10 Rules Piggy Lives by Financially

10 rules that I live by in financial aspect (I didn’t know I could come up with 10, yay!):

  1. Spend less than what you make.
  2. Use credit cards wisely – pay off credit card bills each month, make use of 0% APR offer for financing, use reward cards that accumulate points or have % cash back.
  3. Pay off “bad” debt – this includes any high interest rate debt that is not tax deductible, which is credit card debt for most people (there are pay-day loans which should be avoided at all cost anyways because of outrageous interest).
  4. Contribute to and fully utilize 401k – Most employers provide 401k these days, so contribute some or at least the % of employer matching (free money!) but also educate yourself of the available funds and pick wisely (hence the “fully utilize” part).
  5. Contribute regularly to saving.
  6. Develop your own investment portfolio – whether it be individual stocks or funds, but educate yourself first and invest in a style that suits you. I said “your own” because you should never just follow what others do because our needs, situations, and personalities are all different, so understanding yourself is essential here.
  7. Have a spending budget – this allows you to afford hobbies, gadgets, travelling, etc.
  8. Distinguish “want” vs. “need” – this is the most important to keep myself from spending too much because of how I LOOOOOOOOVE gadgets :)
  9. Invest in ourselves – classes, books, or things that contribute to our general well-being.
  10. Remember the ultimate goal – a reminder to be frugal and financial-smart but yet not becoming cheap :) In other words, balance is everything.

Originally posted 2007-04-12 21:40:49. Republished by Blog Post Promoter

From Subprime to FHA Loans

While catching up on my reading, and I read an article in Business Week that is simply disheartening.

The Federal Housing Administration (FHA) is a federal agency that insures mortgage, where the rate of interest is regulated and loan is insured, to provide modest people with a way to purchase a house. As the subprime sector mostly vaporized, the same people who used to market subprime loans, re-brand themselves, receive certification, and become the people who now market FHA-backed mortgages. Unfortunately, the behavior that’s generic to the subprime business did not change and as one example in the article…

XXX was an unlikely borrower. She had no employment income when she bought a three-bedroom condo in Palmetto Towers, a Hernandez property in Miami, in July 2007 for $318,000. She borrowed almost the entire purchase price from Great Country Mortgage Bankers, XXX’s loan company…

Even though now the subprime has ended, the prediction is that as this goes on, in next few years, the same thing will happened with FHA-backed loans. I said that this is disheartening because of two facts.

  1. The people who made mistakes seem to have no remorse, do not self-reflect, and are not hesitant to perform the same act.
  2. The people who borrowed in this scenario and defaulted are numerous. Many never made one payment, and at most paid for the first 3 months. It is scary to know that so many people have little foresights of their financial situation and probably made the decision while they are blind-sighted by their desires to own a house.

This is the time where we need the change and as people repeat the same actions, it goes to demonstrate how much is inner change, real change is needed where people start taking responsibility for their actions. It is unfortunate and disappointing to observe the opposite. We can keep changing the outside environment, settings, policy, rules, but while we remain the same… the same thing will keep happening. Gah!

Not talk about the executives and bankers who are yet consumed by greed to chase after money, the people who bought the home in this case and had defaulted, surely have a strong desire for a home of their own. However, owning a house doesn’t make it a home.

I will talk more about the topic of home later.

Originally posted 2008-12-02 23:59:08. Republished by Blog Post Promoter

Don’t Give Up Your Mind

What are we?

What’s the most significant between us and other animals?
We have a mind that allows thorough thought process before we take actions.

Right… if a person take a real close look at the society today, one would wonder if that is necessarily true…

Of course…
Critical thinking is tough.
People don’t like tough.
Thinking requires actual work.
People don’t want to work.
Thinking is boring.
People don’t want to be bored.

It’s so much easier to not think and be told what to do, or just go with the flow.
You can always blame the outside when something doesn’t go well.
No responsibility. No strings attached.
What convenience.
Let’s all give it up!
The mind that is.

But there is a slight problem if you take a look…

Looking at the advertising sector, you can observe the rampant, or shall I said rabid, movement and expansion these days. Remember I talked about why there’s no need for financially aware consumers before? Together with that, another idea that actually encourage the ads companies to continue their push to reach into every corner of consumers’ life is because how little people give thoughts about what they consume.

How are the growth of the ads sector and whether people think related, you may ask? If people don’t give so much thoughts into what products they are buying, what kind of loans they are borrowing, what kind of service they are affording, they are more bound, more easily succumbed to spend money on products they don’t really need, loans that cost them more in the long run, or services that bring little to no significant values. That in turn, allows all the ads campaigns to have such an effectiveness that promotes more use of ads. “It works, why not do it more!” Consumers are letting themselves be told what they “need” when most of the things being marketed are just things they “want”.

Take a look at Apple…
Take a look at all weight-loss programs…
Take a look at all the new drugs coming out…

In addition, if we look at the current society, how many people are not too hesitant to make their voice be heard? But quite often, they are just taking sides without clear thinking or they are simply echoing off each other. They said things but they didn’t say things because there are no substance, no real thinking behind those words. My sincere opinion is that they would not be saying many of those words if they truly see the world and the things that are happening as they really are.

Stress is on the rise.
Depression is on the rise.
Obesity is on the rise.
Nation’s health is on the decline.

Could it be that the whole population has been soaked by the message of materialism, perpetual growth, and flashy life style for too long? That everyone would work work work, in order to earn earn earn, to have lots of money to afford “things”.
Who needs to exercise.
Who needs to spend time with family.
Who needs to hang out with friends.
Who needs to appreciate nature.
Who needs a spiritual life.

Let me end the thought provoking content here, hopefully they are, despite them being very high level
I would not claim myself an expert in the above subjects, but hopefully I got my points across.
Just here to offer my point of view.

And to sum up it up…
You should do your own thinking.
Do not let other people dictate your actions.
Take your life personally and find the values that are important to you.
Understand them, prioritize them.
Then act and live accordingly.
Finally, use your mind wisely.

Originally posted 2007-10-30 01:04:25. Republished by Blog Post Promoter

Terrible June for Stock Market

arrow-down.jpgLet’s be thankful that it’s the 4th of July and the market can take a break from tumbling. The terrible June has left everyone staring at some bloody red balance sheets. Hopefully the market fares better in the 2nd half of the year.

I do not look forward to calculating my networth for June. Oh well.

Now is even more critical to be reminded once again of the important idea of investing long term, instead of dumping the all the stocks and funds at huge loss. As long as you maintain the idea of finding solid investment that provide modest gain and not some get-rich-quick-thingie, whether you went with index fund or not, you should be alright in the long term and hence, best to stay put.

Keyword being “should” because let us not forget that buying into the market does not guarantee return. Even if you buy index funds. Even if you diversify. There is always systemic risk. Perhaps a major catastrophe causes the downfall of the sector of your funds, or the Wall Street somehow disappears, or the global market gets destroyed all together ,or our money system simply disintegrates! Give me your best guess. These are not likely scenario but who knows. Pessimistic? Perhaps. But I am just reminding you that no form of investment guarantees return. It is not a privilege.

Actually, the results of the above-stated disasters may not be that bad. First of all, people are screwed all together in those cases, and as result, we may live in better harmony supporting each other. Yeah, I can be a dreamer sometimes. On another thought, the idea of money may disappear and could return people to the true state of living. Or we may return to an age of the survival of the fittest, which will force people to be physically healthy and capable. Alright, I digress. I am done exercising my imagination.

The current market is a mangled pile of mess that is the result of people desiring unsustainable amount of growth in a short period of time and many of these so-called growth are a result of manual fabrication through layers and layers of abstraction (ie. CDOs). A dozen drunken monkeys in a room probably cause less chaos that that. My opinion is that it will take awhile for it all to untangle. It may even take the next 2-3 years during which we see little to no growth, if no losses, in our investment. But like I said again, we should be looking long-term.

Speaking of long-term, people always quote that the market returns somehwere between 10-12%. I don’t really like that. Past pattern does not predict future, especially the future of a speculative market that is a projection of the ficklest human minds. And when you really think about it, a few decades of data is not even that big of a sample either. People just love pulling statistics out of their donkeys to justify arguments.

Here is the thing, I took a look at the Vanguard Wellington fund that has been around since 1929 and Vanguard’s website said the average return is 8.3%. That gives me some idea and helps set my expectation. I do my diligence in investing — studying, carefully selecting, diversify a good chunk through funs — and I shall be happy if I get a 5-8% return in the long run.

I am in no rush to become rich. The journey is the fun part.

Originally posted 2008-07-03 23:19:44. Republished by Blog Post Promoter

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