Father Sez

From and to parents - parental advice to our children on personal financial management and life.
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Archive for February, 2008

Round up for week ending 28 February 08

Thursday, February 28th, 2008

I used to do my round up posts on Saturday evenings. This is now being changed to Thursday evenings.  

The Carnival of Personal Finance was hosted by Broke Grad Student. A certainly gracious and stylish host, BGS included my post which questioned whether windfalls could change people’s lives. 

From elsewhere in the blogosphere, the following posts caught my fancy. 

Mrs. Micah reminds us that though our journey to debt reduction may have stoplights, detours, slow drivers and even construction blockades, we should stay the course. We should keep on reminding ourselves that we are on the road that gets us to where we want to go. 

I completely agree with her. I motivate myself by reminding myself of an aircraft carrier making an “U” turn.  

Trent at the Simple Dollar announced his decision to quit his full time job. He has outlined his reasons why he wants to quit and how he has prepared himself for this paradigm shift. 

I am truly inspired by posts like this. Though I do not feel that I am in a position yet to make this really significant move, the pull factor is strong. I am grateful that Trent, who is clearly a polished wordsmith, has eloquently written about the preparatory work he has put in, before making the big decision.  

Almost as if on cue, another favorite blogger of mine, Ms. SVB of Digerati Life has announced that she, too, is leaving her job to pursue her dreams. She has previously written about her plans for her future plans as well as the steps she has and is taking to prepare herself for this move.  

To both Trent and Ms. SVB, I offer my heartiest congratulations and best wishes. This is the stuff we read about in books, except that this time it’s from real life people that I feel I almost know.   

The Glbl guy puts a 15 month period of pain to rest. He tells us about the sad times of November 06, when he had to pawn off some of his wife’s jewelry and by mistake, an item of tremendous sentimental value had been pawned off….the engagement ring he bought for his wife with his entire savings as a college student. Happily he has now bought for his wife a new ring. 

And the Glbl guy has also managed to weave a useful section on buying from Amazon.com into this touching story.

I am so happy for him. Pop over and read the full story here. 

Moolanomy writes about the systematic process he went through in assessing how much insurance he needed. This post will help a lot of us who are not sure if we are adequately insured and are, for any number of reasons, reluctant to seek an insurance agent or company to find out. 

Free Money Finance wrote about the merits of paying children an allowance for them to read a book and then explaining it to their parents.  I have to respectfully disagree with this idea. We have a system in place for the kids to improve their command of the English language, where the kids write a couple of pages a week from an English book and then read it out to me.  

I have on occasion had to cajole them into writing, especially the youngest girl, but I never considered offering any rewards. Instead, I would like to instill the idea of the children doing additional work / chores at home for money. 

This is all for the week. Have a great weekend, folks!   

Insurance auto renewals may need insurance

Wednesday, February 27th, 2008

We have an investment property, a house which is tenanted by a really nice family. We have a mortgage on this house at rates that make me the prize financial chump of the year, and a few years back. But this prize chump title is not what this post is about.

The mortgage is from one of the biggest Malaysian banks, a bank which has had my custom for many years. We have also taken the mortgage decreasing policy as well as the fire policy from this Bank’s insurance arm.

The loan was taken when I was at my previous job, so the servicing branch was near my then office. This year we transferred the loan to a branch near our home. Though the instruction to transfer was given in March 07, the transfer took place in August 07.

I did not think about the insurance at all. After all, when the loan was taken there was an express condition that the property should be insured for RMXXX with an insurance company acceptable to the lender…blah, blah, blah.

When we took the insurance, we also gave instructions for auto renewal. Hence we could sleep easy. When the time came for renewal, the Bank and the insurance company’s computers would do their thing. A click here and a click there, a whirr here and a whirr here and presto, my account would be debited with the premiums.

Late last week, I was looking for some documentation on the renewal and found none. I thought I had misplaced it and called the insurance company’s customer service people for a copy.

They told me that per their records the policy had been cancelled. 

Wow, they had cooly cancelled the policy and not informed me. A policy that had been assigned to them, a policy that gave them as much protection as it gave me. A policy for which no marketing needed to be done.

And they  had just cancelled it. And this is the Bank that had been kind and thoughtful enough to send me a birthday card.

My wife is now following up with the branch to find out how this happened or whether we were just misinformed about the cancellation.

Yesterday, the staff concerned was on leave. Today she is busy and has to check with something or someone. I hope this issue is settled soon.

I have learnt a lesson, that may be worth repeating to those of us who are in a similar situation. An insurance renewal is easy to overlook. Assuming that the Bank, with all its fancy computers and programs would know what to do may not be that wise.

I shall have to update my timetable to check when the renewal time comes. No longer am I going to act smug, expecting the Bank to do my job for me.

I wonder what would have been the Bank’s stand should there have been an accident or mishap on the property during the months when the policy was dead. Secondly, would  the policy be issued from current date or backdated.

I hope I don’t have to find out about the former. On the latter, I shall know soon enough.

Spotting and seizing opportunities

Tuesday, February 26th, 2008

We must all know someone who is always chasing some opportunity or other….someone who is able to visualize opportunities from something he or she hears, sees, reads about or has sensed.

A friend of mine, who had a full time job, did not think twice about driving a couple of hundred kilometres if he heard that there was a car available for sale at a price he believed he could make a profit from. Yet others will continously try to connect people with needs to people who could satisy the need.

These are people who have the entrepreneurial streak in them. People willing to go the extra mile just to check out the opportunity and just chalking it up to experience if that something did not work out.

Some do it professionally. I know of one young man with web design skills who balances a full time job with multiple freelance web design projects. Of course, he is BUSY!!!

Some others are unprofessional. They try their hands at projects that they have no knowledge of and more often than not end up damaging their credibility. This includes guys who hear from third parties and hawk this information without having verified anything.

How do we rate ourselves at spotting opportunities and seizing them?

My friend, Kalai, once described a mutual friend as follows.

“You give this guy RM5,000 a month and ask him to mine for gold for you at this mine, and you can rest easy, knowing that he will be bringing in the moolahs for you. You tell him that there is gold in the mine and ask him to mine, with no monthly salary but a share of the profits and he’ll say “no”.”

This mutual friend is a “salary” mentality guy. There is a strong need for security and a confirmed source of regular income. This overrides everything else.

Real entrepreneurs thrive on uncertainty, says Rita Gunter McGrath, a professor at the Columbia University Graduate School of Business and co-author of book, “The Entrepreneurial Mindset.” Subtitled “Strategies for Creating Opportunity in an Age of Uncertainty,”. The co-author is Ian MacMillan, who teaches at the Wharton School.

McGrath and MacMillan list 5 common characteristics of Entrepreneuers.

1. They passionately seek new opportunities.

2. They pursue opportunities with enormous discipline.

3. They pursue only the very best opportunities.

4. They focus on execution — specifically, adaptive execution.

5. They engage the energies of everyone in their domain.

(Extracted from review by Ms. Barbara Fox.)

Trent at the Simple Dollar and Ms. SVB over at Digerati Life have both announced their decisions to quit their full time jobs to pursue their dreams.

I congratulate them for their courage and also for the astute planning they have done to prepare themselves for this move.

I also fantasize about leaving my job and pursuing my dreams. I have yet to find the courage to make this move. My mind set is only slightly less salaried minded than the mutual friend that I described earlier.

I have turned down a couple of profit sharing offers earlier in my life, where the salary offered was much lower than what I was getting then.

Presently I have two business opportunities that I am incubating. Both of them look good and I have a reasonable sense of control over the projects. The next few months are going to be very important for me as I work together with my partners on growing the projects.

As I work on preparing my mind to cut the safety harness of monthly remuneration (my grateful thanks to people like Trent and Ms. SVB, who have often written on this), I also want to keep reminding myself of the habits/characteristics of entrepreneurs.

I have let opportunities go before. This time, the opportunities have been taken on. They are being worked upon and improved. And this time, I intend to make the best out of them!

People who have given me a helping hand – A friend of a friend who gave my company a huge unsecured loan

Monday, February 25th, 2008

In one of my previous posts, I have written about my investment in a smallish telecommunication contracting company. The company had and still has a good track record and is well regarded in the telecommunication contracting industry in Malaysia. 

In 1997, we got an opportunity to participate in a tender for what is called “Outside Plant Expansion” called by Ghana Telecom of Ghana. It was an international tender and we participated in it. When the 1st round tender results were announced, we found ourselves in a strong position.  

Like I said before we were a smallish company. While we were very confident of our technical capability, funding was another issue.  

This is the story of how we got our funding strength and my written tribute to the person who gave us the helping hand.  

Some years ago, I was holding a relatively senior post in a PLC, which was a member of quite a large group. During that time, a friend called me up and said that a friend of his wanted to meet with me to ask for some advice. Naturally I agreed to meet him.

Let’s call this friend of the friend, DZ. DZ had a construction company and he had done some civil works for one of the group companies. Various guys from this company had made all kind of change requests in the work scope during their visits, which DZ had obliged. This affected the costs, and when the time came for him to claim variations, the trouble started. DZ wanted my advice on what to do. 

I told him that all the group companies were independent and I did not see how I could help in any way. I also told him that if his documentation was firm, he could legally dispute the claims as provided in his contract. Whilst this would be a pain, his chances would be strong. And then we talked about general things and he left.  

The next time, I met DZ was at a dinner party several years later. I had, by then, left the PLC and was then working in the telecommunication company. I told him about the tender in Ghana where we had a strong chance and whether he would be interested.

At the same dinner, he agreed to a JV and also to extend a shareholder loan of what was a huge amount. His finance people came over the next few days to negotiate terms etc. All were agreed smoothly and amicably. He left the full management to us, only attending and being briefed at the regular Board meetings we held. 

This shareholder loan gave suppliers confidence and we then obtained supplier credit for the most expensive item in Outside Plant expansion work, i.e. cables.  

The rest is history, rich history in my life. 

The project was completed successfully. The loans were all paid. We made reasonable money. For DZ, his shareholding also paid rich monetary dividends. 

All credit evaluation rules were broken in DZ extending us the credit. It was just his gut feel. I had only met him once before in my life. To have turned down my suggestion for joint participation would not have been surprising at all. 

Well, you, DZ did not and for that I, from the bottom of my heart, thank you.  Your helping hand that fateful day resulted in work and changed the lives of lots of people. I still receive emails from my Ghanaian friends who are now working in large companies in Ghana or even outside Ghana, based on skills they learnt whilst with us.  

None of which would have been possible without DZ’s helping hand! 

How I intend to help my daughters secure jobs they would like - Part 1

Sunday, February 24th, 2008

I have written a number of posts on preparing my elder two girls for joining the rat race. I think I have to do a lot more. 

Our eldest girl, Along, has told me that she wants to stay on for a while in Wales when her final exams are over. (This may be subject to a separate post later). Her younger sister, Azah finishes her finals on the 10th March 08, and would be coming home with her bags, books and baggage from her hostel immediately after. She may take some time off at home, and then it would be time for her to join the rat race. 

I have no wish for my children to make the same mistakes that I did in failing to manage my career properly.  

So I intend to plan and try my best to instill in Azah some of the steps she can take to have an advantage as she takes her first steps in her working life. 

I have formulated a plan or rather the matters that I should research carefully and talk to her about. This plan is based on the lessons I have learnt in not managing my career. (Looks like my failure is of some use after all). 

a)  Additional Skills to pick up 

I have to add on to what I have written earlier. She should have at least some grounding in the needed skills to make her more marketable. Skills that employers need, not the E = mc squared kind of stuff. 

b)    Getting her mindset appropriately tuned for employment.

My wife and I have given our daughters a relatively sheltered life. They have never gone out to do any part time work during their school or varsity holidays. Starting work without having at least an understanding of the real life of a working gal might be a culture shock for them.  

c)     Preparing a killer resume

One that will stand out from the hundreds if not thousands of resumes that should be flooding the Malaysian entry level market these months. 

d)    Discussing and drawing up with her the list of qualities or characteristics that she wants in the employer of her choice. And helping her identify the companies that may fit this description. 

e)    Discussing and drawing up with her the list of job or career classifications that she thinks would fit her aptitudes and like. I do not think I can use the word passion here. I believe it would take some time before settles and she finds her calling. 

f)      Researching the companies and key decision makers in the companies that fit the list.  

g)    Seeking the interviews and preparing for the interview. This may take some time as it’s an employer’s market out here. My eldest brother’s son took almost 5 months before he secured his first job. That, too, was in another State. 

I have to remind Azah about our theory of perseverance if ever she feels down during this time. 

h)  Post interview strategies and tactics.  

I also want to extend this exercise a little so that she also starts off her career on the right foot. I have to dwell upon her building and maintaining her network, being able to communicate well and to make as many presentations as she can and develop her brand as an employee. 

(Though there are blog articles and advice on the Internet on this, her mother would be much better placed to guide her on corporate dressing). 

Though I like Dividend 4 Life’s idea of weaving stories into lessons, I think it would be more appropriate for our younger children.   I think I’ll treat this exercise as being about the most important project I have on my plate right now, do solid research, prepare my presentations to her well and take it from there. The Millionaire Mommy herself has said it much better than I could ever have. To quote her:    

                                    This is parenting with a purpose  

Round up for week ending 23 February 08

Saturday, February 23rd, 2008

This week has been a hectic one. The design of the blog has been changed and now shifted to our new site. Hope you like the new design.

For news from elsewhere in the blogosphere:- 

The Carnival of Personal Finance was hosted by the Financial Blogger.  Tastefully interspersing cool pictures of Prison Break, the FB did a great job hosting. Pop over and see for yourself. The Carnival offers a great opportunity to get a great variety of useful articles all at one place. 

Two particular posts that struck a chord with me were : -        

The Digerati Life’s thought provoking “What price are we paying to have it all”. SVB makes the statement that she does not believe that we can have a life that just constantly expands to accommodate anything that we bring into it. 

I agree with her completely. There are only 24 hours in a day.As more and more responsibilities are piled into these 24 hours, something has to give. And when we explore this honestly, we’ll find that we end up giving up the really important things…like exercise, time with the kids, time alone etc. What we take on and what we give up have to carefully balanced.  

The Honest Dollar’s equally thought provoking post, the Parent Trap on the saga of adult children still expecting and getting financial assistance from their parents.  She has laid down in plain words a really telling statement 

What About Paying Yourself First?

I don’t have kids, so I suppose I can’t yet fully understand the lengths to which parents will go to help their children succeed.  But I buy the conventional logic that a child can get loans for school, for a car, for a house - a parent cannot get a loan for retirement.”

Sound advice indeed for both the parents and the adult children. I hope this situation does not arise in our family.

From the other blogs that I follow: 

Millionaire Mommy in the Making is mulling over making her first investment property purchase. The +’s of property investment are many, and so are the –‘s. It will be good to get ourselves well and truly educated before we launch. At least we should be able to mitigate the mistakes.   

Money Myths reminds us that we should be in control of our money, not the other way around. I agree completely with this statement, as money just like fire can be a great servant, but a terrible master.  

The Simple Dollar reminds us that we should invest in ourselves and one of his best ever investment in time and money was to exercise. He also gives some tips to those of us who have yet to start. 

The Frugal Duchess had once of those “work” or “family” decisions to make. And she planned well to make the right decision, without compromising her work commitments. All of us working parents go through this dilemma frequently. Let’s hope that all of us make the right choices all the time.  

I got introduced to a great Malaysian blog, Saif Improvement, through a link from my friend Azrina.

Thanks a lot, Rina. 

Saiful has a really vibrant and cool blog with very useful and motivational articles. Do check him out.  

In line with her moniker Dollar Frugal, Brooke’s frugality clearly covers only the Dollars. In terms of sharing of knowledge and helping others, she overflows with generosity. I asked and she freely emailed me a copy of her insanely massive blogroll, which I am using to add further to my blogroll. Am still working on it. 

Thanks again, Brooke.  

That’s it for this week. Have a great and productive week ahead.  

Aircraft carriers and personal finance management

Friday, February 22nd, 2008

What does an aircraft carrier got to do with personal finance?

For me, everything. Hear me out, please.

Habits are built up by repeatedly doing something over a period of time. The more often we do something, the stronger the habit becomes. Until it become second nature.

Same with personal finance.

The more often we are careful, the more often we are careless, the more often we spend wisely, the more often we spend unwisely, thus shall our habits be. We become a creature of habit of good personal finance or a creature of habit of bad personal finance.

The good thing is that habits, since they are made, can be unmade.  Subject to the general rule that stronger the habit the more difficult it would be for it to be broken and new habits formed in its place. (The exception is the switch.)

Some people, (like me, for instance) have operated for years without budgets and without clear and SMART goals for savings / investments etc. Somehow we have survived. Once it dawns upon us that this is not the right thing to do, we then work on correcting and changing our behaviour and habits. Try to put a stop to current practices and change direction.

And this can be compared with an aircraft carrier traveling at full speed and the captain then deciding to make a “U” turn or a left or right turn.

Well, the aircraft carrier does not stop on a dime. I have no idea how long it would continue traveling before the instructions to change direction actually start showing results. I would suspect that the lumbering giant would go on chugging away for quite a distance, though the slowing effect would be felt not too long after.

(If you want some laughs, you can read how Yahoo answers this tricky question.)

My family and I have only recently started to instill better personal financial management practices. Like most current day people, I have been expecting immediate results  and have not found any that I can trumpet about today. 

Then I remembered the story of the aircraft carrier and its turning circle.

Now I feel better.

Our family’s financial aircraft carrier which has been moving happily into the wrong direction for years and years is now beginning to make its “U” turn. This turning circle may take a while.

I am now happy that the right instructions have been given to our family’s aircraft carrier of personal finance and am confident that, God Willing, it is now moving along the right course. 

Now I hope you see the connection between aircraft carriers and personal finance.

To those of us who have made consious efforts to change and have not felt the results yet, take heed of this parable.

Stay stout in your resolve and by God, the ship will turn!

The “counting down the no’s theory” of perserverance

Thursday, February 21st, 2008

Much has been written about the power or usefulness  of just asking for something. After all, the worst that can happen is we get a “no” for an answer.

Sound financial reasons  for asking can be for a raise, better terms, reduction in interest rates, reduction in prices and even asking for the love of our live’s hand in marriage. 

Mrs. Micah has written about this here and Navin’s take is hereSavings.com has also something to say about this.

What about “just asking” from the point of perseverance?

We all know that “perseverance” is a solid asset, as Abundance and Happiness has so eloquently explained. However it is not an easy trait to develop, much less follow.

The best way I have had the manner of developing perserverance explained was by my friend Bala when we were in the Thai island of Koh Samui many years ago.

We were much younger and still single then.  The island was a favourite of backpackers  and we met a number of young people from all over the world, ladies as well as guys. During one of our “philosophizing” about saving the world and all that, the talk somehow turned to asking girls for a date.

Bala laid forth his theory. He said, all we had to do was to count down the “no’s”. Ask this girl, she says no, move on to another lady, she says no, move on and on, until someone says yes. Though the law of probability says that our chances should be 50%, in reality it is a lot less. But it will eventually happen, if only we keep asking enough times.

I have remembered Bala’s theory ever since.

Frank Bettger wrote about this in his “How I raised myself from failure to success in selling”. He noted each and every sales call he made, even though no sales were done. When, say, his 21st call resulted in some sales, he would divide the 21st call’s sales by 21 and get a figure, say $10. His self motivation to continue making sales calls was that for every call, he was making $10, irrespective of whether the call resulted in a sale or not. 

He then found that as he continued and time passed, his $ per call became higher and higher.

(Though the book may be written some time ago, I have serious respect for this book.) 

The need for us to have perserverance and determination is important. It is so easy to feel demotivated once we hit our first wall. The difference between success and failure often lies in our getting up and continuing.

I hope my children understand Bala’s theory of counting down the “no’s”, remind themselves of this theory whenever they feel demotivated and then continue their struggle.

In  seeking betterment in our careers, in generating more sales and in getting better deals for ourselves.

“Consider the postage stamp, my son. It secures success through its ability to stick to one thing till it gets there.” Billings, Josh American humorist (1818–1885)

The Parents giving and giving - Some Westerners may have no idea….

Wednesday, February 20th, 2008

The Honest Dollar wrote a interesting article on The Parent Trap. She was referring to parents dishing out funds that could have been put to use as the parent’s retirement savings.  

Some Eastern societies have a major sinister twist to this. Payments as dowry when their children get married. In India for example, parents with girls have to save like crazy almost from the day they are born. Not for retirement, not for the child’s future but to give to the groom’s parents and the groom.  This is quite a very sad situation.

Though the Government has very strict rules / laws against the practice of dowry, this practice goes on almost unabated. Many a tear jerker Indian movie’s plot is about the how the hero manages to get his sister married off against all odds, especially financial ones.

You can read a little about this almost dastardly practice here.

A plucky bride made national headlines when she took a brave stand and said “no!” to the incessant demands of her prospective in-laws. This earth shaking event seems to have even reached Oprah’s ears.

An Indian family with 3 or 4 girls is almost financially doomed, unless they are lucky enough to find prospective in laws and grooms who are sincere in fighting this practice of dowry. Or they are part of the Richie Rich.

Some families end up exchanging….we take your son and your daughter and you take our son and daughter. While many Westerners may express shock at such practices, this is just life or fate, or whatever they may call it in India.

I remember my mother telling me that many of the ladies in the village were extremely jealous of her..because she was just delivering boys. (I have 5 brothers and a sister). My late father was a very fervent anti-dowry man. None of us received dowry other than a token amount as per our religious custom. (All my brothers and sister had arranged marriages, except for me. But that may be another story.)

On the other hand, in Ghana it is the reverse. The boys have to pay the girls. Many of my single colleagues would tell me stories about how they could not afford to marry. And the girls’ parents would also prefer to see their girls single rather than to make the logical decision to cut the request for the dowry.

 Free Money Finance also talked about the cost of finding a mate. His article seems more based on the willing person splurging on flowers, dinners and other thingies to woo the intended mate. At least this is by choice.

I am lucky. In Malaysia, the dowry is still a nominal amount. I think when my wife and I got married, I paid her RM77, about USD23 at present rates. Some of the celeberity marriages talk about much larger amounts, but it is largely taken as show.

We have 4 girls, and I thank God that we are not part of the dastardly Indian dowry system.

Welcome

Wednesday, February 20th, 2008

maharaja-welcome.jpg

Dear Readers,

Thank you for visiting my new premises.

Welcome, look around and make yourself at home.

There are still a number of boxes which are still being unpacked. I hope that none of the doors have been labeled wrongly or directional signs placed or pointed to where they should not. Maybe some screws and nuts may be loose, hopefully they will not bolt!

Once again, I must thank the young, enteprising and capable Danny and Phuah of Simpleet Soloutions for having hand held me through this process of design and getting this new site up and running. Thanks a lot, guys!!!

I have also redone the blogroll. I benefited a lot from following the blogrolls of other blogs that I read and hope to keep adding on to this blogroll from time to time. I must also thank Brooke of Dollar Frugal for the inspiration given when she wrote her post on her “insanely massive blogroll”.

Please let me know if I have made any mistakes in the sites listed or missed out your site by any chance.

I would also like to beef up my blogroll on fellow Malaysian bloggers who post on personal finance, motivation and self improvement. I have marked the Malaysian blogs in the roll with a **.

Please email me at fathersez (at) gmail.com if you know of any blogs that I should include. My thanks in advance.

Naturally, I would welcome and appreciate any comments you may have on the site.

Thank you

Fathersez

Note:

The picture is from Google. It reminded me of Air India’s famous welcoming Maharaja.

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