Recession Overhaul!!!

It's been half of the year now since the lashes of the recession have hit Singapore, particularly the manufacturing industry where I am connected with. So far, a lot of measures have been made both by the government and by the individuals in order to survive this crisis. I for that matter have tried numerous actions in order for my limited fund to withstand the storm. One of these actions that I have made was the improvement of my skill. Hence, I have browsed all of the possible benefits that I can get as a PR(Permanent Resident) holder here in Singapore.

Fortunately, I have bumped with this scheme by IDA(Information Development Authority) of Singapore. Through this scheme, I will be able to avail a usually expensive IT related trainings and certifications without releasing a huge amount of cash. IDA is offering an 80% subsidy to any IT related trainings and certifications here in Singapore. Add to that the tie-up that was made by POSB with this scheme such that:
Say I wanted to enroll for a Project Management course whose total cost is SGD3000.00(which includes the certification exam.). Prior to enrollment, I will apply for a study grant from POSB. Then, this bank will initially lend me(through a check) the total cost of the said course at 5% interest and which can be paid within 5yrs! The check will then be handed over to the recognized training institution. After passing the certification, the government(through IDA) will then give me an amount equivalent to the 80% cost of the course. This I can forward to POSB to partially pay my study loan from them. Then, I will have the option of either paying the remainder of the loan amount immediately or within 5yrs!

So, for a loan of SGD3000.00 (for example), I need to pay the bank an amount of SGD3150.00. But, the government will be shouldering 80% of the SGD3000.00. Thus, the total cost that I will just be shelling out will be SGD750.00 or around SGD12.50/mo. for 5yrs. Good enough isn't it? For more information regarding this offer, you may browse this site: IDA.gov.sg

Let's gear up as we cross this storm!!!

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The meaning of PhP32.60 to a Singapore Dollar...

For quite some time, Overseas Filipino Workers here in Singapore have been praying for the exchange rate to increase further. That is, for the Philippine Peso to become more weaker versus the Singapore Dollar. Hence, last week, the Overseas Filipino Workers' prayer have been heard after the exchange rate rose from PhP32.45 to PhP32.60! It is a huge percent difference (8.67%!!!) from its average exchange rate of PhP30 to a Singapore Dollar. With this increase of 8.67%, it is much bigger than the Citibank paylite loan's interest rate of 6.88% (p.a.).

The sudden weakening of the Philippine Peso can be attributed to the appreciation of the oil price at the world market. Since the Philippines is purely importing oils from foreign countries, the Philippines is vulnerable to the oil price hike's impact. With the economic crisis starting to ease up in the first world, the depth of its lashes is just beginning to be felt in the third world(which, sad to say, the Philippines belong.)...

My Financial Freedom Recipe

With the current economic turmoil in the Philippines, I find it quite fitting to write this topic involving the so called recipe to financial freedom. My aim is to impart this simple recipe to my fellow Filipinos in the Philippines. This recipe is not my idea. I have derived them from some famous books that I have read during my idle time.

A lot of Filipinos today are having a problem as regards with making both ends meet. All blame it to low basic salary, high cost of living, and rapid inflation. Problems which even the people of Babylon have faced some thousands of years ago. Meaning, this has been one of man's problem since then and yet, only a few knows or rather acknowledges this simple recipe. Below are the seven basic ingredients(derived from the book entitled The Richest Man in Babylon) together with my personal comment:

1. 10% of your earned income you save.

My comment: If you want to abruptly escape the rat race, increase your savings from 10% to 20%. This may be difficult in the beginning but as time goes by, you'll get accustomed to it.

2. Control your expenses.

My comment: Make your expenses be around 60%-70% of your monthly income. As regards with your credit, have it at around 10%-20% of your total monthly income. Regarding debts, always remember that there are good and bad debts! A good debt is a debt that will give you an amount that is more than your owed amount. Thus, allowing you to be able to pay your debt and at the same time, earn some money out of it(better known as investing with zero capital.). A bad debt on the other hand is the exact opposite of a good debt.

3. Make your saved money multiply.

My comment: Invest with anything that will make your saved money grow. Maybe, as a start, by saving in the bank. One thing to note though: investing in a bank is not a fast way for your money to grow(your money will grow at the bank but it will take years before it can make you a "financially free" individual. Sad to say, we do not have the privilege to live long enough to enjoy the bank's fruit.). There are other ways...it's up to your creative mind to discover them.

4. Guard your saved money(those you put in investment and those you saved) from

loss.
My comment: Always put an insurance or anything that will assure you that your money will never be lost from the investments or savings that you have made. In FOREX investment, there is a Stop Loss option to minimize your loss once the tide goes against you. Same with buying a brand new car, you always ensure that it is covered by an insurance.
5. Invest to have a house for you to live.
My comment: This is no longer much applicable today as can be seen from the outbreak in the US, wherein a personal house is no longer an asset but a liability! Better invest with this one last(particularly now that job assignments are quite so dynamic-one day you're in Luzon, then the next day, you're being re-assigned in Mindanao.).
6. Insure a future income.
My comment: Always invest with those that will provide you a continuous cash flow. One good example:royalty payment from your invention or song composition.
7. Increase your ability to learn.
My comment: Always attend some seminars or other learning activities. This is to enable you to be always competitive(remember: the world of advancement never stops!).

Then, to further monitor your development towards financial freedom, you may want to use the following indicators(as presented by Robert Kiyosaki of Rich Dad Poor Dad.):
wealth ratio = (passive income+portfolio income)/expenses > 1.00
Speaking of income, there are three types of income, they are:
1. earned income (worst will be with 50% tax deduction)
ex: your j.o.b.(which stands for just over broke!)
2. portfolio income (worst will be with 20% tax deduction)
ex: mutual funds, dividends from corporations, interest.
3. passive income (worst will be with almost 0% tax deduction)
ex: rental income, royalty income, etc.
Take note, in computing the wealth ratio, don't include the earned income. Part of the assumption of being wealthy is of not being an employee or a worker of anyone.
debt/equity ratio<1.00 equity ="assets-debt">

So that's it: the entire recipe to becoming a financially free individual! May this recipe be the guiding motivation of the Filipinos in the Philippines during this trying times. Always remember, if there is a will, there will always be a way...

regards,

Gerald Follero-Tan Eduardo