Kiyosaki: “Savers are Losers” – A Sad Truth with a Catch

One of principle that has been emphasized by Robert “Rich Dad” Kiyosaki is that “Savers are Losers“. Yes, you read it right: the one who saves money are the losers. This is actually a sad truth that nobody can denied. But why he even say that? Is that mean we don’t have to save money at all ? What’s the catch ? Since when ?

Although personally I do not really like Robert (try to sit on one of his seminar, not only he is swearing a lot, but he is rude to practically anyone publicly), but it does not mean that what he preaches is not good. On the contrary, many and many of his teaching is pure gold and something really need to be adopted by every one. This is one of them…. Read more

Credit History: An Important Document You Can’t Deny

Credit history is simply a record to all your activities in the past in relation with loan and debt. It’s not only all your personal loan, homeloan/mortgage, car loan or credit card account that you apply are there, it’s may also contain all the subscription that you have such your post-paid mobile account and even electricity/gas account.  And the most important content is what have you done with all those accounts. Such as:  have you ever not paying your rent or mortgage? Have you ever declare yourself bankrupt? How many times you did not pay your bill (or even late paying your bill) ?, etc. Yes, all of those information are available to all company, of course with your consent. Can you start feeling its importance ?

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A Sweet Revenge: Let The Banks Pay Your Debt

Here is the thing. Most of you in one way or another, sooner or later, will probably think that the bank you deal with, is ripping you off. Expensive home loan rate, account keeping fee, monthly fee, yearly fee, transaction fee, exchange fee, settlement fee, break up fee, overdraft fee, loan fee, ATM fee, dishonor fee, name search fee, etc, etc – you named your reason. Well, cannot really blame them as they are in the business to make money by providing financial service, i.e: not charity or foundation that will serve you for free. Now, having said that, how about if there is a sweet way to take revenge to your bank that make them pay your debt: it’s legal, it’s very sweet with very little effort. Interested?… Keep reading.

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Improve Your Finance Position: The Big Picture

Most people will think that to improve their finance position what they do is just increase their income. Unfortunately, that is not true at all. When people get an increase on their earning, immediately they increase their expenses: new house, new car, new TV, holiday, an many more. After a while they will found out that they are in the same position like before: living from pay check to pay check, no or negligible saving, and I bet the debt in form of credit card debt or other debt is even higher than before.

You can see the same situation with all those instant millionaire who won a lottery of some kind. After few years or even faster, their financial position not only go back to where it was before the winning, but also many found themselves in much worse position.

On the other hand, for those who knows the secrets, even without any increase in their income,  their financial position can be improved significantly: less debt, financial protection, more saving, and improved lifestyle. So, what does it takes to improve your finance position? Read more

Debt is Good: Only for Investing & Business Though

When business and investment people are asked, what sort of criteria to make a investment or a business is an ideal one. One of the item high on the list is that the investment or business should not used their hard earn money. In other words: taking other people money (OPM) or having a debt.

On separate article (Debt Is Bad: Insight From Franklin and Gandhi), I have explained why having a debt is not really a good thing, especially if the debt is used for acquaring any kind of lifestyle product.  So, what is the different now, why suddenly debt become a good thing to have ?

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Debt Is Bad: Insight From Franklin and Gandhi

Having a debt on your name means you will personally responsible to repay that amount of money to the lender. This is a responsibility that you cannot avoid unless you declare yourself bankrupt which carries a lot of severe consequences. (Trust me, you don’t want declare yourself a bankrupt!). So, in other words, Debt is Bad. But there is also a psychological factor that might prevent you to reach a happiness if you engage yourself into the world of debt. Read more

Inflation Is NOT Price Goes Up: Common Misconception

If there is one thing that you need to know from ‘macro economics’ world, it is “inflation“. Contrary to popular believe, this word have no direct impact to our day to day life.  But why people talk about this every day as if it’s a food or something? The reason is there is common misconception about the meaning of “inflation”. I  explain in plain english that even a primary school student will never ever misunderstood this ever again. And by understanding it, you will see your finance position like you never seen it before ! Read more

In Debt & Loan World: Cash Flow Is The Most Important

So you want to take a loan (either it’s a credit card, personal loan, car loan, or even home loan)? Then you need to make sure that your cash flow is in a good shape. It’s not the balance of your saving account nor total debt of your credit card that is more important. It’s the amount of money that you earn (and then spend) during specific period or “cash flow“.

Let’s compare John and Bill condition below as they are trying to get a personal loan:

• John: Have $5000 cash in his saving account, income $400 per week, living expense about $400 a week.
• Bill:  Have no saving (well, few dollars) but earns $800 per week, living expense is about $700 per week.

Who do you think in a better position to get another loan, say for a car loan?

Both John and Bill have a steady weekly income, while Bill earns more than John, but Bill doesn’t have any savings. John have $5000 on his saving account. But the most important item here is that Bill have positive cash flow: earns $800, living expense $700, hence he got $100 per week called ‘disposable income‘. Yes, the fact that he did not put some of the money into his saving account, that could be something need to be improved from Bill. But he does have a cash flow to serve the new loan.

Let say the new loan will require a repayment of $250 per month for the next 5 years – typical car loan. John with his $5000 could serve the loan for 20 months only. (And could be less if John decides to take some money from his saving account for something else – no one can prevent this: if he wants to use it, then no body can prevent him).

On the other hand, although Bill doesn’t have any savings, since he has the cash flow, the lender will be confidence that Bill will be conviniently re-pay the loan within 5 years and granted the loan to Bill.

Maximize Your Cash Flow In Front Of Lender: Some Tips

So, if you want to make sure you have maximum chance to get a new loan, you need to show to the lender that you have enough cash flow to serve the loan:

• Mention all of your income (even casual or ‘informal’ one). For example: you have $50 most of the week baby sitting your neighbor kids, but you don’t declare this to the taxman. You can mention this additional income to the lender.
• Mention also all benefit from government including social security payment, grant, scholarships, allowance, etc where you actually received some money.
• Be ready with the list all your expense in monthly or weekly period and determine which expense can be eliminated to create more room to repay the loan.
• Show the lender that you actually have a budget, even in very simple form like excel spreadsheet or note in your agenda. Mention that you have been following that budget with discipline.
• Usually the lender is not comfortable if you have credit card with high credit limit, although you don’t use the credit, the lender will assume you will use them all and repay the minimum. In this case, you may choose to reduce the limit or put in writing that you will reduce the limit the next day.
• Maintain your credit history: never forget to pay your bill, always tell your creditor if you have some dificulties to work out some plans.

Remember: never apply a loan for lifestyle, for example: holiday loan, or car loan (to upgrade to better model, etc) or even worse ‘TV loan’. Taking a debt is justified if you use the money for something productive that will produce more money.

Good luck with your new loan !

Benefit of having 2 (two) Credit Cards of Similar Value

Two credit card are considered of similar value if both of these credit cards have similar credit limit, similar interest rate, both have reward program  and have similar interest rate period. The credit card can be issued by different bank, or have different brand (i.e: Visa vs Mastercard) but as long as 4 factors above are similar, it still can be consider of the same value. So, why we will have a benefit if we can have 2 credit cards of similar value ?

Although you are already following the credit card best practices, sometimes – it will happen sooner or later, an event out of your control just happen. And as always, you are not to be upset about it (remember, it’s outside your control – nothing you can do about it) – especially since you have prepared yourself and have mitigate this risk. Read more

Credit Card Best Practices

If you have a credit card or considering have one, these are the summary of the best practices of owning a credit card:

1. You only need to have either Visa or MasterCard.
   Other brands (American Express, JCB, Diners Club, etc) are not widely accepted, have higher cost although give you exclusive sense.
2. Use credit card as transaction tool, not source of money
3. Always have credit card with ‘interest free period’
4. Follow a good ‘Reward Program / Loyalty Program’ and then avoid using cash for all the transaction and only use your credit card for any transaction as much as possible.
5. Aim to pay the membership fee with your reward program.
6. Pay off the monthly statement to avoid paying interest
7. Always remember:  credit card is DEBT. This temporary debt is perfectly okay since it’s interest free and you got benefit of reward program and you will pay it off every month anyway. But it’s a very expensive debt should you forget this.
8. Avoid using ‘advanced cash’ using credit card.
   Not only the interest rate is very high, but also usually you immediately forfeit the interest free period.
9. Check the monthly statement for any invalid transaction. Report and inquire immediately any suspicious entry for your own benefit.
   If you have internet banking access, check it on weekly timeframe
10. Keep the credit card receipt at least until it’s included in the statement.
11. The credit limit of your credit card need to cover at least 2 times your monthly expense.
12. Destroy the receipt before being put in the rubbish bin (A good shredder will do the job otherwise you need to do ‘manual destruction’)
13. If possible, have a saving account in the same bank of your credit card issuer.
    This will make the transaction between saving and credit card seamless. Internet Banking access betwen them would make it perfect !
14. If possible, own 2 credit cards of the same value for your maximum benefit
15. If you have 2 credit cards, make only 1 card actively used at any one time, don’t use the other one. But try to make even the usage maybe every half year.
16. Yes, you may consider a credit card as source of finance ONLY in the event of EMERGENCY.

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