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Just want to share my experience in personal finance management as I believe I've made some mistakes that should be avoided and some good choices that might be useful.

1. Don't rush to buy a car.

One of my first mistakes was to think owning a car costs only the monthly downpayment. It isn't. Petrol, toll, road tax, insurance, maintenance, oil change, accidents, tire change, stolen headlights and a hefty interest rate soon wised me up. I decided to downgrade to a smaller car, which is more affordable and still able to provide a roof over the family on the road. It costs me only 1/3 of what I used to own and whatever extra I had, I put it in the bank.

Mistake:
Bought a bigger that needed 2nd hand car with minimum downpayment and high interest rates over a 7 year period. Regretted it the most, especially when I decided enough was enough and sold it for a smaller car. Next time I buy a car, it would be an affordable new car with at least a 30% downpayment., and when the interest rates are more favourable. I will not fall into the 0 downpayment gimmicks. The interests they charged for your loans is just not worth it.

2. Don't simply buy insurance.

When I started working, a lot of people approached me about insurance. Although I passed on all of them, I couldn't turn away a classmate of mine which was selling life insurance. Trusting him more because I know him, I took the policy after hearing what he said. I didn't ask so many question because I didn't want him to have the impression that I don't trust him. 1 year later, I never hear from him anymore and I received a letter from the insurance company that informed me my agent has been changed to someone else. My ex-classmate has resigned and I never seen him since. Scrutinising the policy after that, I realise it was not what I had expected and I feel cheated in a way. Luckily I only commited RM250 and not more as I felt I could've gotten a better deal like my other colleagues who pushed their agents for the best deals.

Mistake:
Buying insurance from so-so friends to give them face and trusting their every word because of 'friendship'. If I can afford another, I'll shop around for a better deal like I would if I was buying a car stereo, and not submit myself to anymore 'friend friend give face lah' sales gimmick.

3. Don't apply for credit card so soon

When I started working at 17 after SPM, my then supervisor told me he had 7 credit cards. He was not boasting but showing me his mistakes to warn me of the danger of credit cards. He first had 1 card and applied the rest to cover each card as he failed to settle his debts over a 2 year period. Needless to say, he was heavily in debt by the time he got rid of all his cards and applying a loan to settle everything at a lower interest rate. Because of that lesson, I worked for 10 years without ever applying for a credit card. Although I'm qualified for a credit card since I was 19, I never applied for one, and refused the free ones as well. I've seen a few of my friends in debt with the card companies, and vowed never fall into that trap. That's why after 10 years of working and having a healthy savings account, did I dare accept a free card, trusting that I wouldn't abused it. So far just only 2 months since I got it, all are petrol purchases. I even tore off the pin they gave me so I wouldn't have a chance to withdraw money with my card.

4. Don't buy furniture with monthly payments.

My parents has this mentality that buying electrical appliances and furniture with a minimum downpayment and monthly installment is a good way to save money. I learned my lesson when I let them buy a home stereo system from Courts Mammoth. Other than the interest which I had to pay, there was also late charges when I didn't pay on time, collectors charges when I needed the money for something else and skipped payment, and the worse of all, knowingly paying for something that is already spoiled after the warranty period and is not worth repairing. It is really frustrating to go to Courts to pay for something I can't even use anymore and futhermore obsolete.

Mistake:
Buying items for house with monthly payments when I can afford to pay full, and charged interest etc, for it. Worse was I had the stereo to pay, the refrigerator, and the furniture. I told myself never to buy household things with monthly payment schemes and to pay full after saving up for it when making a purchase.

5. Don't save till you starve

I had the habit of taking out my savings to buy things I craved for but not needed like new fancy gadgets and expensive clothings. I did this for the 1st 2 years of work and finally realised that my savings was still less than RM1k. With that realisation I started saving aggressively and even to a point starving myself when I miscalculated my budget for 3 days. I figured I could lived off bread and even traded in my season pass to cash to buy bread and roti kosong until my next paycheck. It was not a smart thing to do and costs me more when I got sick due to gastric. I vowed never to go hungry again as long as I have the means to feed myself.

My savings are now based on psychological benchmarks I set for myself. Every RM1K I saved was my new minimum, and withdrawals must not go below the thousand, eg. RM3075 means I can only remove max of RM75 and not below RM3000.

Mistake:

Starving or risking health is not a means of saving. With all your money saved, who is going to spend it if you are not healthy at the end of the day.


That's all I can come up with now, it's late. Comments are welcome.

well i guess the main point will be the time value of $, they rather u owe other people $ than owning them, money today is worth more than money tomorrow

benefits:
1) they got cash from other bank when u pay by other bank CC (dun care bout competitor), they can hold more cash and do more things, but still they need 30 days to receive the cash
2) to reduce bad debt, if ur amount is bigger n bigger in the CC bank, u'll most likely turn out to pay them back longer or maybe u get away n get blacklisted

average income around RM3.5k (before epf, socso and tax deduction)

my avg monthly expenditure
Car Loan: RM630(4 more yrs ><)
Petrol: RM200
Insurance: RM300
Parents: RM350
Food & Ent: RM250
Fitness First: RM150
misc shopping: RM200

Balance will be accumulated in Savings then transferred to FD or invested in trust funds when it reaches >8k as force savings.

I'm saving more than 10% but it doesn't look alot to be enough.

thanx for sharing a very nice reminder for all of us in the money land....

i only have these 2 to disagree with.

1)
credit cards aren't evil. they're for convenience. i would say DO NOT apply credit card if you don't know how to use it. i've applied CC shortly after i start working and i've NEVER had any problems with it.

as long as you pay what you spent - it's all well. i think the additional charges are fair, after all - they already provided you the convenience.

2)
installment for furniture and other stuff are fine IMO. try to go for 0% interest type. pay now, pay later. either way you still pay similar amount. it's just that paying all at once sets your spending power back by A LOT.

so either don't buy what you can't afford, or buy with detailed planning on how to make the installments benefit you and not the other way around.

The Evil is within urself and you can't put the blame into the CC. CC actually help us to manage our bills more efficiently, we should thank them for offering us free online and month statements. You actually have the detailed of transactions you did with your CC.

But recently damn the fxxk up with my CC agent. At first ask me don't apply the sup card first, apply it seperately so that can get free gift twice. Now my card approved leow, free gift also don have and wanna apply sup card also no more free gift. Really sienz ....
Cheers and happy chinese new year.

yes. quite many things in fact, such as payment schemes and all.

most important thing to do before going into such commitments (eg installment payment) is to understand all the details and understand the pros and cons, one must weight the benefits vs the drawbacks before committing.

quite often you can work out something that gives you the edge.

Billy very good post! If I may add:

6. Don't try to keep up with technology, or rush into getting the best
Technology is ever changing and everyday we get better gadgets. If we observe the pricing trend of technology (esp electronics), the price will usually slash itself by after a cool-down period. Technology gadgets are what I'll call "anti-inflation", the price goes down with time. Most often, the state of the art gadgets are priced with ridicolously expensive tags. If you wait a while, it'll be much cheaper than it is. So target what you want, wait until it falls within the affordable range that you can have. It may save you a lot!

Several examples are:
Televisions (Plasma anyone?), LCDs, Handphones, etc.

Credit card if it is use correctly it can help you to save money. Those reward points can redemp for items. Thus saving u from using ur own money to buy items u need.

I dont believe in paying installment with 0% interest rate. The interest are actually hidden inside the price you pay for the item u buy.

yes but the thing that even if you don't wish to go for 0% interest installment, you're still paying the same figure. so it's either pay RM 2400 immediately, or pay RM 200 on monthly basis.

i like 0% interest installments as it does lesser damage on my wallet, then again one could argue that in the long run i'm actually paying more (i'm no economist, i can't explain but i think i've heard of such arguments before) but it really depends on which path suits best for one to acquire an item.

regardless of whether to pay one-off or via installment - as long as one manages finance well, it is not a problem.

I need to know more about schemes like swiss cash and all those online investment funds. They are spreading like wild fire..i need to know their modus operandi and how they really get their income. Any lead on the matter would be deeply appreciated..thanks

there was a thread regarding swiss cash i read a few weeks back.. seems like a scam by reading thru it.

I agree with you as well. Some times when i purchase something, even though i have the cash but if there is a 0% installment scheme, i definitely will go for it. I also feel it did lesser damage to my wallet ... lolz ....

dreamer, can enlighten me wat is bank stock?

go for it if u not scared.
banned by bank negara.

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Added on February 23, 2007, 5:48 pmmaybank
public bank
cimb bank
etc

This post has been edited by vvv: Feb 23 2007, 05:48 PM

oh, does it mean like buying stock oso, but its from banks? but wont it be subjected to risk oso? like i see the price move up n down oso..

Andoril,

In my case, my goal is to buy banking stock that pay good dividend. And, I only buy when the dividend yield is GOOD enough. And, once I buy, I never have to sell in order to make money. I collect good dividend every year. I do not have to care whether the stock price is up or down.

I only buy one bank stock. It is the most well managed bank in Malaysia, There is risk. But, comparing to all other stocks, what is the chances of this bank going bad?? What is the chance that Malaysia will let one of its largest bank to go bankrupt??

In this case, my calculation goes like this. This bank normal annual dividend is around $0.40. I bought this stock at $6.80.

The annual dividend yield is around (0.40/6.80) = 5.7%. This is better than FD and slightly higher risk. Last year dividend was $0.60. So, my actual dividend yield is 0.60/6.80 = 8.8%.

Why do I ever need to sell? And, if the stock price ever go down low enough, I will buy more. And, if the stock goes up too high, I may sell.

I had made my money when I buy the stock. I had locked in my dividend yield when I buy.

This is one way to make money. I do not have to sell to make money. I collect good dividend every year.

Disclaimer: Do not take this as recommendation to buy any stock. Do your own calculation and thinking. I do own stock in this bank. My opinion is highly biased.

Dreamer

oh, i c.. i was confused regarding dis.. thanks for d explanation..

(im not jumping into dis yet, im into FD coz still newbie. mayb when i feel confident, then i will try.)

I think I failed on this subject matter.

You guy know what?

Most allocated money goes to


-not car loan
-not half-paid furniture
-is GF


*runs*