Cash or Card?

“Either way at no extra charge,” says the flyer from the Credit Card Association of the Philippines that came in together with my card bill. They say that:

• Surcharging or additional charges when paying using a credit card is PROHIBITED
• Each product or service being sold must display only ONE price tag
• The price indicated on the price tag should be VAT INCLUSIVE

Yeah, right.

One credit card down…

Ladies and gentlemen, allow me to present Exhibit A:

Woohoo! One down, three to go… Haha! This one had the lowest credit limit of my four credit cards, and I “lost” it last December and never activated the replacement card. So I haven’t used it in seven months. I guess that’s what it takes to really zero out credit card debt.

From the total credit card debt I had when I started this personal finance blog a few months ago, I’ve already managed to pay off about 40%. A second credit card is due for
zeroing out this month

On the promises in Arroyo’s SONA

MoneySmart made a quick list of GMA’s promises for the economy in her recently concluded SONA. One item quickly caught my eye: stronger and wider social safety nets.

In my work for ADB, I have learned that one of the major obstacles to poverty reduction efforts is the vulnerability of the poor to socio-economic shocks.  An illness, a layoff, a death in the family, a natural disaster… all these unexpected occurrences can make a middle income family suddenly part of the poor majority.

Depressing News (At least for me)

“The peso closed at P45 today. My sympathies.”

After a day of fighting with credit cards over excessive penalties, processing balance transfers, and basically trying to gain control over my finances, this text message from a business journalist friend was just about the last thing I needed.

For the past couple of months, I have been budgeting conservatively using a P45=$1 exchange rat, even though the real exchange hovered just below P46=$1. I thought that would give me some buffer. Apparently, I wasn’t conservative enough.

I know this Peso appreciation is good for a lot of reasons, but then again, the fact remains that my income is decreasing while prices are not. They’re even going up. Our rent has just been increased. Electricity has gone up by at least 20% too following some new pricing scheme. Gas is still expensive.

How in the world am I going to become a bajillionaire (or just pay off my debts and save a decent amount of money to begin with) with all this?

Two cell phones and lower phone bills

I consider cell phone bills as “painful” bills I have to suffer. Yes, I know we can’t live without them now, but over the past four or five years, I have paid Globe Telecom an average of P2,200 each month. On bad months, I even spend more than P3,000 on calls. That’s about P25,000 each year!

But thanks to the wonders of market forces and competition, I somehow managed to get a free second cellphone while drastically reducing my cell phone bills.

Small Victories

Last month…

1. I was able to almost perfectly stick to my budget (just overspent on a few unexpected expenses). This meant:

• Not shopping for anything that is not essential (no new clothes, bags, shoes, accessories, etc)
• Staying away from enticing sales (Rockwell’s sale was a pretty hard struggle). The only time I failed was when Philips had their annual warehouse sale – where I got a component for less than half the price. A pretty good buy, right?
• Staying home more often
• Cheaper night outs (We would have dinner at home or in some cheap place first before meeting up with friends)

2. I only used my credit card once only (a P500 gasoline charge). Woohooo!

3. I did a whole lot of extra work to earn money solely for debt repayment (following #10 in Thriftmommy’s 20 ways to pay off debt)

Because of all these, once all my checks clear this coming week, I’ll be able to pay off two of my credit cards!!! Yipee! =D They’re the two with the lower amounts of debt, but paying them off will put my total debt down to just 5 figures.

Woot! Now, if I can just do this for two more months, I’ll be debt-free and investing soon!

What? A financial psychologist?

Yup, you read right. Not a financial adviser or planner, but a psychologist. Not one who looks at your assets and debts, budgets and portfolio, but one who looks at why you manage money the way you do.

My boyfriend’s cousin mentioned this to me recently, after I told her of my financial woes. She has a right to lecture me – she earns less than I do, but she’s debt free and she’s currently paying for her very own condominium unit =P

Anyway, she says she can recommend a financial psychologist who will look at, say, why I have a tendency to spend as much as I do on certain things, or why I find it hard to say no to certain expenses.  Hmm… sounds interesting. Since I’ve basically pinpointed the root of my financial woes to lack of self-discipline, this sounds like it can actually work.

I did some Internet research, and apparently, financial psychology is an emerging field. One website said that “experts believe that an individual’s beliefs about money are formed between the ages of 5 and 12″. For those who are out of debt and are looking into investment options, financial psychology can also show they why behind investment decisions.

Hmm, interesting…  Have any of you guys heard of this? Or know someone who practices this? Or have actually consulted with one?

Banking Woes

How in the world am I supposed to save money when banks charge tons of moolah and make me go through so much hassle just so I can receive MY money?!

This is what happened: I had a small writing racket for a company in HongKong, for which I was supposed to receive US$150. This was way back when the exchange rate was still just under P50=$1. I gave the company my bank account details so they can wire the money over. But then I get an email from them saying that transfer charges are too prohibitive – US$24! So they’ll just mail me the check.

I get the check – thanks to the country’s ever reliable snail mail system – more than three weeks later. So I deposit it in the bank, and I was told I would have to wait around a month for it to clear. Hmm. Fine.

A few days later though, the bank told me that since it was a US$ check from HongKong, meaning it wasn’t in the native currency, they would have to send it back to HongKong for “collection” – and the entire process will cost me US$60!!!

WTF?!!

Otherwise, they said I can just ask the HK company to send me another check in HK$, but I would have to open another account in HK$!!!

WTFF??!!!

Of course, after all this trouble, I’ve already managed to collect several more checks from that HK company. We just agreed to tear up the checks, do a one-time transfer of the entire amount, and split the transfer fee between us.

Still, by the time I was able to get my money, the peso-dollar exchange rate was already at P46=$1.

Sigh. Banks. Can’t live with them, can’t live without them.

Tip # 2: Spend less than you earn

Okay, so I realize I’m doing it backwards here. Tip#1 was to deleverage before you invest, but before I have enough money to deleverage and invest, I should first learn this golden financial rule, which according to other financial gurus and common sense, is the basic building block to bajillionairehood.

The fact that I am struggling with credit card debt shows that I haven’t been practicing this yet. Actually, I have been relatively quiet in this blog over the past few weeks because I was doing the opposite of this rule – not following my budget, raking up credit card debt again, and yes, spending more than what I earn.

Discipline. Yes, that’s what I lack. Especially when I see the “SALE” sign on a store window. And discipline is the foremost thing you need to follow this rule. Thus, I’m going to take some extreme measures again to control my spending:

1. Snip up my credit cards
2. Write out checks already for my budgeted credit card payments
3. Open a bank account with a larger maintaining balance so I don’t touch the money I intend to save

Dear Lord, I need help!

I knew I wasn’t alone!

OFWs and ‘Uncomfortably Strong’ Peso

Inquirer Feedback, 05/29/07

THIS is a reaction to Mr. Neri’s irritating remarks from your column, part of which reads: “When asked about the families of overseas Filipino workers, who are likewise adversely affected by the peso’s strengthening, Neri said: ‘Well, they are not being taxed anyway, so that’s their consolation.’

“‘Also, OFW remittances are getting higher anyway,’ Neri said. ‘Remittances are increasing because there’s an upgrade on the quality of jobs.’”

First thing, Mr. Neri should not “brag” about OFWs not being taxed; lest he forget, remittances from the OFWs keep the country’s head above high waters. Second thing, indeed remittances from OFWs are increasing simply because more and more Filipinos leave the country to work abroad.

Mr. Neri’s statement on increased dollar remittances due to upgrades in the quality of jobs is inaccurate. It’s just a matter of ratio and proportion; the more Filipinos leave the country to go work abroad, the more the influx of dollar remittances to the country.

Now why do people leave the country, everyday, to work abroad? Because they don’t see a good future for their family if they just stick around and wait for the Philippine government to give them the opportunity to have one. It’s sad, but it’s the truth!

Indeed OFWs are adversely affected by the strengthening peso because prices are not going down accordingly, which virtually makes the nature of the strengthening peso superficial. With the current exchange rate, OFW’s practically lost about 10 percent of their income compared to fourth quarter of 2001 rates, and approximately 20 percent from September 2004 rates.

…

– Jeoffrey Bautista, Al-Khobar, Saudi Arabia (via e-mail)

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I actually consulted a couple of relatives working in the banking/finance sector about this ‘dilemma’. Both of them say that the higher inflow of remittances along with the weakening of the US dollar itself are the major factors behind the strengthening of the peso. Ergo, the government can’t really take any kudos for the now almost P45=$1 exchange rate.

While I am suffering over this – since I’m effectively earning less with prices apparently not going anywhere down – I try to simply look at it this way: Sometimes you’re up; sometimes you’re down. When the peso plummeted to P56=$1, OFWs and exporters rejoiced while importers sunk deeper into debt. Now, it’s the importers turn to rejoice, while we learn to tighten our belts. In other words, weather-weather lang ‘yan.

In any case, my uncle says his bank’s year-long forecast is for the peso to stabilize at P47 =$1 by the end of the year. I’m good with that.