I think it is based on my spending habits. In June, my credit was very low circa RM100 and I paid in full before the due date. But for the month of July, I spend couple extra bucks which made my total around RM800++. I think they select people with good credits who suddenly spent way more than your spending pattern. By giving you these kinds of breaks, it will increase their success on getting you to pay some interest to them :). I don't want to be careless and only pay in September. So, I'll just clear off the RM800 even I don't need to do so.
Next time, I'll tell you how to get your annual fees waived...
My examples are pretty straightforward. I don’t have big mortgages and loans. But I do have some study loan, unpaid telephone bill thanks to an old housemate, and some others.
My T-account looks like this. This is a summarized version of me.
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0% interest credit card loans
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Table 2: My example
Theorotically, I have a +ve account. But, I want to take out the savings and car from my account because I don’t want to make myself look good and I only want to make myself realistic. Since the ASB account was setup for investment and emergency purposes only. Since all the credits that I have are on 0% interest, the best is to settle the bills/loans on a monthly basis without touching the savings because the savings can actually generate about 7% average revenue. Of course people can tell you that you have to clear off your debts first. But the point is the debts I’m having are 0% interest. Might as well save the bulk money in a revenue generating account than taking all out to pay all the debts.
The amount that I owe will shrink due to inflation because the value of the money become smaller. That’s why I have to increase my savings to counter the inflation as well.
Taken out my debit column I have a –ve of RM19750 which I have to settle over the years.
For your information, I have a separate monthly account to keep track and control of my monthly expenses. I will explain on how I do this later.
For these interest free account, simple calculation was used. I pay rm50 for my phone bill, RM50 for my study loan and a fixed amount of RM299.34 for my 0% interest credit card payments. For the first 2, I have a choice of paying how much I want for a particular month. The key is to at least pay something. For the 0% interest payments, I really don’t have much choice but to follow the fixed amount to avoid any interest.
Rm4100 /rm50 will totalled to 82 months ~ 7 years repayment.
RM12,000/rm50 will totalled to 240 months ~ 20 years repayment.
RM50 will be a small amount 20 years from now.I found a free budget calculator at http://www.free-financial-advice.net/. It currently can serve as a basic financial planning. I have personally use it initially to get a picture how I am currently doing. Practically, you won’t follow the rules all the time. You’ll get a shopping urge, death in the family and others which can be knock the budget out of the picture. But with proper realistic budget planning can make your finances better. Having
Motivational books and seminars will always start with the dream. Sorry folks. But we are not living in a dream world, at least not yet. From experience, dreaming will get the wrong idea, they will be highly motivated but the excitement will never last. Only a few lucky ones which already get into their senses will make out of these books and seminars. For the rest of us, we must anticipate balance. So lets talk about reality first. Dream later.
First, sit down; put some pen, papers and a calculator in front of you. The dining table would be a great place to start. Put all your WIFI enabled laptops, Instant Messenger capable GPRS PDA phone, handphones, kids and maids AWAY for a while. If you have kids, get them to sleep. If you have a partner, please, let the partner sit next beside you unless you want to settle some ‘along’ debt which you don’t want to involve your wife and family. If your partner is busy getting the kids to sleep, then it’s good to start first and get your wife/husband later when they are not so busy. The rule is to at least start. Don’t wait and give excuses that you have a lot of other things to do. That’s why, you are left behind financially.
Accountants will appreciate what I am trying to do. I’m not from an accounting background. So If I do any mistakes, please do correct me. And yes, your house is your asset, your mortgage is, your liability.
Next, draw out a T-account style here in your paper. Mark the left column: debit and the right column: credit.
|House Value, RM102,000||Car Value, RM53,000|
|House Mortgage, RM100,000||Car Loan, RM30,000|
If you’re reading this and you didn’t draw the T-account above, please stop here and continue when you’re really ready. Or else, you are just wasting your time.
In the left column, enter your balances of each savings account that you have to the very penny. This will include your assets as well. An example of the list are:
- House (current value)
- Savings account
- Unit trusts
- Car(depreciating asset current value)
And you will put your liabilities in the Credit column:
- Your house mortgage balance(Link: calculate your mortgage balance)
- Your car’s loan balance(Link: Autoworld's loan settlement calculator)
- Credit card outstanding balances
- Personal loans
- Study loans
- Anything that you owe other people money with
You get the idea?
Once you’re finished, total up both the debit and credit column. Substract your debit with your credit. If you have a +ve value, congratulations, you’re at least not debt ridden. If you have a –ve, I’m so sorry my friend. You’re in deep trouble. If you have +ve the chances are you shouldn’t read my articles anymore because you are on the right track. Maybe you can contribute to my column as well.
The good news is, this is what I’m here for. To help you get from –ve to +ve. To be honest, Im not totally debt free. At least I’m doing something about it. How about you?
So you want to learn more about money?
It seems that you have done some research and stumbled across my humble site. What I intend to do is to let my readers understand the current financial situation in the modern world; and how to live by them.
You have probably read all the motivational books talking about financial freedom. But what is really financial freedom you ask? They will start to put horror stories on you, the “what if a bad thing happens in your family” they say. After that, they put all the glorious stories in front of you. Thousands of people made millions. If you’re a MLM business owner, you will know too well on what I am talking about. You’re confused. After reading a book or attending a seminar, you felt that you can take over the world, or at least do something about yourself. 1 week down the lane you’re back with your usual life (or can I say, miserable?)
Okay, so my life is not perfect either. I was trying too hard at one point, and at the same time not trying at all. The point is, I have not done it the right way. Doing the right thing in this world is not a sane thing either.
What I am here for is to shout some balance in our life. Balance for your finance, spiritually and mentally.
So how do we achieve this balance?