Friday, July 15, 2011

Back to School: Education is an Investment

Some months after March 25, 2007, the day I shyly but proudly walked up the stage to receive my University diploma (which turned out to be just rolled A4 paper lulz) I immediately thought of ways on how to find work so I can pursue my career and start earning for myself. But even then, I really wanted to go back to school.

After four years of working, I have now the chance to go back to school again. It's not a Masters or any prestigious post-graduate studies. I'm currently enrolled in Nihonggo I, under the Mindanao Kokusai Daigaku system. I've always loved learning the Japanese language and have been self-taught on Nihonggo since sixth grade. I was so glad for this opportunity to formally study the language. It was so fortunate that the 5:30 PM - 7:30 PM class schedule worked so well with my 8:00 AM - 5:00 PM work schedule and add the fact that the school is just across the street where I work! Something tells me the world has finally conspired to give this to me. Finally. Finally.

Me and My Classmates on 7/7/2011 - Tabanata Day!

Wishes on Bamboo branches, traditional symbols of Tabanata day

Added my wish on it too! I hope it comes true~

It's been over a month now, and we have four more months to go for this 5-month language class. I think going back to school is a great way to be able to take a break from the monotony of work, with plus points of being able to pursue hobbies and ambitions that have long been buried in resignation. Now I've re-ignited that desire! I really wanted to travel and visit Japan, and I think this is a great way for me to do it, so once I take a vacation, I would be able to fully immerse myself in the language and have a deeper understanding and appreciation of their culture.

For such a fantastic opportunity as going back to school and learning a new language, I am only paying P1,000 per month, after the registration fee of P1,000. That's about P6,000 in total for the 5-month language class, two hours a day, three times a week.  There are miscellaneous things that can add up like my required books which are:
Nihongo I and Nihongo II - P700.00 (P350 x 2) 
But I don't mind at all. These books are already a steal compared to a 500-peso or 1,000-peso book that I would not fully appreciate and use anyway. These books are very user-friendly and understandable. It's really made for a classroom setting.

I also had to adjust my allowance as well to be able to eat out (instead of eating at home) because once our classes ends at 7:30 or 7:40, I usually end up very hungry. I am trying to figure out something as a workaround for this though:
Dinner (Eat out) - P50.00
I will try and find alternative food, like bringing 2x Banana bread P15.00 which I love eating, to help stave my hunger until I get home.

I really like all the things I'm learning so far! I can finally say I've completely mastered the Hiragana and Katakana characters, and I have added new Japanese words and phrases too! I can now ask questions properly, understand the answer to the question, give directions, receive instructions and so many more.  In some ways, I felt like I invested in myself and my dreams, which gives me a very fulfilled feeling!

Thursday, July 14, 2011

Money Mistake: I Hate AXA Honey Saver 5 and AXA Philippines

 Welcome to the first ever Money Mistake Series on The Currency Of Everything.

Everyone has them, no matter how careful you may be with your budgeting or finances. Whether it's a wrong financial decision or a complete mistake, you still lost your hard-earned money. Who in their right minds want that to happen anyway?

Even for savers and investors, it's something that is unavoidable especially when you're also going through with trial and error the first time you try your hand at investing and what products to choose. It's hard enough to find money, plan for a good budget and in the end you will not even get to enjoy the harvests of your hardwork. It's also hard to admit that you made a mistake, but the only way to get over it is to accept and finally find a solution.

The opinion expressed below is solely my own, crafted from my own experiences.

My Money Mistake is Investing in AXA Philippines.

Getting their insurance account, Honey Saver 5, was a very immature mistake in my part. Even now, I know I'm still a novice when it comes to finances, but even now I already know what a bad thing it was to get the AXA insurance. It was almost a year ago when I opened an account with them, and at that time I was so glad that a bank-backed insurance company opened on my Metrobank branch, and it was very near my place of work. I was high with the fact that I was going to open something that could set me at a stable financial footing in the future, and I was very much glad that I could afford the premium, which was set at P1,222.27 a month or P12,886.00 a year.

This is the actual Policy document for AXA Insurance Honey Saver 5. This is my document, my own personal copy, my property.
So that's my Honey Saver 5 policy, a traditional 5-years-to-pay insurance policy that has a Basic Sum Insured of P100,000 until Age 100.
Insured for 100k
My understanding of how my policy worked was through the information given to me by my AXA Financial Advisor. Honey Saver 5 will require about P64,430.00 in a monthly installment over a 5-year period. The Sum Insured is immediately in effect upon the first day of enrollment and payment of the first premium.

In my mind, I wouldn't mind paying P64,430.00 if I was going to get insured for 100k until age 100. I was a trainee at that time, so the premium of P1,200 stretched my budget a little. I got the document, but I trusted AXA enough to just give it a once over, but I did my research, learned about personal financial managment in baby steps, and for 2 months now, my AXA insurance left me with an empty feeling.

AXA has Small Returns... Very small cash values
You can see from the picture above the breakdown of my yearly policy, the cash value it has accumulated as well.

In the First Policy Year, which I would have paid P12,886.00 for has a P0.00 value,
and my Second Policy Year I would have paid P25,722 in total for would be valued at P9,800.00.  

for me that's alright since that's always how insurance starts out. I've learned that for about 1-3 years of payment, it would go to covering the total cost of one's policy. But it is in the subsequent years that worry me.

On my Fifth Policy Year, where I would have paid a total of P64,430.00, my last year of paying, my policy has a cash value of P26,000.00, which is barely half of what AXA had hauled from my premium payments.
If one wanted to get back the total P64,000.00 one has invested in 5 years, it is about impossible. Once my policy reaches its 20th year (I would have been 44 years old by then) the cash value would only be P35,300.00.
In the end... you don't even get what you paid for....
I've been a good payer until this month. Because after so much deliberation... I decided to surrender my policy.

Yep. Money wasted... because this is my first year, I cannot get back the monthly premium I paid as the value of my policy is a big fat ZERO. It's funny how AXA can't even give back even a fraction of my money. Sometimes I want to lash out at the unfairness of it all.

I truly regret the day I joined AXA.

Tuesday, July 12, 2011

Me and My Quirky Budgeting Style

Payday is always a happy time! No matter how bad my mood is or how down I am, payday makes me cheerful. No, I'm not mukhang pera or anything like that, but I get happy because it's time to sit down, relax, and try to work on my budgeting so I can start anew!

My pay is not as huge as some of you may get, but with my simple lifestyle, savings-conscious budgeting style and once-in-a-while splurges, I'm good to go. So how do I go about with budgeting? You may think playing with numbers on a paper is so easy, but you can all attest how hard it is to follow through, right? It's so easy to write that you'll allot this and that amount to savings, and this percentage of your pay on this and that for spending, but once you actually get the money whole, sometimes those good, well-thought of plan flies away as easily as the money flies away from your hands.

This is why I adopted the Envelope Style method! It has worked so well with me, and the division of the money from whole to being broken down into its allotted amount helps me realize that even though I have this chunk of money I've just withdrawn, it is not unlimited and a specific amount has already been divided as per my budgeting.

Putting in money into their designated envelopes help me see where EXACTLY my money goes.

So what is the envelope style?
Envelope Accounting or the Envelope System is a method of budgeting where on a regular basis (i.e. monthly, biweekly, etc.) a certain amount of money is set aside for a specific purpose, or category, in an envelope marked for that purpose. Then anytime you make a purchase you look in the envelope for the type of purchase being considered to see if there are sufficient funds to make the purchase. If the money is there, all is well. Otherwise, you have three options: 1) you do not make the purchase; 2) you wait until you can allocate more money to that envelope; 3) you sacrifice another category by moving money from its associated envelope. The flip side is true as well, if you do not spend everything in the envelope this month then the next allocation adds to what is already there resulting in more money for the next month.
With envelope budgeting, the amount of money left to spend in a given category can be calculated at any time by counting the money in the envelope. Optionally, each envelope can be marked with the amount due each month (if a bill is known ahead of time) and the due date for the bill. - Wikipedia, Personal Budget: Following a Budget

Basically, what you do is get several envelopes and mark them according to what you have originally set on paper. My budget usually revolves around this percentages:

60% - Savings. And out of that amount here is the breakdown:
  • 39% - Emergency Fund
  • 39% - Insurance Payment
  • 22% - Travel Fund
40% - Expenses. And out of that amount, I break it down to:
  • 36% - Allowance
  • 24% - Credit Card Bills
  • 20% - Tuition
  • 20% - Water Bill
Each of those break downs, I put it in the allotted envelopes, and that's it! The big chunk of my money disappears and I get a feel of how they are distributed according to their flow. It reduces the chance of overspending on one aspect and undersaving on another. This way, there is a place for everything and everything is in its place!

It has been so useful for me for the past two years. It has taught me to be disciplined, to recognize how much I'm putting into savings and expenses, and most importantly it avoids me having tap in to other resources by sticking to the contents of the envelope ONLY, and trying workarounds and money-stretching ideas. I like it because they are alotted neatly! But my envelope style is not THAT quirky, but I do get a lot of "wow, you still do that?" with matching wry smiles. I don't mind, well, it's not even unique but it works for me.

Sunday, July 10, 2011

My Metrobank Time Deposit

I live in Davao where life is laid back and the people are unconsumed by the fast pace as well as societal stresses, things that have already swallowed other metropolitan cities in the Philippines. I attribute my own nature to my upbringing in Davao City, and that's why I always go for things that won't worry me. When it comes to banking, I'm this way, too.

I'm not one of those fortunate ones that already have trust funds from their parents, or have some kind of "mana" (inheritance) from my grandparents. I grew up without a cent to my name and my family lived within our means. Now that I'm all grown up complete with a job that brings in stable income, I will now be able to work hard and build something for myself even if it's from scratch.

Last year, after several months of saving dutifully, I ended up with a small amount of  money in my meager savings account. It's not impressive, but I was very much proud of myself. While my money is growing, I thought to myself that I could open a savings account in Banco De Oro (BDO). I've gone through several lengths just to be able to raise the money and, most importantly, KEEP IT INTACT even after almost a year of saving up for it.

If you're like me who likes to keep things very safe, try to remember that it is still UNWISE to keep a high amount of money in a low-bearing savings account. I decided to try, for the first time, a Time Deposit account. I was gunning for Metrobank, but I feared that my money wouldn't be enough. But I learned happily that you can even open a Time Deposit with a minimal amount with a choice of holding period of 30, 60 or 90 days.

My Metrobank Certificate of Time Deposit

This is what the certificate looks like! It's really very business like... so there's basically nothing there except a couple of numbers and a bunch of signatures. I'm glad that my money, no matter how small it is, is gaining slowly and steadily.

The only problem that some people tell me is that the interest rate for the my Time Deposit is 1.5% but it only looks small because they're used to higher rates for their high deposits. In my case, this is the first time I've tried TD, so I'm just cautious. But for 90 days (holding period) I am quite satisfied with even getting only the interest rate set by Metrobank because I am currently set where I am, I just needed a deposit product to keep my money safe and at the same time earn a higher interest compared to my savings account which is only .4%!

The maturity is coming up and I'm scrambling for my next move! I wonder which bank I will turn to, or what high interest deposit scheme I will want to use it for. I've researched for a lot of options, but if anybody has knowledge which bank or financial institution they successfully invested their money in, I would be very glad to hear about it!

Thank you for reading.

Saturday, July 09, 2011

Getting the Significant Other to Save Money

Mike and I have been together for about 10 months now, even though our friendship has already started its roots 15 years way back in third grade. Because we've been friends for a long time, we share almost the same interest, from watching movies, series, playing video games, Asian Language and culture as well as reading books and learning.

That's about what's on the surface, because beneath it we're both supremely alike and terribly different at the same time---From priorities to wants, and most of all, when it comes to handling money.

In a nutshell, I could easily say that he is the SAVINGS = DEBT - TOTAL MONEY type of guy while I'm the more traditional EXPENSES = SAVINGS - TOTAL MONEY kind of girl. If you follow either of the two budgeting equations you would know that there's a world's difference between the two. You may say that both seem like legit ways to manage our payroll, but if you scratch deeper you will see that Mike is the type to think about paying everything off first, ensuring that he's covered for a defined amount of time, and treating what's left as savings. While I, on the other hand, put a big chunk of my money as savings and try my hardest to stretch, pinch, and find a workaround on what's leftover to cover my expenses.

Vastly different people, you may think. But we haven't fought about money even until now because despite our differences, we found a really good balance somehow! I understand why he does the Expenses First equation, though, because he rents an apartment which means he has to pay a monthly stipend, his food and bills also need to be looked into. He can't possibly adopt my Savings First equation, so I try my best to help him budget. He hasn't had much experience with the whole budgeting and saving money every payday until when we got together, and it's only recently, due to my successful (forceful?) coercion to save a bit of money over time, that he has now a pretty good liquid contingency fund in a bank (I can at least brag about that right... hehe!)

It's not that I "inspired" or "pushed" him to anything, I'm just one of the few lucky ones who has a very rational and logical boyfriend, who can easily follow numbers and one who knows that I only encouraged him to save  because it is only for his own good. In my opinion, he is a bit used to his past, where he earned a lot, by whole lot I mean like X5 my salary at that given time period. He could easily buy whatever he wanted, pay cash or credit card and still have enough left to cover the miscellaneous. But now he shifted jobs, changed cities, and now he's stuck here with a very cautious spender! XD

In my case, I am very glad to have someone like Mike who helps me get rid of my notion that spending for myself is bad! Yes, it takes me a quite a while to decide to buy the things I want. Even when it comes to clothes, I say I like it, then not look into it at first. If I still like it after a while, I try it on but don't go through with buying the thing. And if I really like it enough, I will have to find a sort of justification and reason WHY I have to have it. It's an arduous process. Mike tells me it's okay to spend, that I don't have to fear about running out of money anytime soon. I really like saving, so very much, but spending (and especially not getting discounts) is very low, except for my daily expenses which I have already allotted and budgeted properly. This way, Mike and I found balance.

There are people who used to be in a good relationship with their special someone, but has long turned sour because of financial problems. Honestly, though, for me it is one of the worst things to fight over with! But I understand how hard money can affect a couple, any couple, not unless you're Bill Gates and his wife or some other billionaire couple. Fighting over money sounds stupid, but money matters are serious, and if you fight a lot about it, you end up losing a lot of respect for each other. Without respect, love will find it difficult to continue holding on to what's left of your relationship. Thankfully, Mike and I know this, and we follow the age-old adage that "It's just money." No matter what a great enabler money may be, it's still just what we call a "material", a  "thing" that you will be able to replace someday, but when you fight over something that small, it's sad that you have let money control your relationship. Never forget that money is just money, but loved ones are always priceless and irreplaceable.

Friday, July 08, 2011

Getting Started - Saving for Your Dreams, Investing on Your Future

“Pay yourself first” is the adage that has long been a buzz phrase when it comes to personal finance and managing money. It doesn’t mean “treating yourself” to new shoes or spending it all on going out with friends. It means devoting your finances for yourself and on how best you can protect your future.
Last June 17 2011, my company, Concentrix Davao, gave me and all the employees the chance to re-evaluate our financial options with the help of 11 top life and non-life insurance providers in the country. In the Concentrix Financial Wellness Seminar, every insurance company representative aimed not only to introduce their products and policies, but to promote financial literacy as well.
“Aside from your money savings in the bank, you can benefit from acquiring insurance or long-term investments as well. When we have stable sources of income, that’s the time when we have the capacity to save in order to anticipate the things that will happen in the future.” says Joselito Sonora Crisostomo of China Bank, who was there to introduce China Bank’s MoneyMax insurance product, an age-based endowment option that you gives you a variety of guaranteed cash benefits over a 5, 10 or 20 year period.
Money is a great enabler, and there are a lot of things you can achieve in a lifetime with the right amount of money reserves. Every life stage needs to be funded, whether it’s getting married or buying a house together, starting a family or planning for your retirement.

investing and saving for a house
I've always wanted to save up for a house! But it takes a lot of $$$$$$$$$$
 But currently, most Filipinos are unfamiliar with insurance or how it works, and the lack of knowledge has been passed down generations after generations. Research shows that only 13% of the Filipino population is insured, and it is the remaining 87% are the ones that need reaching out. “We have started a new campaign for Filipinos, for them to get started on needs analysis and good practice of their finances. Our advisors want to understand the financial situation of each of our clients and recommend the best steps for them to take in order to attain what they want in life.” says Ms. Mylene Almonte of Sunlife Financial Philippines.
Several companies present in the Concentrix Financial Wellness Event also offer death insurance and memorial services. “Very few people like to think about the inevitability of sickness or death, but if there are people depending on you, it is time to consider what you can do even when you’re not around anymore to take care of them.” says Ely Samonte of St. Peter Life Plans, a well-known memorial service company that offers a unique Life Plans with Return of Premium insurance product.
Mr. Junn Sexcion, the Area Head of COCOLIFE South Mindanao, was proud to present COCOLIFE’s OPTIMAX insurance and memorial plan in one. “OPTIMAX is for people who want optimum benefits and maximum coverage: to be insured for life and they don’t become a burden to their family.”
Other insurance companies that participated in the event included AXA Philippines, a European investment and insurance company co-owned by one of the biggest name in the bank industry, Metrobank; Staff from GREPALIFE Financial as well as Caritas Health were also there to guide those who are interested on getting either cash endowment investment policies or traditional health and protection insurance products.
You are your most important asset that you need to protect. Pinoys need to know this by heart: The future is always uncertain, with a lot of challenges and changes up ahead, but all these uncertainties are nothing in the face of a solid financial plan. Choosing the right insurance policy and starting as early as you can will go a long way to protect everything that matters to you.