out and the Holy Week break coming up, the usual question is, "Where will you be this Holy Week?" Or "What will you do this summer?" Whether it's to the beach, the mountains or the city you're headed for (or staying put in), here are some ways to save money on your vacation as shared by frequent travelers: 1. Book and buy your plane tickets online. You may be able to get better rates online. And if you get the no-frills ticket (no meals, non-refundable, non-rebookable, with no check-in baggage), you will get even better rates. Cebu Pacific and Philippine Airlines offer special promos for those booking and buying their tickets online early. 2. Make a checklist of all things you need to bring. Don't forget stuff like camera batteries, cellphone charger, an extra memory card, hat, sunblock, etcetera. These things may cost you more if you buy them at your destination. 3. Research on the places worth visiting in your destination. Plan your itinerary for each day to save on gas or transportation fare. It will also clue you in on where to eat, shop, get a massage, and so on at reasonable prices. Check out places you can get in for free, such as museums and art galleries, parks, etc. 4. Have enough cash with you and bring your credit card as well. It can be a hassle looking for an ATM when you're in a remote place like the beach. Abroad, you may also get better foreign exchange rates by withdrawing local currency from your bank account using an ATM rather than having your money exchanged at the hotel. A credit card, on the other hand, will make it easier for you to make purchases and settle hotel bills. 5. Stay at a hotel that offers complimentary breakfast and free Internet access. This will save you a lot of pesos. 6. Bring snacks. Buying snacks at convenience stores will cost a lot more. And don't raid the mini-ref in your hotel room. Good healthy snacks to bring include peanuts, trail mix, crackers, and cereal. 7. Buy pasalubong at the public market, rather than the mall or airport pasalubong counters. You'll get the freshest stuff at the most affordable prices. In Baguio, strawberries and broccoli are best bought at the public market. In Cebu, head to the palengke for danggit and dried mangoes. Another plus: at public markets, you can bargain and make tawad. 8. Instead of patronizing the tourist-y places, go where the locals go and eat where they eat. Food in places frequented by locals are usually delicious and cheap. 9. Walk more instead of taking public transport. You'll see more sights, put in some exercise time, and save money with just one effort. 10. Make sure your car is in tiptop condition. A flat tire, a conked engine, and an aircon running low on freon will not only inconvenience you; these will bore a hole in your pocket as well. Before you leave, check that your car is in good condition. Have a great vacation!