This is a series of posts about ‘AKPK DMP Blogger’s Book Review: Tip-Tip Kewangan Untuk Rakyat Malaysia by K.C Lau’ – Part 1, Part 2, Part 3, Part 4 and Part 5.

Are you familiar with financial terms like cash flow, assets, liabilities, good debts, bad debts and compound interests? No? Then, it’s time for you to start getting familiar with them if you would like to manage your debt, control your spending, pay down debt and accumulate wealth.

Bahagian 1 – Tip Kewangan Bijak (Tip #1 – #7)

Tip #1 – Jadilah Seorang Pakar Kewangan
Tip #2 – Ketahui Nilai Masa Anda
Tip #3 – Focus Kepada Meningkatkan Pendapatan
Tip #4 – Jadi Kaya Melalui Hutang Berlebihan
Tip #5 – Miliki Rancangan Peruntukan Belanja Jutawan
Tip #6 – Eksploitasi Faedah Kompaun Untuk Bekerja Untuk Anda
Tip #7 – Nilaikan Sesebuah Pelaburan Dengan Pantas Menggunakan Peraturan 72

There are 50 tips of cutting down your expenses at Tip #3. Try them and see whether they help you reduce your spending.

If increasing your income is currently not possible for you, then cutting down your spending/expenses is a good option. However, if there is a way for you to increase your income, by all means, do so. K.C. Lau has listed 25 ways of increasing your income.

Tip #5 is about budgeting. I have failed many times when it comes to doing a budget. But I don’t give up. Recently, I challenged myself by setting up a 30-Day Challenge of Tracking Every Dollar and Cent Project to record where my money goes to.

By knowing what I spend my money on and how much I pay, it’s easier for me to control my future spending/expenses. Eh, sound familiar? I have told myself my times leh. Wuahaha!

You know, K.C. has listed more than 20 websites where you can download free budget spreadsheets and budgeting tools. You can try out a variety of spreadsheets, from the most simple one to the most complicated one, before you decide which suits your style.

Wow, I am very, very long winded! There are 5 parts for this book review – Tip-Tip Kewangan Untuk Rakyat Malaysia by K.C.Lau!

What to do? People have shorter and shorter attention span now. They read the first paragraph, scan through the rest and read a bit of the conclusion of an article. Me too.

In brief, this book is suitable for those of you who would like to learn how to save money, cut down on expenses, increase income, protect your money and build wealth.

Just like the description on the book cover says, Panduan Mudah and Praktikal Untuk Menguruskan Kewangan Peribadi Anda, the tips are easy to understand and follow.

This book is available at all major bookstores at RM29.90. You can also order online here.

Thanks, Adino, I copied the online store link from your post about ‘Tip-Tip Kewangan Untuk Rakyat Malaysia.

30-Day Challenge of Tracking Every Dollar & Cent – Day 1 – RM32.60, Day 2 – RM31.10.

Just came back from Tesco. Hubby bought some undergarment for men and a tube of toothpaste.

A reminder to myself: Always browse through the leaflets pasted on the notice board at the entrance!

You see, hubby took the toothpaste from the shelf at the counter while waiting in line for his turn. Right after making the payment, hubby went into a watch store while I waited for him at the customer service counter.

Feeling bored, I grabbed a copy of Tesco’s current promotion leaflets and had a look. Oh, my God, the same brand of toothpaste cost RM17.99 for the twin pack! So, it’s roughly RM9 each. Argh, we paid RM11.40 for the one we grabbed hurriedly at the counter!

Breakfast – RM6.10
Cold Drink – RM1.40
Lunch – RM3.30
Fruits – RM2.20
Dinner – RM9.75
Toothpaste – RM11.40
Clothes – RM7.50
Total Spent: RM41.25

Now I am thinking whether I should apply for Tesco’s Clubcard to accumulate points. For every RM2 spent, I will get 1 point. Once 150 Clubcard Points have been collected, they will be converted into Clubcard Cash Vouchers.

Wow, am I really moving towards frugal living?

* My Streamyx internet access payment of RM110 is excluded because it’s kind of like a fixed monthly payment.

You have a debt problem, but it’s not serious enough to get you into AKPK debt management program yet? Lucky you! If you don’t want to resort to enrolling in AKPK’s DMP or declaring bankruptcy in future, then make sure you start managing your personal debt now.

Here is Raymond Roy Tiruchelvam’s article on How to Manage Personal Debt.

THE “easier said than done” phrase latches on to this topic like ants to sugar. While getting into debt is made easier today with the many innovative marketing plans undertaken by financial institutions, getting out of if, leaves much to be pondered.

For those who do not see the light at the end of the tunnel, Bank Negara has introduced AKPK or Credit Counselling and Debt Management Agency. I am assuming a single source of funds being financial institutions, and not “ah-longs” and other unconventional sources.

There is actually one step to be undertaken prior to managing your debt, which is managing your cash flow. It does not mean that if one is a millionaire, there is no need for debt management … well perhaps there is no need, since the ability to source for debt is high, but everyone will need to manage their cash flow, let it be millionaires or paupers.

Let’s look at some steps that we can take to ensure that we are able to manage our personal debts so that we do not go into the “PN4” or “PN17” status (which for companies implies a financially distressed state).

Let’s start with liquid debts, credit card and car loans. For the former, never follow the minimum payment requirement of the bank, which is 5% of outstanding sum. The reality is that it does not diminish in 20 months (5% X 20 months = 100%) – which is the general misconception.

Instead, spread the payment over a reasonable payable period. For example, if you purchase a personal computer for RM1,500 perhaps, you want to make a RM300 monthly payment over 5 months, rather than pay RM75 in the first month, then RM71 for the second month and so on (assuming one follows the minimum 5% payment, excluding interest charge).

As a matter of fact, if one were to purely pay the 5% minimum payment, do you know that it will take 50 years for the sum to trickle down to RM100. And mind you, even with that, the debt won’t be fully settled.

As for car loan, do not take a hire purchase (HP) contract for more than 5 years. What would a car costing RM80,000 be valued at after 2½ years? Depending on the type of car, continental or eastern, a 5-year HP term will value it at RM40,000 (assuming a simplicity straight line depreciation, 100% hire purchase financing, excluding interest with zero value at the end of the payment term).

Assuming one needed cash, don’t you think it’s easier to find a buyer at RM40,000 compared to if you were to take a 9-year car loan whereby you will need to find a buyer at RM62,222 (remaining loan balance after 2 years for a 9-year HP plan).

Naturally, one would say if not for the 9-year term, he or she will not be able to afford the vehicle … but that’s exactly the point. If you can’t afford it, then don’t buy it!

Next comes personal loan. Firstly, it baffles me that banks are giving out “clean” loans today, meaning non-collateralised, non-guaranteed loans as personal loans to almost everybody with a monthly pay slip. If you are unable to pay, there is little recourse, as compared to hire-purchase loan, where you may have the option of selling the car. Hence, unless you are sure of the purpose and that the usage of the funds will return a cash flow, do not indulge in one.

Using electronic means via Internet banking and online payment systems is a good way to manage your cash flow. Today many banks have this facility that allows you to also format standing instructions to promptly pay a fixed sum on a particular date towards debt settlement. This will help you ensure that priorities take precedence. Therefore, it’s only the balance cash after settling debts that will be available for disposal.

What will be the comfortable debt to income ratio? Zero is preferable, otherwise a 25% maximum limit of disposable income is recommended. For example, if you had bought the RM80,000 car mentioned earlier, on a 5-year term; assuming a simplified zero interest scheme, you would be paying RM1,333 monthly installment.

Therefore following the 25% debt to income ratio, you should be earning a minimum of RM5,333 per annum. This is after tax and EPF, therefore gross monthly salary should be about RM6,200. So after reading this, do you think you have overspent on your car? There is no under-spending by the way, since the ratio is only an indicator, and I am sure you would probably want to also invest in a housing loan.

You can also increase your capacity to loan, by simply borrowing money to invest where the returns are higher than the cost of funds.

If you can find one an avenue that guarantees this position, then do inform me, I too am curious!

Raymond Roy Tiruchelvam is a former senior manager – economics and investment analysis at an oil and gas outfit.

If you think that you do not see the light at the end of the tunnel, then attend AKPK’s briefing to see if you need a debt management plan to help you get out of debt.

It’s hubby’s payday yesterday. Early in the morning, I took a bus to Public Bank to withdraw his money and went to Maybank to deposit my AKPK debt management repayment and hubby’s AKPK debt repayment.

Right after that, I opened an online Maybank2u account with the help of a bank officer. So, starting next month, I can pay the AKPK debt repayments of mine and hubby’s online without the hassle of traveling to banks anymore.

There went hubby’s pay of RM1,800; it’s used to pay the debt repayments of mine and hubby’s RM680, the auto insurance RM300 and some personal debt RM520.

The remaining RM300 will be hubby’s weekly spending on meals, clothing, groceries and petrol.

I have discussed with hubby that he needs to try out the envelope budgeting system to help him spend his money wisely.

Last month after he got his salary pay and paid the debt repayments and car loan installment payment, he was left with RM700.

Since it’s his salary, I let him keep the remaining of RM700 to see how he managed his cash in hand.

I was mad that he finished his cash within 15 days! Basically, he spent on food, clothing, groceries and petrol. But, he overspent on every category.

I observed that he loved buying buns and snacks for other teachers. Each week, he would spend between RM30 to RM40 on food for others.

When it came to buying clothing, he was nice enough to buy for me, his sister and brother. Although I had told him that I didn’t need new clothes for the time being, he still bought for me.

Groceries and household products! Each time he came home with bags of big or small groceries and household products, I would nag at him for shopping for groceries and household products again.

He said the groceries and household items were on sales or discounted items that could save money?! Well, there are always sales now owing to the bad economy.

The envelope budgeting system I am going to let him try out is a simpler one; he will be given a budget envelope rather than a few budgeting envelopes every week.

Each Monday, he will receive an envelope filled with a budget of RM200 for his weekly cash expenses on food, clothing, groceries and petrol.

With only RM200 cash in hand instead of RM700, I think he will think twice when it comes to buying clothes or antique watches.

Speaking of watches, I was mad that hubby bought 3 antique watches in one and a half months! He reasoned that he had a full time job, so it’s fine to buy the antique watches he liked.

Argh, I am fine if he buys an old watch every month or every two months. But buying 3 watches in one and a half months is a bit ridiculous, isn’t it?

I am glad that hubby is willing to try out the envelope budgeting system to help him manage his hard-earned money wisely.

Am I worried about my credit card debt now? No, I am not. But I used to be very worried and stressed out about it before I enrolled in a free debt management program called AKPK debt management programme (DMP).

What about you? Are you worried about your credit card debt?

You should be if your credit card debt has spiraled out of control; you pay more than 15% of your monthly income to your credit card bills or/and borrow cash from one credit card to pay another.

You are not the only one who is dealing with credit card debt nowadays. In fact, almost 40% of credit card holders are in the same predicament!

So what should you do to avoid the need of getting help from debt relief options such as debt consolidation, debt management program, or debt settlement and worst of all filing for bankruptcy?

Start doing credit card debt management to help yourself get out of debt as fast as possible!

Most financial experts will advise you to stop using your credit cards. Quit using credit cards is to prevent you from adding new debt to your existing outstanding balance.

If you have more than one credit card, pay the minimum payment on them all. Then, pay the most to the credit card with the highest APR. Once the card with the highest APR is paid off, keep paying the minimum payment to the rest of your cards and pay the most to the next highest APR. Do so until all the credit cards are paid off.

Another way to help you is try balance transfer deals that offer 0% interest free period for 6, 9 or 12 months to save some money.

Credit cards are convenient, but you don’t have to use them all the time and put everything from groceries to petrol to night’s-out on them. Instead of using credit cards, cultivate the habit of using cash to help yourself curb your spending habits and get into more credit card debt.

If you are really concerned about your credit card debt, start doing debt reduction before you end up resorting to debt consolidation, debt management plan, debt settlement or bankruptcy.

After the recent 6D 5N trip in the city, I must admit that I am blown away by the way my sisters and other family members spend their money.

Don’t get me wrong. They don’t spend their money with credit cards. No. Instead, they use cash all the time.

They spend their money as if they have lots of cash, as if it’s easy to make money, as if the bad economy has not affected them at all, as if …

Well, they don’t act as if. The truth is they really do have lots of cash; they don’t have the habits of swiping credit cards.

To them, making money is easy; their hardware stores and motor shops are still making good profits despite bad economy.

Their way of spending money makes me realize the power of using cash and the goodness of not being in credit card debts or other debts.

Serve me right! I only realize the power of cash after getting in deep debt trouble and being in AKPK debt management program (DMP).

Since in the DMP, I have come to love using cash and saving some extra cash by following easy money-saving changes.

If you are also on tight budget and would like to save some extra cash, try out some of these easy money-saving changes; they are actually minor changes to the way you use products and items in your everyday life.

1. Buy the Cheapest Hand Soap. Always buy the cheapest hand soap you can find. The quality doesn’t necessarily go up with the price and you can use it in place of bath soap.

2. Fully Use the Whole Product. Ask any thrifty mom you know and you’ll surely hear this money saving tip of turning bottles upside down and draining to get the last bit from them.

Others are tearing open sugar and flour packets to get everything; squeezing or cutting open tubes to use up all before opening new ones. You’ll be amazed at how much there really is left!

3. Never Use More Than You Need. Just because it is stated on the box that you need a full cup of detergent, it doesn’t mean that you really pour a full cup.

As hubby and I don’t sweat a lot, there is really no need to use a full cup as what the manufacturer says. Instead, half a measure of laundry detergent is usually enough.

4. Use Some of the Things in Your House Creatively. Instead of spending money on the fancy floor cleaners, try using ammonia that also does a great job. Use plain water in between times.

If your furniture needs some polishing, mix equal parts of white vinegar and vegetable oil and rub on the furniture. Buff with a cloth until it shines.

Sure, they are minor changes, but they do add up in the long run and put some extra cash into your pocket throughout the year!

Hubby and I were in the city for 6D 5N. While hubby was attending a 3D 2N seminar, I was staying at my uncle’s place.

Overall, we spent less than RM100 on food, shampoo, toothpaste, parking fees and discounted trousers during the trip. Unbelievable, right?

You see, hubby’s meals and seminar, petrol and accommodation fees were all fully paid by his school while my accommodation and meals at my uncle’s house were free.

Whenever I went out with my uncle’s family or my sisters, they were the ones who insisted on making payments.

My younger sister who knew my financial woes better kept buying foods and clothes for me. Of course, she paid cash. I am happy that she loves using cash, not credit cards.

I only realize the power of using cash after I was so deeply in credit card debt and had to sign up with a free debt management program called AKPK debt management programme (DMP) in my country.

I am grateful that I was approved of the debt repayment application last October and given a chance to bring my financial ruin back on track without having to declare bankruptcy.

Use cash, if you don’t want to end up in a debt management program to help you get out of credit card debt.

Use cash so that you don’t have to pay high interest rates, late payment fees, over-limit charges and other miscellaneous fees. And most important of all, you don’t have to pay interest on the interest charges you owe!

I am a credit card debt woman who no longer owns a credit card. Of course, I am still loaded with credit card debt that needs a few years to pay off through AKPK free debt management program (DMP).

It’s difficult to find an adult who doesn’t own a credit card these days, isn’t it? Credit cards, especially to working people and those who live very busy lives, are ultimate financial saviors.

Well, credit cards used to be my savior too when I needed cash or a particular item urgently. I loved the glamor and the convenience credit cards brought to me that I got myself 7 credit cards and ultimately loads of credit card debt.

It’s the convenience of carrying credit cards compared to carrying cash when making purchases that triggered my thirst for material things, led me into the temptation of buying stuff that I didn’t really need and eventually got me into the unmanageable credit card debt.

Having a credit card is a big responsibility. If you don’t use it carefully, you may owe more than you can repay and be suffocated by high interest rates, late payment fees, over the limit fees, cash advance charges, retail interest fees and miscellaneous fees that add exponentially to your existing outstanding balance.

Aren’t you scared and stressed out when you hear news that credit card debt is growing or see statistics that credit card debt has ballooned tremendously if compared to previous years?

I bet you are if you are one of the million credit card holders who has already accumulated more debt, especially after Christmas and holiday shopping seasons.

Perhaps it’s time for you to consider using debit cards. Start getting used to paying your bills or groceries with cash or debit cards instead of credit cards.

Start using debit cards and stop using credit cards when your credit card debt is still manageable. Don’t wait until your credit card surcharges, financial charges and late payment fees add up until you find yourself buried by insurmountable credit card debt.

Credit card financial charges, late payment charges, cash advance fees, retail interest fees and miscellaneous fees are charges and fees that lead to fast credit card debt accumulation.

With current global financial crisis and looming recession, debit cards are expected to eventually overtake credit cards and become the most popular form of payment.

It just dawned on me that I am living on CASH only now. I use cash for everything from buying groceries to paying for the petrol to making payments to debt repayments.

I have NO MORE CREDIT CARDS. I am now a credit card debt woman who doesn’t even have a credit card. Of course, my debt is still here.

I feel good. Feel good that there are no chasing calls from banks, creditors and third party agencies. Feel relieved that there are no more exorbitant late payment charges, 18% finance charges, and ridiculous retail or cash advance fees.

Because of being placed under the debt management programme, I have a bit cash left in hand or saved as emergency funds now.