NEED MORE COFFEE

The budget has been announced. There are some “ooos” and “aaahhhs”… carrots behind tall glass panels. Oh yes, that is where the hippity hopping comes into play…and here, we’ve been thinking about dance music of the 1960s and frogs. And I remember seeing a picture of this announcer…the scene… the floods of late 2021. It was a few days after the heavy rain. People were still on rooftops and stranded without food.

The picture was of the announcer in a large wide motorized raft / boat, standing at the front end of the raft / boat and pointing…”the flood, the flood…look at all those people stranded and suffering! It is a pity we did not bring any relief or supplies because we do not have space on this vessel. What with all you 10 or 15 media people with cameras and equipment crowding out the space.”

Back to the budget…what was that again? People are generally excited about the coming budget due to the hype that builds up leading to the day. This year, the hype was intensified by daily bombardment of news in almost every nook and corner that one would be hard-pressed to escape it for even an hour.

Budget 2023 is better known as an election budget. Up to 80% discount as the sale of big stores would advertise. Thousands of items to choose from – 107 inch televisions, flying cars, furniture, electrical items and the list go on. People rush to these stores hoping to grab that mega tv or super-luxurious, expensive leather furniture sets hoping to get 80%. They search and search for these items hoping to get them with the 80% discount or close to it.

“Up to” 80%. You will find the 80% discount on items such as a $1.50 wall plug, a plastic vase costing less than $5… The big ticket-priced items have a 5% or 10% discount only.

So, election budget… carrots behind glass panels.

While the greenback is strengthening against the local currency, and the central bank is raising interest rates to curb further consumer spending; the consumer is enticed to spend more.

Where does the average man go from here? Reduce spending. It only makes sense. (Haha, get it?) Will this affect the country’s coffers? Yes, for a short while… in the transition period of being a spending nation to one that saves. Otherwise, our financial position will head south.

Speaking of south, we have our southern neighbor as an example to emulate. It may be too drastic to do an about turn and head north to be debt free. Who came up with these “head south” and “head north” idioms.

I am all for working with the finance minister, central bank governor and all those that have an interest in helping re-build the nation’s wealth and people. It may look like a tough balancing act to follow, walking on a tight rope. Just make sure the balancing pole of ideas keep growing longer and evens out on both ends.

Purely coffee shop talk with just a couple of sips of coffee, today, so far.😉

BUDGET 2023 AND THE SAYUR MAN UNCLE

It is a very cool morning. Just off-ed the rain. It has a minute and some seconds left before the morning officially becomes noon.

I have been dilly-dallying putting paper to pen (or is it pen to paper), finger to keyboard pad to get an article going. Well, now it is moving. See, words are coming out on the screen. Is it time for a break?

Everyone is super-excited about what is to come in a few hours. Picture the finance minister, skipping and hopping all over the place I know, I know. The anti-hopping law has been passed. That is for the record only. Not gazetted yet. So…skippity hop. He has been advertising his budget-to-come over radio and perhaps other forms of media… shadowed by more of himself, really.

Was there any cost involved in creating this media blitz? Did heee paaayy for this media blitz from his own pocket? Logical question, yes? I mean as finance minister; he has to record everything in his buku tiga lima. he learnt from the sayur man uncle (1) of the 1970s.

The sayur man uncle used to come around our housing area in his partially wooden Morris Minor station wagon, bringing the freshest vegetables to the neighbourhood. Not sure if the vegetables he brought were from the lively hills, not the Sound of Music…no not those hills but from Cameron Highlands. He always wore a safari-type hat.

The sayur man uncle used this type of vehicle to go round selling his vegetables. Same colour, too. The Morris partially wooden station wagon.

The familiar dash – meter in the centre between two parcel shelves.

The safari-type hat similar to this, but without the strap.

The sayur man uncle had a mini library of Buku Tiga Lima, one for each of his customers. In this book; he would record the “Utang” (I.O.U.) amounts each customer purchased. So, this uncle was like a banker but better – he did not charge interest. He was his own economy, ran it wearing many hats (besides his safari hat) – Minister of trade, finance, transport, hospitality…

There was a lot of hype over the past couple of weeks asking people what they wanted to see in the upcoming budget. Most people talked about having allocated amounts going to their cause. Radio shows in the mornings and evenings each day had people interviewed on what they expected the budget would provide. I think all that is well and good.

Without having to pour cold water over “make-beliefs” when the budget has already been prepared and is only waiting to be presented, I think it has been a waste of time. if you multiply time used on this make-beliefs per person x number of persons x number of days; it amounts to a big number of hours translated to $ and cents (or Ringgit and “seen” [as pronounced over radio]). Unless it was considered purely entertainment. Then, it is just that.

The biggest missing piece of this whole budget charade (maybe), is that there is hardly any pronounced talk of rebuilding the nation’s financial coffers, to help the nation become debt- free. Yes, there will be talk of narrowing the budget deficit. But what about the nation becoming a net-income saver instead of the current spender?

I think let’s rally behind our finance minister to help steer the nation to becoming a net-income saver. Possibilities.

Chef Jeannie Atkinson teaching me (modern day sayur man uncle) how to chilli fry char kuey teow. In these pictures; the kuey teow has not been added in yet.

NOTES:
1. We knew the man that came round our area selling vegetables as the “sayur man”; not veegetable seller. Mentioned “sayur man uncle” and everyone knew.

A BORROWER OR A LENDER

Neither a borrower or lender shall I be.

Is the person who borrows money from you a friend or your slave? For discussion, a person here, can be person or several people, or business.

In the first instance, if you practise the idea and stand by this principle that you would neither lend or borrow money from anyone, than you are sure of an up front relationship with your friends or people around you.

On the other hand, you borrow some money. You will have to ensure that you keep to your obligation that you re-pay the loan on the stipulated day or earlier. Then, it is fine. But the usual advice is, don’t make it a habit.

What happens if you cannot meet the deadline, even by a few days. You expect and hope your friend or relative that lent you the money would be understanding. On the other hand, if that friend or relative who lent you the money, lent that money which was reserved for something else with the expectation that he or she will get the money back on the stipulated agreed day. Now, that person is put in a spot.

The person has to remind you about repaying back. He has to ask you back for his money. If you are able to repay it soonest possible, even though it is a couple of days overdue; then, it is kind of ok, I guess. It depends on the borrower.

If you, the borrower, is not one that usually borrows money in the first place; just the act of asking for a short term personal loan from a friend or relative, itself; can make you squirm. So, if you have to borrow, make sure you meet your repayment obligation.

Best practice is neither a borrower nor a lender be.

NOTES:
1. In anticipation of what is expected to be an election budget in Malaysia. Incentives in tax cuts should not be a recipe for spending.
Tax incentives should be viewed as a means to easing the overall financial position of the person, family or business.
2. Spend wisely. Spend on only what is needed.
3. Most people will borrow money or take loans to spend more. Taking loans from a financial institution will have interest factored in as well.

‘Neither a borrower nor a lender be’ is a line from Act 1 Scene 3 of Shakespeare’s play, Hamlet.

It is spoken in a speech by Polonius, King Claudius’ chief minister. His son, Laertes is leaving for university in Paris. Laertes and his sister, Ophelia, are waiting for him at the harbour. He arrives, and delivers a speech, in which he gives his son his blessing and offers him advice about how to conduct himself.

It is the speech that probably has the most quoted phrases in all of Shakespeare’s speeches. Wise phrases such as ‘Give every man thy ear but few thy voice,’ ‘to thine own self be true,’ and ‘The apparel oft proclaims the man’ fill the speech. The last piece of advice in his speech is ‘Neither a  borrower nor  a lender be’:

In all of his works William Shakespeare never tells us what he personally thinks about things. His characters’ opinions range around the whole spectrum of what human beings think and believe. So we don’t really know whether Shakespeare approved of borrowing and lending money. Polonius’ disapproval is part of the portrayal of one of his characters, Polonius.

Benefits Guru

HANGING ON TO THE OLD BURNER

I’m standing under one of the big trees in front of the TNB building in Taipan, USJ Subang Jaya…beginning the first few lines of this essay.

The weather is cool, with a constant light breeze blowing.  The traffic along the road is heavy as usual, synonymous with Taipan. A couple of crows are cawing nearby above, in the trees. I have to admit, I am a bit apprehensive standing right under the tree for fear of being “white bombed”. There are quite a lot of flies, here; too.

So, why am I here, soaking in nature’s beauty and all that it has to offer? The “blastid” (as Popeye the Sailor Man would say) car broke down…something about a defective fuel pump, according to Affendi, my regular mechanic, over the phone. The car starts and the engine dies off soon after.

I called the motor insurance assist to arrange for a tow truck to the workshop nearby. It has been 50 minutes. The tow-truck operator called me nearly 1/2 hour ago for my location. In case you are wondering,  his name is not Mater, Tow Mater or Sir Mater.

Mater

When he arrived, he certainly was not Mater from “The Cars”. This guy was rougher than the corsest sand paper. He shouted something like, “Your luck kereta (car)”. “Say what?” I  asked. He shouted even louder,  “your luck kereta”, while motioning me to push the car. Ooohhh…”tolak kereta” (Malay for “push car”).

This guy certainly looked prosperous. He had an overhung belly 2.0. He seemed the type to always get up on the wrong side of the bed, no matter which side it was. I think he was cheesed off when earlier on, I asked him where he was, since he had not showed up after half hour.

Popeye The Sailor Man

He took a bunch of pictures and made me fill up a form and sign it before he even proceeded to hook up and crane my car to his truck. His truck was a Mitsudiesel.

I think he may not have liked the idea that I was going to ride navigator, to the workshop. No way was I going to leave the car alone with Friar Tuck, here.

The ride to the workshop was a short one. Thank goodness my regular workshop was nearby. Was I glad to see the last of F.T. (Friar Tuck).

Now, in the workshop, being intoxicated with the fumes of petrol. An initial diagnosis of the problem was right – the fuel pump which is slightly less than 2 years old when I replaced it last; was faulty.

Working on the Samsung Galaxy Z-Fold 3. Off and on, in between writing, ok ok, tapping on the screen keyboard, dozing off 💤💤💤 for a much needed shuteye. Few minutes at a time. When I wake up, I feel so refreshed. Then, a while later, I slip into a lull, back to my sleep mode💤💤💤. Must be the petrol fumes for sure, as I am sitting…dozing off, wake up, dozing off again in the car.

I get tired when I sit too l long. I prefer to move around and keep busy. I decided to take a stroll around the surrounding area to looksie looksie to see if there was anything interesting in a predominantly motor workshop area. There is a Speedmart grocery, three, four or five restaurants all looking rather quiet – no customers.

There is an interesting restaurant there that serves Italian food. But it is only opened from 11.00am to 7.00pm on weekdays. It is closed on weekends. From the pictures on the menu which was stuck on one of the glass panels, the offerings look good but it is pricey especially when you look at the location where this restaurant is situated. This is a restaurant started up by 3 college students. That explains their business operating hours. I am guessing that these students are hands on with this business.

The replacement fuel pump accessory was delivered to the workshop by the parts shop’s runner. In no time at all, the part was fitted to the car. Now, the car is as good as new…figurative speaking. almost. I am happy that Affendi and his younger brothers are professionals in what they do, and are very reasonable in their charges. That is why my late brother, Nigel; and I, have been using Affendi’s services for over 10 years now. We have become very good friends, too.

Should I trade in the Green Hornet (my trusty steed) for one of those new vehicles that have a “Hybrid” badge stuck to it? Will the replacement make financial sense?

Have you noticed that almost every brand of “Hybrid” vehicle, no matter how high on the price or status the spectrum range they maybe, has exactly the same “Hybrid” badge affixed to it. The vehicle can come from the Mercedes-Benz, Honda, Kia, Hyundai, BMW, Maserati stables – if that model is a hybrid model, it will almost certainly sport the same “Hybrid” badge as all other vehicles.

I believe in times of economic uncertainty, where the central bank here in Malaysia has raised interest rates for the third time with the theme, “There’s no stopping us now”, it would be more prudent to hang on to the “old burner” since it is fully paid for. Monthly installments with interest charge, will not make much financial sense.

freepik

So, I will continue to flog…er use the Green Hornet. It may have a bit of the bumper sticking out at one end, a scratch or two on most parts of the car and make various sounds that put a good fusion jazz band to shame. It does almost the same thing as a Rolls Royce, Lambo, Toyota, Mahindra, Kia, Geely, Bugatti, Dongfeng – transport me from A to B.

By spending less, we will be able to keep our exposure to loans and interest at its minimum. Happy weekend!😁🎉

IS IT WORTH THE TRADE-OFF?

A new 330i BMW sits in the porch next to now; quite famed metallic deep scarlet-red, mid-sized Mazda CX-5 4wd SUV (sports utility vehicle) in the porch. The porch had to be big and wide enough to accommodate both vehicles fully, parked side by side each other, protecting them from the “harsh” weather of the sun and rain.

The 2-storey house was built around 15 years ago. Though a mid-sized inter-link building; it is gated by a stainless steel designed auto-gate. Since the purchase of the house, extensive, expensive renovations had gone into it. The original house as it was before the renovations; was very much looked after and did not need renovations. But then, what would their new neighbors think of them? What would their societal friends think of them? How would they had to then maintain their status membership in the “ANYTHING YOU CAN DO, I CAN DO BETTER” club? Ouch!

The front main walls of the hall was moved up front, much closer to the gate, leaving just enough space for a fairly large vehicle to park inside the house compound (porch area). That is why both vehicles could only be parked side-by-side of each other. Due to this, the normal size gate had to be replaced to practically fit the full width of the house.

Next, the rear of the house was pushed right back to the fence. This included the floor above.

With the front walls pushed closer to the gate and the rear walls pushed back to the fence boundary; the built up area became much bigger. Bigger hall, dining room, kitchen and bedrooms.

Next, fixtures and fittings had to be top-notch – fancy lightings, over-sized wrap around tvs all over the place, even on the ceiling with the use of the Samsung “Freestyle” projector; air-conditioning in every part of the house, including the store (the fancy word is “utility”) room (no not really).

There was a maid’s room included. How thoughtful. The maid would have to either be very thin and pint-size or really tuck it in, to fit inside that room. From what seems to be talked about, the maid only needs a place to sleep, not live in opulent luxury. After all, the reason for her to be there…is to work.

The new owners of this property, a family of four – businessman, housewife, son who is just starting his college education and daughter who has just started middle school; moved in after the renovations were completed.

The active and busy lifestyle of this family of four is that they are out of the house (home) most of the day. They get home late on most days, and have to muster energy and strength to get into bed, fall off to sleep and began “life” the next day by doing what they have been doing day in, day out; all over again.

In the meantime, pressure has been mounting on the businessman. While his orderbooks have been filling up, the supply chain for his products have been affected by the recent Covid-19 pandemic, the war in Europe, the looming possibility of a world recession and other factors.

The Central Bank has raised lending interest rates today – the third since May. The tightening of cashflows has forced him to tap into his reserves. He hopes to recover financially sooner than later as his reserves is not a “spend like there is no tomorrow” position. Nevertheless, it is important to look good and keep up with the Joneses.

~~~~~~~~~~~~~~

How many of us can relate to the above? We try to impress people who don’t matter and don’t really care. We worry about finances all the time, have many sleepless nights – we don’t have peace of mind. Is it worth the trade-off?

As a very wise man said once before: “It is important what your spouse and children – your immediate family, think of you”. Others don’t matter. This wise man dropped out of lower secondary school. With his street wise intelligence, he went on to build one of the largest office equipment businesses in the country. He has also made a name for himself in the automotive accessory business.

Wouldn’t it be nice to wake up in the morning and not be stressed out on how to settle bills? It is up to us to take stock of what really is important to us and take decisive measures to put things in perspective. Seek help on how to go about regaining that “peace of mind”. That “peace of mind” is awesome!

Bunker-riley

NOTES:
The above lifestyle example may work for some people.
It is always advisable to be up to speed on person’s financial position.

DECI$ION$

There are signs…Inflation is on the up in most countries. Malaysia just announced it hit 4.4%, mainly due to the rising cost of food.

Interest rates are climbing to curb inflation. Bank Negara, Malaysia’s central Bank; has increased rates twice this year. At least another two increases are expected before year-end. The 4.4% increase from the usual average of 2.5%; will see to that.

In layman’s terms, it means “stop buying!” The everyday person is affected.

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Governments reduce interest rates to encourage people to spend in hopes of self-propelling the economy.

An overheating market can be seen when there is a rush to spend money on too few goods available, causing prices to soar very quickly. This can be seen in the share market, too.

When signs show of an overheating market, interest rates are raised. The brunt falls on the everyday person, the same person that was encouraged to spend in the first place.

Now, that same person has to live with headaches, worry, high debt, depression at times leading to suicide.

All these financial hardships also leads to easy withdrawal access from the forced savings retirement funds like the Employees Provident Fund (EPF) in Malaysia. The government allowed for 4 withdrawals during the recent Covid-19 pandemic. Is there no end in sight of this financial abuse to the everyday person?

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Cashflow in the Malaysian market (1)
To help understand this system, a simple way of looking at this is generally laid out in front of us: Let us say there is RM100 billion cash flowing in the market.
Money is used on food, housing and travel (motor vehicles, etc).
Next, some is used on luxuries and lifestyle.
A major portion of that is used for investment. These investments include, share, equities, fixed deposits, savings and other types of investment. Here, we are looking at investment by individuals, small-to-medium enterprises and businesses.

At anytime, RM100 billion circulates in Malaysia. If investments are attractive, the public may cut down spending and invest more in their investments. When they do this, it will cause a situation to have more products available and less consumers, meaning goods available outstrip demand. If this situation prolongs for a period of time; it may force the price of goods downwards.

The same came be said if the situation reverses where there is more cash in the market than goods. Too many people chasing too few goods, causing the prices of goods to spike upwards.

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Can we call this “financial abuse”? Well, it is quite simple. In a free market, businesses are allowed to advertise and entice. No wrongdoing there. It is the everyday person that would have to learn to be responsible in his fiduciary decisions. It is a free world (in most parts), after all.

I welcome businesses with all their advertising and enticing. With all their cajoling, coaxing, soft sell, hard sell, sweet sell. Picture yourself in the acres of room in the rear passenger seat of a motor carriage that oozes with charm, looks and class; upholstered with only the very best of leathers and material that money can buy.

The strength in the whole process lies within you, me, us. We decide if we are to buy / acquire or not.

NOTES:
1. This is a very simplified explanation for the general readership, especially people without financial knowledge. I have purposely left out keypoints like foreign direct investment and other factors to keep the explanation at its very basics – entry level. It is assumed here that loans taken out; do not involve cash from the system.

A FINANCIAL STORM IN A TEACUP?

Recession, here, recession in that country, recession in the world – this has been topping the charts of newsrooms and various forms of other media for months now.

istock / indiaTimes

Currencies like the USD$ continues to rise and strengthen even further on one end of the currency scale, while currencies like the Malaysia Ringgit (MYR) continue to tank. Malaysia is largely, a trading nation and uses the USD$ in most of its trading transactions.

Then, we watch, hear and read about countries that have succumbed to tough times, the latest being Sri Lanka where it is strapped for cashflow which technically means it is bankrupt. Or so, as per what is told to us by the media.

To be more accurate, a country never goes bankrupt. When a country fails to repay its debts, it defaults on the loan. Second, the government, defaults, not the country.

Sri Lanka has its natural resources and trade, amongst others; that contribute to its economy. When you think of Sri Lanka or its name of the past that it was famous by, “Ceylon”; you think tea. “Ceylon tea”. The government of the day of that country defaults in its financial repayment obligations.. An incoming government that takes over from the government of the day, inherits these financial obligations. It has to turn the economy around.

“Recession” – reasons to picture black skies, tornadoes or typhoons in economies. The economists and financial analysts – the “knowers of the financial future” rush to outrace each other to majordomo the bleak news of a world recession.

My beef is that all these financial experts predict with certainty or can I say “know for sure” that the world is heading for a steep fall off the cliff, i.e. recession. The keyword here is “predict” because in the interviews they give over the media, they always say, “I think” which in simple layman’s language means, “for sure, I am not sure”. Therefore, it is as it states: prediction or theory.

There are signs, sure…cost of living continues to rise, so does the negative prediction charts.

Let’s say that signs do show that the world is heading for a recession. We are on a collision course with recession. How much time is spent trying to prevent it from happening or trying to cushion or lessen the impact?

The focus should then be on preventing the recession, or the very least, “minimize the impact”, don’t you agree?

What is a recession? According to Investopedia, a recession is a significant, widespread, and prolonged downturn in economic activity. Because recessions often last six months or more, one popular rule of thumb is that two consecutive quarters of decline in a country’s Gross Domestic Product (GDP) constitute a recession.

On the other hand, we hear another word being tossed around – “inflation”. So, what is inflation in economics? According to the Oxford dictionary, inflation is a general increase in prices and fall in the purchasing value of money.

Therefore, a recession makes the economy move much slower due to a decline in economic activity and potentially higher unemployment. Inflation would be the opposite, making the economy charge at full speed, sometimes uncontrollably, leading to price surges and a higher cost of living for the average consumer.

Which leads us to stagflation. Stagflation or recession-inflation is a situation in which the inflation rate is high or increasing, the economic growth rate slows, and unemployment remains steadily high.

A financial storm in a teacup?

What do we, as the everyday person; do from here? We have to be ready just in case it is not a storm in a teacup.

fig 1

Always have additional sources of income if possible and invest in any way you can for the long term. This may be an opportunity for us to explore some of our hidden talents.

While everyone’s circumstances will be different, there are a few key tenets that people should adhere to in nearly all situations:

  • Emergency Fund – It is important to have an emergency fund. This is money you have set aside that you can use in times of emergency. You should aim to have at least six months worth of living expenses saved in your emergency fund as a general rule of thumb. This emergency fund should not be touched unless it is for as it states; “an emergency”. It should also be easily accessible for that emergency, only.
  • Minimizing Debt – The next step to prepare for a recession is you have to try to reduce your debt as much as possible. This means paying off credit cards, car loans and the likes. Don’t add on more debt. Cut down spending. All this will take some pressure off you if a recession begins and your income starts to get squeezed.
  • Managing Your Mortgage – Finally, if you have a mortgage, you may be able to work with your mortgage provider to restructure your monthly payments, at least for a short period of time, somewhat like a moratorium. This could take some pressure off you if you are seriously struggling to meet repayments each month.

The baseline is to take a more conservative approach, having easy access to funds if needed and having minimal debt.

NOTES:
There are many helps available to help you with your financial planning. In Malaysia, one of the ways is Malaysian Compass Catholic NYFGW.
To find out more on Malaysian Compass Catholic NYFGW; and its next preview, go to this link: http://bit.ly/CompassCatholic

fig.1 milspousemoneymisson

FINANCIAL FREEDOM – IS THERE HOPE?

“The rich rule over the poor, and the borrower is the slave of the lender” ~ Proverbs 22:7

Can it get any more profound than this? We do not really need to think hard into this statement because it is as plain and simple for all to see.

After 2,000 years or so, things really have not changed much for the “poor” man. He is still in debt. And the lender… well the borrower is still the slave of the lender.

What may have changed is the way that loans are so easily available. Advertising and marketing help us discover the need for loans that we never realized we needed before…Take a loan to renovate and extend the brand, new house that we just collected the keys for, and yet to move in to; buy that luxurious sports car for the weekend and an additional 4wd sports utility vehicle (SUV) for the new found hobby of mountain tracking that you never thought about doing until you saw the advertisement.

Or buy into that super luxurious time-sharing holiday that promises you paradise on earth. It does not matter that you will have to book this unit that you presumably own, months in advance; to finally find out that you cannot book it for a week or two in a stretch and that when it is available; you are not. You do not get a refund on this.

The magic of all magic statements when you are encouraged to use your credit card: “It is not like you are paying for it.” Well not immediately…until the credit card statement comes. Then, you will have to pay for all your purchases. And here, the credit card issuers encourage you to pay a partial amount – a bare minimum of 5% or 10% of the total statement; not to worry about the balance. It can be settled over the next 12 months or so…with interest.

Or, if you need immediate cash without wanting to go through the process of applying for it; you can just use your credit card at the ATM and withdraw that cash… of course, with a 5% fee… and then…pay an interest, most times at a high percentage, while repaying back this super-easy-to-get cash advance.

You acquire and accumulate all these things. Absolutely nothing wrong with that. Then, there is keeping up with appearances when you start comparing with Tom, Harry, Christine, Jessica, the Joneses, “Bucket”… You find that you become an advertisement junkie – dressed from head to toe in branded attire, including your underwear. The best part is YOU PAY TO ADVERTISE! How cool is that? It can become a race to out-do each other, even to the point of getting into financial trouble.

You find that you have to work hard, long hours; just to help support this lifestyle. The general perception of “financial freedom” is you earn enough or more than enough to pay the monthly bills. Most times than not; “contentment” is not in that equation.

Advertisers control our lives. What would happen if advertisements include a statement at the bottom, “You will have to pay for these products”. It’s like pouring cold water on a make belief world.

Is there a way out of this “false” happiness?

The recent Covid-19 pandemic took a toll on the finances of people. They struggled to juggle what needed to be achieved and prioritize their financial obligations. Relationships suffered. “Where is God in all this?”, we wonder. What does God say about money and our possessions?

Good news. There are answers to your questions. Which then leads to more questions. Did you know that there are 2,500 verses in the Bible that deal with money and possessions? Yet there are fewer than <500 verses on faith and about 500 verses on prayer.

Compass Catholic ministry helps people break away from the grasp of worldly consumerism. In Malaysia, this ministry started just over two and a half years ago with a small group of 12 people.

The programme, “Navigating your finances God’s way (NYFGW)”; is a 9-week Bible study, Catechism and Church teachings. In addition to the Bible study, participants also complete personal, practical applications including:
> How to track your spending habits
> How to pay off your debt
> What to do in time of a crisis

Your takeaway from this is financial freedom, “peace of mind.”

To find out more on Malaysian Compass Catholic NYFGW; and its next preview, go to this link http://bit.ly/CompassCatholic

So, where do you go from here?

Sarah Lazarovic

The advertisements and promotions on how life is in the world of luxury, will continue. Absolutely nothing wrong with that. We are offered a humongous spectrum for choice. Wow!

Can we re-take control of our lives?

THE WHITE FLAG FORGOTTEN

The pounding of a wall on the house in front of mine; a loud grinding or what seems like a sharpening of metal plates in another house nearby; another house towards the north-east of the direction I am facing at my workstation; with a hammer-drill, hammer-drilling into a wall or something like that. One could be forgiven to think that this is a major construction site. It is not. It is just that there are quite a few houses in the midst of major renovations. ‘Tis the season?

Then, one can be forgiven (again) if they were to ask, “economic tough times, inflation, possible recession?” Apparently not. With prices of things in general on the rise, construction and renovation are not spared from it. There is a massive labour shortage all around with home renovation contractors finding difficulty in getting workers. Yet home renovations are still in full swing. The unspoken ‘kiasu’ trait is in the air: “If you can do, I (also) can do; but better”. For the uninitiated, “kiasu” is the Chinese version (1) of the western saying, “Keeping up with the Joneses” (2); loosely translated.

Kiasu sounds better. It has a more aggressive “oomph” to its expression!

It looks like people are going on a spending rampage or revenge, being let loose from the confines of being cooped up at home during the Covid-19 pandemic which turned into an endemic on its way out.

One can be forgiven in thinking that this is a spending rampage or a spending epidemic with the many homes in just one area, being re-modelled or renovated.

This spending splurge is not just limited to re-modelling and renovation of homes, but also in cars, especially luxury cars, property investment and travel, too. For instance, until recently, there was an incentive for people to buy new vehicles in Malaysia. The government waived the sales and service tax on the nett selling price for both, completely knocked down (ckd) vehicles which is 10% and completely built up (cbu) vehicles which is 5%, thus reducing the overall price of vehicles by quite a bit.

It can be quite difficult to fathom or even believe that, not too long ago; around the same neighbourhood vicinity, some people were flying the white flag outside their homes. The white flag was a signal that homes were suffering from financial distress, with no money to buy food and basic house essentials.

These were homes in the middle to upper strata residential areas, too. This could have been due to many people having to take big pay cuts or were laid off from work due to the Covid-19 pandemic. They were not poor people. It was just that their monthly expenses outstripped their incomes which were reduced or stopped.

With the wonderful support of the generous public, and biding of time; they pulled through. The general takeaway lesson here was to live within one’s means.

Income seems flexible, non-guaranteed and cannot be taken for granted. Loans on the other hand, are most times not flexible. Once a loan is taken out, repayments have to be met.

When a loan has been taken out or a purchase made with a monthly installment repayment schedule, the onus is solely on the person to meet those obligations. It is a sale for the seller or financial institution. There is no “toui toui tak balek”. (3)

And, he has to meet those obligations, regardless of his financial situation. If he encounters any form of financial stress and may have difficulty in repayments even if it is for a short period of time; he will still have to meet those obligations punctually. As a chairman of one of Malaysia’s leading banks once said (could have said it many times before), “It does not matter to us if the customer had a spotless record in meeting all his financial obligations for the last 25 years, what matters most to us is ‘now'”.

Interest rates have gone up twice this year and is still expected to move up the scale at least a couple more times before end-December. This in turn, has caused the cost of most things, especially essential goods; to go up. Unfortunately, salaries and wages have not increased in tandem with the increased cost of everything else.

The question you may want to ask is, “Do I want to have a bigger financial risk exposure than I am in now?” Why is it a risk? We cannot really guarantee that we have the funds if a loan facility is recalled and full payment is demanded. Unless, if collateral is assigned to a loan making it a “secured loan”.

But collateral is becoming a rarity for personal loans as financial institutions want to charge a higher interest rate on unsecured loans. Overall non-performing loans (NPL) in Malaysia are low, with little risk to the bank.

Are we more prepared now for a “financial pandemic”? Have we forgotten the white flag era or will we re-visit it again?

Food for thought: Funny how the price of things does not come down when the reason for it going up in the first place, does.

NOTES:
1. Taken from the Chinese dialect Hokkien, kiasu translates to a fear of losing out, but encompasses any sort of competitive, stingy or selfish behavior. If you stand in line for hours just because there’s a gift at the end, then you’re kiasu.
2. Striving to achieve or own as much as the people around you: “If you want to keep up with the Joneses in this neighborhood, you will have to own at least three cars.”
3. “Toui toui tak balek” in Malay was used when we were kids to mean “it is not too late to go back on your decision”.

BANK OPR RATES ARE UP, SO ARE YOUR MONTHLY INSTALLMENTS

fig.1

Bank Negara Malaysia recently raised the overnight policy rate (OPR)[Bank jargon] for the second time by 25 basis points. That totals 50 basis points this year….so far. “Blah blah blah…” this is what many people will say when they see this. Maybe, it does not hit home for them.

What this means in layman’s terms is that cost of borrowing goes up. Examples are property loans and others that have a “floating interest rate”. This is an interest rate that is generally pegged to the OPR. To keep this as simple as possible, I will not go deeper into technicalities like Bank rates, etc.

In terms of $ & cents; like everybody else affected with these two increases; I received a notice in the mail from my bank informing me of my monthly installment increase by 15.30782%! Incredible, yes? While this hefty increase could be due to the bank’s recent exposure and not so shiny performance and “the buck stops with us”; I would prefer to focus on what we can do perhaps to reduce monthly cost increases such as these.

You can implement some or all of these:
– Going to and fro work: Pick the shortest route. Travel during non-peak hours. This helps reduce fuel expenditure.
– If your household has more than one car, use the most fuel efficient one more often.
Reduce the frequency of travelling out.
– Car-pool.
– Eat more meals at home. Cook in bulk and deep freeze. Have two or three varieties that you can alternate at each meal.
– If you have to eat out, go to one that is less expensive, not necessarily compromising on the quality of food or starving your tastebuds. I will touch more on the perception that paying more is always better in my upcoming article.
– Reduce electricity consumption: Switch off all electrical appliances when not in use. Use LED bulbs and energy saving appliances.
– Shop around for better loan / mortgage packages and switch if viable.

This list is not exhaustive.

These may not seem much in savings. If you are conscious in tracking your income and expenditure; the above measures can definitely go a long way to mitigate the rising costs of households.

fig. 2

Inflation. What about it? Very loosely put: inflation is too many people chasing after too few an item. Desperate people are willing to pay more or are forced to pay more, just to get that item. Which leads to companies coming out with “limited editions” to hike the prices up. Then, there will be 2nd, 3rd, 4th limited editions or colour specific limited editions.

We can control inflation in our own very small way by controlling our expenditure.

This is a good time, as any; to re-look into how you, we, us, can manage finances efficiently. There is a short 2 hour per day x 1 day per week x 9 week programme available in Subang Jaya, Kuala Lumpur, Malaysia; to help learn to manage finances more efficiently. (1)

NOTES
A floating interest rate is one that changes periodically, as opposed to a fixed (or unchanging) interest rate.
Floating rates are carried by credit card companies and commonly seen with mortgages.
Floating rates follow the market or track an index or another benchmark interest rate.
Floating rates are also called variable rates.

Inflation is action of inflating something or the condition of being inflated for example: the inflation of a balloon
In economics, inflation is a general increase in prices and fall in the purchasing value of money. So, policies are put in place, aimed at controlling inflation.

1. Catholic Compass
fig.1 PropSocial
fig. 2 IQI Global