Why did I buy YNAB?

1. Jesse knows budget matters. Jesse Mecham, who created the YNAB on Excel and as a desktop application is also an accountant, so I trust he knows his spreadsheets.
2. Strong YNAB community. It’s encouraging to see that there are a lot of newbies and YNAB veterans who are still willing to help out. That’s how I got to use…
3. Easy tracking anywhere using YNAB Pocket Mod (how to fold) by fellow YNAB user Mudie. This teeny tiny booklet is where I track all cash expenses. Nifty!
   
   
4. Goodbye envelope plastic case. It can be a hassle going around with a bunch of envelopes. JP would always look at me all weird when I pulled out my envelope case at the cashier. It helps that I’m on my iMac everyday so I update my YNAB at least every other day, while I’m still getting the hang of it.
5. Easy to use. The software is well-documented. True enough, I got started in about 20 minutes using the cheat sheet

4 rules of YNAB

Rule #1 got me hooked. Being an entrepreneur, with variable income (timing andamount), it hasn’t been easy curbing the occasional splurge (like getting 4 pairs of sandals on sale at VNC Glorietta last June *sigh*) when I’ve given up a lot of other luxuries I’d gotten used to (weekly movies, meals out everyday, salon day, etc). So I’m building my buffer, which will help me truly NOT live from paycheck to paycheck.

1. Stop living paycheck to paycheck
2. Give every dollar a job
3. Save for rainy days
4. Roll with the punches

Can’t wait for YNAB Pro on Mac - due 2008. YNAB has two versions, YNAB and YNAB Pro. There’s YNAB Pro ($39.95) for Windows and already compatible with Vista. I got to try it on our HP laptop for initial setup and I really liked the interface. I can’t wait for the Mac version! Thankfully, there’s a toned-down version of YNAB ($19.95 - less than PHP1,000) that works on Excel/NeoOffice/OpenOffice so I went ahead and got my own copy and set it up on the iMac. 3 weeks in and I’m really happy with it. It’s addicting actually, scanning my 3 sheets (Register, Budget, Overview). $39.95 or $19.95 isn’t so bad at all considering you’re going to use it for years.

You can know more about YNAB and order your copy online over at YouNeedaBudget. Pay by credit card (via Paypal or Google Checkout, just make sure there’s “https://” in the address bar) and you’ll get a personalized download link so you can download and install the YNAB Program.

I allot P600 for commuting every month. That’s for jeepney rides, the rare bus ride, and MRT Stored value P100. Sigh. I used as P7.50 as my base when I computed that… I guess I should add about P50 or P100 more to my transportation “allowance”.

BUT… I had 2 jeepney rides today and they both charged only P8. Either:

a) not all the jeepney drivers know about the P1 price increase; or
b) I got a greedy driver yesterday.

I don’t have a TV in the pad so I don’t know if this was in the news. So I looked it up (source).

Time to adjust our commuting allowances! I wonder how much this affects the daily commuters who take a really long trip from the house going to the workplace.

PUJ, PUB, Taxis - Public transport prices up

Sigh, I remember filling up my car with about P47/liter… Now it’s up to ~P61? I haven’t been using my car since December 2007, maintaining, parking, and driving it in the city just wasn’t worth it even if it’s 1.3 engine.

Feedback for Die Broke:

Die Broke authors Stephen Pollan and Mark Levine certainly provide a “radical” four-part financial plan:

1. Quit today
2. Pay cash
3. Don’t retire
4. Die Broke

I carry this book around with me in my laptop bag. Whether it’s so I have it handy when I finally write this book review or I honestly want to live by it, I’m not really sure.

What makes a good personal finance book?

I like how it’s written. The voice is authoritative and the book is sprinkled with illustrative examples of real-life financial planning clients which made the lessons more tangible. It’s a really radical personal finance philosophy that might not be for everyone. Even I don’t follow everything it says but the points they make are really helpful.

I personally Quit Yesterday and work literally for myself. It’s great to have that affirmed because it’s sad how I see and hear a lot of zombies on the daily commute apparently living from paycheck to paycheck and with probably no aspiration of breaking free, working for themselves, of promotion or standing out in their job. If I have them read this, they probably won’t even begin to comprehend how they can apply it to their life. You’ll need to combine this book with a lot of personal development exercises to fully appreciate the Die Broke philosophy. And appreciate the sarcasm of PFHacks’ top 7 acts for dying broke.

Buy Your Second Home First

While my last book, Your Money and Your Man, says that you ought to buy a house the first chance you get just because you can, Pollan says you should buy your second home first. Foget about starter houses and serial home ownership and buy the house where you want to live until you have a family, until you grow old and grey.

I have nothing against buying your second home. I myself am undergoing a dilemma of renting or buying. I don’t know where I’ll be by end of this year, so I guess I should just stop about thinking of moving into a brand new place. Now where that second home will be I don’t know… Serendra at the Fort is fancy and really more of a status symbol. In The Millionaire Mind, the author surveyed self-made millionaires and they mostly had old houses with appreciating value and they don’t go for novelty. So if I want to emulate them, I probably should look at houses in San Lorenzo, Forbes Park, Dasmarinas, Greenhills — maybe BF Homes? Well, maybe if there were better water supply.

Pay Cash

Hide or destory your ATMs and keep only one emergency credit card. Visit the bank, wait in line, withdraw once a week the cash you need. So you feel the pain of spending. Credit cards and EPS truly desensitize consumers from the pain of spending.

I can’t realistically follow that though being an entrepreneur with erratic timings of cash flows. I keep my credit card handy for those dire times when there’s absolutely no cash because it’s all advanced for business or inflows are delayed. I monitor my card spending though and always pay in full. I know the pain of spending already.

Annuities and Living Rich

So, you ought to die broke, right? Leave your heirs with no assets upon your death, just enough life insurance to cover your basic funeral. How do you deal with crises? You’re supposed to LIVE RICH and enjoy your wealth with your loved ones while you’re alive and not want to build up this impossibly huge estate which will just be whittled away by estate tax.

One way you can benefit from your assets while you’re alive is through annuities, one way is a charitable remainder trust. I’m curious what’s the equivalent in the Philippines. You donate your assets to a trust fund or charity and they pay you an annuity or a yearly allowance as thanks for giving them the asset. This can be any titled asset like stocks or land. This way, you even get to be honored by the charity while you’re alive!

Get Disability and Health Insurance

Die Broke is yet another advocate of health insurance. Yes, I finally got my own real health insurance, not one of those not-as-useful health cards. My policy is designed the same way as a car insurance plan, I pay the annual premium which is still really low for my age and if I God-forbid have to be confined within the year or have to rush to the emergency room for whatever body pain, Blue Cross pays for the hospitalization expenses. If I get diagnosed with a sickness in the future, they won’t give me a hassle about whether the sickness existed before my policy. I did enough due diligence and apparently that’s a problem with the usual HMO. Contact me if you want to get my agent’s number; he’s very easy to talk to and helpful.

Die Broke Video

Stephen Pollan guested on Oprah. His exceptional videos are accessible via Quicktime and Windows Media Player.

Should you buy this book?

The 4-part financial plan is very radical and may be unsuitable for the taste of some. If you’re willing and able to put away your credit card (or don’t have one) and ATM, go ahead and invest in this treasure-filled book. Stephen Pollan and Mark Levine’s Die Broke plan gives you a priceless financial alphabet covering A (Accountants) to W (Wills).

Feedback for Die Broke:

If you use Google Calendar, on top of your Calendar, you can also input “Personal Finance Philippines” and click on “Search Public Calendars”. My calendar will show up and just click “Add to calendar.”

I’m counting on your support.

In college, I ran for hours on the treadmill at the local gym, paying about P1,500 monthly. This went on for about 4 months, till I got my target waistline. I promised myself I’d run instead with the running club around the school football field. What happened? I couldn’t muster the energy to get up for the 5 AM run.

Fast forward to the present. I’m giving running another shot, with a more concrete finish line of running the 5K. La Salle Cares Foundation will be holding a charity run on July 13 at The Fort. It’s the push to my constant delaying for working out because I don’t have budget allocated to any gym memberships.

Top 6 Reasons Not to Sign Up for (Franchise) Gym Memberships

1. One-year contract. I’ve read countless horror stories of the consequences of pre-termination clauses that the sales agents don’t bother to explain. Scour forums or craigslist and you’ll find members looking to transfer their contracts. I thought I might be able to save if I get a secondhand contract but figured the savings was negligible and I won’t have a ‘friendly’ sales agent at the gym.

2. Required auto-charge on your credit card. This builds up on #1. If I decide to change gyms or go abroad or get sick in the middle of the year, that photocopy of my credit card granting the gym authority to charge it won’t make me a happy health human being. The realities of ‘freezing’ accounts or pre-terminating or transferring are too troublesome to ignore. Since requests to refund or to cancel are futile for a lot of Fitness First members, they have to cancel their credit card. Auto-charging utilities or telephone bills are convenient, saving me the trip to the payment center, but auto-charging for dues to use the gym which I always go to anyway? No.

3. Confined to gym operating hours. Eclipse Gym is 24/7 (1 of the 2 gyms I’d consider paying for) but the other big franchises (Golds Gym, Fitness First, Slimmers World) are not open early enough, not open late enough.

4. Trainors tend to have more to gain by upselling. Thus, you can’t always expect free expert training. I was lucky to have Joel at my college gym, Super Sharp; he was helpful to all the gym-goers and he regularly updated my program. At the bigger gyms, you basically fend for yourself if you don’t upgrade to personal training.

5. Pressure to suit up. Fancier gyms tend to attract fancier people. One reason I kept putting off going to the gym was because I have mostly no-name workout wear. Try walking into a fancy gym in no-name wear and no iPod, you’ll just feel so bare. Keeping up with the Joneses syndrome would hit you faster than pulling up 2.5lb dumbbells.
I got jogging pants for under P100 at Harrison Plaza (or Plaza Fair). But I do have to buy branded sometimes: Nike Women for sports bra and Speedo for swimsuits.

6. High rental fees. After paying joining fees, admin fees, monthly dues, and a plethora of gym fees — you spend more without any sense of ownership of equipment nor or your time. My boyfriend JP bought two dumbbells for home workouts. Consider the benefits of setting up a home gym.

The Running Challenge

The Goal: Run the 5K (3 miles) on July 13 La Salle Run; August 10 FEATI Fun Run. Be ready to participate for future running events.

The Plan: Run 2 to 3 miles everyday for 30 days. Refer to Beginner Training Program for the 5K.

The Perks

• I don’t know exactly why but I’m addicted to running on the treadmill. Running on concrete is a whole other matter.
• Extra push to get into the habit of rising early.
• If I’m bored or if it rains, I can always alternate with swimming at the Olympic-sized pool at DLSU Sports Complex. Cost P500 annual membership dues.
• Leaner, healthier, me.
• The clincher: No gym fees paid to run the smog-laden streets of Makatii. P3,000 better reinvested into business.

Thanks to my boyfriend JP for gifting me with running shoes. I wish I can gift him with running gear too.

Savings Trackers for Motivation

Like I said, I have 2 trackers for my goals. Hope showing them off will keep me motivated and out of the movie houses.

1) P45,000 (~USD 1,000) for a deposit on a lease on a condo. I know I’m not ready to buy just yet. Rent vs. buy is a whole other debate. I really think moving out and living by yourself is necessary for you to grow and truly be independent. I always thought of myself as independent, being the eldest of 3 girls, but I don’t think I was as ready for my first job as I would’ve liked.

2) P20,000 (~USD 450) for 1 month living expenses. 1/3 of the emergency fund I have to rebuild. Will deposit into a 30-day time deposit when I accomplish this and roll over. After this, save another P20,000 for a 60-day TD, then another P20,000 for a 90-day TD.

How to Set Up Your Automatic Savings Account

Just deposited my “salary” today before the 1:30 PM local check clearing time. When I logged into BPI Express Online, I only just discovered their BPI Direct - Save-Up Account. Similar to HSBC’s AutoSaver Account. I used to have a monthly recurring funds transfer from my main BPI savings account to my BPI Family savings account as automatic savings– didn’t really work out. I’d pull out my 2nd ATM anyway for “emergencies”.

Employees have the option of setting up automatic savings with their cooperatives (coop), just like Ella and Dexter. In her case, there’s a minimum contribution of P200 (~USD 5) every payday. Some caveats though, like no withdrawal while your funds are below P100,000.

The Fine Print

BPI Direct Save-Up is an interest-earning Peso savings account… linked to a Peso SA/CA with ATM card. Interest is at 1% for P1,000 to P400,000 and 2% above P400k! 1% is higher than their stingy 0.625% for the Express Teller Savings or 0.875% on the Platinum 2-in-1 Savings. I’ll take whatever interest I can get, but it’s just cents, right?

Reference: Terms of BPI Direct Save-Up

What’s good is that there’s no initial deposit. You set up a recurring funds transfer from your main account/payroll account/source account. Minimum recurring transfer of P250, whereas HSBC Autosaver requires P1,000. But there’s a required ADB of P1,000 in Month 4.

But remember: No deposits to or withdrawals from the Direct Save-Up account over-the-counter. So when I hit my goals, I have to transfer it online back into my ATM account. It’s really just a “HOLDING” or temporary account until I transfer the money to a TD or mutual fund.

Oh, Yay, Life Insurance

Opening the account entitles me to free Life Insurance from Ayala Life. I doubt that’s going to be much. I won’t keep much in the account anyway, I’m just appointing it as a way to keep some of the money away from my reach via my ATM card. If my ADB is P10,000, the maximum benefit is P50,000. Um, sure, thanks.

Weekly Transfers - Could this possibly work?

The auto-savings account doesn’t have an ATM. I have to be logged on to transfer money from the auto-savings to my “source/ATM account”, so there’s at least some deterrence from my withdrawing it prematurely.

Here’s a video I created to guide you through the sign-up process. You might want to turn down the volume — I’m indoors but the mic manages to capture street sounds.

I used to do it monthly, now let’s try weekly, to go along with the “tingi” mindset. Some accomplishment without feeling as if I “deprived” myself of so much in one fell swoop. This is worth another try. Unlike Paid Twice, I don’t have an aversion to automation. I have automatic calendar reminders for everything, thanks to GTD. But auto-debit arrangements from my credit card, I’m not too keen on that, except for donations to UNICEF and phone bill payments where amounts don’t change.

Update: BPI finally stopped timing out on my 4th attempt to sign up for the BPI Direct Save-Up account. They’re supposed to mail an “Info Card” with the new account number. I really pray I manage to maintain this auto-savings plan.

I’ve had a free membership at ChinesePod.com since they officially launched in December 2007 but I just filtered their emails straight to label(folder) called (Old/Learn Chinese) so it was hidden right away. I decided to face it, that sometimes you have to spend for something to dedicate yourself to it, like how others pay for exorbitant gym fees or tutors. So I started with the Basic Plan, which is USD 39 for 6 months — exactly PHP 1753.10 (I called my credit card hotline the day after to know the exact peso amount for my monitoring). Less than P300 a month! Beat that! When I get a bit past Newbie, I’ll likely upgrade to the Guided plan.

It’s pretty neat actually. Now that I’ve paid for it, I actually listen to a new Newbie Mandarin lesson at least every other day. My roommates must find it weird when I practice saying aloud “zaoshang hao” (good morning) when I’m still too lazy to get up in the morning.

I download the audio to my iTunes — I have my own feed URL and access to lesson reviews and PDFs. I copy it to my pq1 USB disk (2GB, P540 from CD-R King) so that I can listen when I’m using the HP laptop. I also sync a copy to PalmOne Real Player for JP’s Palm Tungsten T3 which I’ve claimed for myself. And I have a printout of the first 6 Newbie lesson PDFs at my bedside.

It’s really suited for me since I like to do things at my own pace. Affordable quality Mandarin lessons — don’t you just love the magic of the web? I’ve listed other places you can get beginner Mandarin lessons in the real world, however I can’t attest to their teaching methods.

• Chinese Mandarin Business Language - Level 2: August 2-30 Saturday PM (Call PTTC at 4688969) ~ P2,500 for 5 Saturdays
• Speak/Read/Write Mandarin. 10 Days Guaranteed. Lessons available every Saturday 9am-11am, 3pm-5pm at 32 P. florentino St, Corner Araneta Avenue, Talayan Village, Quezon City. Call Dunric Ng at 412-5493 or 0922-881-1618. ~ Free

Next, I’ll be mastering the First Tone! Xing! But here’s one for you.

Good quality right there. If you sign up for a free membership at Chinesepod via the links on this post, I get a teeny-tiny thank you from them, so I’d appreciate that. And oh, I just remembered. I don’t have a Chinese name So I still can’t fully practice the “What is your name?” exercise. Know how I can get one?

Learn Chinese with ChinesePod.com
Here’s what ChinesePod’s customers are saying…

“It is the first time in years that I am truly learning.I am able to fit the learning into my schedule. Many thanks.”
“I simply love ChinesePod. Keep up the good work!”
“This is a great way to learn. I love the flexibility of the material presented. The podcasts are so listenable and the extra learning tools for the dialogues are extremely helpful.”
“Very high quality lessons — interesting, contemporary, relevant.”

Why not see for yourself.
Click here for a free trial.

Tags: fetede la musique

How do I keep track of my credit card spending?

I have a dedicated sheet in my white Project Paper pad (I have 2, yellow and white if you’d like to know. P24.50 each from National Bookstore and they’re ever-present in my always-bulky pink shoulder bag. The bag is unlabeled and was a birthday present on my 21st birthday — roughly 2 years old. Now that I look at it, it does look a bit battered so I guess I should go easier on it since I don’t plan to buy a new bag just yet.

So back to the page on my pad paper. Like today, I’m at Coffee Bean, once again breaking my diet oath. So I make my entry right away:

5,937.28 - 6/15 - P354 - Coffee Bean
Running balance - Date - Transaction amount - Store

Easy enough, right? Since my cutoff date was June 14, I entered this on a new sheet. So this sheet is the one I’ll be comparing to my next next credit card statement. The running balance is just the sum of all previous entries.

Running balance on your cutoff date = full amount due on your next due date. Check any discrepancies with your records then confirm with your credit card’s hotline. Possible causes might be a forex difference, hidden charges, or fraudulent transactions.

Effect on your running balance:

• Every time you sign on that charge slip (+)
• Every time you buy online (+)
• Pledges/donations to UNICEF (+)
• Annual fee (+)
• Waived annual fee (-)
• Payments (-)
• Refund (-)

Other Monitoring Tools

Is the pad a little impractical for you? You can also use an index card that you just fold up in your wallet. The BDJ planner also has a credit card sheet in its monthly view. I guess you can use a spreadsheet, I tried that for ah while but it’s hard to be consistent when, of course, you spend while you’re away from the spreadsheet software.

Pay the Full Amount Due

I know a lot of people don’t even bother to monitor their credit card expenses and/or only pay the minimum amount due.

Why do you have to pay the full amount due?

To illustrate:

Total Amount Due P6,825.34
Minimum Amount Due P500 — P500 or 5% of the total amount due, whichever is higher

A lot of newbie credit cardholders pay only either the minimum P500 or say only P3,000 as partial payment by the deadline. If you pay any amount less than the total amount due, which is your principal, you start incurring interest. That’s the 2.5-3.8% every month! That’s called revolving or borrowing; you’ll incur interest.

Check your monthly interest rate. BPI Classic has 2.75%, BPI credit cards have 3.4%, HSBC credit cards have 3.5% finance charge/interest per month.

Let’s say you have a credit card with:
Monthly interest rate: 3.5% (usually the only number highlighted on flyers)
Annual percentage rate (APR): 3.5×12 mos = 42% per annum

On Month 1 you charged P10,000, that’s your principal.
The due date flies by and you only paid P5k. Next bill, you’ll likely owe:

P350 interest charge (P10,000×3.5%)
P5,350 balance from your principal
= P5700 total amount due (Month 2)

Then you paid P2k. Next bill, you’ll likely owe:
P187.25 interest charge (P5,350×3.5%)
P3,537.25 balance from your principal (5350-(2000-187.25))
= P3,724.50 total amount due (Month 3)

So far, you’ve paid P7,000 and paid about P500 in interest. It doesn’t seem so bad when the amounts are smaller but if that were P100,000 instead of P10,000. Move everything up a decimal place and the picture won’t be so pretty.

Read thoroughly your credit card terms and conditions. Bank websites will usually have the application form online; you’ll find the terms there.