Tuesday, August 30, 2011

Credit Card Do's and Don'ts

After taking a two week break and having a long four-day holiday, we now come to discuss the credit card. Most people avoid getting one simply because it’s a new thing. People usually fear the unknown. So now I’ve decided to educate you on a financial double-edged sword.

Being cashless is not really a desire of people who don’t have much to go on. However, financial status isn’t the only deterrent to getting a credit card. Fear due to lack of understanding is the most common reason. Now, a credit card can actually help you save a couple of bucks for at least one year if you use it correctly. But, before you get one, there are some things you need to know:
  1. How much money from your budget can you use to completely erase the outstanding balance in one month? This is important as it will allow you to determine the credit limit that you will have. Be careful about this as your bank will extend your credit limit every time you go near this value. Although banks tell you that this is for your convenience, it will allow you to go over your budget and have a gradually enlarging outstanding balance on your credit card. The bank will then get more of your precious money.
  2. What’s your most accessible bank? This will make it easy for you to pay your bills. Get your card from this place.
  3. The shops that you frequent should have a list of cards that they accept. Try to remember what is acceptable. You usually cannot go wrong with a VISA or a Mastercard as their usage is commonplace. If you’re planning to get a different brand, I’ve tried a lot and I’ve also discarded them. These are the two that remain on my list.

Okay! So we now know our credit limit, our favoured bank, and our credit card of choice. Given that you have the proper credentials and requirements to fill out an application, here are the benefits of having a credit card:
  1. Going cashless is nice. Not only does it free up your pockets for other things, having money in small denominations makes it easily expendable. On the other hand, having large denominations is a deadly gamble. Not all shops will accept credit cards, so it helps you develop impulse control (which was the important concept in the previous article) and you still have a hard line to cash should the need to buy something large arise.
  2. Zero interest is a really great thing. It saves you money if you can get something now and pay in instalments. This is the concept of the Time Value of Money. The article I linked to is really comprehensive but the short version is that you want to have a full value item now for less cash now. Sure, eventually you would have paid what it should be worth in three, six, or twelve months but, by then, you would have had the item for the exact same period of time and the credit card company had less.
  3. Swiping your card as payment generates points. Depending on your card, there will usually be benefits attached to it that you can purchase with the points that the card produced. You might think that it will require a large expenditure of money on your part. It actually doesn’t since you can pay off other bills with a credit card and this will earn points as well. Phone, water, electricity, internet, and what-not. All of them provide you service off-the-bat and they may eventually get you a PSP or a trip for two to Boracay for free! Now, being the gamer mentality that I am, I asked around if you can pay off one credit card bill with another and earn points. The answer is a conditional yes. If the card used to pay will be swiped to pay the bill, then perfect. If they’re going to just transfer your balance, that’s a no-no. Some cards add a percentage when accepting balance from some credit cards.
  4. Your credit card bill often comes with a list of places that offers things in exchange for something. If your bill reaches a certain amount, you either get a discount or an additional item. If you buy one thing, then you can get another for free or for an additional amount. Be forewarned. Before you take advantage of an offer, be honest with yourself. Get the freebie only if your actions will produce it. Do not go out of your way and spend extra cash and tell yourself that it was only a small amount to add. Those small amounts add up and the thing you bought was actually cheaper without the “freebie.” Remember, impulse control.

Can you have too many credit cards? Yes, it’s true that you can have too much of a good thing. It’s useless to have a credit limit that you will never reach and one card will usually have more than enough. Remember, you will be paying an annual membership almost every year that this thing is in your possession. Ensure that you check your bill regularly and look for the time when they charge your membership fee. If you want to terminate the card, make sure that you have the bank waive the fee. Ironically, some bank managers can pull strings to waive your membership fee if you’ve been good with your payments or if you used the card sparingly in the past year. Why is this so? They would rather keep you on their string than lose you to another card. It’s good business practice.

Before I close this article, let’s enumerate what you SHOULD NOT DO with a credit card:
  1. Never give a card to a person with poor impulse control. It’s very easy to spot these people a mile away. They’re the ones prone to tantrums and need to have something now. If you really, really, really, really need them to have a card, give them supplementary ones with a small credit limit. But you will regret doing that someday.
  2. Never pay off JUST the minimum balance. Always make sure that your outstanding balance for the month is reduced to zero. This guarantees that the bank will only get money from you when the membership fee becomes due.
  3. Never activate a pre-approved card that you don’t need. In the first place, you don’t need it and there is such a thing as having too many credit cards. Secondly, an activated card will often have hidden charges. Caveat emptor. (That’s Latin for “Buyer beware!”)

I might slip in a different topic next time, just to manage a break between topics. Writing about money too long makes me feel greedy. Remember that your most valuable resource is time. Spend it wisely.

Monday, August 15, 2011

Getting Capital By Controlling Your Spending

Let’s take a break from health care this time and look into making ends meet. After all, this is a primary concern of most people, moreso if you believe that you are earning less than you should. A common question that always arises when discussing finances with friends is why don’t you have the savings your friends do? Of course it is always easy to rationalize by saying that you have more expenses than they do and they have a bigger salary than yours. But is it really that simple? Let me discuss a few things that may be bloating your budget.

By and large, a lot of people simply live and spend beyond their own livelihood. In a nutshell, you feel rich. Hence, you spend much on luxuries you can do without. Do you really need all those after-market products on your car? Is Shu Uemura the only one that can clean your face? Do you really need a new Iphone? If you think so, then think again. Believe it or not, these are expenses that you can temporarily halt. The money you spend there can actually be enough to start your investment capital. If you aren’t spending richly, are the people you support living thusly? I know someone slaving his life away on some forsaken ship in the middle of nowhere while his wife lives it up here in Manila. Then he comes home to find his family bereft of any savings whatsoever but he thinks that there’s more where that came from.

Another example is the Filipino characteristic where able-bodied parents rely on their children’s underdeveloped incomes to survive. “Buhay mayaman,” where people spend the entire day lounging around, is actually “buhay tamad.” I’ve never seen the rich simply hanging out. If ever, they have to be taught to relax. Most of them wake up early in the morning and sleep late at night. They travel around to make money and rarely have time to themselves. An insurance agent once told me that as much as 53% of parents rely on their children for money later in life. On another instance, an elderly man told me that he sacrificed for his children when they were young so they have to repay him in the present. When I told him that he was confused between sacrifices and loans since sacrifices aren’t repaid, he fell silent. I’m not telling you to abandon your parents. I just want you to be able to give them a better life. Your family included.

Studies of good resource managers show that they are masters of the concept of “deferred gratification,” which is the ability to wait in order to obtain something he or she wants. If you think this is a foreign or novel concept, it’s also known as “impulse control,” “will power,” and “self-control.” The results of Stanford Marshmallow Experiment, done in 1972, expose this phenomenon quite well. Mastering impulse control is an intellectual ability that will eventually help you in the long run. It can actually get you a lot of things for free, mainly because your money will produce money which will increase your purchasing power.

This is the first of some topics on resource management. Luxuries are meant for the luxurious. Earn the money first. Then you will deserve it.

Thursday, August 4, 2011

How to Do the Four Minute Workout

To start things off, I would like to apologize to my readers for not being able to post last week. I had several hindrances, both personal and professional, to cause writer’s block. In addition, trying to get a search engine to lead back to this blog is starting to bug me.

I’m happy to say that I had the time to post more than once a week last month and I hope that my passion for writing will continue to develop. I would appreciate some feedback on the topics I place on these pages mainly because, although there are several people who visit this site, I have absolutely no idea on what they think or what they would like me to write on. Anyway, this seems to be my last post on health care for the moment so I hope you would endure me for the next few minutes.

So now we go to how to improve output. First off, there is a baseline level of energy expenditure. Sedentary people use only 1500 cal/day while very active ones spend more than 3000 cal/day. The moderate ones, of course, would be in between.

Now let’s go hypothetical. A cup of rice would at least be 100 cal/serving and fried tocino would be 250 to 300 cal/serving. If you only have one serving of food for breakfast, lunch, and dinner, you would get about 1200 cal per day. However, we would be without snacks. Realistically, a Filipino usually has 4 to 5 meals a day. Considering that a can of regular soda would have at least 100 cal and a bag of potato chips go for at least 155 cal, you could easily breach the 1500 cal mark. This is the reason why a lot of people are getting fat.

Although most people would teach that aerobic exercises burn more calories than anaerobic ones, I would beg to disagree mainly because anaerobic exercises accrue an oxygen debt similar to aerobic exercises. However, they pay their dues long after the exercise has terminated. Aerobic exercises allow a person to pay off his oxygen debt during the exercise process. Some people argue that anaerobic exercises build muscle, add weight, and do not burn energy. This statement is a contradiction in itself. Any man of science knows the law of energy and matter conservation. You don’t build muscle from nothing. In addition, the process requires energy. Furthermore, muscles increase the maintenance cost of the body and burn more for nothing in the long run. The only thing they require for maintenance is exercise.

So, without further ado, here’s the Four-Minute Work-out as I understood from the video of Jim Saret and Tina Ryan. But before you start, don’t forget to limber up. Focus on your arms, neck, and waist. These are the things you normally don’t move a lot during the course of your day.

The first step is the plank position. This is a basic exercise taken from Pilates. You stay in this position for 30 seconds.

This is soon followed by squats. Ten repetitions will do.

You then go down on the floor again for ten push-ups. I found an instructional video here just in case the first video of this section wasn’t clear.

Now you stand up and do twenty lunges, one for each leg. Beginners can do what DJ Tina Ryan did in the above video. If you’ve done it long enough, the real lunge looks like this.

The last step is composed of ten crunches.

Now, if I remember correctly, Mr. Saret mentioned something about burning 400 cal per episode. Remember, you don’t need to pay and you don’t need to change clothes for this. You can do it on a long flight and even while it’s raining hard, without fear of catching a cold. Since your feet are firmly fixed on the floor at all times, there’s no impact. Beginners can do this once a day until you get used to it. I would recommend a maximum of three episodes a day, five days a week. Happy weight loss and weight management!