A Personalized Cash Based System

Forgot password?

I don't like to keep track of my expenses. I don't want to put on an app what I ate and how much I spent. Expense tracking is very tedious for me. I'm a very impulsive person, and I don't think I can change immediately to the ideals of how to manage money properly.

So, I've hacked a cash-based system to fit my personality. I spend very early in the month on any bills that I have to pay. Even money that I commit to save, I "spend" it by separating it quickly. The rest, is money that keeps me alive. My lunch money. I can do what I want with it. I have a baseline on how much I should spend everyday. Any day I overspend, I know that I will compensate on other days by spending less, or none.

It's worked well so far. I don't go to the ATM to pull out cash because I pulled all of it early. This month, I forgot my ATM PIN, entered the wrong PIN 3x and had my card blocked. Luckily, it was only for 2 days.

Top 4 Factors to Consider Before Having a Loan

With the enormous rise of lending institutions and banking industries, taking a loan is just a matter of seconds. Financial institutions are luring customers for a big purchase with a guarantee of 1 year to pay, no collateral, zero interest or other hype.

But you must take into account these 4 factors to consider before having a loan or you will blame yourself in the end.

1. The purpose must be a need or has a future value (FV) appreciation

Needs: house, car, education

FV: business, investment

iPhone is not a need, communication is. But you can simply have a cheaper phone to provide your communication needs. Likewise, BMW is not a need, travel is. And you can opt for a reliable Toyota without having any trouble. In any way, it will depreciate and are not worth for a loan.

Meanwhile, loans for business and investment are different. It doesn't guarantee a return but the payback outweighs the loan undertaken. Best example is business loan. How about having a $5,000 loan, payable in one year with monthly installments of $480 but the potential income is $1,000 a month?

That would be $520 pure profit every month! That is considered an unlimited ROI since there is no cash outlay or No Money Down!

2. Monthly payments are affordable

If the above condition is met, make sure you are capable of repaying it. The source of paying off the loan must be decided. Else, your credit rating will suffer. Bear in mind that the loan must not affect your savings, short-term plans and other monthly expenses/bills/loans.

3. Annual Percentage Rate (APR) is industry average

Most of us don't really mind how one loan could ruin us financially. Some loans would take 10 years and it really sucks.

By default, APR should not be more than 16%, else seek another lender. In most cases, banks' annual rate ranges from 12% - 16%. Choose the lowest.

If a loan really matters to you and can't afford to miss that opportunity, try to negotiate the APR and/or increase your monthly payments to shorten the term. Take note, the latter may sacrifice savings or plans so evaluate wisely.

4. Commit yourself to pay off the loan

Acquiring is bliss but repaying is painful. Self-conviction is very important as it will make or break your credit standing. Bad credit standing will result to lesser chances of future loans from creditors. Handle debts carefully. The purpose of the loan is reward; paying off the loan is the offering. So take it positively. 

Moving Without Transgressing

Transgressor!

Believe in Allah and His Messenger, and spend of that whereof He has made you trustees. And such of you as believe and spend (in Allah's Way), theirs will be a great reward. 

57. Al-Hadid (The Iron; 7)

And We said, "O Adam, dwell, you and your wife, in Paradise and eat therefrom in [ease and] abundance from wherever you will. But do not approach this tree, lest you be among the wrongdoers."

2. Surat Al-Baqarah (The Cow; 35)

Since the beginning, we have been given limits that we could not cross. Like a board game, those limits become rules in which we must abide to, it is still possible to come out a winner. However, board games like Monopoly doesn't really teach the complexity of how money is spent monthly.  It doesn't have charity or monthly expenses. The sole purpose of the game is to spend all the money we have, as quickly as possible, to win.

The game of life (not the board game) has its limits. The limits within personal finance is our income. If we spend our money on a cash basis, it would be impossible to step over the limits. The only way to step over is to use debt instruments, like credit cards, then falling into debt.

O you who have believed, do not prohibit the good things which Allah has made lawful to you and do not transgress. Indeed, Allah does not like transgressors.

5. Surat Al-Mā'idah (The Table Spread; 87)

I have to underline that debt itself is not forbidden (credit cards, however, is a wider discussion which needs to be saved for a later time). It is possible to have debt but not transgress. From my previous post, by dividing our budget into present, future and past needs, we can set either the future or the past as our limits to debt.

We can also switch our focus to our limitation, income. It is possible to raise the limit by having a bigger income. Find a job that pays higher or negotiate it. And that is probably the only way we can move within the limits, with Allah's blessings (getting an increase in income or a job with one).

How to Control Risk Management in terms of Finance?

One of the easiest ways to avoid catastrophe regarding your finances is to get them insured. There are many insurance companies willing to help. But before taking any step, it is very important to understand what insurance and finance are. Finance is the management of your investment, funds, and revenue. It is the knowledge of how to take care of money and the way to generate it more. On the other side, insurance transfers the risk. In simple words, insurance is the safeguard, a precaution taken against the investment.

Different Types of Finance
There are three types of finance such as personal finance, public finance, and corporate finance.

• Personal Finance: Finances taken to satisfy any personal need is known as personal finance. For example buying a car, purchasing an apartment, buying your school bills, paying for your health all come under it.

• Corporate Finance: Corporate finances deal with the financial conditions of the companies. Its job is to make sure that what amount of fund is raised, and how is it distributed. Furthermore, it also helps to make necessary decision for the betterment of the company regarding capital.

• Public Finance: Public finance deals with all the capital which the government or the state, exhibiting control at all levels. The government is accountable to spend and receive revenue to improve the condition of the economy and also the effect on the society. For example, the tax which government receives and how the state invests further for the betterment comes into the category of public finance.

Risk Management Strategies

Risk management is a way to avoid the troubles and all the risk one comes across. It is a process to deal and reshape problems the company, state or the person himself is facing or is about to face. Problems such as fraud, lack of innovation, manipulated data, loan delinquency, bankruptcy, and interest-rate volatility lead to devastating consequences and can havoc the reputation of the company. The company requires a body that can take care of these issues and protect the interest of the organization whether on personal or a state level.

The body insuring the safeguard of the financial position can deal with new strategies in order to keep the organization safe. The idea of protecting the capital is done by keeping an open eye and taking decision to make sure that the funds are safe and are invested and distributed properly.

Structure settlement is another way to insure the finance of a person seeking easement. The owners of these settlements enjoy a tax free life according to the tenure of their contract. In these types of settlements, you sell your annuities to the company and then the company pays you according to your contract. Einstein Structured Settlements is one of such companies. They transfer the risk on themselves in exchange to monetary consideration taken on monthly basis. Here, an insurance agent comes to a settlement which can be on terms of years, a payment after a required time, a shared settlement with your family or after retirement. These settlements are a way to provide a risk free finance to the people suffering from personal injury, lottery winnings or workers’ compensation claims.

Why Car Buying is one of People's Least Favorite Activities

To numerous people visiting the DMV is their idea of Hell, but to countless others the terror begins before they've even driven their car off of the lot. You would assume that buying a car would be a happy and somewhat exciting occasion, but that isn't always the case. Buying a car is a task that almost everyone will undertake at some time in their life, and for some people, it is a task that they will undertake numerous times over their lifetime. When asked, customers say that visiting a car dealership makes them feel stupid, weak, powerless, and manipulated. They find that the process of buying a car is extremely stressful, and the process seems to take forever. Ultimately, they leave the car lot after spending a large amount of money feeling as if they have been taken advantage of.

Critics believe that local legislature has been changed to ensure that your car buying experience remains an unpleasant one. A paper by economist Fiona Scott Morton published in the Journal of Economic Perspectives states that “There is a system of state franchise laws that protect the profits of new car dealers.” States earn approximately 20 percent of all states sales taxes from auto dealers, and these car dealerships account for up to 8 percent of all retail employment. The majority of these taxes that are generated by car dealerships account for 89 percent of tax revenue that states earn. Because of this, local and state car dealership associations have gained considerable power over local legislatures. The result of this influence has resulted in a set of state laws that basically guarantee car dealership survival and profitability. Evidence shows that the result of these laws have caused distribution costs and retail prices to climb higher than they should be. This means that the excess costs are transferred to consumers, making it harder for them to find an actual “good deal” on their vehicle purchase.

Although consumers take a big hit, this legislature affects car manufacturers as well. Manufacturers deal with car dealerships directly, and the current legislature that is in place comes at the expense of their profits as well. For instance, a manufacturer can't simply close a dealership that is causing it to lose money, even if the dealership's contract with the manufacturer has expired. In order for the dealership to be closed, the motion must first pass through the car dealership review board. The problem with this is that the review board is made up of car dealers, so the manufacturers don't really stand a chance. For example, in 2008, Chrysler and GM were facing bankruptcy. The government stepped in, and both manufacturers began the process of restructuring. Both manufacturers planned to close approximately 2,200 dealerships, but all of the designated dealerships weren't closed. The manufacturers were forced to reinstate almost 700 of the dealerships, and countless others were referred to arbitrary hearings to become reinstated against the manufacturer's wishes. In the end, it's not hard to see that car dealerships are causing grief for both their customers and the manufacturers that help to keep them in business.



About the Author: Blair Thomas is an electronic payment expert, who loves all things finance and planning.  He is also the co-founder of eMerchantBroker.com, the credit repair merchant account company in the country. If you would like to see what he's up to, add him to your Google+ circle.

Utilize Direct Deposits

Americans have a tough time saving. Nearly a third of Americans have zero savings, and around half have less than three months of emergency savings. Equally daunting is how little Americans contribute to 401(k)’s. Dr. Hensley of the National Foundation for Financial Education pointed out in this alarming video that only 11 percent of individuals with a 401(k) are putting enough money away to meet their retirement needs.

The goal of this article is to provide the content and behavioral tips necessary to save.

Understand yourself and how to overcome your own savings obstacles
Saving can be exhausting if you allow it to be. As John Tierney points out in Decision Fatigue, we draw from a chemical in our brain to feed our willpower each time we make a choice. The more frequently we surround ourselves with things we really want and choices we have to make, the more we draw from this chemical. Do not make saving another draining choice you have to make, make saving automatic.

The Marshmallow study best illustrated the challenges we innately face to delay gratification, and the latest Marshmallow study is digging into the particular challenges people face who have had previous experiences that punished them for waiting, complicating the problem even further. We have seen how hard it is for people to pass the test. Do not put yourself through the torture of delaying gratification, make saving automatic.

Become a member of a Bank, Credit Union, or Matched-Savings Program
Find a bank or credit union that offers the lowest fees, or better yet prize-linked savings programs. Do not concern yourself with the interest you are going to earn on your savings account. Rates are low and are likely to stay that way for a while. So, your interest won't add up to much if you do not have a lot of money. What can add up are fees - - so comparison-shop for financial institutions that offer the lowest possible fees.

Another option is matched savings programs such as Earn, who also provide additional support services designed to help low-wage families.

Make saving automatic with a Direct Deposit
A Direct Deposit electronically deposits funds directly into a bank account as a form of payment. This past Bankrate article explains how Direct Deposits work, and dives into further advantages. To be clear, only establishing a direct deposit into your checking account isn’t going to help you much. Work with your HR manager and your financial institution to setup a second and a third direct deposit into your savings account and retirement account. This is sometimes referred to as “split deposits”. Make sure there is no additional fee for setting up or using a Direct Deposit service.

In this research Mindy Hernandez of Innovation@cfed provides behavioral insight on the decision making process“…often the decision we make is not about the ‘optimal choice’ but the one that requires the least amount of effort – the one on the path of least resistance. Defaults are the option you get if you do nothing at all, and they are extremely ‘sticky,’ meaning you are not likely to change the decision (or lack thereof) once it is done…” In other words, by saving first with a direct deposit it would be harder not to save.

The positive results of setting a savings goal and reaching it by making saving automatic is confirmed with research over and over again. According to research reported here by the Electronic Payments Association, 93 percent of employed adults who use split deposit contribute to their savings every month. Conversely, of employed adults who do not use split deposit, 23 percent contribute nothing to their savings.

Make investing automatic with a Direct Deposit
This quality resource on the Department of Labor website empowers employees with useful information about retirement plans, and the power of compound interest. Here is the example the DOL used to illustrate the importance of beginning to invest for retirement at a young age:
“A 20 year old who saves $1,000 a year for 11 years in a row, then stops but leaves it there to earn 7% interest, will have $168,514 at age 65.

However, a 30 year old who starts saving $1,000 a year for 35 years, also earning 7% will have only $147,913 at age 65. Even though the 30 year old has put in more money for more years, it has less time to earn that compound interest.”

In other words, fully match your employer’s 401(k) or 403(b) contribution and do so electronically with a split deposit as soon as you get a job. Make sure there is no additional fee for setting up or using a Direct Deposit service.

America Saves Week is February 25-March 2nd. Now is a great time to pledge or repledge to save. By pledging to save you will commit to a simple savings plan and goal. Research tells us that regardless of income you are more likely to spend less than you earn, save for emergencies, and save for retirement if you have a savings plan.

Set a savings goal, take the pledge, and remember that Direct Deposits matter.

Note - this post was originally written and posted on the America Saves website. 

H&R Block Student Contest: How Big is a Billion?

Americans leave more than $1 billion on the table every year by doing their own taxes. So H&R Block asked teachers to turn the idea of illustrating the $1 billion as a math assignment and submitting real-life examples to illustrate the concept. 

Here are just a couple of examples...

...did you know you can wrap $1 billion in dollars around the world 4 times!

Classroom grants of $3,000, $2,000 and $1,000 were awarded across three grade tiers: grades 4th-6th, 7th-9th and 10th-12th. So although the previous examples were very good, they were not the winning entries. You can see the winners of the FaceBook contest here.

Encouraging teens to complete their taxes is of particular importance. A new finding by H&R Block found that teens stress about money, and one of the main causes is the complexity of tax forms. A matter of fact, only 3 out of 100 teens reported filling out an income tax form.

Note - this is a sponsored post I agreed to write because of my support for the content area, the reputation of H&R Block, and the nature of the contest held by H&R Block.

You will love these HOT offers from Groupon! (Ended)

Spice up your week as the Lenten Season is approaching. Saw some great offers and thought I should share it to you. I handpicked these Groupon items with big discounts. You can only find this here exclusively in JuanInvestor. Shop more, sae more! Enjoy and thank me later.

Keratin Blowout Treatment Packages at Headway V.e.r.a Salon at P1,350 (55% discount)

Highlights

• Headway V.e.r.a Salon offers professional salon services to both kids and adults
• Make hair stronger with a keratin treatment
• Trained professionals
• They also offer eyelash extensions, body massages, foot reflexology, hair and makeup, manicure and pedicure services, and waxing services 

Or maybe you want to spoil yourself before Friday.. Here's a luscious treat from Gaucho.

Argentinian Roasted Meat Samplers at Gaucho from P490 (51% discount)

Highlights

• The first authentic and traditional Argentinian restaurant in the Philippines
• Serves slow-roasted meats (roasted on a fire pit for 5-6 hours)
• Has a great view for diners
• Located on the 3rd floor of Robinsons Magnolia

Or better yet, indulge in heavy Asian banquet featuring Malaysian, Singaporean, Thai, Vietnamese, Indonesian dishes! Here's an amazing treat from Banana Leaf.

Banana Leaf Lunch or Dinner Treat starting at P550 (45% discount)

Highlights

• Serves authentic Asian cuisines
• Enjoy Malaysian, Singaporean, Thai, Vietnamese, Indonesian dishes
• Redeemable in seven branches
• Banana Leaf has been included in the Philippine Tatler’s list of Best Restaurants for several years

Final Thoughts

Treating one's self (or even family) is a great way to acknowledge and reward thyself for the great work! These treats should be lavish to unwind from a heavy work.

However, there are luxuries that are bargained. Find these deals and live happily! I hope you like this post! Share to your friends and have fun! Happy Lenten Season!

The Vehicle You Deserve To Have

I have a 20 (+/-) year old car and I've been thinking of purchasing a new one. It's time, maybe. The car is running fine with no issues, but the air conditioner and that it's a gas guzzler (Nissan Pathfinder). I've always been a firm believer that the car I need is the car that will get me from point A to B and fits my budget. The problem, I don't really know which car exactly fits my finances. Until I was given a recommendation to an article by the financial samurai about the 1/10 rule for car buying. It's simple, the vehicle you buy should be 1/10 of your gross annual income. If you make 50,000/year, you deserve a 5,000 vehicle.

And so, now I know that I am currently deserving a combination of public transportation and walking or a scooter.

Start Your FREE Blog in 10 minutes

I must admit that having a blog is complicated as it may seem, but simple once you take the plunge. Most people complain about the cost and intricacy involved in blogging. Fortunately though, simplifying solves the issues. Now think of a blog like driving a car - simple but not easy. Check the Benefits of Blogging.


I'm a Blogger fan and user so I know the experience. Blogger is a "free" platform for blogging. Here you can make a customized website without a penny. It is easy to use and up for grabs to anyone. So why not try it yourself for a couple of months and see if you're into it or not? There's nothing to lose.

Here are the steps to start your FREE blog in 10 minutes:

1. Create a Gmail account.

(Once you already have a Gmail account, proceed to Step 2) 

a. Go to "gmail.com"

b. Click "Create an account"

c. Fill up the registration form. Don't forget to tick "Terms of Service"

d. Click "Next Step"

e. A new window appears. Click "Next Step"

f. You now have a Gmail account!

2. Create your Blogger account.

a. Go to "blogger.com" (use another tab or window)

b. Type your Password

c. Click "Sign In"

d. A new window appears. Click "Continue to Blogger"

e. Click "New Blog"

f. A pop-up window appears. Choose your blog title and address wisely. Click "Create Blog"

g. Click "New Blog"

h. Write your first post (Ex. Hello World) and Click "Publish"

         i. It's posted!

         j. See your blog by typing the URL in the address bar

           (Ex. therapidgrowth.blogspot.com)

CONGRATULATIONS! You now have a new blog! Did it even take 10 minutes? The rest is customization on your blog layout, color schemes, etc. You can change it anytime and choose what suits you best. Got any questions? 

3 Reasons Why You Should Have A Blog

A couple of friends and acquaintances have asked me why I have a blog. Most of them were serious about the question so I answered with modesty, "It's my outlet to express myself and to release my emotions." Surprisingly, the last thing I would hear from them is a silent "Aah."


I never knew (and don't want to find out) what their expression meant. I taught myself recently not to judge other people on their facial expressions or awkward responses. Over-analysis and reading other people's mind is a complete waste of time.

Upon self-examination, I found out these 3 cool benefits of having a blog and why you should have one too. While the initial plan is to monetize my blog, it has changed and dropped it down as a bonus.

3 Benefits of Blogging

1. Writing a blog is a therapy

I don't know with you but since I've started this "blog", I'm amazed with great things that happen to me unexpectedly. And I seriously love it!

Every time I share a post, all the tensions and burden in mind are released, leaving me feel calm and happy. I truly agree that sharing is caring, not only to others but (unknowingly) yourself. Ultimately, you receive a tremendous blessing that you can't find somewhere else - happiness.

2. It improves your communication skills

I don't have an English or a Literature degree but I don't mind the handicap. The way I learned English back in primary and college were sufficient for me to communicate well verbally or literary.

Writing a blog sharpens the edge of my communication skills. Aside from the joy of learning intricate words, it is the enthusiasm of using it that satiates the ultimate learning. "Reading" is bread while "blogging" is the butter. While one can live without the other, there is really nothing better than having both. 

3. It feels darn good to be appreciated

Setting aside hypocrisy, it is inherent in human beings to be appreciated for the warm things done to other people. Their gratitude, affection and sympathy are priceless. A simple thanks from someone who appreciates what you did is uplifting. However, not to a point of idolatry or obsession. There's only one person who deserves such - Him.

You might want to check out my new post on How to Start your own FREE Blog. 

Credits to keepcalm-o-matic.co.uk

The Golden Rectangle Budget

1.618 The Golden Ratio

One of the reason why many stories and parables in the Quran are perfect when it comes to personal finance is because it is a reminder. Reminder that includes three aspects; the past, present and future. So, I have been thinking how we can put all three aspects in our money management since they play a part in our budget. Example, the past plays a part in things we consume now and pay later, things like credit or utility bills. The present is the food we eat. The future are for things like retirement, investments and emergency savings.

This goes back to our previous topic, budget percentages, what is an aesthetically pleasing distribution for those three aspects? I looked to the golden ratio to guide me since it seems to be a magical number. I came up with this:

We have a choice of making the last proportion as charity or the past. Should we choose to have charity rather than the past, the things we consume now and pay later like rent, electricity, water, trash, sewer bills, can be bundled in the present. If we have a mortgage, it should fall under the future, since it is an asset that fluctuates like an investment. A car loan however would only decrease in price, it should fall into the present.
In truth, charity actually falls under the future because it is our investment for both dunya and akhirat. It is your choice to make.

So, how should we distribute our income in percentages?

Present 62% (food, transportation-gas, rent)
Future 24% (investments, savings, mortgage, charity)
Charity or Past 14% (utility bill, car loan)

If we would like to have the past and charity as separate categories, it would result in:

Present 62%
Future 24%
Past 9%
Charity  5%

It still looks like an ideal budget. In this scenario, what should be categorized into the past would either be utilities or a car loan, as one or the other will fall into the present. Simple and aesthetically pleasing, right?