Get rid of your debt!

Debt is one of the biggest termites in our financial foundation! But before we go deeper into that, debt is neutral, it is not all bad. There are 2 types of debt, simply a bad debt and a good debt.

Good debt is a type of debt when it will be used for business and in return, profit! You gain more money because you borrowed money to do business.

A bad debt is completely the opposite, you borrow money, use it for something that will not earn you money and in return, you are unable to pay it because you do not have enough money to pay for it.

This is what we should get rid of, bad debt! Now we can talk about a lot of types of debt but I want to focus on credit card debt.

Credit card debt in the Philippines can turn into a nightmare! Compared to the US and Canada, interest on credit cards may go as high as 19% a year, In the Philippines, it may go as high as 42% a year!

Many drown in debt here in the Philippines and when that happens, collection agents starts calling and harasses the debtor, these collection agencies go as far as sending you an "attorneys" letter and scarring you that you will get sued if you do not pay this and that and it goes on until the debt is paid.

Talk about inconvenience! I personally know someone who had so much debt, 6 digits, all from credit cards and if someone get this kind of problem, most of them would just give up but not this person, this person paid all the debt and right now, this person is out of debt and is in the green, this person have investments and it is growing! Right now, she is one of the speakers in Wealth Academy for debt management. How did she do it?

Number 1, one must be determined to pay off debt! Discipline is a must when paying off debt, cutting expenses and making extra sacrifices to make more money and pay off debt. This is the first step and most important step, with it, nothing would happen.

It is also recommended by financial experts to pay of your debt first before investing, the reason for this is because, usually, debt interest in higher than the growth of investments. It's a case of steady interest (debt) vs. fluctuating gains (investment).

If you have investments and bad debt and the same time, a good call would be to withdraw your investments and pay off the debt! That way you get rid of termites and build you financial foundation right!

Remember, control your debt or debt will control you!

Truly there are a lot of ways to get rid of debt, if you want to get more information about this, we have a dedicated series in Wealth Academy on how to get rid of debt!

On my next articles, I may divulge into detail on how to get rid of debt. Keep an eye for that.

You can get more details here about Wealth Academy:

https://www.facebook.com/WealthAcademyProgramCebu

If you are in Cebu, you can catch Wealth Academy in 2nd floor, JY Square, Lahug. Every Wednesday and Saturday, 6:30PM.

If you are in Manila, you can catch this at 3rd Floor King's Court 1 Building, Pasong Tamo cor Dela Rosa St. Makati. Every Wednesday and Saturday, 6:30PM.

Cheers!

Picture is not mine, it belongs to http://boilingfrog.ca/wp-content/uploads/2013/01/180.jpg.

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Increase your cash flow

Increasing your cash flow is the base of our financial foundation. How do we increase our cash flow? You can do business, have investments, have 2 jobs, 1 full time then after a part time job, make a Youtube Video, write a blog, sell load etc..

There are a lot of ways to increase our cash flow but the question is, is it easy? Is it easy to manage a business? Are you able to start investing strictly? Can we manage 2 jobs? What do we need to make a good Youtube Video? A blog? Sell load?

It is easy if we do it, just add discipline and it will be easy. All it takes is discipline. Now these are ways we can increase cash flow, another question would be when do we do these?

Answer: SPARE TIME! Do you have spare time? While we are working and we own a small business, use your spare time to grow your business. 8 hours in the office and after, manage your business, make it grow using your spare time.

Spare time can be used in 2 ways:

1. Make spare time a productive time. When you have spare time, use this time to create more money for you. Do things where it would create you money.

2. Waste spare time. How? By doing the opposite. Do something that kills time and not make money for you. Normally, doing this makes you spend money. Now I understand that we need rest, yes, we need it but for a reasonable time.

We cannot rest always during our spare time if we wish to increase our cash flow. I know of someone who works full time in a call center but after work, he works from home, runs a small business and serves his clients and he also knows when to rest.

In result, he is making more money for himself, increasing his sources of income. Spare time can be a productive time or a waste time. Make more money or spend more? The choice is yours.

Cheers!

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The foundation of building wealth

What is the foundation of building wealth? Many people think that it is just plainly investment. Many think that once you have invested, that's it, it's gonna grow and I will become rich. Let me shock you, investment is not the ultimate solution. Investment is just the tip of the iceberg. 

This was my mistake before too, I thought that once I have invested, that's it! Nothing else to do but to put more and more. I was wrong.

Investing is good but it should have a foundation, just like any building, you cannot establish a 100-storey building without a foundation. Everything that you build must have a foundation, that includes wealth because creating wealth is building wealth.

Here is the Ideal financial foundation:

Increase cash flow - to make money work for us, we have to have money first, earn as much as you can while you still can.

Protection - We need healthcare when we get sick and if we are the breadwinner of the family, we need life insurance for income replacement in case something happens.

Debt elimination - Usually the interest of debt is bigger that the growth of investment, why bother investing if our debt eats all our money up.

Emergency fund - If small emergency rises, this is where the emergency fund should come in, this pays up for the small emergencies. (Not parties or going to the mall, but REAL emergencies)

Investments - Finally, after having established these, it is time to invest, we let our money make more money for us.

Why do all these? For example, we get sick and we have no insurance, where would we get the money? If you have investments, for sure, it will be taken from the investments, this will stop our investment from growing. Same thing with small emergencies, if these event arises, it will all be taken from the investment, worse, have a big debt!

The purpose for this foundation is to protect our investment, we let it grow. If I explain it here, it would like be writing a book! 

I learned all of these in IMG-Wealth Academy, such an amazing venue for learning! So if you have time and want to learn more about this, please do visit the office. 

If you are in Cebu, you can catch Wealth Academy in 2nd floor, JY Square, Lahug. Every Wednesday and Saturday, 6:30PM.

If you are in Manila, you can catch this at 3rd Floor King's Court 1 Building, Pasong Tamo cor Dela Rosa St. Makati. Every Wednesday and Saturday, 6:30PM.

Happy investing!

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What is a Mutual Fund?

What exactly is a mutual fund? Many have heard about this but what exactly is it? I too had this question long ago so let me share what I learned.

A mutual fund, is a pool of funds from different investors. Investor X invest 100,000, investor Y invest 50,000, investor Z invest 5,000. This is combined and now we have a pool of funds otherwise called as the mutual fund.

With this pool of funds, these will be invested. (stock market, bonds, etc.)

Mutual fund investing are done through mutual fund companies and these mutual fund companies have money being invested as well. Individuals can invest in the mutual funds with 5000 Pesos as starting. (This is the usual opening of a mutual fund account.)

So for example, Company X has 1 million pesos being invested in the stock market, now you, a saver and an aspiring investor would like to join in, how, through the mutual fund. You now invest 5000 Pesos with Company X, Company X then will add your money to their 1 million Pesos. So it’s now 1 million and 5 thousand pesos being invested.

If Company X earns 20%, they earn 20% from their 1 million and you will get 20% from your 5000! That’s it!

Whatever they earn, you will earn too! The good thing about this is that you do not need to do anything, in the mutual fund company, there are tons of expert managing your money, so they will do all the complicated things, the result, this turn to passive income for you. In exchange, a little fee is applied when you invest in the mutual fund, this is around 2% to 3.5%. (e.g 5000 Pesos x 2%)

Sounds good? Remember, this is an investment so returns may vary, if the market does good, you will earn good, if market is not good, you will receive the same.

Scary? No, unless you have proper Financial Education.

You can learn more about this through the IMG-Wealth Academy and not only you will learn about mutual funds and investments, you will learn how to manage your money!

Series 1 is absolutely free! If you are in Cebu, you can catch Wealth Academy in 2nd floor, JY Square, Lahug. Every Wednesday and Saturday, 6:30PM.

If you are in Manila, you can catch this at 3rd Floor King's Court 1 Building, Pasong Tamo cor Dela Rosa St. Makati. Every Wednesday and Saturday, 6:30PM.

I hope I have simplified this for you and I hope this will help you in your investing!

Cheers!

Picture is not mine. All credit goes to http://www.topnews.in/files/AUM-MF-Industry.jpg.

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Mutual Funds or buy Stocks directly? Try Financial Education!

It’s not an argument which is best, after all, these 2 instruments will help us increase our wealth. Where does the difference come? Pretty simple, if you are the type of person who have all the time in the world to monitor the stocks movement, that’s from 9am to 3pm, Monday to Friday, have all the experience in the stock market, has the right information which company is good to buy or not, have all the needed skills, then by all means, go right ahead and invest directly in the stock market.

Now you ask yourself, should I invest in the Mutual Fund? If you are the type of person who is busy doing something else like work, has no experience in the stock market and do not have the right information on which company to buy or not, then go with the mutual fund. In the Mutual Fund, there is an expert who handles your money, this expert knows very well what to do with the money, has the right skills and is dedicated to let the money grow.

Simply put it this way, these 2 instruments will help you achieve your financial goal. Think of it as an Airplane. Investing in the stock market directly makes you the pilot of the airplane, you must know how to fly it, you must lift off and safely land to reach your goal, you’re driving it by yourself. Now the Mutual Fund makes you the passenger in the Airplane, you just sit tight and relax until you reach your destination while the pilot flies the plane for you. Still both of you reaches the same destination.

So which is best? Both of them, it really depends on your investing style but the most important thing before investing is being financially educated. I have friends who just invest without knowing how it works, the result, money was not growing, worse, they lost their money.

There are some basic questions that investors should know like,  do you know what to do when the market soars high? What about when the market crashes and charts go red? When is a good time to buy or sell? How long should I keep my investments? These question will arise for sure and it is always good to prepare yourself by looking for a venue where you could be taught this.

There are venues which offers this but please be careful as scams are not far from this. On my end, I learned this in Wealth Academy. Wealth Academy taught me everything that an investor should know, it taught me so much, it made me an Associate Financial Planner. (My certification has just expired, it’s just a matter of renewing it now.)

Wealth Academy is the educational arm of International Marketing Group or IMG and here is a plus, the first series is free!

Just like going to war, you need to be equipped, trained and disciplined. Investing is the same way, with proper training and education, you can’t lose!

Cheers!

All credit goes to LeniProduction for the picture above from http://browse.deviantart.com/art/Question-mark-174773523. I do not own the picture.

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The 2 pains in Life

While I was joining a seminar in Wealth Academy (this is where I got my training in preparation for becoming an Associate Financial Planner and it's open to all too!), in the first talk, it talked about the basics of savings, why we should save and values needed to save. One very important slide hit me, I still could remember if as if I just listened to the seminar again.

It talked about 2 pains in life, I thought "it must be pain from broken hardheartedness, or pain of failure, rejection, or even a physical wound." Well, it's not, let me talk about it a little about it here:

In life, there are actually 2 pains:

1. Pain of Discipline

2. Pain of Regrets

What are the similarities? For one, taking both ways will still cause pain but in the long run, one pain is only temporary and the other is permanent.

The Pain of Discipline

This pain is something we get our from a sacrifice that we make because it is only right. For example, you know that we should save money for retirement and to do that, sacrifices are made, we cut expenses, we save money, we don’t party that often anymore, we limit our wants, in other words, our life style changes. When someone invites us to have fun and party, we decline because we should not spend so much anymore.

The pain that we get from this are pain of discipline, we sacrifice a certain action for the betterment of the future. This pain only last for a few minutes then after that, it would be gone.

After all, when it is time that we can’t work anymore and we saved so much. We will live our rest of our life with no regrets.

Pain of Regrets

Pain of regrets is exactly the opposite of the pain of discipline. When we do not do something about securing our future or you have done something that would have a negative impact in our life, we then would regret it. As the saying goes “nasa huli ang pagsisisi” which means regret is at the end.

Remember the last time you had a regret? It sucks right? I had regrets too and In life, I do not like to have regrets. The worst kind of regret is the regret the you will bring throughout your lifetime.

Avoid regrets, do what is right, live life to the fullest! Do what you can do today, do not delay!

Cheers!

All credit goes to ~JonathanTheSmex for the picture above from http://browse.deviantart.com/art/discipline-317705581.

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