Why am I still broke? - Meals

Why Am I Still Broke?

2. Constantly overspending your budget for daily lunch/dinner

Do you have friends who complain that they do not have savings at the end of every month and yet always have been having good food all the time?  

Maybe it is a time to relook at your own lunch and dinner budget.

(Note: this is for those who are constantly eating out. If you are lucky to have home cook dinners you can adjust the budget accordingly. Also I only factor in as Individual, not a family)

Cost of lunch / dinner:

Main meal (Chicken rice up to Japanese Bento set) - RM12-RM30

Drinks (Coffee or tea to Fruit Juice or a glass of wine???) - RM3-RM30 Dessert (Ice cream, fruits or cakes) - RM5-RM20

Now, multiply this by 30 days and twice for lunch and dinner. Now that's a big monthly food budget for you to evaluate.

RM100 daily budget adds up to RM3000 a month.

Or a RM25 lunch & RM50 dinner budget daily will add up to RM2250.

A RM15 budget for a meal everyday would add up to RM900.

What you can do:

Making your own dinner or sharing home cook food with a colleague would be one way of saving.

Moving a step down on your regular food price range. From daily bento sets costing RM25 each, maybe you can reduce down to food that cost RM12-15 range. Or your original budget of RM12-15, to be reduced to RM8-RM10 price range.

With the reduced budget plan, you are able to save up for a better meal once a week.

The few hundreds of Ringgit that you managed to saved up can be saved into some Unit trust or ASB/ASN/SSPN which has minimum entry investment of RM100.

Why Am I Still Broke? - Movies

Why Am I Still Broke?

1. Watching a movie 7 times in the cinema for a record that has nothing to do with you

 I have heard of a few "friends of a friend" who said that they went to see a certain film more than three times hoping to help make this film top grossing film in Malaysia.

My question is what does that record mean to you (if you are not from the cinema, investor, shareholder or royalty owner who stands to earn from the movie)?

Cost of watching a movie:

Ticket price - depending on screen format (normal screen, IMAX, LED, etc.) and seats (D-Box, Geetha, Cabin sets, etc) the price of a ticket ranges from RM12-RM160.

Popcorn/Drink/Indulge Experiences - RM10-RM50

Transport to the cinema + Parking - RM3-RM20

Now, multiply this by the number of times you went to see the same show. How much does that cost you?

What you can do:

Watching once in the cinema, and then wait for availability in streaming platform. (Note: It is not wrong to watch with different group of friends, but we are talking about how we can help you to save money)

The few hundreds of Ringgit that you managed to saved up can be saved into some Unit trust or ASB/ASN/SSPN which has minimum entry investment of RM100.

3

Interest On Your Loan Moratorium

Just recently Bank Negara Malaysia has issued a directive that all financial institutions in Malaysia will need to provide loan moratorium for their customers.
So which are the types of loans affected?

• Housing Loan
• Personal Loan
• Business Loan / Clean Loan
• Hire Purchase (Car Loan)
• Credit Cards - (not affected, but some banks are offering conversion to term loans)

What I want to discuss is actually the impact of the INTEREST/PROFIT during the moratorium to total loan and tenure of repayment.

Loans with Reducing Balance Interest:

Referring to the chart above, if you have followed the standard calculation, your loan settlement would be delayed by a few months or years (depending on how much is the interest of the loan)
Chart example explained: Let's say you have a RM500k loan now and you took the moratorium for 6 months. On the 7th month your loan amount is now RM510k to begin with (not RM500k 6 months ago). will affect your loan repayment (If you maintain as the same monthly repayment amount of RM2416, that extra RM10k of loan, will extend your repayment tenure by 22 months.

Certain banks have stated that there won't be interest compounding during the period of time. Means that you resume your loan settlement as usual after the 7th month.

Meanwhile, a few banks will be getting you to readjust your actual repayment amount so that you will still be able to settle the loan within the same tenure of the original loan agreement.

So which bank does what? Refer to the chart below of a compiled info of the banks in Malaysia. Disclaimer: The status is correct as per listed in each bank's FAQ at time of writing. This serves as a guide and the banks may changed their terms as the days follow. Do follow the final T&C of the respective banks for final and correct info.

Loans with Fixed Interest:
Typically Hire Purchase or Car Loans fall under this category. For these loans it is pretty straight forward. Moratorium of 6 months, means you continue to pay 6 more months after your original due settlement date. Basically just pushed back 6 months.

Why should I take the moratorium and not follow the original loan schedule?
This plan is originally hatched to make sure Malaysians would have enough cashflow for these few months for their other necessities. It is also to assist Malaysians who probably have little or no income during the MCO.
If you fall in the category of people, you probably can opt to maintain your loan schedule:

• someone who has job security. You are definitely not going to be fired or have your income slashed. (Example, probably government servant???)
• someone who has fixed income. (Example, director of company who pays yourself)
• someone who has enough umbrella money to last 6 months (cash-rich individuals who have prepared for this type of scenario)

Who should take the moratorium as a blessing:

• property investor. (You are still collecting rentals from your tenants. 6 months of rental income into your pocket !!! It is a long term cashcow anyway, so it is a blessing indeed)
• SME business owners who many need to use the extra budget to pay staff's salary or the month's lease.
• Commission earners/Contract workers who are facing low or no income during this period.
• Everyone else who need to use the cash now and doesn't mind sacrificing an extra year or two for repayment later own. Current survival is more crucial in your mind right now.

Cheers,

CK Lau 

For more information do follow our page
http://www.facebook.com/cklwealthservices
My FB Profile - Lau Chee Kin

Should I or Should I Not Reduce My EPF Contribution?

Should I or Should I Not Reduce My EPF Contribution?

With the recent economic slowdown due to the impact of Covid19, Malaysian government has issued a few program to stimulus the economy.
One of the plan is to have your EPF contribution reduced from 11%  to 7%.
Original official statement: Reduction-of-statutory-contribution-rate-for-employees - EPF

So the question for you now is, should you or shouldn't you. Let's weigh in the pro and cons:

Lower income group:
An individual earning RM2,500 in salary would have contributed RM275 to EPF currently. But at the new rate of 7%, he will only need to contribute RM175. He will have the extra RM100 which could be very crucial in his monthly spending.

Slightly higher income group:
An individual earning RM8,000 in salary would have contributed RM880 to EPF. But at the new rate of 7%, he will only need to contribute RM560. He will have the extra RM320 which could be insignificant in his monthly expenditure.

Pros:

1. More cash on hand. The main idea of this program is so individuals would have slightly more cash to spend.
2. Some savvy individuals may divert that money into more savvy investments which will continue the role as retirement fund builder. Example: Buying into PRS, Stocks, Unit trusts, bonds, etc. (Note: for savvy investors who understands the risks of these products)

Cons:

1. Money not saved, means money spent. Not having that RM100 per month in your EPF is potentially a difference of RM45,500 in 20 years. (Compounding interest of 6%, Monthly savings of RM100 for 240 months)

2. That extra RM100 would have easily be used unnecessarily into items which is only temporary satisfaction for the individual. This may 'help the economy around', but not a good plan for that individual in the long run.

3. Your long term retirement plan will be slightly affected, and you will gradually see that there is getting harder and harder to achieve a retirement fund target that you are comfortable with.

________________
Should you want to maintain you EPF contribution at 11%, there is form for the employer to submit to EPF. You can find the link in EPF's website.


Next, I really should be writing on how to estimate your Retirement Goal.

Cheers
CK Lau

For more information do follow our page
http://www.facebook.com/cklwealthservices

5 Emergency Contact Numbers To Have

In our everyday life we go through, we do not think of all the bad things which can happen to us. But when something truly bad happened, we would be struggling not aware of what to do.

Here are the 5 key emergency contacts which we need to have.

Tow Truck Operator / Foreman / Motor Insurance 24 hour Helpline

I would put these three in the same category because chances are,you would be calling either one of this when you met with an accident or had your car stalled in the middle of the flood or etc.

They would be able to assist you in your accident reporting and insurance claims when necessary.

House Maintenance / Plumber / Electrician

This person, would be able to handle any technical emergency in your house. You may be facing electrical  short-circuit, burst water pipe or even low water pressure at home.

Family Lawyer

A lawyer will be able to advice you in any emergency related to law. He/she may not be able to handle the particular problem, but will be able to recommend anyone in his circle of lawyer colleagues to take on the case. There are difference category of lawyer specialties such as family, corporate, criminal, employment and loans.

Insurance Agent / Financial Consultant

Your insurance agent would be able to advise on anything related to medical emergency. He/she may be able to recommend a nearest medical facility to treat that medical emergency. You  will also be guided on the procedure of admission and claims.

Estate Planning / Wealth Consultant

An estate planner or your wealth consultant would be able to assist the family in managing your wealth distribution in case any untoward happened to you. With or without a will, the estate planner would be able to guide you in the process of getting the wealth distribution in accordance to the will instruction.

A wealth consultant role is much bigger as he/she would be able to advise on building a larger asset for you which can be your distribution for your future generations.

*The Golden Rules of Personal Finance*

Managing your finances does not need to hard. You make X amount in salary/commission, you spend Y amount in expenses, and you try to make sure that Y is ALWAYS less than X. However, your finances are not as simple as that as your habits and life value dictates how it will be. Put another way, your mindset matters just as much as the math.


Three basic rules that will always help improve your financial life:

Spend Less Money Than You Earn: 

If you are earning RM30,000/year and you spend RM31,000/year, you’ll end up in a spiral of debt that’s hard to walk away from.
If you spend exactly as much as you earn every year, you’ll never be prepared for emergencies or major life changes.
Spending less than you earn allows you the freedom to save, to prepare for the future, and deal with the inevitable crises that life throws at you. The bigger the gap between your income and your spending, the better.

Plan For The Future: 

This doesn’t just mean planning for your retirement only. Having a retirement plan will ensure you have income when you’re unable to work anymore.
Establishing an emergency fund will allow you to deal with unexpected car repairs or medical bills.
Be cautious of probability of medical bills by planning your insurance and not all insurance products are the same.

Make Your Money Make More Money: 

Want to know how the rich keep getting richer? It’s because money can grow while you sleep, provided you save some of it.
Properly invested money earns more money over time.
Don’t just save your cash away in a low-interest savings account.
Invest in things that will earn you more money than you had before.
Sometimes that’s an investment account, but sometimes it’s starting a business, or even getting an education to get a better paying job.