Father Sez

I have acknowledged that 2007 was a year of a paradigm shift for me. 

With this has come the drive to be a lot more frugal, a lot more organized in managing our finances, and a stronger drive to earn more money. 

Two plans have been set in motion in 2008. 

Launch our goat farm 

My wife and I have long wanted to start this. Procrastination came naturally as we consoled each other that we had not found the “right piece of land”. In late 2007 all the pieces fell in place. 

A piece of land owned by relatives of my wife came available. This was the only “asset” the family had, so we did not make any attempts to offer to buy. Rather we proposed a joint venture and it was accepted. 

My wife and I provide the capital to start up and operate the farm. Zai, my wife’s cousin brother, (who had been planting mangoes on the land before this), will be handling the work on the ground and manage the farm when completed. 

The farm is taking shape now. The land has been cleared, fenced, access roads improved and the goat sheds are now in progress.  

We have targeted 1^st April 08 as the completion date and have marked 5^th April 08 as a date where we’ll have a small “kenduri or thanksgiving prayers” to launch the farm. 

A little on Zai and his family.  

His family consists of his grandma, his mother, his 3 sisters (one elder and 2 younger), his nephew and his children(two boys and a girl). His family has always been very close to us. His grandmother stayed with us and helped nurse our son and the little girls when they were born, whilst his mother is one of my wife’s closest confidants. (They have kindly agreed that the farm be named after my mother). 

My wife and I both know that Zai will do his best to make the farm a success. On our part, we have to make sure that there is adequate funding for the farm, and assist in marketing etc. 

Once a week, I drop by (about an hour drive from our home) to see the progress. So far it is looking good. 

The company in which I was literally gifted a 25% stake, has secured a  project in Indonesia. (I am writing this post from Jakarta).

This project is for the building and leasing of common telecommunication towers for the telecommunication operators in Indonesia.  

There are still a number of issues to be resolved, and the prospects look great. God Willing, we should be starting work around the same time as the farm is launched, i.e. beginning April 08.  

We have done our business plans for both these projects and there are some spin offs that can be created once these two take off. There is a lot to be done and 2008 looks like it is going to be a busy one. And also looks good for the wallet.  

There are many kinds of “helping hands”. 

There are hands that help us in a time of dire need, there are hands that just give us a break and there are hands that show us the way.  In our lives, there must have been many instances of us having been given helping hands.  

It could have been our teacher in school, who went out of her way and patiently taught us something that we just could not get the hang of. 

It could have been our boss who, based on his judgment, promoted us to a job that we had no experience in. The lucky break many talk about. 

It could have been some community program like this which gave a helping hand to Miguel Santos. 

It could have been a sibling, who sacrificed his or her wants or even needs to ensure that our needs were met.  

It could have been great neighbors, as Karma Calling points out. It could have been something seemingly inconsequential at that time, but the influence of which we still feel today. 

We may now have gone our respective separate ways and may have even forgotten about the particular helping hand. But some events may trigger off a memory, and we can’t help feeling a glow of gratitude. 

These days I find myself thinking a lot about the people who in one way or another helped shape my life to be what it is now. Many of whom, I did not even thank properly. 

This blog now gives me an opportunity to pay them tribute. Of course, I don’t expect most of them to be reading this blog, but at least my conscience will be a lot better. 

What about you? Have you thought about those who have given you a helping hand?  

A good friend of mine once told me that we should never ever underestimate the wife’s power to influence the husband. 

His observation was that the wives use the “fine needle” approach. Say for example, the wife does not like you going out with your good old college buddy. The wise wife will not try to stop you head on. Rather it would be a continuous series of seemingly innocuous comments, small tasks given to you just as you are about to go……… fine needle pricking, fine needle by fine needle, something that you will not even notice, until one day you have a blinking bazooka wound on you. 

And you stop by yourself, never knowing what really hit you. 

It’s the same with corruption. It envelops us, starting as issues almost inconsequential and creeps slowly and surely on us. The trick is to recognize it as it starts and kill it off straight away.  

Cash Money Life had an article titled “A question of Ethics and Money……..” 

He sought the views of his readers whether they would return extra money given out by an ATM. Everyone who commented had no doubts they would return the extra money. Some pointed out that the transaction would have been logged and / or on CCTV and the Bank would eventually know anyway.  

What if we knew for sure that no one would know? How then would we react?  

Our reaction then would we akin to how we would react to an offer of corruption.  

I live in a country whose reputation for corruption can be vastly improved. My children may end up in jobs which may allow opportunities for them to be exposed to corruption.

We have set three rules in our family which should help take care of issues like this. 

a)  Our Family Mission Statement includes the paragraph that “our sources of wealth must be capable of being revealed with pride and dignity…..” 

This is pretty much self explanatory. If we have gaps in our explanation of how we obtained this or that item of value, then these gaps would be open to speculation.  

b)  Never accept any offer from anyone, which you cannot easily reciprocate. 

This may be a little tricky. The offers will start in small innocuous ones like meals and presents. Meals that you can easily reciprocate. These, then start getting a little more expensive, perhaps with some travel thrown in…etc. We just have to read the subtle signs and say no. 

c)   Would you get this “gift” if you were not at your current post or position? 

This is another good test. We have to carefully evaluate ourselves the people who claim to just give gifts because of the festive seasons. Would they be doing the same, were you not in the position? If in doubt, then just say no.   

The seductive nature of corruption is legendary. The nature of its irreversible trap is something not fully appreciated until we are trapped within.  

I hope that my children will know and understand how to recognize the dangerous creeping vine known as corruption. And never ever get entangled, whether other people ever know or not.  

And no wealth accumulated out of corrupt dealings can ever give us true financial independence.

You think this skill is not cool? Or do you think this has nothing to do with personal development? 

Hear me out. 

If there ever was a skill that is easy to learn, a skill that would save you tons of time, a skill that would save and / or earn you money and a skill that will make you as cool as anything else can, it is cooking. 

Cooking used to be a skill that almost everyone learnt as part of growing up. Now with so many parents working, time for cooking is less available, and is easily replaced with fast foods and take-aways.   

As a result, many children are growing up not having this useful skill. Just see the benefits: 

a)    Cooking at home, taking lunch to work, planning our meals a week in advance, etc., are all rated up there, not only in the world of personal finance, but also in the world of healthier living. 

This alone should rate cooking skills as a must have. 

b)    Flexibility in being posted overseas. In 1998, a bunch of us turned up in Ghana to work. Food was something that we did not put much thought on. (We were a small company, not a huge conglomerate that would have had checklists for these kinds of things.) 

Ghanaian local cuisine was not something that many of us could adapt to. Meals at hotels and restaurants were not affordable as an option for meals. Thank God, we managed to find house maids, who could cook   some basic food that we were used to. 

c)     As we all must know, restaurants that serve good food are a great way to make money. So knowing how to cook opens up yet another option for earning money. 

d)    In many of the movies that I have seen, the line that seems to impress the ladies the most is the hero coolly explaining to his date, (after serving her an excellent meal), that he cooked it. I strongly suspect this spills over into real life.

e)    Restaurants generally do not make food with our health in mind. They usually serve what is saleable, what makes money for them and what is easy to prepare and serve.  Knowing how to cook would assist us tremendously in selecting better ingredients and making far healthier food. 

f)      Just like we like frequenting restaurants that have a reputation for serving good food, we look forward to visiting relatives and friends who serve delicious stuff. The great cook has a great way to widen and strengthen his/her network! 

I have a young friend who likes food and his wife is an excellent cook. Together they are now planning to launch a small catering service, whilst he still holds on to his full time job.  

I have no doubt that with cooking skills getting to be less and less common and with my friend’s passion for food, his venture will grow from strength to strength.                                                       

Brip Blap recently wrote an interesting piece on why he thinks net worth is not an awfully important metric to know. This article created an active discussion thread with some people disagreeing.  

My thoughts on this. The principal metrics we should have are:- 

Knowing where we are financially at any one time. 

No matter what our financial goals are, this is an important piece of information to have. Without knowing where we are, it would be next to impossible to get to where we want to go. 

A good indicator is the balance sheet, or our net worth statement. This has to be consistent. For example, whether you want to include or not include your house and mortgage, whether you want to take your house at market value, whether you want to include your vested pension, etc.  

Our financial progress 

The two tracking statements for these are our cash flow statements (how much net cash flow we generate, whether positive or negative) and our profit and loss statements (how much do we spend from what we make). Good indicators of these would be our yearly spending statements, if we have one. 

What I use 

I refer to 2 statements:- 

a)  My net worth statement 

This is a list of all my assets less all my liabilities. (We include the house). Yearly I track the increases / decreases against the previous year’s total. (In 2006 and 2007, my NW decreased by 3.60% and 7.75% respectively. This was basically the costs of university education for our 2 elder girls. Hopefully, we can start building it up now that the kids should be completing their studies). 

Whilst I keep myself aware of the various rules of thumb that suggest the amounts for retirement, I really do not have a target for my NW. For the time being….just more is better… 

b)  Yearly Income Statement 

I classify my yearly income into 5 headings,  

i)                  Employment Income, 

ii)                Trading gains and losses and dividends etc from stocks and shares, (This information is easily available for us.)  

iii)             Property Income. (This is rental from the one property that we have). 

iv)              Business Income. This is from investments in small businesses that I have. Presently income is zero! These businesses are structured in such a way that I have little active participation.

v)                Extraordinary income. This is unplanned, unexpected income that I had not spent any energy on.  

On income our goal is to ensure that (ii) + (iii) + (iv) is equal or more than our estimated expenditure. (Incidentally, I am quite far from reaching this goal.) 

My wife and I have only recently done our first budget. All these while, I have used an estimated amount as our expenses. This year we should be able to get a better comparison.

Ultimately, we have to have some sort of measurable factors to track our financial progress. This is an issue where there may be no exactly right or wrong answers.  The only thing that is right is that you must design one that feels good for you and includes the relevant assets, liabilities, income and expenses.  

Many self improvement blogs, books and gurus, suggest that we should follow our passions. And the suggestions on finding what our passions are range from: 

-         what would we do if money was no object, to 

-         what would we want people to say about us when we are dead and gone.

Lynnae at Being Frugal has written a poignant post, “what I want most of all”. Stripping aside all the frills, she has articulated the one thing that she would want most of all. 

And she had found it in her book of Guidance. 

She is blessed in that she has with pin point focus identified what she wants most of all. This is important, as it will influence and guide everything else that she does. In fact, it could well be the cardinal rule against which all other issues will be judged. 

Whatever our plans are in life, be it savings for retirement, writing a book or running for political office, it will all be dictated by what we really, really want in life.  

How we earn our money, how we conduct our affairs and how we raise our families will all be dictated or at least be terribly influenced by what we really, really want in life. 

I, too, have thought deeply about what I want in my life. Though I was not able to bring it to focus as sharply as Lynnae did, my findings are also from my book of Guidance. 

As the concluding paragraph of my personal mission statement, I have written that when I pass on, I want to leave behind:- 

a)    Pious, value driven, balanced and confident children, 

b)    People who have benefited from my assistance, and  

c)     People who have benefited from my knowledge and teachings.  

These shall be the cardinal rules against which all other things I do have to be judged against. 

Paid Twice speaks about why keeping an eye on her long range goals is good. It’ll help smoothen out the little short term bumps and setbacks that happen as we progress on our way to meet the long term goals.  

And I have the above listed 3 things as my ultimate long term goals. And my eye shall always be on them.

A number of years ago, I was holding a senior level management post in a PLC.

During my tenure, the company I worked for issued out several large tenders. The winners of one of the tenders was a company, we shall call “A”. Though I was not involved in the technical and financial evaluation of the tenders, nor in deciding on the final recommendations leading to the award, by virtue of my position, outsiders would have inferred that I was a major influencing figure. 

I left this PLC before the final recommendations were made to award to “A”. One of the directors and shareholders of this “A” was, shall we say, Mr. B. During the tender period and process, I had interactions with Mr. B and I liked and respected him, but the relationship sort of tapered off after I left. 

About 2 – 3 years later, I received a call from Mr. B. He had sold off his shares in “A” and was about to invest in another small company and wanted me to join him as a fellow director and shareholder. 

Whilst I had faith in the business model and prospects of this company, I had no money to invest.  

And Mr. B offered me an interest free 5 year loan for the full investment. 

This was at that time, the biggest loan I had ever been offered, about 1.5 times my mortgage. This was the biggest monetary amount I would have had in any investment, even bigger than the value of the house my family was living in. And it was the only interest free loan that had ever been offered to me.  

I took him up on his offer. 

And just look at the returns I received from this investment and what I did with that: 

a)    The loan from Mr. B was paid back in full, though I went slightly over the 5 year period, 

b)    My mortgage was paid off, 

c)     This company, in partnership with others, secured a contract in Ghana and this gave rise to my working stint in West Africa. The first time I had ever been to Africa. 

d)    The 3 years in Africa was my best ever working experience.  

e)    The interactions with my Ghanaian colleagues somehow led to me writing a book titled with the long name of “We wish we knew these 20 years ago”. This book was meant to be a guide to my children. Working on this book created changes in me, changes which I consider “paradigmic”, if there’s such a word.   

f)      When that Ghana contract ended, one of our partners offered me a job which took me to India, where I spent 2 and half very eventful years. 

I can go on with quite a few more returns. And it is still ongoing.  

The point, I am trying to make is, what is really my best investment? 

i)                  Is it the investment in this company? 

ii)                Or is it the investment I had made in myself? The investments that given me certain qualities and values. Qualities and values which had made Mr. B offer the interest free loan to me, so that I could be his fellow shareholder. 

You tell me. 

I have never asked Mr. B, why? Neither has he ever volunteered to tell me. Though I have thanked Mr. B profusely, I guess he may never ever fully realize what a great opportunity and favor he has done me, my family and a host of other people, who have benefited indirectly. 

Thanks a million, again, Mr. B!

The indefatigable Mrs. Micah has hosted the 134^th Edition of the CoPF, which also has the singular distinction of being the 1^st CoPF for 2008. 

I tried but have failed to think of an introduction better than the words Mrs. M has crafted. I have to quote her here.

Quote

“There are two basic rules of to get ahead financially:Spend less.Earn more.The rest is details. And the details are very important. We have to figure out how, in our unique financial and life situations, we’re going to spend less and/or earn more. Personal finance blogging is part of that quest to figure it out.                                                                         Unquote 

Quite a bit of these details are given in the posts that make up this CoPF. Some of the posts that immediately grabbed my fancy are :- 

a)    The Clever Dude’s story on rehabilitating our finances. He compares this to his own current experiences rehabilitating from some back problems.  

 b)    Patrick of Cash Money Life puts forth a compelling argument that our greatest asset is actually an intangible. It’s our ability to generate income. Let’s not overlook this.

c)     Almost an entire reference library on the good, the bad and the ugly of credit cards. The contributors being:   

- Funny about Money’s “Are credit cards good for you?”, 

- My Dollar Plan’s no less than 25 reasons to love credit cards, 

 - Debt Free Revolution’s plea for us to know that credit card companies separate us from our money,  

- Being Frugal’s dire warning that credit card companies want to eat us alive,  (Incidentally, Being Frugal has just decided to shred, pound, cut up and otherwise mutilate her credit card….check out the complete details with pictures and all.) 

- Finance and Fat’s self reminder on why another credit card is not wanted. 

Me vs Debt has some of the good of CCs, with important caveats. 

The Amateurist Finance Journey tackles another credit card dilemma. 

And two other posts that I think should merit mentions. Brip Blap’s suggestions on how to talk to a teenager about personal finance. As the father of 5 children, this is the type of advise I search for. 

The Honest Dollar has written a nice piece in defense of PF bloggers. To the some of us who read the PF blogs and come away with an opinion that the PF Bloggers have no life, other than counting the pennies and worrying ourselves sick about retirement, this is a must-read. 

At this rate, I might end up repeating Mrs. M. Though there are a number of other posts that I’ll be reading and taking notes from, I’ll stop here for now. 

Please take some time and hop over to the Carnival. The time will be well spent!

Sometime ago, the Simple Dollar wrote a series of one hour projects to improve our finances.  I found it inspiring.   

So I did what he suggested and cut off some waste in my finances, or rather things which I could do away with, without affecting the quality of my life in any way.  

a)  Cancel one credit card 

Ever since I got my first credit card so long ago, I have always paid the bills in full. My cards have never carried any balance. Since 2006, I have been carrying two cards for which I pay yearly subscriptions.  I have now received a card with a life long waiver of fees, so I have cancelled one of the earlier ones. 

b)  Earn points by paying bills using the credit card 

Many of the bills which I used to pay by cheque, I have now converted to paying using the credit card. In addition to the accounting trail, I also earn points which I would not have gotten otherwise. And I use less cheque leaves now. 

c)   Convert the car into a NGV car 

Petrol and diesel are a lot cheaper in Malaysia than in most other countries. Despite this, my fuel bills were getting a little heavy since I have commute almost 150 kms daily. In addition, the Gomen is making frequent statements that the country has no choice but to live with a higher pump price. We are all expecting another jump in fuel prices. 

So I spent about RM 6,000 fixing a NGV kit so that the car now runs on petrol or NGV. Though there is the inconvenience of having to fill up daily, and NGV stations are not that common, the savings are adding up. 

I should recover the cost of the fit out in about two years, and then it would be savings all the way.       

d)  Cancelled Club Membership 

I have been a member of a club for a number of years, though I hardly ever used or use the facilities.  I discussed this with my wife and then cancelled the membership. 

These changes have had zero impact on my lifestyle and I am now happily encouraged to go deeper. 

The plans for 2008  

a)  Phone Bills  

I am one of those silly consumers (whom telcos just love) who do not study the plans available. In fact this has caused a lot of tension in my household. (I’ll write about this later.) 

I have now researched the plans and it looks like some of the plans will reduce our bills substantially.  

b)  Cable TV 

This has just been cancelled. The children spend all their time watching cartoons and I hardly have time to watch cable anyway. In a week or two, my household would have forgotten all about cable.  

c)   Medication 

I spend a fair amount of money on this. I am now on the lookout for the generic versions.  

With my newly reawakened enthusiasm for exercise and this conversion to generics, I am confident that the 2008 bill for medication will be substantially lower than 2007. 

The net financial impact of all these may not exactly be the stuff that fortunes are built upon. Like an old school friend once told me about waste, “Even if you throw something into the sea, it makes a “pop” sound, but this one does not”.  

This is the waste that I want to cut. The waste of expenses incurred or benefits overlooked, just because I did not look a little harder, ask around a little or did not make one or two phone calls.  

We must all have had our share of run-ins with rude, obnoxious and plain pain in the &*@ people. These run-ins spoil our moods, and sometimes, extend to spoiling our days. And sometimes, we end up paying it forward by being rude and obnoxious to others.

I was one of these rude, obnoxious and plain pain in the &*@ people. I have had friends telling me that sooner or later somebody was going to give me a tight slap. And God knows how many people I must have left with nothing but vile thoughts about me.  

Thankfully it did not require a tight slap to make me come to my senses. 

The change came about when I started writing a book on my experiences. This book was meant as a guide to my children. As I was writing, I realized that I was not the kind of person I wanted my children to be.

And I changed, slowly and steadily.  

One of the more significant changes is in my dealings with people. Now I am a lot cooler and kinder, even though I do say so myself.  

I have to thank my 3 rules for this. 

Rule 1 - Don’t judge anyone by our standards.  

We call a person crazy or silly when he or she does something we consider crazy. Who are we to decide what is crazy and what is not crazy? What is crazy to us may not be so crazy to others. And what may not be so crazy to us may be absolutely bonkers to others. 

We are always free to disagree, but we should not judge.  

Rule 2 –     If we are unhappy with a person’s behavior or   manners, just tell ourselves, that his behavior is a reflection of the sum total of his upbringing, education and experience. We do not have to come down to his level. 

May seem to be a long rule, but it works. 

If we walk into a store and see the attendant reading the newspaper and ignoring us, this is the rule to apply.

We do not have to feel unhappy, slighted or anything along these lines. We can walk away and find another store or apply Rule 3. 

Rule 3 -      I shall treat everyone the way I would want them to treat my children. 

I have 5 children. Like any other parent, and I am sure, like my parents before me, I worry about how they would be treated by the “world”. Their employers, their friends, their future spouses, their colleagues and all the countless other people they will come into contact with as they go about their daily lives. 

I want my children to be treated with kindness and with fairness. I want them to be given guidance and if they make mistakes, corrected in a way that will leave them feeling good. 

And I shall treat everyone I deal with in this same manner. 

These are my 3 rules.  

I try my best not to enter into any argument. After all, no one will really care who is right. If I am drawn into some discussion which may not end well, I just smile and say that on matters like these, I am no expert, and walk away or change the subject.  

So far they have worked for me. And the world now seems to be made up of perfectly reasonable people.