Monday, October 31, 2011

Avoiding Financially Disastrous Habits

There are many habits that are too hard to change. I have learned that to avoid unnecessary expenses, one has to plan in advance. Planning in advance is a good habit. It can save you a lot of money too.

So we plan and do family budget that covers all including food, phone, electricity, water, entertainment, gifts to name a few. We made a decision to spend only based on budget. Of course there are cases where the item we need to buy was not included in the budget. For such a case, we review our financial resources and align our budget.

But the reason why I am writing this article is to talk to you about one budget buster that I experienced- none other than unplanned activities. If gone unchecked, it becomes a financially disastrous habit.

The other day, my wife and I decided to go to market. Because we use cash, I normally withdraw money in advance for this purpose. That day, I didn't do that,  but I knew I can withdraw from an ATM of a bank near the market. When we arrived at the bank, the line of people intending to withdraw money was too long. We decided to do it in another bank, also near the market. When we arrived there, the line was longer! Oh boy. We made our way out of the market and went to a bank about 3 kms away from the market. By this time, my mind already calculated the amount of gas I could have SAVED if only I had prepared the money in advance.

That same day, we decided to visit the cemetery to visit our parent's tomb. We were trying to beat the traffic that is expected during the All Saints Day. So off we went. This trip wasn't really planned. The route I choose was heavy with traffic. We had to get out of that and take a longer route. Once again my mind started to compute the amount of gas I could have SAVED if only I planned in advance. That's wasn't the end, when were approaching our destination, to our surprise, the road was clogged with all kinds of vehicles. We had to abandon our plan and have to take a longer route to do that.

That day, I spent a lot of money on gasoline because we didn't plan ahead. Unplanned activities are costly and can be a financially disastrous habit if it remained unchecked.

The lesson: In everything you do,  it is best to sit down and plan ahead. It will save you a lot of MONEY. Plan ahead when you travel and when going to merket or supermarket.

To our debt-free life,

P.S. There are other habits that can be financially disastrous if unchecked. Can you name some for us? I would appreciate if you can comment.

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Friday, October 28, 2011

Some Practical Ways To Reduce Debt

This is a bit simple. I found out that we can actually reduce our expenses by using the "zero waste" concept.
I am clearing the vermi compose 
I came to know of this concept when my wife and I, my daughter Nica, our friends Mon and Elvira together with their children went to attend a week of seminar at Semilya Sa Kinabuhi in Bukidnon. This seminar was different. The mornings were dedicated to working in the field, which includes watering the vegetable gardens, cleaning the environment, vermiculture, etc. After lunch, we go to our class. We learned a lot from this one week of stay at Semilya.
Nica, Maritess and me enjoying our work of selecting our harvest of stringbeans to be sold at the market

Maritess and I, preparing early for work at the farm

Before we left for home, we toured Mt. Moriah, a lettuce farm owned by Dodong Cacanando. Dodong is also the President of Semilya. Mt. Moriah is one of the biggest supplier of lettuce to Mc Donalds.
Me and Maritess having a taste of how to harvest the lettuce
Me at Moriah Farm

At Mt. Moriah, they implement the "zero waste" concept. Simply put, they use whatever they can from what they have instead of buying these. Case in point is the catch basin for the waste of their piggery farm. Instead of using "iron" they used bamboo as the material. They are also using the pig's waste as their fertilizer. In this way they save a lot of money!

What do you think this will do to our budget if we put this concept in our homes? I can think of one example: instead of buying vegetables, why not plant them in your backyard? Okra, Camote tops, Kangkong are a some example. We have a pumpkin garden where we source its leaves as our veggy. We also have Malunggay, the leaves of which are a great source of nutrients.. for free.

Simple things like this contribute to reducing our debt as we use whatever we have instead of buying them outright.

What else can you think of? Why not share it with us?

To your debt-free life,

Friday, October 07, 2011

Getting Out Of Debt Takes Courage

I have noticed that time is an important ally in our battle to reduce debt. There is a time for everything. When my wife and I decided to deal with our debts, we realized that we have to do something fast. Let me share with you some of the practical, down-to-earth actions we did:

1. We reduced our expenses. This was simple. First, we terminated our cable TV subscription since we are having a hard time paying for it anyway. That was easy. Second, If I could, I did all maintenance work at home. Lastly, we sat down with our children and told them what we were trying to do and we enlisted their cooperation. That was a bit embarrassing but we did it. It paid off. Every expenses, no matter how small, was evaluated against our goal of reducing expenses.

2. We looked for ways to increase our income. My wife, after some encouragement, have gone into business distributing Dakki products. She just started but we know it will produce one day. We looked for items in the house that we don't need and we put them on sale. These included two (2) chest freezers and other items. In other words, we sold and still selling our non-performing assets. Then I got a raised in my salary early this year. That was timely!

3. We Invested. This was a bit hard. The only way we knew how to do this was to seek the wisdom of our God. You may not believe it, but it works! We practiced what we believe -- that as we sow, we will reap. We first gave to God our tithes, the ten percent of any amount we received.  Then, we sowed money by helping those who were in need. This was sacrificial giving on our part, since we also need money. You can try this one, it works every time. The amount of money we received was more than what we gave and helped us in balancing our finances.

In all of these things, the bottom line is to do all you can to generate cash in order to avoid falling into debt while clearing your existing debts.

It's almost a year now. Time has helped us recover some debts. One of my credit card has been fully paid. Patience paid off.

What else do can I do? Maybe you have ideas we can put into action.

To our debt-free life,

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Saturday, October 01, 2011

How to Become Financially Independent in Seven Years or Less

I am 59 and looking forward to a financially stable life. I can't complain, but I also want more in life. I feel I am just beginning to accelerate in my quest for financial independence. That's part of the reason why I blog. It helps me discover out-of-this-world ideas, opportunities and people. I learn from them.

Mark Ford, Editor of the Palm Beach Letter, son of a teacher, started out with no money but built a multi-million fortune.

If you are middle aged, whose net worth is meager,  and your income is barely sufficient to meet your expenses, this article is for you. He says that we should take responsibility for our situation and make changes. When we see our financial goal not aligning with our age, we are to take courage. Don't give up on your dream of being wealthy. Mark says that we always have the ability to change our financial life. But it will take a bit of time and patience.
Here are four things he suggests we do:

1. Accept the fact that you are solely and completely responsible for your financial situation. Nobody can change your future but you. The sooner you do that, the anger and blame will be dealt with and you begin to feel financially powerful.

2. Set realistic expectations. Don't be in a hurry to get rich. Be contented with 10%-15% returns per year. This is a journey and like a train, you can't go from 0 to 100 mph in no time flat. Be content with 10 and then 20 and soon you're doing 100. Your journey to millions of dollar is earned $100 at a time.

3. Thoroughly understand the difference between spending, saving and investing. Mark says that every paycheck you get cover your necessary expenses first, then put money on your savings and then put some money toward investments. Then and only then, after paying yourself, should you add to your spending.

4. Recognize that your net investible income (the amount of cash you have after spending and saving) is the single most important factor in determining how quickly you will become wealthy. Commit to adding to your income a second income.

I love the what he says about the value of time: devote your time to wealth building rather than spending time on non-productive hours like watching TV.

I am so happy to discover this very practical and doable tips from a man whose been there and came out successful. If Mark can do it, we can.

To your debt-free life,

P.S. I have changed the way I think. Blogging  about my passion, helped me gain not only personal but global economic realities.

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