I see my environment. I see my work place. I see my family. I see my blogger. I see friend. I see colleague. It is the same problem – money. Even though it is not about the whole community but it’s about 90% of the community facing the same problem called financial problem. Why I choose this title instead of Financial Freedom? Financial Freedom is different. Financial Freedom is when you are not afraid of losing job or not working where money works for you. Let say you have so many houses and the rental income give you a positive cash flow, when you losing your job you still alive and can survive with the income you get from rental. Get what I mean?
When we say financial problem, a lot of people get it wrong. Many people think if you are rich you are out of the financial problem circle. The answer is wrong. Doesn’t matter how much money you earn, but if you are a big spender you will face the same problem like any others too.
Here I want to discuss about this thing with you. Exchange ideas and tips too if possible.
1. Live below our mean
How many of you live below your mean? Live below your mean here means that you do not spend based on how much you earn or you can afford. Let say you earn RM1,000 monthly. You are not suppose to use up the whole RM1,000 without put aside some saving and investment. Investment here does not mean those investments like stock and others; you can simply put some amount of your money in ASB or ASN for your future. Remember, to be a financial problem free… you must at least have saving of 6 months of your salary. So it’s good for our rainy days. You never know something might happen and you have zero amount of money in your bank! I see most people in Malaysia use up all money and wait for the next salary money. What if all in sudden you fall sick and need some amount of money? What you can do? Borrow from the bank as personal loan? Borrow from family? Borrow from a friend? What if they are facing the same problem like you too and the bank just simply doesn’t approve your loan application? You’re dead my friend. So, try to reduce your monthly expenditure by write down your budget in a log book starting with the money you earn as your debit and money that your spend as your credit. Using a log book as your budget plan is the best way to see your cash flow. I know you can’t do it drastically but you can reduce it slowly. When you want to buy some things, put them in a list on a piece of paper and decide whether it’s necessary or necessity. Buy only necessary thing. There is no such thing as you have to pamper yourself after a hard work. Remember, when you have enough money and saving… you can enjoy yourself more without worrying at night before sleep that something bad might happen or it’s your down side of a life wheel. Do this and you will see your life is bright.
2. Do not use credit card
This is another thing that I always mention to my family and my friends. Credit card is the method for you to bring more debt into your life. It’s simple, don’t buy if you can’t afford. If you can afford why use credit card? Pay cash. Actually, I can’t say that using credit card is a bad thing to do. Only those who are discipline can use it. This does not mean you use credit card and waiting for the end of the month to pay the debt. You need to be honest to yourself and pay the amount that you spent last week in this week. That mean by spending your credit this week, you must be sure that you can pay the amount next week. By doing this, you already put aside some amount of money for credit card. Some of my friends feel weird that I never use credit card. I know bring some big amount of money is risky but I just simply don’t use credit card. The least I can do is to make debit card. You know what is debit card don’t you? It’s exactly like prepaid system for your cell phone. You pay before use. It’s safe and you don’t have to worry about any payment in the end of the month. Warren Buffet, the richest man on earth never use credit card. Why do you think you need it anyway? I was bad to my mom by breaking all her credit cards into pieces and left one for the petrol usage only. Actually I love her so much and I want her to be financial free when she retires. I don’t have certification on finance but I could help you with some advice on how you can save some money and have a financial problem free life.
3. Buy asset instead of liability
I see many Malaysian are crazy of car. Even some of my friends and colleagues prefer to buy a car rather than a house. Weird isn’t it? It’s totally weird. Remember, houses never depreciate and if it happens you can count by fingers. What about liability? Let’s take good example – a car. You buy a car this year and you want to sell it next year, do you think the price will gain and you get some profit? No, you don’t. But house will gain money and profit for you. It’s ok for you to buy a car after you already own a house. I know car is important in our life since there is no good public transports network. So, car is the safest vehicle at this moment. I was so shock when I found out my colleague changed her mind from buying a house with me and bought a car. I did advise her but she still stick to her own choice, buying a car. I hope she won’t regret with her decision since I know the price for house in Malaysia will increase more very soon. Oh by the way… do you know that sometimes liability can turn into asset when they make money for you. Let me give some examples for you. Let say you buy a car and you turn that car into a taxi, this car make money for you. So, it becomes your asset now. Another example is you buy a laptop for your business purpose. The laptop is not an asset anymore even though the price won’t gain any money when you sell but it already gives you some amount of money for your business by using it. These are good liabilities. Many people buying a house for rent using their own preference such as spacious and beautiful marbles. That is ok if you buy a house for you to live but it’s otherwise if you buy a house to rent. The location and the rental price are the only thing you need to consider before buying a house for rent. I see some mistakes made by some of my colleagues and friends. I shut my mouth for not being nosy. But if they ask my opinion, I have a bunch of them to share. I’m not a genius in this real estate business but I read a lot about it and exchange ideas with some friends who are already involved in this business for 10 years or more.
To diversify you need to be creative. You need to work hard in order to be free financial problem unless you have great deal of salary. Work hard in here does not mean you have to work hard for your company. For many companies, do they pay you extra if you work hard for them? I know some companies do but can be counted by fingers. Your company gain profit but you gain nothing. Work hard here means you cannot be lazy. I like this quote:
“Laziness travels so slowly that poverty soon overtakes him.” –Benjamin Franklin-
I know many people out there want more income but how hard have they tried? Planning this and that without doing it is just a waste of time. It’s like daydreaming of you becoming a prince and when you are awake, you are just an average person who has nothing special but debt around. To get more income, you need to work hard (unless you are IT genius and you gain money by online business, but how many people can do it?). You need to diversify. Let say, you work from 8am-5pm. What can you do after work? You can bake some pizza and sell or simply on your laptop and build a website for people. Both make money. Both give you extra income. The more creative you are… the more income you get.
Remember, you can’t be rich by working to a company or get highest qualification. The key is business. Do you think all people who own a private jet working with people? Do you think the richest man on earth work with people’s company? Do you think people that drive BMW and Mercedes normally those who work with people’s company? Some yes… but most people don’t. They own a company and they run business. The more business you are involved, the more income you get. To get or own more business you need to be creative like the 4th tip. Like me, yes I work with people and I do my part to save money for my rainy days and yes I will end up quitting with my job now and own a business. That is my promise to my body and soul. I keep praying to God and I hope I will be blessed.
"90% of wealth is from sources of business" -Prophet Muhammad S.A.W-
P/s: I have a link for you in case you still have doubt about how to clear your debt and be financial problem free. Click here.