… con’t.

Let me try to quantify the 25 year cost of my subtle addiction on diet sodas. Let us assume that the cost of a can of soda today is P25.00 and on an average and I consume 2 cans a day (I go more than that). Let us also assume that the price of soda goes up by an average of 6% and the cost of money will be also at 6%. For 25 years, my addiction to diet soda will look like this:

“In medical terminology, an addiction is a chronic neurobiologic disorder that has genetic, psychosocial, and environmental dimensions and is characterized by one of the following: the continued use of a substance despite its detrimental effects…”. – Wikipedia. Addiction is often attributed to dangerous abuses such as alcohol, drugs, gambling… even shopping.

Allow me to make a confession of my addiction – diet soda. While some people will not look at drinking soda as an addiction, I still need to get off this stuff for 3 major reasons:

1) My kids – I am not setting a good example for them. We often teach our kids not to drink soft drinks because it’s not good for them. When I drink my diet soda, I am telling them that it’s ok to drink soft drinks. Fathers who smoke cigarettes have a horrible record in preventing their children from smoking. Whether we admit it or not, many of our children’s wrong behaviors were because of us parents and especially us fathers.

2) My health – diet soda or soft drinks are very unhealthy. Caffeine, sugar and sugar substitutes, etc. are clinically proven to be bad for us. Aspartame, the sugar substitute being used in diet sodas can do so much damage to our body. Imagine drinking diet soda for 20 years; it definitely will have some adverse effect on us one way or another. I am 42 now, imagine how many liters of soda I have gulped in my life.

3) My wallet – while a can of soda typically costs us about P20.00 or so (depending on where you take it), the accumulated value of this addiction can be very costly.

Let me try to quantify the 25 year cost of my subtle addiction on diet sodas. Let us assume that the cost of a can of soda today is P25.00 …

Catch part 2 soon!

It’s December! Cooler nights and mornings… christmas decors and christmas carols.

When I was a child, I have always loved the Christmas season like every other child. I have often looked forward to the season with joy, excitement and much anticipation.

I have to admit that I still have the childish feeling when it’s the Christmas season and, as a father, I love seeing my children enjoy the same excitement I had decades ago. Buying our daughters a doll house, and my sons their action figures. Reunions and all those wonderful Christmas experiences are memorable moments forever etched in my heart.

While I still have those youthful warm feelings about the Christmas season, there is one thing that us adults always have to contend with: Christmas spending.

After all the Christmas festivities have winded down, have you ever found yourself hoping that you did not have to spend as much as you did? Have you ever vowed that you’ll never spend as much again, yet you find yourself spending more again the following Christmas?

If you do, welcome to the club! But don’t despair because if you really want to curb your Christmas spending, here are some easy tips:

§          Make a priority list. Determine who should be an absolute “must” to receive a gift from you. You can set an order of priority, like spouse, children, parents, siblings, etc. While you may want to be a generous giver, you are not the fictional Santa Claus. Your boss or your officemates will not take it against you if you only give them a simple Christmas card this year, or better yet a sincere greeting. If a friend of yours will feel bad that you don’t have a gift for him/her, he/she may not be such a good friend after all, right?
§          Set a budget. I know this is not easy, but it is best that you have a budget for your Christmas spending. Determine the amount you are able to set aside and make sure that this budget will not eat up on your mandatory expenses, like rent, food and utilities. It really doesn’t make sense that you give Christmas expenses a priority over your necessary expenses. After determining your budget, you may now allocate them according to your priority list.

§          Be creative. Most people will always equate a good gift with an expensive gift. Year after year, well-meaning friends will churn out really expensive gifts which I really appreciate, but can’t reciprocate. Sometimes, I’d like to tell them that the gesture is more important than the gift. I will have the same appreciation if they gave me a card or an uber-expensive Christmas basket. It may be cliché but it’s really the thought that counts. I have a good friend who gives me the best Christmas gift year after year—an offer of prayer.

§          Never buy your gifts on credit. Don’t use your credit card, don’t buy something on “gives” and don’t use deferred payments. Buying gifts to please others and yet bury yourself into consumer debt is one of the most unwise things you can ever do. If I go home with a nice expensive gift for my wife and yet I purchased it through credit, she will definitely have an issue with it and it will really spoil the gesture. Give what you can afford, if you can’t afford it, don’t give it. I’ve always subscribed to the saying that “you can’t give what you don’t have.” Buying gifts on credit is the same banana.

My biggest advice to the readers is to remember what Christmas is all about. There was once a wonderful commercial on television where they started the ad with the photo of Santa Claus. There was an eraser and pencil that changed the photo of the jolly old Santa to the picture of the real reason for the season, Jesus Christ.

We should start thinking less of the ho ho ho’s and more of the hallelujahs! Christmas has been replaced with rabid commercialism, which has engulfed all of us. I don’t think that was what the Lord expects from us.

While there is nothing wrong with sharing the spirit of Christmas by merry-making and gift-giving, let us always remember that we can’t let social pressures affect proper personal finance management or our faith. Besides, we are already recipients of the best gift we can ever have and the Bible made it clear in John 3:16: “For God so loved the world that He gave His one and only Son, that whoever believes in Him shall not perish but have eternal life.”

… part 2

As financial planners, are we getting our message across? Are Pinoys any closer to financial freedom? I am elated to see more and more financial planners, more books and articles and a gazillion blogs on personal finance. I’ve seen, heard, read a lot about personal finance of late—some are great messages; while others are really rubbish, but at least the message to do something about one’s personal finance is being mentioned. Let me repeat my earlier question, are we getting our message across? From my perspective, it seems that whatever we are doing is a mere drop in the bucket, and my colleagues in this field need to realize that we are not as effective as we believe we are (apologies to bruising the egos of my colleagues).

There’s definitely nothing wrong with what we are advocating, and our message is extremely relevant. I believe that there is something wrong with the manner we convey our message. To the real world out there, we sound like condescending self-righteous bigots telling everyone they are wrong and we are right. Have you heard personal-finance speakers? They will tell you not to drink Starbucks coffee and stick to 3-in-1 or not to buy a flat TV or a new car. They will tell you that gratification is evil and will burn you. Let me use an analogy here: It’s like hearing a preacher tell you that ogling a beautiful woman will cost you eternal damnation. Yes, they are probably right, but they may not look at things from the right perspective. It’s not just about the message, it’s also about the delivery of the message.

I think it’s about time people like us realize that folks have dreams and they must enjoy these while they can. Dreams do have a deadline, as my mentor aptly phrased it. Are you going to have that dream family house when all your children are grown up and have moved out of the house? Will you buy that nice flat TV when your eyesight has become so weak? Our life has a timeline and we must act according to the set time we have. I like how the Bible puts it—“Man’s days are determined; you have decreed the number of his months and have set limits he cannot exceed” (Job 14:5, NIV). Knowing what we want in life is critical and the way we live should be reflective of our goals. It’s not all about accumulation of wealth that we should be concerned about but also the purpose for accumulating wealth.

It’s about time we really know what our dreams are and that our “dreams have deadlines”; it’s about time we know the purpose of our dreams. Oh, it’s also about time for financial planners to change the way they sing their song.

“The man who plants and the man who waters have one purpose, and each will be rewarded according to his own labor” (1 Corinthians 3:8).

Sometime ago, I had lunch with a mentor of mine, Rex Mendoza (of the giant real-estate conglomerate Ayala Land). Rex was one of my mentors in financial planning; there are many things I learned from him that pretty much influenced my career as a personal-finance coach and educator.

Financial planners are not known for extravagance and flamboyance—in fact, people have always looked at us as misers. Financial planners are very prudent people; they are not the kind that will spend money on a whim and will really take a lot of time trying to ascertain needs from wants.

My friend Rex was very much a financial planner in all sense, highly knowledgeable in the aspect of personal finance and one who really practices what he preaches. However, the Rex I was having lunch with seemed to be a different person, a changed man singing a different tune. What happened to my old mentor? Has he gone to the dark side? I was trying to figure out who I was having lunch with. Years ago, this was the guy who was telling me that every peso counts, that Starbucks coffee was evil (because of the cost) and that investing was the only activity we should engage in…get the drift? The “new” guy I was having lunch with was talking about expensive LED lighting, koi pond and exquisite veneers for his house renovation, playing golf every weekend, traveling all over…and I almost choked on what I was eating when he mentioned driving a Porsche. That’s it, I am certain that my old mentor and friend has been possessed, cloned or just plain, well, lost his marbles. I was just about to gag this guy to ask him what he did with my friend when he uttered something that pretty much left me speechless for a few moments: “Randell, after all these years, I finally realized that ‘dreams have deadlines.’” Er, what—say that again?

My lunch encounter with a former mentor got me into thinking, and the words “dreams have deadlines” seemed to me like experiencing LSS (last-song syndrome). Financial planners have been preaching about living a life of extremes while the real world has a totally different view with regard to the use of money. Filipinos and financial stability are two words you don’t normally see in one sentence. Just look around you—how many of your acquaintances do you know need a spanking with the way they handle their finances? Our country remains to have the lowest savings rate even in Asia, yet we see a steady increase in consumer debt among our population—a definite recipe for disaster. The solution: financial literacy. If our brothers and sisters become financially literate and have a better mindset with regard to the way they use their money, we would definitely see a lot more happier people. The solution is simple—or is it?

… catch part 2!

You will often hear the word “diversification” when you discuss about investmetns. Diversification is important, in fact it is still considered one of the most effective risk managment tool, minimizing investment losses.

What does Investopedia say about diversification? (a favorite on-line site for invesmtment stuff)

“A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio.

Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated.”

What does the Bible say about diversification?

“But divide your investments among many places,
for you do not know what risks might lie ahead.”

– Ecclesiastes 11:2. New Living Translation.

Both definitions are essentially the same but I like the one from the Bible better — I understand it better and I am sure it is the truth.

“If money is your hope for independence, you will never have it. The only real security that a man can have in this world is a reserve of knowledge, experience and ability.”

– Henry Ford

Jim Rohn wrote a very good article about the Ant Philosophy. When you study the ants, they really are amazing creatures largely because of their characteristics and their characteristics are very applicable to personal finance.

When you look at how the ants go about their business, they are very structured and deliberate. They know the value of hard work and they definitely know the value of having a storehouse. If we can apply the characteristics of ants into they way we go about our life, we definitely are more prepared with the challenges of life, and definitely more prepared for our life events — emotionally and financially!

The way the ants behave is so amazing and long before Jim Rohn thought about the said creatures, the Bible already made reference to those wonderful creatures. God actually wanted us to be like ants – “Go to the ant, you sluggard; consider its ways and be wise!” (Proverbs 6:6, NIV). And for a good reason… “Ants are creatures of little strength, yet they store up their food in the summer.” (Proverbs 30:25, NIV).

You want to achieve financial freedom? Be like the ant!

The Ant Philosophy

by Jim Rohn

Over the years I’ve been teaching children about a simple but powerful concept – the ant philosophy.

I think everybody should study ants. They have an amazing four-part philosophy, and here is the first part: ants never quit. That’s a good philosophy. If they’re headed somewhere and you try to stop them; they’ll look for another way. They’ll climb over, they’ll climb under, they’ll climb around. They keep looking for another way. What a neat philosophy, to never quit looking for a way to get where you’re supposed to go.

Second, ants think winter all summer. That’s an important perspective. You can’t be so naive as to think summer will last forever. So ants are gathering in their winter food in the middle of summer.

An ancient story says, “Don’t build your house on the sand in the summer.” Why do we need that advice? Because it is important to be realistic. In the summer, you’ve got to think storm. You’ve got to think rocks as you enjoy the sand and sun. Think ahead.

The third part of the ant philosophy is that ants think summer all winter. That is so important. During the winter, ants remind themselves, “This won’t last long; we’ll soon be out of here.” And the first warm day, the ants are out. If it turns cold again, they’ll dive back down, but then they come out the first warm day. They can’t wait to get out.

And here’s the last part of the ant philosophy. How much will an ant gather during the summer to prepare for the winter? All that he possibly can. What an incredible philosophy, the “all-that-you-possibly-can” philosophy.

Wow, what a great seminar to attend – the ant seminar.  Never give up, look ahead, stay positive and do all you can.

Just thought of posting some highlights — sorry, a bit ‘nose-bleed’ but this information is quite important to us Pinoys. The information can’t really say we are headed for economic recovery, but it means there are some economic activity that can give us hope. Hope, after all, is eternal right?

A concern is the slower pace of excports especially if you compare it from last year. However, May numbers showed a good improvement from April numbers and let’s hope we can sustain the moderate increase. A global softening of the electronics market has continued to affect our electronincs exports industry especially if you compare it from last year… but it is better in May as compared to April still. I’ll take any form of good news anytime of the day!

Foreign Direct Investments is a good indication of economic activity and reversal of the outflow trend is a much welcome break we all need. Because of the gloabl financial crisis, capital moved out of emerging markets like the Philippines to seek safer havens. A reversal in FDI flow is a good indication that things might be looking a little brighter for us Pinoys.

Fiscal issues continue to besiege us and it will be very difficult to balance the budget because government is trying to spice up the economy; it times when consumer spending is low, government tries to spend more to ‘pump-prime’ the economy. It looks like RP wants to take advantage of the low interest environment to float bonds which we all desperately need. While we can’t avoid borrowing, at least our cost of borrowin is much lower. Just to note that consumer debt (like credit cards) are still something we should avoid, ok? We are not the Republic of the Philippines, haha.

Things are really ambivalent but I am still one who clings to hope… hope that things will look brighter for all of us soon.

Hope is easy when we are connected to the real source of hope – “We have this hope as an anchor for the soul, firm and secure. It enters the inner sanctuary behind the curtain…” — Hebrews 6:19

1. Export falls at slower pace in May

Philippine exports continued to fall in May albeit at a slower pace
NSO disclosed that May exports totaled $3.08 bn, down 27% Yoy
However this is up 10% Mom as exports reached $3 bn per month mark in May versus $2.8 bn in April
YTD exports still down 34.5% to $13.8 bn
Electronics declined 27% yoy to $1.8 bn in May; Compared to last month, elctronics exports were up by 8%

2. Foreign Direct Investments inflows reach $601 mn in April

FDI surged to positive flow of $601 mn in April, reversing the outflow trend in Jan to March of $27 mn
April inflow considered considered an aberation as it featured Kirin Holdings’ investment in San Miguel Brewery
Exclusive of the $1.1 bn inflow from Kirin, FDI wouldve posted a decline of $500 mn for the month
FDI inflow in the first four  months of the year reached $648 million, up 29.1% from a year  earlier.

3. Philippines approved $1 bn bond issue

Philippine central bank approved plans to raise as much as $1 billion through an  international bond issue
Will either be through a global bond or a eurobond proceeds to finance the widening deficit.
Budget deficit target for 2009 raised to P250 bn and can even reach P320 bn or 4% of GDP

“Hope is the companion of power, and mother of success; for who so hopes strongly has within him the gift of miracles.”

– Samuel Smiles

“Expect to have hope rekindled. Expect your prayers to be answered in wondrous ways. The dry seasons in life do not last. The spring rains will come again.” — Sarah Ban Breathnach