By Karen Galarpe

IT seemed like a scene from a scary movie:
P30,000 per sem tuition now will become–
P111,000 per sem in 17 years at 8 percent increase per annum
P152,000 per sem in 17 years at 10 percent increase per annum
P206,000 per sem in 17 years at 12 percent increase per annum

As Registered Financial Planner Alvin Tabanag continued on with his Powerpoint presentation at the recent Money Sense Live! Family Finance 101 seminar, the audience looked at him in disbelief when he said it may take P1 million to P2 million to get a child through college 15 years from now.

That may be peanuts for the millionaires out there, but for the rest of us, that is a tall order. A very tall one.

Clearly then, we must all save for our children’s education, and the earlier we do so, the better. Just how to do that? Tabanag, personal money management coach, author of Kaya Mo Pinoy! 12 Steps to Build Wealth on Any Income, and founder of Pinoy Smart Savers, counts the ways:

1.Pay as you go.
It’s crossing the bridge when you get there. “A bad strategy since there is no guarantee that the parent will still be gainfully employed or earning income at that time,” said Tabanag. This may also lead to huge debts if that’s the case.

2.Get an educational plan.
Now educational plans are viewed with utmost suspicion since the industry is having problems. However, Tabanag said the industry is recovering. What really pulled the industry under was the sale of traditional educational plans since the 80s which promised payment of tuition fees in the future no matter what the cost may be. The unanticipated deregulation of tuition fees, the 1997 Asian financial crisis, and the lax enforcement and monitoring of government agencies adversely affected the trust fund earnings of the preneed companies offering traditional educational plans, and the rest, shall we say, is history.

“The preneed industry, while troubled right now, will get better,” explained Tabanag, citing the recent SEC order requiring preneed companies to increase their trust fund deposits up to 70 percent. He further said saving for a child’s education through a preneed education plan may be attractive to some because it is ideal for those on a tight budget, fits nicely to our “gives” mentality, is easy to understand, and forces us to save.

Here are Tabanag’s tips for those considering getting an educational plan:
a. Buy only from big, reputable companies.
b. Read the terms and conditions carefully.
c.Compare rates of return.
d.Buy the plan you can afford.

3.Save and invest on your own.
Another strategy is do-it-yourself: Invest for the purpose of getting higher potential earnings. There is a risk involved, and this strategy requires discipline and regular monitoring. However, there is a wide array of investment choices available which can help you meet your goal. Examples of investment choices are long-term deposit accounts, government securities, stocks, and mutual funds or unit investment trust funds.

4.Use the mixed funding strategy.
This simply means employing a combination of any 2 or all approaches.

Whatever way you choose, start saving now.

Finances On The Edge Photo by DeadAir

For the purposes of analysis and policy-making, there is no escaping the pounding on the table and the endless debates on what caused this crisis, who is to blame, what could have been done to avoid it etc. etc. But at the end of the day, reducing all that talk to doable measures is a process that could end to be as convoluted as the shadow play that caused this crisis in the first place.

Personally, I would rather focus on things that we all can do—now—to deal with what’s happening. After all, crises are part of life, whether financial, emotional, relationship, spiritual. They will happen, again and again. Only the details will change, but the fact that they will railroad our lives and make us shift our priorities will not.

An excellent series in the Philippine Daily Inquirer has been showing readers how different households are dealing with the crisis. Some are moving to condo units near mass transit systems to reduce travel time and stress, some are really cutting down on expenses especially dinners outside the home—even if they are only trips to fast food places.

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The not-so-friendly bundle of grocery receipts have been winking at me for quite some time, so I finally got around to putting all the figures down into an Excel worksheet to make a Grocery Booklet—an exercise that reveal some pretty interesting lessons.

Here are some of those lessons:

From January to August, these items showed the biggest jump in prices:
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At the press briefing for the 2nd Philippine International Motor Show held last Tuesday, automotive manufacturers promised to tell car buyers what they really need to know to “get all that jazz with less gas” and what they need to do to squeeze more mileage for every liter of gas or diesel.

Homer Maranan, executive director of The Chamber of Automotive Manufacturers of the Philippines (CAMPI) shared the following tips:

1. Buy smaller engine vehicles if your family is small
2. Go for diesel-powered cars. He says it is a misnomer to say that diesel is dirtier than gas (although some “insiders” swear by that.)
3. Avoid stop-and-go driving and sudden acceleration as much as possible as this uses more gas
4. Paying for proper and regular maintenance is more frugal in the long-term

Watch my video interview with Maranan with reporter Izah Morales.

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(Photo from Agence France-Presse)

The other day, I felt like crawling inside a cave and hiding for the rest of my life. Oh, for at least 10 minutes.

This news story that originated in San Francisco in the US the other day that said a basic flaw in the Internet could allow hackers to take over the web triggered all sorts of warning signals in my brain.

Major software and hardware makers worked in secret for months to create a software “patch” released on Tuesday to repair the problem, which is in the way computers are routed to web page addresses.

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