Seven steps to achieve financial freedom

"If you would know the value of money, go and try to borrow some." - Benjamin Franklin

Step One: Change your mindset.

Since I was a kid my parents told me to work hard if I want to buy something I like. They also trained me to work and study hard so that I can get good grades and get a good job later. This pattern of work-earn-buy is how many of us were raised.

I remember back when I was in college, I get an allowance of Php 200 every day and I was happy that I can save a little with that amount. During my first year of work, I was earning Php 350 a day and it wasn’t enough. I began to ask myself “What’s happening? I’m earning almost double the amount when I have in college but it seems that it’s not enough.

I realized that, what I want in life and my lifestyle changed. I’ve bought new clothes for work, ate from more expensive restaurants with my officemates, have a new line subscription from Globe Telecoms, etc. And even before I got my salary, taxes and insurance are already deducted from it. Without realizing it, I’m acquiring expenses and liabilities.

Like I said the first step in becoming financially free is to change our mindset. If I ask you now, if for example you get a bonus of Php 20,000 would you invest all of it on stocks/mutual funds/small business or buy a new laptop/any cool gadget? For almost all us the answer is simple, buy the things we want, go to a vacation, spend the remaining on expenses and if there’s a little amount remaining, save.

I believe that it’s not impossible to change our mindset. It may be hard but it’s doable. My mentor and good friend of mine told me that we humans can program our thoughts like a machine if we really want to, whatever your age is it it’s never too late. We need to change our mindset from work-earn-buy to work-earn-invest and when our investments paid off it we will be financially free.

Step Two:  Invest in your financial education.

Like arts and sciences, we need first to invest in our education to become what we want. If we want to be become a programmer, take an I.T. course or computer science. So, if we want to be rich and financially free we have to study the art of making money. The first thing that we have to do is to have a personal financial checkup. And yes, you can do this in private J.

a)    List all your assets (work, investments, anything that gives you money)

b)   List all your liabilities (expenses, phone subscription, debts, anything that takes your money)

By doing so, we’ll have a picture of our cash flow.

c)    Learn to budget, segregate your assets in different areas.

I’ve learned about this on a seminar that I attended. For example, I have a Php 100,000 in my savings account. It’s a huge sum right? Wow, I can even buy a second hand car. But by segregating it like this it’s really a small amount:

Retirement Fund: 20%

Retirement fund is composed of insurance, pensions and savings in preparation for your golden years. Who doesn’t want to retire young and rich? Maybe it still small today, but after years of acquiring good investments you’ll see it grow and you’ll be amazed on how big it will be. I suggest that you get a savings account with passbook so that you won’t easily withdraw it. If it reached the minimum amount for time deposit, please do so. If you have enough money please get insurance, this is more important if you have a family already and it’s cheaper to get if you’re younger.

Expenses: 20%

Okay, there’s nothing we can do about this. They say that we humans are the only one that pays to live in this planet. Expenses are composed of taxes, electric bills, phone line subscription, food, water, clothes, etc.

Education: 10%

Education does not end in college or in our career. For example, if I’ll have enough money I want to study how to cook because I love food. Or I can study law because I love to debate and defend what I believed. I want to travel around the world and meet new people or just anything that you want to learn that will make you a better person.

Luxury Fund: 10%

All work and no play make a dull boy right? I know that no matter how we saved, there’s something inside all of us to buy something we want really, really want. Be it a vacation, a car, gadget or watch or just anything you put it in here. You deserve it.

Investments: 20%

Investments take many different forms. Some are more riskier than others, some are good and some are bad. Investments come in forms of stocks, bonds, mutual funds, gold, real estate. This can also be a business idea that you want to venture to or franchises that you would like to acquire.

Emergency Fund: 10%

During one seminar that I attended, a man that I spoke with told me that accountants keeps 10% of the company’s revenue for emergency. For example if the company needs additional budget for projects like company outings, trainings or anything that additional funding was needed. I thought if companies adopt this practice because it works, why don’t we? So this fund is for emergencies or “emergency gimiks” or anything else that needs emergency funding.

Tithes: 10%

Once I attended worship with LOJ or “Light of Jesus” and they tackle the topic of giving tithes or giving 10% of your income to the church, charity or community. Maybe you’re not that religious or maybe you don’t believe such things but I still recommend giving at least 10%. It hurts I know, but the feeling of giving is something you’ll never forget.

Step Three: Take Action

Of course, all this reading and studying about money is useless we act on it and test it ourselves. Ideas are just ideas until someone acts on it. In school, we were taught and have an exam but in life we get our exams first and then we learn. I too, before learning about investments have some mistakes before I understand it. I lost some money but the lessons learned are so valuable that I still practice it. I know it’s scary but we can do it.

Step Four:  Reduce your debt to zero.

                                                                                                                  

I highly recommend this. Before saving and investing we need to pay our debt first. Why? Because the interests from our debts will not stop growing unless we pay for it. For example, credit cards offer a “small” interest rate of 3.5% per month right? If we don’t pay it up in a year it will be 12 X 3.5% = 42%. That’s why I don’t want long term loans unless the property that I bought is income generating. So pay your debts first or it will grow so big that it will eat all your savings and investments.

Step Five: Buy real assets.

Most of the time, people confused assets from liabilities. For example, many thought that a house is an asset; it is not, unless someone rent it from you. Some buy cars thinking of it as an asset but once you take it outside of the company building its value depreciates and taxes and oil change, maintenance will really cost you. Others buy cool gadgets like mobile phones but it immediately depreciates in value. So buy assets, investments that generate money for you.

Step Six: Live below your means.

I’ve learned about this in an article in Yahoo that many millionaires and billionaires practice. Warren Buffet one of the richest man in the world encourage practicing this. He discourages having many credit cards and buying unnecessary things. So regardless on having a good salary or not, live below your means. If you have a Php 16,000 salary, don’t go to a spending spree and buy all you want. Instead of eating on an expensive restaurant go to a fast food or to an inexpensive one or just buy a voucher from group buying sites, if you’re going on a someplace near don’t take a cab and just walk and it’s good for your health.  Don’t be a show off because people already know who you are.

Step Seven: Learn to share and bless others.

What is the worth of your wealth without sharing it with others? How sad is a lonely rich man. History tells us of tales of kings and the rich people that dies a lonely death because of their greed. As they all say, money is not evil it’s the love of money that’s evil. Money is just a tool, we can either use it to share and bless other people or be blinded by our greed and be hated by all.

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How financially educated are you?

“The best way to help the poor is not to become one of them” -  Laing Hancock

Two weeks ago, the news that 80% of Filipinos don’t have a savings account caught my attention. The reason is that majority of Filipinos can’t afford the 5,000 peso maintaining balance of set by banks. Personally, if one would really want to open a savings account they’ll just need to find banks like BPI that offers as low as 1,000 pesos maintaining balance to open a savings account.

It struck me the reality that the majority of us Filipino have a bad habit of spending and have poor financial education. I have friends from different walks of life, from messengers to upper management that told me of their challenges regarding money.

I remember my parents talking about what happened to some of their friends and co-workers after retirement. Most of them become financially challenged because they lacked financial education. After getting a huge retirement pay, most of them spend it like crazy. They spend it to what they believe are investments like the houses they bought, businesses in faraway provinces, go to their dream vacation they’ve been dreaming of. Some lose it in vices like alcohol, bad women and gambling.

And then reality bites, expenses doesn’t stop whether you have money or not. The bills keep on coming and without enough money flowing in they resorted on selling properties, some are buried in huge debt and these people who spend their lifetime working will be forced to work again.

At an early age, I too have experienced this. I realized that I’ve been working for some time now but my savings aren’t that great.  Is there really a way to get out of the rat race? If there is really a money game, I’m losing. For such great effort exerted in work every day, I’m not earning that much.

So I came to question the system because for almost all of us, the system didn’t work at all. The more we earn, the bigger the expenses. Our salaries are even reduced even before we get it due to taxes and other deductions. Of course, we shouldn't just blame it all on the system because the true culprit is our spending habits. How we spend it all, like there is no tomorrow.

Before we were born, this kind of system is already in place. Many call it the rat race, some experts call it the money game. The game is simple; to be financially independent the money going in should be higher than the money going out. The money going in is called assets, the money going out is called liabilities. We just need to acquire real assets that work for us so that we don’t need to worry about liabilities. There are many ways to acquire real assets, see my previous post “Investments that work for you” to have an idea of what I’m talking about.

I listed some of the reasons why we need financial intelligence. Feel free to comment for suggestions that I can add up to the list:

1. Money is confidence. The more money you have, the more confident you become.

2. Financial Intelligence is freedom. The more you know how money works the less you worry about it. The less you worry about money, the healthier you become.

3. Financially independent people send their kids to the best schools.

4. Nothing beats the feeling of helping others. To be financially free, gives you the power to help more people. You cannot give what you didn’t have.

5.  5. The power to choose. Financially independent people have more choices regarding how to spend their time and work they want to have.

I'll be posting more free tips and tricks on how to manage your hard earned money and make it work for you. Feel free to join my tribe and subscribe to my newsletter. 

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Investments that work for you

When I was in college, I've been given the opportunity to work for the Marketing head of our school as a on-the-job-trainee. My boss who eventually became my mentor was so passionate about investing that everyday he keeps insisting that I should read a very good book that he's reading. 

That book was "Rich Dad, Poor Dad" by Robert Kiyosaki. It was the first book that I've read about investing and little did I know that it will change the way how I think about money and the world around me.


Let's first discuss the difference between active and passive income. Simply put, active income is something we earn while working on something. Getting paid by doing our job is a classic example of active income. People pay us in exchange of the product or services that we offer.


Passive income on the other hand, is generated without doing any work at all. Sounds good isn't it? Imagine, if you have enough passive income you'll be financially free and can do whatever you want with your life without worrying about money.


I've listed some of the most popular types of investment vehicles that I've already tested. I'll just give a brief description of each because each investment vehicle will be discussed in detail in my next posts.


Time Deposit - The bank will pay you a bit higher interest rate if you let them keep your money for a period of time. Interest rates vary depending on the bank, amount of deposit and how long your money will be locked up.


Stocks - acquiring stocks (aka shares) makes you a part owner of the company or corporation that you invested in. If the company is earning, you will be earning too (The amount depends on how many shares that you bought). This is called stock dividends or simply dividend. Mostly companies pay every quarter while some pays one or twice a year. In my opinion, this is the most riskiest and most exciting investment vehicle because the market always tend to fluctuate.


Bonds - Bonds are like promissory note that was issued to you by a company or the government in exchange of the money you lend them for a period of time. It's one of my favorite investment vehicle because its nearly risk free. Interest rate varies from 5% to 21% and are subjected to taxes. Here in the Philippines, you can buy bonds from banks like Bank of the Philippine Islands (BPI), Banco de Oro (BDO) and Development Bank of the Philippines (DBP). 


Mutual Funds - If you know little about investing, I think this the most safest way to start. Mutual funds works like this, investors purchase "units/funds" from a company that offers mutual fund services. The company have a finance manager that manages all the money collected and invests the money to different investment vehicles like stocks or bonds. 


There are still many types of investments that I want to try, like real estate and gold. However, we'll discuss in detail the four investment vehicles that are listed above.

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Awesome Bum's Top 10 Greatest Anime of All Time

When I was a kid, my grandfather and I was very close that we always watched different cartoons everyday together (both American and Japanese), in the morning and  afternoon. I grew up watching Tom and Jerry, Felix the cat, Little women 2, Zenki, B'TX, etc.

As I grew up, different anime masterpiece was shown in national TV that I was so inspired that I can't help myself but to dedicate this blog post to honor them.


Ten: Gensomaden Saiyuki

Gensomaden Saiyuki is an adaptation of a chinese famous novel "Journey to the west". The anime is about the journey of the four anti-heroes namely Genjo Sanzo, Sha Gojyo, Cho Hakkai and Son Goku. They were ordered by the three aspect of buddha to stop the resurrection of Ox-Demon King, Gyumaoh. The main characters are high ranking gods in heaven before they were reincarnated on earth as punishment to a certain incident. When I first watched this anime on AXN, I immediately became a fan. The anime was presented with a new style of visual effects during fight scenes and confrontations. The anime is not only about action, it also mixes some comedy and drama to the story.


Nine: Bleach

I first saw this anime when it was featured in our college newspaper. The writer gave it high ratings so I became curious and watched it in youtube. Eventually, I became addicted to it that I even watched it during office hours (sorry my past employer). Anyway, the story is about a young man named Kurosaki Ichigo who can see dead people (even dead animals). One day, he bumped to Kuchiki Rukia a shinigami aka Grim Reaper (or Death God or Soul Reaper whatever you may call it). Rukia was injured by protecting Ichigo from a hollow and have no choice but to give some of her spiritual powers to Ichigo. But Ichigo absorbed all of her powers, became a shinigami himself and slash the hollow to pieces. As the story progressed, Ichigo became more powerful than a captain rank shinigami and protected Soul Society and Karakura town from its enemies.


Eight: Hajime No Ippo

Every Filipinos love boxing. And everyone can't help but relate and sympathize to the story of the young protagonist, Ippo Makunochi. Ippo was bullied in school and avoided by his classmates because of his study-work schedule giving him no time to socialize. When he was cornered and beaten up by some bullies from his school he was saved by Takamura, a boxing genius that later inspired him to become the strongest boxer in Japan.


Seven: Gundam Wing

I watched this anime when I was in fourth year high school (damn, i'm old). For me, this anime shows that war doesn't solved anything. It just brings grief and sorrow to both parties and mostly the current and the next generation suffers because of it. Anyway enough of me being sentimental. This anime is the story of five unique and remarkable gundam pilots that was chosen and trained by five scientists that rebelled against "Organization of the Zodiac" aka Oz. The mobile suits was called Gundam became the metals used in constructing the suits was called Gundamium. The five mobile suit pilots was sent to earth to free the colonies from the Alliance's opressive rule.


Six: Naruto

Naruto was one of the few anime that offers a rich collection of characters but still gives emphasis on everyone of them. I was impressed on the number of ninja moves, uniqueness of each character and unpredictable fight scenes. The story is about the child Naruto who was sad and indifferent because of the cold treatment of the Leaf Villagers towards him. He was treated this way because the nine tail demon fox was sealed inside him and the villagers believe that the demon fox was Naruto himself. As he grows strong through hardship and training, he also struggles to be acknowledged and to earn the respect not only by his masters but also by the people.


Five: Yu Yu Hakusho

Who can forget Eugene's signature shout "ReiGan" or Ray Gun!! Yusuke is the original name but I prefer to use the name Eugene because it was the name used when it was dubbed here in the Philippines. Eugene(Yusuke), Alfred(Kazuma), Vincent(Hiei) and Dennise/Denise(Kurama) formed a team that was sent to fight the evil guys under the direction of the baby boss of the underworld Jericho(Koenma). I used to watch it on Channel 13 and I became really frustrated when it was always replayed back on the first episode. Thank God, the series was transferred to GMA 7 making it one of the most popular show in the Philippines.


Four: Slam Dunk

I watched this first in AXN and I was hooked in this series because of its funny yet serious approach. The story revolves on Hanamichi Sakuragi a self-proclaimed Tensai (genius in Japanese) as he joins his schools' basketball club (Shohoku) because of the girl he likes (Haruko). By joining the club, Sakuragi met diifferent people like his rival Rukawa, baskeball captain Akagi and many others. The series ended before the national tournament starts and I'm one of the fans who's still praying for a second season.


Three: Death Note

What will happen if one of the best criminal mind and the world's best detective collide? The anime is about the story of a young genius who founds a mystery notebook that can kill any person by writing his name on it. Because of the number of the criminals he killed, interpol has summoned the best detective to chase him. With unbelievable twists and unpredictable story line this anime is a must watch!


Two: Voltes Five

"Borutesu Faibu Ni" I bet that you're singing this while reading. I first saw this anime when I was 6 years old and during that time it was extremely popular. Even today, majority of the people I know especially the younger ones still knows who Steve, big Bert and little john is. This anime is a classic and laid the foundation of anime fandom here in the Philippines.


One: Ruruouni Kenshin

In my opinion, Rurouni Kenshin (aka Samurai X in the US) is the best anime ever produced. I first watched this anime on Studio 23 and eventually became an avid fan. The story revolves around Kenshin Himura, the legendary swordsman that paved the way to the Meiji Era. Even though he tried his best to live a peaceful life, his dark past always seemed to haunt him. The reputation of being the strongest always attracts different challengers and even the government asks for his help.

This anime boasts an awesome soundtrack, superb fight scenes and amazing plot. If you haven't watched it, your missing half of your life. Just go to youtube or crunchyroll and give it a try.

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An awesome visit to MV Logos Hope

Last month (March 3, 2012), I asked my girlfriend to go with me to a Philhealth Office in Quezon Ave. to get a new Philhealth ID. Little did I know that she was planning to go somewhere else.

After getting my Philhealth ID, she asked me if I want to go with her to visit MV Logos Hope. It's still early, so I said yes. We rode a jeepney going to Pier 15 and asked the driver if he can drop us there.

We walked towards Pier 15 and asked the security guards where the ship is and they pointed us where to go.

We were greeted by a couple of friendly foreigners. They also collect the entrance fee of Php 20.

After boarding the ship, we were immediately guided by the ship staff to our seats and have an brief orientation.

They talked about what the ship is all about, the conversion rate of 100 units = Php 100, what's inside the ship, and what we can do to help.

MV Logos hope offers an incredible selection of books that comes with a huge discount. 

They also sell CDs, notebooks and souvenirs.

Lets take a trip to the "journey of life". The story is like a modern day prodigal son (sorry spoiler).

The ship also have a canteen but the food is a little expensive so we decided to eat outside.

The items I bought: Entrepreneur Book = Php 300 (originally cost $24), MV Logos ID Lace = Php 150 and MV Logos Key-chain = Php 50. Total Price = Php 500. 

Just some memos about the MV Logos Hope Experience.

I really like the crew members. You can feel that they enjoy what they're doing. Maybe I can join them in the near future :D.

We really enjoyed our visit, and I hope that they'll be back in the near future. Hopefully, I'll be buying more books by then :).

And oh, I'm still thinking about this until now.

Anyway, thanks karlytops for helping me with the pictures :) 

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Baguio Adventure and Panagbenga 2012 Day 4

Day 4 (Feb 26, 2012) Unfortunately we didn't woke up early as planned. We tried to get up by 5AM but Baguio's temperature and inborn laziness is dragging us back to sleep. 

We're on the road by 7:30 AM and as expected many people are already gathered on the side of the road where the floats will pass by.

According to a radio station, 1.3 Million tourists are expected to come to Baguio this year. And yes, majority of the spectators are tourists and some of them are extremely rude.

Majority of the floats are company sponsored. Some of them are popular in the whole country like SM Supermalls, Mang Inasal, TV 5, ABS CBN 2, and GMA7. 

It also involves some participants on the grand street parade and guests from other countries like south korea and storm troopers from star wars.

It's hard to take a shoot a good video clip because the flower float parade is much more disorganized than the grand street parade. For instance, when the float of Channel 2 passed by many fans chased the float, crossed the safety line and the ushers had a hard time dealing with them.

Feel free to watch the highlights of the Flower Float Parade below:

The parade also started at around 8:30AM and finished at 11:30AM. We tried to eat at nearby fast food but almost all of them are full. We managed to squeezed ourselves in on one of the restaurants in Burnham Park.

We tried to go to Good Shepherd Convent to buy some of their heavenly ube but because of the taxi shortage and lack of time we have to buy some on nearby stores. Its a bit expensive but we're running out of time, we need to pack our clothes and get some rest.

We leave for Manila at 7:30 PM and arrive at 2:30 AM. The travel is quite long because there is ongoing road repair in Tarlac.  The adventure is tiresome, takes a lot of effort but the experience is all worth it. To our next adventure, cheers!!

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Baguio Adventure and Panagbenga 2012 Day 3

Day 3 (Feb 25, 2012) Me and my girlfriend hardly woke up at 5AM so that we can arrive early at Burnham Park to avoid the heavy traffic and find a good spot for taking some pictures. We're lucky enough to find a cab at this time of day because only a few cabs and jeeps pass around Balacbac.

The cab dropped us at Burnham Park and because we don't know where the parade exactly will pass by, we ask the locals to help us find a place where we can hang out while waiting for the Grand Street Parade. 

We ended up in the Athletic Bowl but the sun rays is frying us so we decided to find a good spot in Burnham Park.

As we wander around Burnham Park, we noticed that there are only some people waiting in the gutter of the road giving us the opportunity to pick the perfect spot for taking pictures.

The Grand Street Parade started at around 8:30 A.M. and finished around 10:30 A.M. The parade showcases Baguio's local talents and rich culture. It involves local schools in Baguio, nearby provinces and some guest from abroad. Feel free to watch the highlights of the grand street parade below.

After the parade, we were shocked to see some people camping around Burnham Park just to have a good look on the Grand Street Parade.

We ate our lunch on the nearest Jollibee, and proceed to go to the next stop in our itinerary which is the Lion's head in the Kennon Road. As usual, we asked the locals how to get there and they point us to the jeep terminal going to camp 6 (Fare = Php 16).

The Lion's Head is one of the places in Baguio that I always failed to visit since I was a kid. If we took the Kennon Road route, we always failed to make a stop.

The Lion's head is lot different before its restoration. Also, I've noticed that it's a little crossed eyes (hehe). 

We decided to go home early to get some sleep. Because the next day, we need to wake up early again because of the Grand flower float parade and also the last day of our baguio adventure (I call it pasalubong day).

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