Your credit card and personal loan is way to high. My suggestion:

First : Create an emergency fund of RM10K (If you save 1.5K per month, you can manage this in 7 months) Suggestion on the breakdown of your income (assuming that RM9K is net) during this period
Car loan RM1,340K, House Loan RM1,234K, Min in Credit Card & Personal Loan : 3,500.00, RM1.5K for emergency fund and the balance for your other expenses RM1,426.00.
Most Important : Stop using your credit card. Cut it up.


Second : Once you have your emergency fund in place then the RM1.5K that you have been putting towards the emergency fund should now be directed to the credit card and personal loan debt. Any additional money you receive including your bonus should be used towards this debt as well. As far as I know credit card and personal loans usually attract a minimum of 13-18% interest. Low risk savings is not your option at the moment because no return will beat the interest charged on the credit card and personal loan debt. High risk investments may put you into further debt.

If you follow this system your debt will be paid in 2 years or less.

The Emergency Fund is to be used for emergencies like sudden car repairs, hospital fees etc. It cannot be used for your daily and monthly expenses which are not urgent. As you need to live within the RM1,426 budget, you have to understand that this includes your food, clothing, telephone bills, internet etc.

To keep within this budget, I suggest the following:-
1. Talk to your family and say that if they don't make the changes together with you, you could be bankrupt within 5 years
2. Keep your electricity low - below RM50 (For my condo I only use less than RM25 per month) - switch off all lights when not in use and try to utilise the family room together at night and not each member in their own rooms wasting electricity.
3. No more clothes shopping for 2 years. Utilise what you have. Do an audit and I assure you that there are clothes that you have not worn in at least a year.
4. Cook at home. Do a weekend bulk shopping and cooking. I only spend RM100 per week on food for two people (Used to spend more but have cut down) Go to wet markets and Pasar Tani. I sometimes get free stuff from my regular vendors.
5. No new gadgets and sell what you already have if you can.
6. Cancel Astro (it is an unnecessary expense and there are other ways to spend your time). Take up reading and utilise the national library
7. Downgrade you internet package if you have an expensive one. I think Digi has a RM30 per month package. You can watch tv and download videos online. I have watched all the latest series like CSI online.
8. Do things to increase your income. Sell whatever items you have at home that is not essential.
9. During your free time, instead of the mall, go for walks or picnics in the park, the national library, join a local community...anything that does not require payment.

Once you have pay off your debt you would have acquire a good savings and spending habit and you can save RM5K per month and be in a position to buy the blue chip shares you want in a year after you are debt free.

Regards and the best of luck.

This post has been edited by cynthusc: Jan 5 2011, 02:19 PM

Thanks...hope it was of some help. As for the food, it is still RM840 per month on food if you keep within the RM10 for two persons per meal. That's a large amount to spend on food. Nowadays even hawker food will cost close to RM20 for two persons and is full of salt and MSG.

If you buy a chicken...about RM10 from hypermarkets (can even be lesser during sales), and some vegetables RM5, you have enough for three meals and even more if you are a small eater and that is RM15 per day which comes up to RM450 per month. Usually I make simple soups with all sorts of root vegetables which is packed with nutrition. I also make homemade spaghetti sauce (with beef that I grind myself and fresh tomatoes) and freeze them for quick meals. I usually freeze six meals at a time.

Anyway I wish you all the best and keep at it!

There are so many types of investments like:

- a business
- shares
- property
- unit trusts
- gold

The most important is your risk profile and how familiar you are with that particular investment. I personally invest in my business, property and blue chip shares because these are the investments that I am the most familiar with. With familiarity, risk is lessened. My advice would be to get educated on the investments you are interested in while building your investment fund.

I would advise against this as you are withdrawing from your retirement fund. I always believe that you should not touch your EPF and not consider that money as a saving that you can withdraw. Did you know that even if you are a bankrupt, the OA cannot touch your EPF money?

Don't worry and be patient about repayment...you did not acquire the debts overnight and definitely should not expect it to disappear overnight. Do you think you can be discipline enough to make sure that the house installment will be paid towards the credit card? You might be tempted to use it. Look at your spending history and be honest with yourself.

The system I outline will help you to rein in your spending and help you develop more responsible spending and saving habits. Another way to help you would be to get the bank to automatically deduct the car, house and credit card payment from your bank account every month. Then at the end you know that you only have RM1.4K to spend and am not tempted to use the money for other purposes.

Another thing...you should also try to transfer the balance of your credit card debt to one with 0% for 12 months to reduce your interest (I think MBB has that offer now) but remember cut up the old card and no using the new ones.

This post has been edited by cynthusc: Jan 6 2011, 11:39 AM

I would suggest the following:-
1. Get another car that costs less than 1K per month - Saving of RM439 per month. Get a more economical car like a Myvi will cost you less than RM800 per month. Why add a bike if you have a car loan unless you plan to sell the car and get a bike.
2. Your son's insurance is pretty high. Is that an education plan or just a medical card?
3. Instead of a landline perhaps you can get a family plan attach to your current mobile plan. You can limit the credit to RM30 per month for the home phone.
4. I notice you have two house loans. Is any of the houses bringing in any income or is income from that property already included in the RM6775?

Hmm...well IMO the car cost the most and is not an investment but a liability. Even if you seldom use the car, the value drops each year and you have to pay road tax and insurance. Maintenance for a high cost car is also higher. Having a bike may save you some money but replacing the car would save you more in the long run. You are paying RM1.4K++ every month but the value drops by about 15% every year (depending on the type of vehicle). A bike also comes with increase risk. Statistically it is more dangerous to ride a bike then a car in Malaysia. Now that you are a father, this should be a consideration. Assuming you are the primary income earner, your well being is very important for your family.

The medical for your son is really high. I pay RM650 per year for my daughter and although the coverage is not luxurious i.e. the RM400 per night room but the RM200 per night room which I think is reasonable. How much is the estimated return for your son's education plan? I am currently paying RM300 per month and the estimated return when she reaches 18 is about RM70-80K (depending on the returns). I have also purchased an apartment to be redeemed for her education which is currently valued at approximately RM140K with an initial investment of RM20K. The apartment is currently being rented out so it is paying for itself without any additional payment from me. I hope to be able to have at least RM200K for her tertiary education. The idea is that perhaps you should explore other investment vehicles for education savings because the insurance alone may not be sufficient.

Don't forget your own retirement as well. I am not sure how old you are but if you are in your 30s, you should start putting away the $$ for retirement.

Best Regards

This post has been edited by cynthusc: Apr 1 2011, 12:44 PM

Your food costs is very high. If you consider eating packed lunch twice a week, you can probably reduce that to RM400 per month. If you live with your parents and really control your spending, you can easily save 50% of your salary. With that 50% which is RM2225, you can first build an emergency fund of about RM10K++(in 5 months) and subsequently save the rest in an interest bearing account. In one year you will have approximately RM15K. With that money you can then invest in various investments like property, shares and even a business.

As for insurance, I would suggest not buying life insurance unless you have dependents but you should get a medical card (unless your company already insures you for that). It doesnt cost much...about RM500-RM700 per year depending on the type of room package and coverage you are looking at.

IMO insurance is only necessary for protection and is not an investment. If you are just starting out in your career, the only insurance you would probably need is a medical insurance aka medical card to cover your medical and hospitalisation expenses. Life insurance is only important if you have dependents who are relying on your income. This is to help them cushion the blow in the event of your sudden death. So if your parents are financially independent and you don't have a spouse or child, life insurance is not so important. If your dad has bought you insurance, then just find out what kind of insurance it is and determine if you need further insurance base on your needs.

You and your wife's expenses are very high. If I were you my first action plan would be to reduce expenses. You want higher pay but you want a 9-5 job. Unless you have a special skill that is in high demand, that is unlikely to happen in the near future. This is what I would do:

1. As you are renting, move to a house nearer to your workplace or your wife's workplace whichever is cheaper. Sell off one car (the one with the installment) and share with your wife the other. If staying near your work place is cheaper, she can send you to work and drive to work after that or you can take a bus or walk. Save RM800

2. Cut out the entertainment. RM400 for both of you is excessive. Perhaps RM100 per person. Save RM200

3. Cut out the 3G. You already have Unifi or cut out the Unifi and utilise the 3G. Save RM70/150

4. Groceries RM400 and eat out another RM220. That is a total of RM620. Way to much. It can be reduced to RM400 per month. Just cook at home more. Save RM220

5. What is AOWA set? If you have to pay installment for a 4K purchase you shouldn't buy it in the first place. Save the 4K and then buy.

6. Utilities is very high especially when both work. My household of 2 only uses RM30-35 per month of electricity and RM6 of water. You should target below RM80. Use energy savings bulb and switch of unused lights, appliances. Save RM70

Total saved is about RM1400.00. Since you are a bumiputra, you should save most if not all your money in ASB which is giving 8-10% return per annum. You can easily save RM1800 to RM2200 per month in your ASB. In two years you can afford to put a downpayment on a property of RM300K-RM350K and with low interest rate of 4% (and I think your company can even give you a 100% loan) you have a distinct advantage as your monthly for a 30 years loan is less than RM1000 per month. You can also have a child then.

This post has been edited by cynthusc: Sep 27 2011, 10:09 PM

Hi Drummer, congratulations on starting work!

In so far as investment is concern, you feel pening because people all say that a certain type of investment is better then others. This is because people invest in instruments that they are familiar with. I myself invest in property mostly but have very little investments in stocks and gold because I am not familiar with those investments and therefore consider them risky. My advise to you would be to first start a savings plan by putting away an emergency fund (about 6 months salary) to cope with any emergencies you might have. After that, save 20-30% of your income in ASB (which is capital guaranteed) to the maximum of RM200K. While doing that you should read up on investments and research on the different risks involve in each investment. Once you are more confident in the investment you like then you can take out part of your savings in ASB to invest in the instrument of your choice. So it is important to learn on the different type of investments, the risk involve, your own risk appetite and financial goals.

My suggestion:-

1. Build up your emergency fund from RM5000 about 4-6 times your current salary to cater for emergencies (real ones like car breakdowns etc.) and not for impulse buys) i.e. RM14K- RM21K. This money should be put in an account that is easily accessible and is not difficult to liquidate.
2. Now calculate the amount of money you need to buy a property of RM350K. Don't forget to include legal fees, stamp duty, renovation costs, monthly maintenance costs, quit rent and assessment costs and the downpayment itself. Are you sure you can afford to service a loan for a RM350K property? If you pay RM35K for a down payment and take a loan for RM315K, your monthly would be close to all your monthly savings of RM1400 not including the monthly maintenance fees and yearly quit rent and assessment rates. Make sure you can afford to buy.
For a RM350K property, conservatively you would need at least 20% of the price to purchase, pay for all legal fees, stamp duties and do some minor renovations. That means 70K. It will take you approximately 3-4 years to save that much if you save RM1400 per month and place it in an investment that can bring in 4% per annum returns.
3. IMO you need to adjust your expectations. If you intend to marry the next two years and want to buy a house before that, then get a cheaper apartment for around 200-300K or stay with parents until your income can support the loan for a RM350K house.

An emergency fund should be placed in a high interest bearing savings account. Usually this is used in instances only of emergency and not for your monthly expenditure. However what amounts to an emergency differs from one to another (for me it is a job loss or a major car breakdown or unexpected medical fees not covered by insurance)

There are many investment vehicles, all with different risks. My advice would be to pick 2 types of investment with different risk profiles and study it thoroughly. When you are more knowledgeable about an investment, the risk is lessened and can be calculated. Read from the internet, consult with your friends, mentors, professionals. Then start small. Eg if you are interested in shares, read up on it and start by buying 1 lot. Books written by Kiyosaki are good inspirational reads but they don't deal with the specifics. You need to deal with specifics.

Eg. If you want to go into property, you should know the process of buying a property, the different types of property, the initial investment and the cost of upkeep, the location, the return etc. Even after 5 years of learning about property investment, I am still learning something new about it because it is an evolving industry.

Good job in revising your expenses!

First of all I think it is great that you are taking the first step towards gaining your financial life back. It's never too late. I grew up in a relatively well off family but due to personal tragedies I had to start fending for myself since I was 20. Because I had a very comfortable life before, it was difficult for me to differentiate between my wants and my needs. Here are some tips and suggestions:-

1. Totally remove Astro. It not only saves you money, it will help prevent you from being influenced by commercials to buy, buy and buy more. Take up another more beneficial and cheaper hobby like reading books ( you can borrow from the library or friends)
2. Take stock of what you have and sell it off. Clothes that you haven't worn for a year, memorabilia like football collection etc. Sell it off. No point keeping stuff when your financial situation is dire.
3. Learn to cook. Get a cheap secondhand cookbook or ask your mom to teach you to cook simple dishes. You will be able to reduce your food bill by half. Eg. Cooking a spaghetti for 6 individual meals cost less than RM25 but a plate of spaghetti outside cost RM25.
4. No entertainment until all your debts are paid. Don't you think that entertaining yourself since 24 is enough? You want to be a husband and a father? You need to manage yourself first before you can manage a household.
5. Create a budget. My suggestion for the next 1 year:
AKPK - RM200
Insurance - RM150 (if you don't have dependents, life insurance should not be taken. Just take a medical card)
Utilities - RM40 (stop wasting energy - My house of two people only use RM40 per month on water and electricity)
Food - RM400
Transport - RM50
Phone Bill - RM30 (prepaid)
When you get your salary, Take out the above cash as per the budget and put in envelops designated for the respective purposes.

Balance - RM1710 (To be automatically withdrawn from your account so that you have no chance to spend it)
- Put away RM700 in an interest bearing account that does not have an ATM. Give the passbook to your GF or mother or father etc
with clear instructions not to give it to you unless a real emergency occurs (and a football kit is not an emergency) - This will be your
emergency fund.
- Put RM1010 towards your debt. Until you pay off all your debt and build a good credit, how can you plan to buy a home and
marry? You want to save RM15K and then marry? If you don't get out of debt first, marriage should be the last thing on your mind.

Your goal should be; in running order : Stop buying crap, clear what you owe, build a 6 month's emergency fund for emergencies and then save for a wedding.

Your target is 50K but I think 80K is a more realistic figure for a 350K-400K property. Please bear in mind that you have to pay for legal fees, stamp duty, renovation and furnishings.

If you want to do it in four years you should save 1400 per month@3.2 interest rate for the next 4 years.

My advice would be first to cut your expense and to increase your income. This is how I would do it:-

1. Parents - Reduce to RM500 - Tell them your goal and they will be happy to help you - save 200
2. Rent - RM550 - maintain
3. Food - Reduce this to RM500. Start cooking at home and only eat out once a week - save 500
4. Bills - Cut out Astro and water and electricity should be below RM50 - Save 350
5. Other items - This is too high. Shampoo and other misc should be less than RM100 - save 150

In all you will save an additional RM1200. Include that with the RM500 you save every month, you will reach your goal in less than 4 years. Not only that please know that once you buy a property you have to start paying your monthly installment which may be RM1400 per month. If you can save this much every month then you will be able to afford the installment when the time comes. You also need to know that although once you buy a property you don't have to pay rent, you will have other expenses related to home ownership like maintenance, quit rent and assessment etc.

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Added on March 29, 2012, 6:11 pmYou have a savings of RM3144 per month, why do you want to withdraw your epf to invest? You should only do that if you are certain that you can invest that money in another investment vehicle that can give you at least 7% return per annum. If not my suggestion is to:-
1. Build an emergency fund of 6 months of your household salary of RM6700. You already have 35K so you can save 3K for another two months and you will reach this target.
2. Then set up a baby fund. Calculate how much money you will need initially when your child is born. Estimate the price of the medical expense, the equipment (baby crib, car seat etc). If you need RM20K, then start putting part of this 3K into this baby fund after your emergency fund. Also start paying the principal on your ptptn debt. Although you have to pay low interest, it is still interest. When your child is born you should start thinking about saving for his/her education and not be still paying for yours.
3. Once your child is born, if you are bumi, start up a ASD account and start putting away some money there. Even if you put RM500 per month, by 17 your child will have at least a RM150K head start.

I started saving for my child when she was born and also taught her to save her money. All angpows and money gifts are added to her education fund. I also bought an apartment which I will sell to fund her education. All in all I estimate that there will be a fund of at least RM350K for her studies when she reaches 17. My problem is that hoping she will WANT to go to college/university.

Good luck and happy planning!





This post has been edited by cynthusc: Mar 29 2012, 06:13 PM

Car maintenance is extremely high. Assuming your loan repayment is RM2000 per month. That's a total of RM32400 per year. Imagine that's 30% of your income (assuming your income is 9K). I think your should consider changing to a more economical car.

Phone and electricity bill is also on the high side. Both should not be more than RM200 per month.
Meals are also expensive as this is RM400 per person per month. Is this groceries or just eating out? My family of two only uses RM400-RM450 per month on meals. Personal care is also expensive. That is RM2400 per year on grooming. I think you should switch to more generic products or use less high end salons. What is etc? If you are serious about cutting down you have to be very clear on where your money goes. IMO you can save at least another RM2K per month by cutting your unnecessary expenses. Do you have at least 6 months' salary as your emergency fund in case another unexpected drop in your income occurs?

First of all, you need to identify your financial goals? What are they?

Eg. To have a house by the age of 35.
To be financially free with an income of RM5000 per month at the age of 45
To marry in a couple of years, have a kid in two years after marriage

Once you have a purpose only then you can decide what you should do and how you should do it.

For example, my financial goal is to retire at 50 with a fully paid double storey house with a small garden and to have a minimum income of RM5K per month until the age of 100. To do that I intend to save 100K per year until I retire. So all my investments are geared towards earning and saving 100K per year.

When you mentioned the rent of RM550 per month, does that include you paying for the monthly maintenance? If it does that means your return is lesser. You also have to calculate the cost of maintaining the apartment (repairs) and the assessment fees.

The way to save more is to earn more than you spend. So the strategy should be twofold...increase your income and decrease your expenses. Increasing your income includes increasing the returns on your investment.

In your case your goal is to save RM30K at the end of one year. At the moment you can perhaps save RM500 per month. As you need to save RM2500 per month, this means you need to increase your income by RM2K. You can earn this by selling your property (Make sure that you sell with a profit of at least RM30K) or get another job that allows you to bring in an additional 2K per month. You can work either at night or during the weekends. If you can work during the weekends for at least 8 hours a day with RM30 per hour, that would earn you an additional RM1920 per month.


When I was much younger, these are some of the jobs I did to earn money to pay for my university fees:-
1. Telemarketing (I could earn almost 3K a month with commissions but you have to be persistent and thick faced)
2. Wrote papers for government proposals. This was very lucrative. I earned up to 5K per paper. It is hard work and deadlines must be met. Once I worked on a paper for three straight days without sleep (just 15 min power naps)
3. Babysitting and Tuition (I used to do babysitting at night for tired moms who want to go out - I charged RM10 per hour. I think the rates are much higher now)

This post has been edited by cynthusc: Nov 8 2012, 12:23 PM

IMO you should NOT buy a car. Once you have a car, you will not be able to save much. You will spend at least RM200 per month on petrol and even more on tolls and parking. Yearly maintenance as well as road tax and insurance will set you back at least RM1000 per year. Continue saving and work on getting the skills to increase your income. Work for at least five years and save your money. If you can save RM1000 a year for the next 5 years with a return of 4% per annum, you will have RM66K saved up. Then you can buy a second hand viva for RM20K and have 40K towards a house. Don't make the mistake of many young graduates now by getting yourself into debt just because everyone has a car.

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Added on November 9, 2012, 2:30 pm
For the government proposals, since I have friends in the government service and their English skills are not very good, they pay me to rewrite their proposals. 5K may seem a lot but we are talking about 500 pages of rewriting, rephrasing and even adding ideas. The only reason I was given the job was because of my educational background and language skills. If you don't have these skills, it would be very difficult for you to get those jobs. In fact there was one assignment where I had to go through close to 1000 pages in one week and was paid a lot of money. You also have to have excellent word processing and typing skills...we are talking about 60-70 words per minute. You also have to read and re-read everything so your reading speed must be fast and accurate. I can read 200-300 pages a day. It is not something I trained for but it is because I was a mega bookworm as a kid.

This post has been edited by cynthusc: Nov 9 2012, 02:30 PM

[quote=ninja88,Nov 9 2012, 03:56 PM]
[quote=cynthusc,Nov 9 2012, 02:07 PM]
IMO you should NOT buy a car. Once you have a car, you will not be able to save much. You will spend at least RM200 per month on petrol and even more on tolls and parking. Yearly maintenance as well as road tax and insurance will set you back at least RM1000 per year. Continue saving and work on getting the skills to increase your income. Work for at least five years and save your money. If you can save RM1000 a year for the next 5 years with a return of 4% per annum, you will have RM66K saved up. Then you can buy a second hand viva for RM20K and have 40K towards a house. Don't make the mistake of many young graduates now by getting yourself into debt just because everyone has a car.

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Added on November 9, 2012, 2:30 pm

Like that ah..but some jobs required us to travel, and need a car. Public transport in Malaysia not really dependable. Now, I'm travel by bus and public transport only. I'm not really in need to buy a car, but I might need it if my job required me to have it..if I have a car, my target to buy a house will be delayed..haih.

[/quote]

What kind of job do you do that requires you to travel a lot? Are you in sales? To me if you work in an office and have a generally 9 to 5 job, you don't need a car. If you are in sales and your company expects you to travel then they should pay for your transportation costs i.e. car, petrol and toll allowance. Otherwise it is not financially sound to buy a car at your salary. Don't buy just because your job MIGHT NEED IT. Is it a need now?
If in the future you start working in a job that needs it, then that job should pay much much more i.e. 4-5K to allow you to afford a car.

If your house is too far from where you work, move nearer or get a job nearer to where you live. The point is don't put obstacles in front of your objectives. Once you tie your money up in a car loan, you will not be able to save and even worse you will start relying on credit to pay for your necessities. Don't just follow the herd. Most of the young graduates now have very little or no savings, have a large amount of debt and often ask their parents to help them pay for their debt. Sacrifice comfort now when you are young to save for your future.

This post has been edited by cynthusc: Nov 9 2012, 04:57 PM