From Dead Broke to Cash Rich (Part 4-FINAL)

This is the final part of this book review.

Once again, I have to thank
Noryani Ismail from "From Dead Broke to Cash Rich" and 
Susan Reynolds and Lauren Bakken from “One-Income Household – How to Do a Lot with a Little”
for their guidance.

During my tours on the internet yesterday, I do encounters many on-line advices on how to reduce credit card bills. Some of which even told me to shift all my debts to a 0% or low interest account. I have something to say, "Tried that, Done that & Screwed that too". Closing credit card accounts, as said on these sites, will make a bad financial credit record. But, you will be a worse condition by shifting all your debts into one account, clearing up the offending accounts and yet not to close them. I would advise otherwise, as on the same track as these writers, who may also "done the same".

Once you cleared the account, you are no longer in debt with that bank, and if you do not need so many cards, for God's sake, REMOVE them. I know the banks not going to like my statement here. But that's the truth. So if you take the advise or not, it is entirely up to you.

 This is the summary we had discussed:

1                     Recognise That The Root Is the Problem

2                     Show Me the Money

3                     Open Up

4                     Seek Professional Help

5                     Make Tough Decisions

6                     Keep Daily Financial Records

7                     Avoid Monthly-Instalment Payment Options Like The Plague

8                     Change Your Shopping Habits

9                     Create Multiple Sources of Income

1      Create Multiple Sources of Income

a.       Spending less and saving more is the first strategy out of financial misery. However, no matter how much you save, it will take you a very long time to repay all of your debts and set you on the road of financial freedom, with just one income.

b.      As there are multiple methods of spending money, of course there will be more than one way earning money.

c.       Developing multiple sources of income does not mean that you will be using your employer’s time. You can develop alternative source of income on your own time. Or develop business that does not require your presence to run. You can hire someone to work in the business you own.

d.      Some runs a leasing services, like taxis, shops. Some write books and earn a royalty out of it.

e.      There are plenty of opportunities out there for you. Just keep an open mind and do not stop looking. Remember, if you cannot afford it or do not like it, do not let anyone talk you into it. Your new venture should not require a large chunk of your money at this time or require you to make monetary commitments that you cannot afford.

f.        Many have been cheated during their quest on finding additional income the quick and easy way. Many invested in Stock, options and properties only to lose it all. What they do not understand is investment is not something to do with your life saving or your emergency fund. Every single individual should have money saved for their retirement. Money saved for retirement and emergency cannot be used for anything else because this is your lifeline. It is something you fall back on should everything fails.

g.       Many unscrupulous business people, especially ones with a gift of the gab, successfully convince people to invest in a business, scheme or fund that they are developing. And many people lose money in the process. So how do we know whom we can trust?

h.      Number one rule of investing is to invest in something you understand. And it you do not understand it, learn about the business before you make any decisions. And you are not 100% sure what to do, do nothing. Simple as that. Investment brokers and agents may rush you into a decision satin that if you miss this chance, you will lose a once-in-a-lifetime opportunity. Do not fall for that. Whenever you are rush, you often cannot think straight. The Richest Man in Babylon says, “Better a little caution than a great regret.”

i.         Most people say that you need money to make money. And they will say it with frustration written on their face. Many people think that they need to take on a huge loan to start a business. This is because they are only familiar with large scale business such as opening a restaurant. What about something small and capable helping you make a lot of money, as long as we are willing to work hard.

j.        We want to do something today that will make us rich in the quickest possible time. This is why many people fall for scams. You see, you can make money with no money or very little money, there are ways that are legal and morally acceptable by all standards. You just need yo get your creative juices flowing on ideas. Then choose one path and get going.

•           Planning the savings

There are many ways in planning savings, I heard of splitting into 4 taught in one of scriptures, which 

(1) Savings (2) Donation (3) Expenditure (4) Investment

Otherwise, noted from the 2 books, which sounds more or less the same:

a.       With the money you have accumulated, split it into 7.

                                                               i.      Savings & Emergency fund (Save it and forget it)

                                                             ii.      Investments

                                                            iii.      Paying down debts

                                                           iv.      Charity

                                                             v.      Own Expenditure

                                                           vi.      Family Expenditure (2 portions)

b.      Many of us are too deep in debt to think of dividing the money into so many portions. If this is the case, use the money from second third and fourth to do this. If you do not start distributing your cash this way, you will never get any closer to achieving any amount of financial success.

c.       Remember, it is not the size of your pay check or income that leads you down the road of financial freedom but what you do with the money that matters.

d.      While waiting for the money in your investment to grow. It is best to learn about good investment opportunities. Legal and lawful ones only.

e.      Do not be surprise how your nest egg can attract unwarranted attention. With your growing pile of savings, you may find a growing interest from others wishing to borrow or suggest that you partner them in an investment deal or a venture. Be alert and aware of some people and their attention. Look, if you can go through the sweat, heartache and tears getting yourself from dead broke to cash rich, there is no reason why others cannot do the same. Furthermore, if you loan them money, you are not helping them in anyway; you are merely helping to eliminate the symptoms and not the problem itself.

f.        We may feel pity for others but will they feel the same for us when they do not repay us? Pity or any such emotion will not put money or food on anyone’s table. So unless you are a bank or financial institution, it is best that you stop offering to give your money to people who have no means of repaying you. If they could, wouldn’t the banks approve them for a loan? So if the banks are wise enough not to do it, so should you.

Instead, why don't you teach them how to plan their expenditures and savings as well? 

                     Spread the knowledge!

3                     Conclusion

a.       Above Steps to get back on track. After doing so, it is easy to slip back to old ways. Therefore, your mind-set must be changed first. Once you change your thinking, actions to complement your thinking follow automatically, and you will have the power to change your life. Let this be your lifetime occupation, building as many income pipelines as you deserve. In order to continue to rise up the path of financial success, grow your interest in the subject of money, read more, attend seminars and surround yourself with people who have already achieved what you want to achieve so that you can learn from them. You have got nothing to lose!

Notes complemented from

(1) Noryani Ismail from "From Dead Broke to Cash Rich" [ISBN 978-967-5428-10-4]
(2) Susan Reynolds and Lauren Bakken from “One-Income Household – How to Do a Lot with a Little” [ISBN: 978-1-60550-133-8]

From Dead Broke to Cash Rich (Part 3)

So far, we have discussed in the last two parts on seeing where is the problem of being poor, even though you may be earning BIG bucks out there. By now, you should clear on where your money goes, be it paying instalments, interests to banks. Hopefully, your family is aware what you are doing and with their help, your pathway to getting cash rich should be easier. Personally, i have not found GOOD professional help yet. In Singapore, we do have "problem gambling" helps, and there are public counsellors who might be able to advise and address financial issues, and credit card issues.

So far, I had aids from KK Women and Children Hospital, and the MOE to ease my children's medical expenses and school expenditures, and I know these are only temporary. I do admit it does helps a bit, now I just have to focus on reducing my debts, and daily expenses.

Now, we shall continue with the rest of the saving techniques.

1                     Recognise That The Root Is the Problem

2                     Show Me the Money

3                     Open Up

4                     Seek Professional Help

5                     Make Tough Decisions

6                     Keep Daily Financial Records

7                     Avoid Monthly-Instalment Payment Options Like The Plague

8                     Change Your Shopping Habits

9                     Create Multiple Sources of Income

1      Make Tough Decisions

a.       Those who are in businesses, be it a MLM, traditional or modern, check and double check if your sacrifices made is feasible. A business should be able to support itself financially with its own income. Once YOU are supporting your business with your salary from another job, then you should STOP that business.

b.      Start to downsize some of your expenditures, such as having one car instead of two. If not, no car is even better.

c.       Whether to pack lunch or eat out, decisions as such to be made and abide by it.

d.      In short-term, you may make decisions as follows

                                                               i.      What are our absolute necessities?

                                                             ii.      Who to pay first? Who can stall?

                                                            iii.      How can we reduce debt quickly?

                                                           iv.      Where can we drastically cut expenses?

                                                             v.      How long can we sustain our current lifestyle?

                                                           vi.      Do we have any assets we may want to liquidate?

e.      In long term, decision as follows:

                                                               i.      Can we afford to stay in this house?

                                                             ii.      If now, how much should we spend on housing? Where can find housing in that price bracket?

                                                            iii.      Can wage earner finds ways to move up at work?

                                                           iv.      Is there other ways to increase income stream?

                                                             v.      Will the wage earner need additional education or training?

                                                           vi.      Can I fund college for children?

                                                          vii.      Can I fund savings account and/or a retirement plan?

f.        Follow the seven basic rule:

                                                               i.      Accept responsibility for your financial future

                                                             ii.      Pay yourself first

                                                            iii.      Stay fully conscious of your financial situation

                                                           iv.      Reduce spending.

                                                             v.      Earn more at your job

                                                           vi.      Generate additional income streams

                                                          vii.      Invest wisely

2      Keep Daily Financial Records

a.       List down your net monthly income and monthly expenditure. Note that your income is the real cash you take home after all the government deductions.

b.      Money left after deducting your expenditure will be used to pay for your daily essentials such as groceries, petrol, snacks, school supplies, etc.

c.       This could be tedious, but it is very effective.

d.      Separate items such as diapers, cereals, milk from grocery bill as they made up a chunk of the bill, so it is easier to calculate and differentiate.

e.      Compare prices and buy in bulk if a discount is offered, this way you will reduce the number of trips you make to the supermarket, to reduce “impulse buying”.

f.        Once you have a full month’s entry, you can start analysing the data. It may be painful but it will get better as data analysis is the key to solving your financial issues.

g.       This way, you can plan for all your expenses in advance.

h.      Surrender the “Can-have” attitude.

3      Avoid Monthly-Instalment Payment Options Like The Plague

a.       A lot of banks and stores offer those zero-interest monthly instalment to pay for certain items. Yes, AVOID them.

b.      Doing so will bury you deeper into the debt, unless you are able to pay out the full amount you own the bank every month. Else, you are forgetting you are paying the interest and hence, you are paying more for the item you buy in instalments than in full.

c.       These offers fool you into a false sense of security because that is what they are doing. Do not be fooled because as the saying goes: A fool and his money are soon parted.

d.      In order to save yourself from these money traps, remember this rule of thumb: If you cannot pay the full amount right away, do not buy! Save the money for it if it is something important and when you have the full amount, you may find that the purchase price has gone down or you may get a better bargain because you are paying cash. Or better still, you may realise that you do not need the item at all!

4      Change Your Shopping Habits

a.       The cons of credits cards frequently far outweigh the pros.

                                                               i.      Credit card issuers are constantly seeking customers who charge beyond their means and make minimum payments carrying 10 or 30 percent interest for long period so time.

                                                             ii.      Always keep in mind that credit card issuers make their money on interest, additional fees and annual fees.

                                                            iii.      Credit companies continues to barrage you with offers even after you racked up debts, such as more low interest rates. These are tempting, you must read the fine print to watch out for hidden charges. Or best, cut them all altogether.

                                                           iv.      Stores are always trying to entice you to open an account, sales personnels are trained to push these offers, and easy to sign on.

                                                             v.      Game plan to reduce Debt

1.       Fund transfers offers, for transferring balances from one card to another, gives you a false illusion that you can get your debt under control. This is a very bad idea. There is no way to address the probe but to tackle it head on with cash and to cease all credit card spending.

b.      Change where you shop

                                                               i.      Changing where you shop is one of the most logical things to do. Sometimes some things are cheaper outside the shopping centres.

                                                             ii.      In hypermarkets, impression that they offer better price. It could be the arrangement of their products causes the impulse buying. And methods to cause buying more than one because the second item is offered half the price. These are few of the many tricks of the trade.

                                                            iii.      However, if you have a big family, though, shopping at hypermarkets may not be a bad idea, as they offer items in bulk, that’s where your financial records comes into play, as you are able to know how much you can buy for a month.

                                                           iv.      On top of these, the lesson comes down, you have to find out how much other stores is selling for the same item be it supermarket or traditional provision shop. This way, it is easier for you to do the budgeting.

c.       Pay attention to great deals and clip coupons

                                                               i.      Supermarket coupons, be it from on-line, local newspapers or even along the supermarket aisle, can be useful.

d.      Plan your weekly consumption and write a shopping list

                                                               i.      Planning your daily consumption for the week is the best way to save on your grocery bill. This comes down to the number of meals you intending to cook.

                                                             ii.      Write your shopping list.

e.      Do Not go shopping on an empty stomach

                                                               i.      When you are full, your subconscious mind tells you I have enough. When you are hungry, it tells you I don’t have enough. I need more, more and more. And you will put more things into the shopping cart, buying things you really doesn't need.

f.        Change brands

                                                               i.      House brands, or even no-frills packaging can save with very little effort.

                                                             ii.      Another trick is to examine items placed at the bottom shelves, where most of the best priced items are placed.

g.       Clothes and accessories

                                                               i.      Make no apologies for wearing same outfit year after year. Change only when necessary.

h.      Trim Energy Costs

                                                               i.      Energy costs are always spiralling out of control, we can’t control prices, but you can control our consumption.

1.       Minimize laundry expenses

a.       Wash only full loads whenever possible. But do not overfull the machine, else, when it does not comes out clean, you have to wash it again.

b.      Wash using cold water, unless clothing is unduly soiled.

c.       Use the correct amount of detergent.

d.      Buy house brands detergents. Leave expensive spot sprays, use old-fashioned soap and scrub method, or dab the spot with white vinegar and baking soda paste or with lemon juice.

e.      Wash delicates in ordinary dish soap.

f.        Consider hanging clothes outside to dry. It will leave your laundry smell clean and fresh.

g.       Limit purchase clothes that require dry-cleaning.

2.       Appliances

a.       Set Air-conditioner temperatures to 25 Degrees Celsius.

b.      If possible use a fan, then air-conditioner.

c.       Replace light bulbs with fluorescents, which use 75% less energy and last ten times as long.

d.      Ask your electric and gas provides to do a audit of your energy use if it is free of charge.

e.      Take shorter showers

3.       Travelling with vehicles

a.       Make sure your vehicle is serviced regularly

b.      Tires are fully inflated.

c.       Use cruise control on highways. This keeps vehicle safer, steady, legal and save fuel.

d.      Join car pools.

4.       Outings without spending more

a.       Picnics in local parks or beach

b.      Play board games

c.       Go for free music, dance, or theatre performances

d.      Watch out for free entertainments around the city

So, there many things to do with these few steps, yet it goes a long way. 

From Dead Broke to Cash Rich (Part 2)

These are the steps to gain your financial holdings:

1                     Recognise That The Root Is the Problem

2                     Show Me the Money

3                     Open Up

4                     Seek Professional Help

5                     Make Tough Decisions

6                     Keep Daily Financial Records

7                     Avoid Monthly-Instalment Payment Options Like The Plague

8                     Change Your Shopping Habits

9                     Create Multiple Sources of Income

1                     Show Me the Money

a)      Getting organised

a.       People who are organised are less likely to have bad debts. So if you one of those who gets overwhelmed by mounting debt, you probably have all your bills and late payments reminders unopened or even purposely misplaced them.

b.      In the end, you find yourself sinking deeper into debt.

c.       So get those letters out of their envelopes and start organising the bills, and file them into different files.

d.      Keep yourself updated of your debts

b)      Lay it out on paper

a.       This is to write out everything on Paper

b.      Yes, making it on computer on spreadsheets are good, but, provided you are not distracted by anything else on the computer.

c.       What to put down is, your income, Gross and net, and your liabilities, Debts, and expenses.

2                     Open Up

a.       Once you have a clear idea on your finances, it is to share with your family, be it your spouse and children if you are married. If not your parents and siblings.

b.      This is an emotional issue especially for breadwinners, as they are usually are unwillingly to share their situation so they can keep the family of being worry free. However, this can lead to much depression and internal stress as they couldn’t voice out their problems.

c.       With this laid out, at least the family is clear that they should not overspend, and do unnecessary expenditure.

d.      However, there are cases that the sharing got back-fired. If this happens, you know it is not a partner you should keep.

3                     Seek Professional Help

a.       Be it whether with the support of family, there’s another group of people who might be able to help you.

b.      However, do not get trick by designations like “Financial Planner”, who will end up selling only insurance plans to you, or saving plans to you, which ended up you into further debts. As you can see, you are already in financial trouble, why would want to buy more things that you may not be able to pay continuous for the next few decades?

                                                               i.      There are fee-based advisors who charge you for their time and expertise. With a monthly fees, these people look into your finances and determine what needs yur attention. They should NOT be earning commission on the product they recommend.

                                                             ii.      In public social service, there are counsellors from Family service centres (if in Singapore) and debt management facilities, who delivers financial advice. These counsellors are trained to advice you on how to manage debt problems and not how to increase your income or diversify your investments.

                                                            iii.      Your own friends whom you trust and who are better versed in financial matters. Do not forget to offer to pay for their services.

c.       It is true that it may be embarrassing to reveal your financial difficulties, however, things to be done, have to be done.

d.      Many will advise you to block your credit cards to prevent further unnecessary spending. This way you can keep up with your payments without further expenditures, and not damaging your credit report. If need be, you may have to talk to the bank to arrange a better repayment methods.

e.      Remember on top of reducing the expenses on debt and interest repayment, you still have a goal to increase your cash flow.

f.        That’s why the best way to pay your debts is to use CASH. If does not have saving, have to get an extra income or work longer hours for more overtime pay. Of course, sometimes your employer may not allow you to work overtime at all, in that case, it is time to get another form of income than to rely on one employer.

g.       Other than restructuring loans, keep a close record of your daily purchases to the smallest cent. This way, you will find out what spent is unnecessary and be able to cut back on that.

h.      With advice in hand and determination to get and stay out of debt, tough decisions are to be made.

That's a lot of absorb, and a lot to do. START NOW!

From Dead Broke to Cash Rich (Book Summary) Part 1

These are the basic steps to wake up and start thinking what's wrong with your bank account.

1                     Recognise That The Root Is the Problem

2                     Show Me the Money

3                     Open Up

4                     Seek Professional Help

5                     Make Tough Decisions

6                     Keep Daily Financial Records

7                     Avoid Monthly-Instalment Payment Options Like The Plague

8                     Change Your Shopping Habits

9                     Create Multiple Sources of Income

Here we shall discuss part 1:

1                     Recognise That The Root Is the Problem

Nowadays, a lot of people acquire money in the form of debt which make us sinking deeper and deeper into debt. Money in your bank account is like fruits on a tree. If you see the fruits fall or if the tree does not bear more, treating the fruits will not make the tree bear bountifully. Realising that the root of money problem has nothing to do with your employer, spouse, family background or war, It is yourself all along!

Symptoms:

a)      You honestly do not know where your money went but you are broke before the month is over.

b)      You live pay check to pay check

c)       If asked at any time how much you have in your bank account, you probably do not know the exact amount, refuse to know the exact amount or answer, zero.

d)      You have to check your balance, first even to withdraw $100 from the ATM.

e)      You get late payments reminders from your banks and you avoid calls from debtors.

f)       You apply for loans in order to pay off loans you already have. Fancy names for this includes “balance transfer” or “refinancing”.

If you exhibit one or more of the above symptoms, you may suffer from the following curable “diseases”:

i)                    Lack understanding of money

You only thinks of ways of spending money, never know how to accumulate more or even invest what you had. You may start learning by reading the business section of newspapers, financial articles, magazines and books.  Reading theses regularly helps develop your acumen for the subject and learn interesting facts like banks are not as smart as you think. Moreover, during a financial crisis, people well-versed in money matters do not stop making money. They make more.

ii)                   Money is not important

When people says money is not important, you should know, they are broke. Money comes into play in every aspect of your life. From the very moment you wakes up, switching on the lights to the very moment you turn on the tap to get water, you are already spending money. Money will leave you for the company of others if you do not acknowledge its importance in helping make life more comfortable for you. It is a universal law that we attract the things which are important to us.

iii)                 Money is bad, I am pure

If this was the mantra you live by, then you and money does not live together. Unless you change this mind-set, you will remain in a financial mess. This is part of our subconscious mind that works without us interfering its activities.

iv)                 Zero sum game

Many people subconsciously believe that money is a zero sum game. These people believe that if someone has a lot of money, they must have accumulated it at the expense of someone else. In short, someone has to be very rich and to balance it out, someone else will have to be very poor. In actual fact, all can rich without depriving anyone else. It is a matter of understanding that the universe is one of abundance. It is a misconception that the rich are hoarding all the wealth. The truth is that the rich get richer by working together making money working for them, while the poor get poorer because they are afraid to share their knowledge, ideas and earnings.

v)                  No love for money (Instant gratification)

Many of us by traditions do not talk about money in the open, as it is not something one boldly declare you want more of it. It is not about one does not love money, but, scared to be embarrassed about it.

So, wake up a bit? Which category are you in?