Dear Readers, 

We are shifting!

Hopefully you will share our belief that the new premises are newer, bigger and better so as to serve you better. 

The blog design was done by two enterprising young men, Danny and Phuah of Simpleet Solutions. The hosting is also by them. 

We are a little late in the shifting. Our original scheduled date was 8^th February 08, but better late than never.      

Please click on the link below to be transported to our new home.  

                                        http://fathersez.com 

Note: 

The picture is from Google. I remember seeing this shot in one of our local papers some months ago.  They actually do shift houses this way….. sometimes!!!

I remember reading in Readers Digest quite some time ago, that should all the money in the world be equally divided amongst everyone, in less than 3 years, the wealth would go back to the earlier distribution.

RacerX wrote about the “buy out packages” being offered by Chrysler to some of its employees. By taking a sum of money, maybe equivalent to about 2 - 3 years of salaries, the workers were expected to walk away and begin life anew. Without the safety net of the Chrysler salaries.

I am not sure if this offer has been completed or how many workers accepted the offer.

I believe most people used to receiving a monthly salary and spending it, attain a certain mind set. A mindset of spending what they have. To be sure, some of the money will go towards savings / investments. However, I dare say that a large amount will go off towards some sort of consumption or another.

And sooner rather than later, they will be left with no job, and no money.

The same has been demonstrated in Malaysia.

a) We have a Government regulated compulsory savings scheme. The employer pays 12% and the employee pays 11% into the Employee Provident Fund (EPF) which manages the funds and pays dividends yearly. The contributions are tax deductible.

EPF officials have been quoted saying that their studies indicate that the people who withdraw their savings in a lump sum upon reaching the age of 55, tend to spend their savings off in 3 years!

b) We also have a Federal Land Development Authority(FELDA). Set up in 1956, it was part of an ambitious plan by our country’s then leaders to create income opportunities for a vast number of underprivileged people. The Government parcelled off huge chunks of land in 5 acre parcels to families who wanted to grow cash crops, mainly rubber and palm oil.

See Wikipedia’s write up on FELDA.

The Government also made large investments in palm oil mills which provided a ready market to the farmers producing the palm oil fruits.

Over the years, some of these land parcels were seen by property companies as having development potential and enticing offers were made to the FELDA settlers. Not surprisingly, a number of the settlers took up the offers and became instant millionaires.

Our tabloids were full of stories of a number of these instant millionaires buying cars, building mansions, swimming pools, taking on second wives and the like. Basically squandering away the funds.

Those of us who are used to receiving regular payments as salaries and use that to manage our financial lives have to be very very careful, when we receive lump sums or windfalls. No matter how we may have planned the utilisation, a little by little the amounts may be frittered away

It would be good and very useful to revisit Mighty Bargain Hunter’s write up on piggy banks and choose the very best model available.

I am also expecting a significant part of my retirement to come from EPF. I must, must remember to follow this advice!!!

Much has been written about how finances are treated in families. Some have joint accounts, others have 3 accounts - mine, yours and ours and others just have yours and mine accounts.

Some of the more “careful” or “risk mitigating” types may look ahead and consider financial consrequences in the event of family breakups and try to structure something now to minimise issues later.

In our family, we have the “all or nothing” structure.

My wife was working in a bank when we met. She continued to work after we got married and had our second girl.  A near tragic incident involving the second girl, when she was 3 months old, made us review the situation. As I was earning more, we decided that my wife would stay home whilst I would continue working.

At that time, we still had separate accounts, though I paid for all the household expenses.

When I started work overseas, she became an additional signatory to all my bank accounts, hence having powers to withdraw any amount she chose. Now all our assets are in our joint names though most of the liabilities are under my name.

This structure is one that may self destruct if there are ever irreconcilable rifts between us.

I have thought about this. But I want to give an iron clad guarantee to my wife that whatever happens there will be no significant negative impact on her or the children financially.

I think for the sacrifices my wife has made in giving up her career for the betterment of our family, the support she has given me in my business ventures, the support that she has given me in my personal life, this is well worth it.

The week started off in a great fashion.  

The Art of Manliness, a really interesting blog “dedicated to uncovering the lost art of being a man”, highlighted my post on what should I tell my children on choosing a spouse, and this drove in a nice stream of traffic.  

Thanks again, Brett.  

Some of the posts from the blogs that made me sit up are listed below. 

Get Rich Slowly’s conversation with one of his readers which gave birth to the question on what motivates people to pursue smart personal finance. For people who are already shouldering heavy debt loads and become slaves to servicing these debts, maybe the source is clear. It would be pain. 

What are the identifying factors that give equal or stronger doses of continual motivation to those starting off in life now?  This is what I am searching for, as my daughters approach the day they would start their own financial and life footings. 

The Simple Dollar listed 9 simple ways to stand out in our careers. Well, I am guilty of not having managed my career well, but this advice will stand in good stead for my children.  

I could not help smiling as I was reading this. I Have Paid for this Twice Already had an accounting dilemma on her hands. She was sure she owed somebody $800 for her car repairs and everyone seemed to say, “Nope! You don’t.” Luckily it did not escalate into an ethical dilemma, and it has now been finally resolved. 

My Dollar Plan has neatly analyzed her time to see if her work/life balance is what she would like it to be. Her pie charts gave me quite a jolt.  She has (whilst juggling 89 credit cards et al) managed to devote an astounding 33% of her time for the children. This is truly incredible. Even when she starts going back to work, it would still be a remarkable 22%. Well done, Madison.  

I have to look harder at some of my time wasters and see how I can squeeze more time for the children and the family.

The Carnival of Personal Finance – the Valentine Edition was hosted by My Dollar Plan. Though I did not participate in this Carnival, there are lots of useful and interesting articles listed.    

Petrol prices are terribly, terribly cheaper in Malaysia than in almost everywhere else in the world (except maybe the Middle East). The Gomen keeps telling us how much they are spending on subsidizing the cost of petrol to users, and how much a financial burden it is.  

Our general elections have just been announced and we are all gritting our teeth expecting a fuel rate hike soon after the new Gomen is safely ensconced for the next 5 years.  

Sometime ago, I wrote about having fitted out our car, a Toyota Camry with NGV capability.  This has reduced our costs of the Camry’s utilization significantly, and I should be able to recover the cost of the NGV fit-out costs in about 2 years. 

We also have another car, a Toyota Innova. This is larger and is more suitable when we travel as a family. This car is also used by my wife for her grocery shopping, kids to school and other activities, errands etc.

So generally, this car is used a lot less than the Camry. We keep a car log book, tracking daily travel, km when we start and when we return, cost of servicing, and fuel pumped etc. 

The average petrol cost per month for this car over the last 7 months is RM 213.90, or say RM214.  The estimated cost of NGV fit out is RM 6,800. In addition, I have to install overhead racks for baggage as there would be no more room at all in the car for stuff. This is another estimate of RM 1,500, making a total of RM 8,300. 

Assuming I can save 50% of my petrol bills per month (which is the savings rate I get for the Camry) or RM 107.00 per month , this investment will take 77.6 months to be recovered or 6.5 years. 

Or an investment rate of return of 15.38%. 

And, of course, if there is a petrol rate hike, the rate of return will be proportionately higher.  

I have been undecided on this for some time now.  I am now revisiting this issue a lot more analytically.  

One 

Should I go through all these trouble to save RM107 per month? (Ever since I started reading the pf blogs, I have decided to be a lot more careful with cars, basically maintain them well and run them to the ground. So this car is going to be with us for quite, quite some time.) 

Two 

Should I ask my wife to try better planning the usage of the car? For example, Lynnae is working on with 3 days a week of no driving at all.   

Three 

Would I be able to take the RM107 savings and chuck them into a savings / investment vehicle and watch it grow? Or would I just waste it away? 

FMF highlighted as one of his favourite money saving tips on cars, a comment from a Yahoo reader. 

“In 2001, I bought a five-year-old Jeep Grand Cherokee with 40,000 miles. I paid cash for it and decided to invest what would have been a “new car payment” of $400 a month into a mutual fund. Five years later, I have nearly $40,000 in the fund. It was easy and a lot of fun watching my money grow. My Jeep is still running great, and I’m now trying to figure out what that to do with some of that money when I retire!”

Looking at the reasoning, the answer to my dilemma seems to be a resounding YES.  

a) I should pay for the NGV fit out. And if necessary take out part of present savings in Unit Trusts to pay for this. 

b) Set up standing instructions from my bank to pay in RM107 per month back into the Unit Trust. 

c) And quietly let my savings grow and reduce my carbon footprint at the same time. 

What do you think? Is there something else I can do to make the whole thing even better?

I want to thank Get Rich Slowly for his excellent post, “What motivates you to pursue smart personal finance?”  It provided me the inspiration for this letter to my elder girls. 

Dear Along and Azah, 

The time is drawing near for the both of you to graduate, seek jobs and find your own financial footings. Your mother and I have tried our best to bring up the both of you and your other 3 siblings, in a responsible manner. All your lives, we have always had food on the table and a solid roof over our heads. Almost all your requests have been met. You have almost never been left with any of your wants unmet.  

You have never ever seen debt collectors come to our house and bang on our doors.

You never had to pick up the phone and lie to the other person that your father is not in, so as to avoid a bill collector. 

You have never seen unpaid bills lying around the house. 

And you have no idea what it is to be poor or to seriously want for money. 

Having brought up the both of you like this, I wonder if I have done enough to instill in you  the motivation to pursue smart personal finance. 

I envy parents who have taken steps when the children are so much younger. There are many examples, some of which are listed below. 

- Money advice to my teenage son,

- Teach your teen the basics of money management,

- College money matters,

- Following our own path.

For the vast majority of people, motivation to pursue smart personal finance comes from two sources:- 

a)  Guidance and examples set by parents or other role models and 

b)  Pain, loss, suffering or set backs caused by lack of money or money mistakes. 

Well, I may not have done enough of (a) and certainly you have not gone through (b). So what do we do now to instill in the both of you the needed motivation? 

You have been writing down your goals for some time now. We have talked about seeking financial independence as one of your major goals in finance.  

Now I seek you both to think hard and write down the reasons why you want financial independence. It could be:- 

a)    Never having to work for a lousy or “kerepot” boss, just because you needed the paycheck. 

b)    Being able to do things that you choose to do and not because someone else wants you to do. Like travel, working with the underprivileged children in Rembau etc. 

c)     Never having to go through the financial pain your Auntie Faridah and your cousins Sophia and Mima went through when she went through the messy breakup with your Uncle. Your mother rented a house for them and they lived with us for almost a year. 

d)    Being able to spend comfortably on your real wants knowing that you have a strong financial base. 

e)    Never having to be a debt slave.  

f)      Doing the greatest charity, which is not being poor yourself.  

g)    Having a sense of purpose in your life. 

Spend some time on this and think about this carefully. These reasons should be strong enough to provide you with a continuous stream of the motivation you’ll need to pursue smart personal finance. Reading again your “WHYs” should keep feeding you the required motivation.  

And believe me, strong and continuous motivation, you’ll need. 

- To protect you from succumbing to the relentless advertising of all kinds of products and services that you’ll see day in and day out. 

- To protect you from so called “well meaning friends” who’ll nudge you into spending just a little above your budget, today, tomorrow and everyday. 

- To protect you from the clever and well oiled banking machinery that seeks to offer you loans to buy things that you don’t really need, so that the banks can live off you. Slaving away to pay them interest. 

There are still many other things for you to learn about smart personal finance. I am still learning myself. However, once you have your motivation embedded strongly and deeply enough in you, you’ll start seeking out this knowledge and it will come. I have no doubt about that. 

My dear princesses,  

You’ll never fully appreciate how difficult it is for parents to see their children go through difficulties of any kind, until you are parents yourself.    

I can only pray that your mother and I have brought up the both of you responsibly enough to recognize good advice and to listen and be prepared rather than to go out unprepared, make the unnecessary mistakes and then learn.  

We have talked about the story of the mother mouse and her baby. The baby mouse did not listen to its mother’s advice and got caught in the mouse trap.  

The last thing, your mother and I want to see is you getting caught in the trap of bad personal finance. 

When you have finished your studies, let us spend more time on going deeper into planning your personal finance moves. After all, getting a good job is also part of smart personal finance.  

For now focus on your studies and do well in your exams.  

Your mother, brother and your two younger sisters convey their best regards and wishes to the both of you. 

Love 

Papa

Wikipedia’s definition of a handyman is a person competent in a variety of trade skills, inventive/ingenious repair, and maintenance work.

We must all know these kind of people. People who have their weekends full repairing various parts of the house or building extensions like car porches and such. Lighting fixtures, plumbing work, window replacements are all a breeze.

Others (like me) have to pay someone to do it.

Handyman skills have been underrated for some time, though there may now be a resurgence as shown by the popularity of DIY items in outlets like Home Depot etc. 

Popular Mechanics wrote about this in their October 2007 issue.

The savings the families rack up in having a handyman in the family is incredible. Emily of Remodeling this Life estimates her family’s savings at almost USD100,000, and still counting. And if we take into consideration the fact that a $ saved is better than a $ earned, these amounts seriously mount up.

There are now many resources available for us to learn these skills. TV programs, websites, books and classes.  All we need is interest and willingness to invest and learn.

Handyman skills can also be easily leveraged into a ready source of  side income. Lawn services, housing repair jobs, plumbing jobs, lighting and air conditioning jobetc. should be quite easily available in most of our immediate neighbourhoods.

These skills are also handy for those of us in real estate, who buy, rehab and flip homes.

My father in law is an outstanding handyman. When we purchased our first home a number of years ago, he built us a retaining wall and did all the minor repairs. He is quite advanced in age now, otherwise he would be a great partner in a “handyman business” that I often yearn to set up.

Now one of my wife’s many uncles helps us out with home repairs, plumbing works and sometimes electrical work.  

In school, we had classes called “Industrial Arts”, where we were taught skills in handling the basic carpentry tools. I was never good at this and can still remember being fascinated by the elegant pieces of furniture some of my classmates could craft up.

Want to rate yourself. Have a look at the 25 items Popular Mechanics has listed in their choice of skills everyman must know.

The purpose of communication has been defined as getting our message to others clearly and unambiguously.

I am not an expert, though, like a great many of us, I have been communicating for a considerable number of years . The experts talk about various processes in communications and how all the barriers should be removed so that the purpose of the communication is achieved.

A very important chain in this link is the “preparedness of the receiver of your communication”.  This is something that we never know for sure. The feedback we receive is a a good indicator of how our communication was received and understood.

How do we better our chances at getting our communication better received and understood?

What about “indirect communications”?

The U of San Francisco talks about indirect communications. My idea of IC is actually more like “lobbying”.  Wikipedia’s definition of lobbying refers to this as all attempts to influence legislators, organised groups etc.

I am talking about the same principle here. The message that we want communicated is sent indirectly through another channel to the intended recipient. The recipient being more receptive of this “new channel” receives the message in a more willing and open manner, gives good feedback and the purpose of the communication is more effectively achieved.

We do this all the time, don’t we?

For example, I pride myself that I have great communications with my wife. We tell each other almost everything about our lives. However, there are somethings that I can convey much more efficiently by telling some of her close confidants to tell her. People like Ungga or her uncle, Che Lek for example.

This is no indication of failure to communicate between me and my wife. My wife is a people person while I am a number person. My idea of great communication is direct to the point. This fails in a number of situations. Ungga and Che Lek on the other hand are also people people, so they know how to convey the same message in a much better manner.

Now you may ask, how did I manage to convey my message to Ungga and Che Lek in the first place. I don’t really know. I can only suspect that this has something to do with the relationship between the receiver and the sender.

This blog is another example. The primary objective of this blog is for me to communicate to my children, especially the two senior girls, the life and pf mistakes I have made and ideas on how these could have been done better. So that my children do not repeat my mistakes.

By using blog posts the need to have both of us mentally and physically prepared at the same time is removed. My girls can read the posts alone or with their friends and whenever they want. 

I think the messages are better delivered this way.

What about you? How often, if at all, do you use indirect communications? 

My wife and I dropped by the farm earlier today.

Whilst the goat shed is almost completed, there are still a number of items to be done. The fencing, the planting of geti and petai belalang trees, the store room, water tanks, electricity connections and general cleaning works should round it up.

The Napier grass will be planted next week and should be ready for harvest once the first intake of goats arrive.

The geti and petai belalang trees are in a nursery now and will be transplanted all around  the farm where bunds have been built. The leaves provide a rich source of food the goats love. (I could not find any web references for the geti trees. Both are local generic names).

So far the target date of 5th April 08 for the thanksgiving / opening “kenduri” appears to be on track.

The development budget for the farm has been exceeded. I am not that concerned, as none of the people involved, Zai, my wife or myself have ever set up a farm in our lives. I always had this contingency in mind from day one.

Operating expenses have been budgeted at a base of 1000 per month. Our cash breakeven would be selling about 5- 6 goats per month, something that we feel can be reasonably easily done.

In my mind, more important than this financial target are the operating targets. Like setting up and adhering to clear cut and understood systems for bringing in the goats, feeding them, tending them when sick, tending to pregnant goats and deliveries, looking after the young, maintaining goat records per goat and maintaining farm daily records.

And of course, marketing, logistics and sales.

I am using my Ghana experience as a benchmark. Despite all our initial studies, we still got taken in by a number of small issues that most people would overlook in doing feasibility studies. Like all payments to be in cash and not by cheques. Like payment for house rental one year in advance. As our ground knowledge increased, so did our ability to negotiate better and much more reasonable terms.

The rest of the year from 5th April 08 shall be dedicated to honing our skills in these activities.

We are intending to bring in only 20 - 30 females and 2 males to start with, whilst our learning process is going on.

To ramp up capacity once we are comfortable should be relatively easy to do. 

The side or non monetary benefit of the farm is that all, or rather, most children like visiting farms and playing with young animals. Today, our son, Abang came with us for the visit and we are sure the younger two girls will also join us from time to time.  At least this takes away their attention from video games and such and allow them additional outdoor activities.

This week has been a little hectic with considerable travelling. I have also not participated in Carnivals for some time. I really should get my act back together.

I must thank FMF for making mention of my blog in his weekly roundup.  

On the positive note, I have finally managed to “google reader - ize” most of the blogs that I follow. Using my previous bookmark and read, which was “upgraded” to email was quite time consuming. Now it is a lot more manageable.

Some of the posts that I found interesting this past week are listed below.

- The Digerati Life’s take on teaching our children how to handle debt and credit.  This guest post by Tisha Kulak will come in real handy for the compilation I am doing for pf lessons that my children should grasp and understand.

- The outstanding “How to manual” for pf management applicable all ages, bringing together the knowledge and experience of 17 pf bloggers whose work I enjoy and respect. 

- RocketC talks about heading in the right direction in reducing his deficits after starting his budget. I know exactly what and how he feels. My wife and I have also just started on this journey after a long, long time of ignorant bliss.

- Wise Bread wrote about getting free lectures from renowned Universities, like MIT and Yale, even though it does not come with any credits. My eldest daughter who is doing psychology may find this tidbit of information very useful.

- Lynnae’s declaration on behalf of all ladies to those of us clueless husbands (self included) on the 7 things that women want us to understand about money. Man, this makes a lot of sense - after seeing it in writing.

Here’s to a great and productive week ahead!