My Michael Jackson Article.

Everyone has written about the King of Pop so here's mine...

Its been a few of months since the death of Michael Jackson so I thought that maybe I should be able to write about him now without getting everyone angry at me. Please don't get me wrong, I loved Michael Jackson's music. He was indeed a legend. But unfortunately this guy knew very little about handling money. He is the perfect case study of what not to do with your money!!!

Back in the 80s or 90s he bought the rights for all the Beatles' songs. This means that everytime someone plays, remakes, or buys the Beatles' songs he makes money. Add that to his own song collection and you have passive income like no other!!! Yet how does a guy who also signed a record deal for USD500 million go nearly into bankruptcy? Its totally unbelievable. But yes Michael Jackson nearly did go into bankruptcy and he nearly lost his famed Neverland Ranch. When he died he had debts of around USD200 million. Magastos talaga siya!!!

Its a classic case to all the people who tell me that the only solution to their financial problems is to earn more money. Learn from the King of Pop. No matter how much you make if you don't know how to save and cut back on your expenses you will never have enough money.

So if you do get a salary increase, or you win a little bit of money in lotto, or you get money from inheritance, or you get a big commission or your business makes a good profit. Don't change your spending habits! You lived without this money in the past so you don't need to spend it. Save it instead... So you don't have to work hard all your life.

Oh one more thing... Don't tell anyone in your family you got this extra money... I hope you know what I mean.

The Holy Grail – Passive Income!!!

The entire theme of what I write about on a regular basis is How to Make Everyday a Sunday. I believe our financial goal in life is to make everyday of our lives a Sunday. Why Sunday? Because Sunday is the day when we can do anything we want - wake up late, spend the day with family and friends, eat out, go shopping or do the things we love.

So how can we do this? It’s very simple. We make enough money WITHOUT WORKING so that our monthly income exceeds our monthly expenses. Say what? How do you make money without working? The answer is Passive Income. Passive income is income that is generated from investments. It makes money for you if you are sleeping, on a holiday, or spending time with your family. See that's the beauty about money. When you don't spend money all it wants to do is make you more money!!! It is your best worker. It works 24 hours a day 7 days a week. It never gets tired and never complains.

How do you get this passive income? There are basically 3 ways - interest, rent and dividends. To start with it’s as simple as putting your money in a time deposit. Time deposits generate interest which is passive income. It’s not much but it’s a START! And it’s better than nothing. Then when you have more you move up to longer term bonds which give more interest. You can also start looking at properties which generate rent. Later you can invest in stocks or businesses which produce dividends.

Most people focus on getting a higher salary. They think that once they get a higher salary it will end all of their financial problems. WRONG! You can't work forever. Remember that. At some point in time you have to stop working. Now I want you to imagine life where you don't have a salary. For most people that's going to be a big problem. You have to build up your passive income now while you still get a salary.

Of course you can't accumulate investments if you don't save. The bottom line is still saving enough so you can generate enough money to invest. But my point here is start focusing on the passive income because its in the passive income where you will achieve financial freedom.

For more information on how I can help you email me on hoover@barongroup.com.ph.

I love you Money... Ay mali... Mommy pala... I love you Mommy...

I'm sure the past few weeks have been very tough for all the parents out there. Its tuition time! and we have spent the last few weeks emptying our bank accounts (and borrowing money!!!) to pay not just for the actual cost of tuition but all the other expensive stuff that go with the first day of school - new books, new stationery and bags, new uniforms and shoes, school bus, tutors, and, of course allowance.

It's a yearly event and for those who year after year have the same problem of trying to find money to fund their kids education, those people who borrow money year after year... May bagong invention... Ang tawag, saving!!! If your kids tuition is 20k this year then you have to save 75 pesos a day, 5 days a week. If its 40k then you have to save 150 pesos a day. Its that simple. Start now. Not later. Wag mo sabihin tsaka na. Now na!

And no one can touch this money!

Let's say your mom calls you up 6 months from now and says she needs money. You see that you have already saved up 10k for your child's education next year. What are you going to do? You don't give it to her!!! You don't say bahala na si God. Remember this is not your money. This is your child's money!!! This is her future. You have no right to give this money away. Give your mom money if you have spare but don't throw away your kid's future. You are a parent now and once you become a parent your kids become your number one priority!

Now what if you tell me... I can't make ends meet on a monthly basis to afford the tuition at this time of the year!!! That's fine. Then you have to change a few things:

• Look at lowering the quality of the school. As parents one of the most important things in our life is that our kids get the best education but if you are going to dig yourself into a financial grave then forget it. If you can't afford it. Forget it!!! Go with a school you can afford. Remember a child's best teacher is the parent. And if you are busting your ass trying to pay for the tuition of your kids only for you not to see them then there is no point because your child will grow up without their best teacher! You!
• Look for a nearby school. So your kids can walk to school. If the school is not good enough. See my first point.
• You are not a bank. Your kids don't need new stuff all the time.

I'm going to end my blog with a story of a friend who left her teenage kids to work abroad so that she could send her kids to good schools. She feels like she is not their 'mommy' but more like their 'money'. Because everytime they talk to her they are asking for things - load, allowance, new clothes, etc. They really don't understand the amount of sacrifice and hard work their mom has to do to give them a good education. All they know is that they have this ATM machine that sends them money when they want it. They have taken their mom for granted.

For more information on how I can help you email me on hoover@barongroup.com.ph.

Deadbeat Guys! An increasing phenomenon.

What is wrong with these scenarios?

A woman is finding it difficult to get married and start a family because she is supporting her sick mother while her brother who works odd jobs doesn't do anything to help out.

A woman's husband works hard as an OFW. The woman however is finding it hard to cover her expenses because she gives money to her brother who is a 40 yr old accountant but doesn't have any work. The brother has a family but has not had any work in a year.

A brother and sister both have jobs and live with their parents. The problem is the sister is the only one contributing to the monthly expenses! While the brother spends his money on himself and his friends.

The women that I talk to above are all telling me - bakit ako lang! Bakit ayaw niya tumulong! Or bakit ayaw niya kumuha ng trabaho!

Here's the ultimate one. Women leaves her 3 kids and husband to work in another country while spoiled husband stays home and doesn't even work! Do you know how hard it is for a mother to be away from her kids?

I'm increasingly hearing more and more stories about deadbeat guys! and you know what these are all true stories!

Look I'm all for women's rights and gender equality but this is ridiculous. I'm still in the belief that a man's position in the family is as a provider. What use are you to your family and society in general if you can't provide for your own family.

If I was in a position that I had no job I would do anything in my power to earn money for my family. Does it matter if the job is 'beneath' you? Beggars can't be choosers! One of my mentors always told me that one of the first things a man should do is learn to drive because if nothing else you can be a driver! Swallow your pride and take any job available.

Ladies... if you have a deadbeat guy in your family - son, husband, brother, father? Don't let them get away with it! Stop spoiling them. In the end it is your family that will suffer.

For more information on how I can help you email me on hoover@barongroup.com.ph.

Walang Yumaman na Hindi Kuripot

I was having coffee with a friend of mine and we were admiring the frugality of one of oura mentors. Ang yaman yaman niya pero ang kuripot pa rin niya. My answer was... ganon naman dapat.

Our culture looks down on people who are kuripot. In fact we should be a nation of kuripots so that our savings rate will go up. Look at the Chinese and the Japanese. They are a nation of savers and they also happen to be the richest countries in Asia.

And you know what? Ang kakuriputan ng mayaman ay hindi para sa malalaking bagay, in fact the rich are frugal in the small stuff.

• I know of one taipan who goes around his building to personally turn off the lights during lunch.
• I know a lot of wealthy people who shop using coupons or only buy stuff at a minimum of 30 per cent sale.
• The rich carry a database of where is the cheapest place to buy certain groceries. And they go there.
• I save the water from my shower to use it for flushing the toilet.
• The wealthy bargain no matter how small the amount.

There are so many more examples but the question is why are the wealthy so kuripot when they have so much money. I'll give you an analogy... I was talking to my friend who is so thin and fit. He works out so hard and eats so healthy. I ask him... Pare why do you workout so hard when you are so healthy already? He tells me an answer which makes me think... I am healthy because I workout so hard...

So it’s the same thing with being healthy. Why are the wealthy so kuripot when they have so much money? Actually it’s the reverse. The rich have so much money because they are kuripot!!! They know that if they can save small amounts of money this can go to savings and investment. The money will compound and compound and eventually it will be big.

Throughout my study of the rich I have learnt one thing - walang yumaman na hindi kuripot. Meron mayaman na hindi kuripot but the ones that became rich from being poor are all KURIPOT.

For more information on how I can help you email me on hoover@barongroup.com.ph.

Bring Him Home ASAP!!!

A friend of mine has asked me for advice about buying a Lot in a nearby village. She and her husband have managed to save about 250k and were ready to make the purchase. Her husband has been working overseas and sends money back on a regular basis. They have young children and can save about 10k a month. They currently live in a small unit which they own.

Sounds like a good move right? Invest in the Lot so that one day they can build their dream house. Land prices never go down diba? Well... It’s not bad but it’s not what I would do... Here's why:

• The Lot once they buy it doesn't generate any income or benefit. It just sits there doing nothing. Remember if the asset doesn't earn any money I don't consider it an investment.
• I estimate they will need 1m to 2m to build a house. Saving 10k a month they will need 8 to 16 years of saving!!! That's a long time not to generate any income or benefit from an asset.
• The general assumption is land prices always go up but this is NOT ALWAYS TRUE. When the time comes that you want to sell the land, there is not always a ready buyer AND if there is, it’s more often below market value.
• They will also have expenses in maintaining property - real estate tax and some maintenance costs. Imagine it doesn't generate income and you still have expenses!
• This last point is the most important. They already have a place to live. The husband works overseas and therefore he has to endure the suffering of living away from his family. He can't generate the same level of income here so he will be away from his family for at least 8 to 16 years just to save for the house. Remember this is just for the house, they still need to save for their retirement income!!! That will probably take another 16 years. At this rate his kids will grow up without their dad! (See Apr. 9 Blog - It's Hard to Say Goodbye)

At this point, they have to ask themselves what is more important to them. Living in a nice house (which the family may never enjoy) or being able to bring her husband home as quickly as possible and live as a family? If the answer is the second then here is what I would do:

• Focus on the saving, not on the lifestyle. Make do with what you have. REMEMBER!!! Every peso saved brings him home just that little bit sooner! Think that way about everything you spend from now on because every peso counts. (See Jan. 4 Blog - Na Libre Ka? Invest Mo!)
• Invest the 250k and the 10k a month. At 12% p.a. compounded over 16 years it will grow to 7.3m!!! Enough for them to retire on already! Once you have the cash then you can go out and buy your dream house. If you pay in cash, I promise you, you will get a better deal!

So remember it's ok to buy a Lot but you have to be able to generate a good income or benefit from it from day one, and that means you need to have the money to build a house on it. If you don't then you might be making one of the worst investments you will make.

For more information on how I can help you email me on hoover@barongroup.com.ph.