There is no magic in managing money. No magic to get out of debt, to pay off any small or large loans. You may think a business or a new venture will be the answer but I doubt that. Business is also grown one customer at a time, one email sign up at at time or call at a time.

You don’t expect a tree to fruit overnight when you just planted the seed yesterday, so why do you have such expectations with regards to money?

If you have children, you know they will take several decades of hard work, discipline, effort, time and money investment that they grow up to be responsible, balanced and productive adults.

So too with money. Want to invest? Start small and keep doing it. The magic, if there is such a thing, is in the Doing and being regular at it.

There will be times when it seems you are not making any headway. In fact, you might feel you are going backwards. That is okay. Everyone has their moments.

Celebrate small victories, don’t be too hard on yourself on small failures. Keep moving on forward.

You may feel overwhelmed. The problem is too huge. Like chipping at an iceberg with a pick axe. That is normal too. Don’t give up. Take a rest if you have to but not too long.

See what you need to focus on and focus on that for the next 3 to 6 months or even a year. Do something and keep doing that something.

Eventually, you’ll get there, I promise.

Original article from Personal Money Tips

Nations and companies have money policies that they abide by. The reason for having policies is to have pre-decided decision rather than make every single decision each time.

For you as an individual or as a family unit, it is also good to have money policies or rules that you operate by. Recently someone ask us for a short term loan of a couple of weeks. While we really wanted to help the person out of a business predicament aka cash flow, it wasn’t something we are comfortable with. The reason is we know that lending money to other is a bad financial choice.

We have a policy to lend money only to family members, and, we must be willing to forego the money, if they can’t pay back. This limits the amount of money we can lend out. The reason is we want to help the family member and not have relationship break down over money. So with this policy, if we ever decide to lend money, if the money comes back, it is a bonus. Other wise, we will not ask the other party back for it.

Because we have such a policy we adhere to, saying no to borrowers is much easier. While it doesn’t feel good not to be able to help someone, I’m sure it feels a lot better than having sleepless night thinking whether the money you lend out will ever come back.

Anyway, I’m advocating having a policy not that you follow ours. Do you have money policies at home? And have you ever been in a position that you regret lending money to someone?

Original article from Personal Money Tips

This is a guest post from Kevin Craig. Kevin wrote to me a few weeks back and offered to write an article about unnecessary spending. Hope you enjoy it and apply the tips below if they apply to your situation. Kevin is related to the Oak View Law Group. You can find him on twitter too.

If you are planning to save a hefty amount of cash then make sure that you keep control on your expenses. You should always remember this quote “To have money is good; to have control of money is better”. If you have a habit of reckless spending then you might get trapped in to the maze of debt. The following ways would help you to put a bridle on your expenses.

1. Avoid using plastic money:

Plastic money is basically hassle free so people are fond of displaying it in their wallet. The card tempts you to indulge in to extravagance. If you want to curtail the habit of over expenses then make sure that you avoid the use of card and keep a limited amount of cash. You can get a basic idea of the amount you have spent. The card allures you to spend more because you can’t see the cash virtually slipping out of your wallet. While using credit card our desires increase and we often go beyond our budget. In this way we tend to buy things that are unaffordable and that paves the path for incurring debt.

2. Make a list of all your expenses:

You can avoid unnecessary spending if you make a list of all the required items. You might buy redundant things if you fail to make a proper plan. Impulse buyers often pick up stuffs that are hardly used by them. Extreme urge for shopping often force us to exceed our budget. In this way we burden ourselves with debt. Making a list would help the reckless shoppers to have a control over their shopping spree.

3. “Spend nothing” day:

Dedicate a day in a week where you can put a bridle on your spending habits. Other than your basic expenses make sure that you do not buy anything. Carry a small amount of cash when you are heading for office as that would control your urge for spending. Avoid keeping your credit card in your wallet as that might tempt you to dissuade from your plan.

4. Maintain a spreadsheet for you expenditure:

If you keep a record of your daily expenses then it would be easier for you to prepare a budget. Incorporate in your list the time, place, cost and the quantity of the things you bought. Once you jot down your expenses then it would be easier to track down where the money is actually draining.

5. Avoid e-stores and Websites:

Few stores and websites allure you to buy online and we get easily tempted by the offers they display. If you cannot restrain yourself from reckless spending then it would be advisable to avoid browsing these websites. You can keep yourself engaged in some other activities in case you are looking for ways to resist your desires. It won’t be difficult to spend dollars in a day but it takes time to earn that money. You can block your browser if you think the offer given by the website is irresistible.

So these are the few tips that would help you to save money from unnecessary spending. Follow these steps in order to make your future financially secured.

Original article from Personal Money Tips

This post has been long over due. For some of my regular visitors, thanks for checking back from time to time. It just that I don’t have anything really interesting on the money part to share.

Since this blog title is partly personal, partly money, maybe I’ll write a bit more on the personal side for this post. So here goes.

We went to have some fun time last week. Took time off work to see some hot air balloons which is rare over here. The half day off was really enjoyable. I did not have so much fun in a long time. I got to practice my photographic skills, (which were quite rusty), ride in a hot air balloon and also a trike for the the first time in my life.

Photographing hot air balloons is also new to me since, like I said, we don’t have them much over here. Even the event was limited due to proximity to our airport. Gosh, I wonder how on earth the organizers planned the event. Granted there are some nice background to photograph the hot air balloons.

Heck, there was even a pair of Levi’s that got inflated.

The balloon ride was tethered, not go with the wind type of ride. Perhaps one of these days, else where, we might just try that. The best best part of the day was riding a trike. If you don’t know what that is, it is a tricycle with 2 wheels up front and you ride it in a reclining position much like a sports car. The trikes can go pretty fast and cycling them is quite different from a normal upright bicycle. After riding the trike, I came back and look up some information about such tricycles online. This is what I found and here we can draw some lessons from history.

Reclining bikes also known as recumbent or “bents” like the one above (those with 2 wheels) have been around in the late 18th century. The story of reclined bicycles is as follows

In 1933, Francois Faure, a Frenchman, rode a recumbent 49.99 km in an hour, a new record. The day of Faure’s hour attempt the other racers jeered at him and his bike. Stand up and pedal like a man they joked, lying down will make you sleepy. Their laughter died as he out paced two professional riders. Faure went on to beat the world hour record, going 45.055 km in one hour. In 1934 the UCI (Union Cyclist International) ruled that the Velocar was not a bicycle and could not be raced in UCI events of for UCI records.

Faure’s record was relegated to a foot note in cycling history with the stroke of their bureaucratic pen. The recumbent was faster, and they didn’t want to have to compete with it. They have not relented to this day. In 1938 Marcel Berthet rode a streamlined velocar 50.5 km/hour, another new record. Francesco Moser surpassed this mark on a wedgie (normal upright bicycle). Moser rode 51.1 km/hour, but not till 1984, 46 years later!

Till today, reclining bikes are still just a tiny niche even though they are faster, more comfortable, allows you to put more power to the wheel and generally much more fun to ride. They are more expensive due to the fact that they are usually larger, need more material to build and production never really reach mass production levels.

What has this got to do with money and progress? Well, the story here goes to show that just because some things are the norm does not mean they are better. Society accepts certain ideas and very few questions them. The same thing goes for ideas relating to money.

For instance, I recently looked at some mutual fund returns over 5 years. Since the market have become a bit more stable and the recovery looks good, it seems reasonable to look at the returns. Over 5 years, some of the better funds achieve in the region of 8 to a little less than 10% return a year. Most funds showed lower returns. Now while the returns are commendable, taking into account inflation, the figures are not that interesting anymore. Fixed deposits would have shown much lower figures and yet, a large portion of people still keep money in FD (where I live anyway). Property prices have jumped quite a bit and here we have largely escaped the property bubble like that in the US.

But to change what has been acceptable and safe might not be easy.

Original article from Personal Money Tips

I went to a fund raising event with my other half and some friends recently. While we are not loaded rich to give money out simply, it was a cause that we believed in and wanted to support this non profit organization.

So we bought tickets for the dinner, which by my standards are for the well heeled to say the least. It was a new experience for us. The event was attended by some VIPs (perhaps 10 to 20 percent of the crowd). How I knew? There was only a few of them bidding during the auction.

What I did not expect during the dinner was raffle ticket sales as well as an auction, since we already paid a handsome chunk of change to eat. I have a sneaky suspicion the event was organized by pro’s for this kind of thing. I had to say there was no hardcore pressure of any kind for us to buy anything and no, our table did not once participate in the auction.

Anyway, what I learned during the event.

Tip 1. If you want to support any cause, calculate what you can and cannot afford and stick with it. While you may feel bad if you cannot contribute, I reckon it is better than to pay the price financially and emotionally later on.

Tip 2. While you might feel you have to buy something, in this case raffle tickets, you can always spread the price out among friends instead of bearing the whole bill. This is what we did and somewhat got us off the hook for not buying any at all

Tip 3. If all else fails and you find it hard to say no, run to the gents or the ladies. No, we did not do this but now that I thought of it, I reckon I share it here.

Tip 4. If you feel pressure is over the edge, look at Tip 3 and maybe next time, you might want to reconsider supporting the cause. If you know the person well enough, then some feedback is for them will do them good too. No point raising funds now and losing the important people, the backers right.

Tips 5. Just send them a check. Then you don’t need most of the tips above.

Hope these tips on how to survive a fund raising event help you manage your funds better.

pic credit

Original article from Personal Money Tips

If you have been investing for any period of time, I’m sure you would noticed that the average return of any fund does not usually equal your average return . Why is that so?

For your information, the average return of a fund is taken from the begining of a period (usually the 1 Jan) to the end of the period (usually 31 Dec). This assume no further buying or selling during the period. Investor returns on the other hand are your real life returns that you actually receive.

See the diagram below. Even though the fund below gave say 10% return for the year (from Jan to Dec), it would have been very different if you invested at Point 1 vs Point 2.

From a study conducted by Dalbar Inc. from 1985 to 2004, they found that

the average mutual fund investor achieved is a 3.7% annualized return while the S&P500 achieved a return of 11.9% and inflation averaged 3%.

According to the study,

the reason for the average mutual fund investor’s low return was that these investors invested more in “Hot Performing” mutual funds at the end of bull markets and then became frightened and took money out of the market toward the end of bear markets.

In other words, the investors bought high and sold low; buying when prices are already high, saw the high returns, got tempted by what they see and invested. Shortly after, when markets are on a downward trend, they sold because of fear and not wanting to lose more, when they should be holding.

Financial planning is more of being a smart investor rather than chasing investments!

Original article from Personal Money Tips

A tipping point is where “momentum for change becomes unstoppable” according to Malcolm Gladwell, who wrote a book titled “The Tipping Point: How Little Things Can Make a Big Difference”.

Just 2 weeks ago, my sis got herself a new car and I got myself a new mobile phone. She has been putting off getting the car and I have been putting off getting the phone. For me it was a small thing. I just wanted my last phone to make it to 3 full years of use before relegating it to the junk bin. For my sis, buying a new car mean a small chunk of money down plus many months to pay off the loan.

But, the old banger that she was using is reaching past useful life both economically and reliability. You would never know when it need emergency resuscitation on the roadside. Being an old car means repairs and fuel economy suffers and so too the wallet. With the new car, the money she spends on fuel drop nearly a third! After factoring in the repairs and time lost waiting to be rescued when the car breaks down, the extra money she spend each month is not a whole lot more. Which brings me to the tipping point.

In anything you spend money on, eventually it will reach a point where it no longer is financially feasible to hang on to it. It makes sense to pay attention to the tipping point so that you know when to get rid of something.

How about my mobile phone? Similar thing but instead of money, some of the keys were getting stuck, making me frustrated to try to get the keys working sometimes. So getting a new phone increase my level of enjoyment. So too the new car for my sis. There is what money is for after all, isn’t it? To solve problems, make life more pleasant, to achieve an outcome, to do our bidding.

Enjoy it at the appropriate time.

By the way, the book tipping point is here The Tipping Point: How Little Things Can Make a Big Difference

Original article from Personal Money Tips

I wanted to write about the Law Of Attraction for sometime but some how something else got in the way. Now I felt that is is time to say something on the subject, at the risk of starting a war on this blog.

First, let me say, I’ve seen and done quite a lot of all these visualization for success, positive thinking, positive reinforcement whatever. Being in the sales line, we become rich targets for people wanting a piece of our cash. For many years, I believed a lot of this crap. Many colleagues who succeeded swear by the stuff the trainers or so call gurus dish out.

In hindsight, I realized they just worked a lot harder than the less successful ones. I know a couple who worked, and I quote we take 1 day off a month or in 2 months. Other less aggressive colleagues are putting in at least 60 or 70 hours plus weeks. And they did well. Assuming for the moment, we define success being earning more income.

If you have not heard of the Law of Attraction, basically it is summed up as think of something hard enough, long enough, believe that your mind attracts what it thinks about and it becomes true.

The so called Law of Attraction should not be called a law in the first place as there is not concrete proof that it works 100% of the time. Calling is a principle is okay, but a law? Let’s not argue about definition here but off course the word law has a air of authority. However this law, I think, is just a corruption of a principal of sowing and reaping.

You reap what you sow. You sow a mustard seed, you should get a mustard tree but the seed might not grow. Sow enough of seeds, then you will get a tree. No guarantees but you won’t get an apple tree when you sow a mustard see.

Now, there is quite a lot of information arguing both sides of the Law of Attraction. Google for it and you have millions of pages for and against it.What I’d like to know is what do you think about the Law Of Attraction? Better yet, if you have been there, done that. I’d like to hear about it.

I’ll post my thought a bit later.

Original article from Personal Money Tips

While there is bad news all over about the financial crisis, there is something to learn from it all. Although this mess is so big that 3 men in black i.e. Henry Paulson, Ben Bernanke and Timothy Geithner have more than their hands full and sleepless night putting out fire across the financial firestorm, the lessons I think are quite simple.

Don’t be Greedy

It was greed that spark this firestorm in the first place. Greed by those on Wall Street, including financial giants like Lehman Brothers, AIG and the similar companies. The greed was relatively easy money on the returns of their investment.

Management of the above companies were also greedy since they are rewarded with bonuses and stock options when the company’s bottom line met or exceeded. What better way than to jump onto a band wagon of easy returns.

Don’t Over Leverage

The other thing is over leveraging their financial positions. Leverage is a double edge sword. If you are leveraged 10 to 1, when the markets goes up 1%, you make 10%. When the markets go down 1%, you lose 10%.

What happens when greed and over leveraging hits you at the wrong time? You have to sell! In the case of financial institution like AIG, they are forced to sell their most valuable assets. For an individual, you might have to liquidate you home, your car, anything that is worth something.

You have to pay back what you borrow. There is no two ways about it. In a sense, this type of investing is no different from gambling. Anyway, that is another post for another time. For now, learn from the financial crisis. While the present crisis is far from over, you can be sure that it will happen again!

Original article from Personal Money Tips

In my last post, I mentioned I sort of tracked markets around to get a feel of what’s happening. Off course, I did a fair share of reading to make sense of the financial fiasco.

I say fiasco because as usual, a relatively small group of people in financial and investment circles managed to turn the world’s financial system topsy turvy.

In case you want to understand more what happened, I suggest you take a look at this article on Time magazine. I spent a good amount of time to read and re-read the article to understand. I

In case you don’t understand the article, that’s okay because most people don’t as well.

Warren Buffett, the nation’s most successful investor, back in 2003 called these derivatives — which it turned out almost no one understood — “weapons of financial mass destruction.

Having taken a financial planning level class on investment, I do understand a bit about derivatives, but the level these people do it coming out with all sorts of fancy pants names is altogether a different level. Check this out

Would you know how to rate a collateralized loan obligation? Or commercial-mortgage-backed securities?

I know of people who invested in financial instruments they know nothing about and bought it just because the returns are good. Don’t make the same mistake. Stick to what you know. Something safe and boring is better than losing your retirement money. You can read the full article here.

Original article from Personal Money Tips