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.

Our Crazy Government

I don't normally write about politics because I try to avoid it as much as possible but I found this article in August 26 of the Inquirer so crazy that I just had to react to it!

The article stated that the government was having to export excess corn production at a loss. The government would buy corn at P10 a kilo from farmers and sell it at P8-9 a kilo to countries like Vietnam. They were doing this to stabilize the price of corn which had gone down so much because of the excess.

Now here I am thinking that's pretty silly because we are losing 1 to 2 pesos per kilo! The government was selling 150,000 metric tons to Vietnam so basically that's a loss of 150 million to 300 million pesos!!! But then I thought, that's ok because if we don't sell it, the corn will just rot in the warehouse. And then I thought that's pretty good because our farmers are producing a lot of corn which means eventually we will be able to export our corn at profits with better planning.

But guess what... The article then states that there was a surplus in corn because we IMPORTED 1.1 million metric tons of corn substitute known as feed wheat!!! This is crazy!!! So our country will lose PHP150m to PHP300m because some guys allowed this feed wheat to be imported.

Any businessman will tell you... Don't freaking import the corn substitute when you have a corn production excess.

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.

Huwag Kang Puro Hangin (Like Ricky Hatton)

This article is for all the guys out there who just don't get what this saving and investing is all about. So today I'm going to talk our language - Sports.

Why did Ricky Hatton lose? Because he didn't protect himself when Manny hit him with that powerful left hook. He was too focused on trying to knock Manny out! In other words all offense and no defence.

In basketball, it's the same thing. All basketball experts will tell you, defence wins games. It’s nice to see the basketball teams that can score, dunk and shoot but rarely do these teams win basketball games.

Fortunately, it's the same with saving and investing. Offense is income generation and defence is expense minimization. In other words offense is trying to earn as much money as possible through salary or business. Defence is trying to keep money in your pocket, saving and minimising expenses.

Ricky Hatton was all about offense, all he said he was bigger than Manny and he was going to knock Manny out. He was all glitz and glamour. High profile. All offense and no defence.

The high scoring basketball teams are all glitz and glamour, people love to watch teams that are all offense. People love the dunks and the nice shots but don't appreciate the defensive plays. In the NBA, the Phoenix Suns and Dallas Mavericks are the best offensive teams. But it was the Boston Celtics, the best defensive team that won the Championship. This happens every year.

It’s the same when it comes to saving and investing. We often admire and appreciate the high offense people; people who earn high incomes and live the glamorous lifestyles. But like Ricky Hatton normally puro hangin lang sila. We should look for and emulate people who live simple lives but retire early. These people earn good incomes (good offense) but are extraordinary savers (excellent defence).

Its true that we can't save if there is no money coming in but I believe people today are too concerned with how much they earn and not concerned enough about saving. No amount of offense can't stop a poor defence! In other words no matter how much money you earn it will never be enough if you don't have the discipline to save.

My message today is short and simple. You can't win in boxing without defence, you can't win in basketball without defence, and you can't win in life without defence!

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

Bakit natin inuuna yung gamit sa bahay?

I went to visit my friend at his house yesterday. He lived in a nice condo and I commented on his nice furniture and appliances. He even 'invested' in a nice entertainment system. That was all great until I found out he was just renting his unit. To make matters worse, he didn't have any savings and all of the stuff he bought was on zero installment...

I spoke to another person about her plans and goals for the future and one of the first things she told me was - 'Gusto ko na magkapera para magkaroon na ako ng gamit sa bahay.'

I'm at the house of another friend who is about to send a balikbayan box back to the Philippines (I’m overseas right now). It was full of groceries and 'gamit para sa bahay'!

Why do we give so much importance to the stuff we have for the house? Bakit natin inuuna yung gamit sa bahay?

Why can't we give priority to our long term financial future instead?

Is it because it was on sale? Is it because we think we need it? Is it because we just liked it and bought it? Or, is it because we grew up thinking that the 'gamit' we have rewards our hard work and shows our success in life?

Honestly, I don't know the reason. Different people have different reasons. But what I know is this:

• Most of the time, the stuff we buy for our house we don't really need. It's nice to have but we don't absolutely really need it. The 'gamit' depreciates as fast as you buy it. This means the moment its in your house you can't sell it for what you bought it for.
• Saving the money that you spend for gamit and investing it means that you are one step closer to having a comfortable retirement.

When I was younger I dreamed of the nice car, nice clothes, nice house, travel and all the 'gamit' that I ever dreamed of. I used to dream that I would get this high paying job or have a big business that I would get my income from. But then I learned two important things:

1. No matter how much money I earn I can NEVER have all the gamit I ever want. There is always something newer that comes along and my bank account was always EMPTY!
2. I met two very important people that changed my life. I met a guy who I thought was successful. He had all the stuff and the lifestyle I wanted. But there was one big problem. He wasn't wealthy. He had to work harder and longer just to maintain his expensive lifestyle. Then I met another person. On the outside a very simple person, didn't have all the things that I wanted in my life but there was one thing she had that I REALLY wanted. At age 40 she was already retired. She didn't want to work her entire life so she saved her money little by little until she had enough to retire. Now she wakes up everyday not needing to work, she does the things she wants to do. It's a beautiful way to live.

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

It’s so Hard to Say Goodbye Part 2

I received some great feedback from my article - 'It's so Hard to Say Goodbye' - last week. If you missed it please go to www.everydayasunday.blogspot.com. One email really captured the essence of the difficulty our OFWs face as they go overseas looking for a better life for their family. Here is a summary...

We have this notion that if you're an OFW, you're rich. That's not TRUE! We earn more, but to say that we are rich is a fallacy. It is sooo hard being an OFW. Kailangan magtipid, hanggang kaya. It is also true, food is delicious but most of the time, we have to be contented with, noodles and eggs in order for us to save. Most of the OFW’s money goes to the family back home. Mostly we ask ourselves, why are we still paying for the bills i.e. electricity, water, cable, internet. It is obvious that we are not there to consume or use those bills. Sometimes my sister will text me just to say "Wala kami pambili ng GASUL!” Can you imagine that? What will happen if we are not here? How can they even manage to cook THEIR food? What's even worse is if you cannot give them the money that they say is "utang", sila pa may gana magalit at magtampo sayo!

Hindi bato ang OFW, tao rin ang OFW, hindi money o cash machine. Napapagod rin, nalulungkot (madalas), nagkakasakit, nag-iisip at nagugutom. Kailangan din ang suporta, kundi man physically, emotionally o spiritually man lang.

We did not want to leave our love ones behind, but what we can do? It is so nice to be by their side while you watch a movie, eat galunggong or pinakbet. But sad to say, we must leave all of those so that they too can enjoy the fruits of our labor.

All we need is just a little understanding from our dear families back home. Di nyo nalalaman na umiiyak kami every night dahil sobra naming kayo na mimiss. Kayo naman, piso lang ang text sa roaming, mano ba naman send nyo kami kahit "HI, HELLO, MUSTA NA KAYO". Mababaw lang ang happiness ng OFW…. A simple text message will go a looong way.

You can email me on hoover@barongroup.com.ph

It's so Hard to Say Goodbye

I was on the plane to Hong Kong last week and was sitting next to two OFW ladies. I accidentally overheard their conversation which made me sad. Both these ladies were sharing their pain about having to leave their kids in the Philippines and go overseas to work. Both have been OFWs for over 10 years. Literally they have missed their children grow up. Sadly this is a common fact in our country but most of the time a necessary one. My mom left us here for a couple of years while she settled in New Zealand before we joined her so I know the pain and sacrifice it takes to leave your loved ones home.

What made me sad is that the lady was saying that when she started working overseas the idea was that she would save enough money so that she wouldn't be away from her family for too long. Maybe 5 years max. But its been 10 years already and she has little savings! She mentioned the usual problems that I hear from other OFWs:

• She underestimated the expenses. When you work overseas you will earn more BUT you also spend more!
• She sent money home to her extended family only to watch it disappear! Most of the time she sends it for one thing but it gets spent for something else! In the end a lot of it doesn't get spent on her kids but on the people who take care of her kids.
• Her extended family thinks that because she works overseas she is now BIG TIME! Suddenly they think she is the answer to their prayers and start asking her for all sorts of help. They don't know how hard she works just to make ends meet!

So listen up! Here are tips from successful OFWs that I have talked to who have managed to save while working overseas and who now provide a comfortable life for their kids.

• If you aren't saving 50% of your salary then you should rethink why you are working overseas. It’s not worth leaving your spouse and kids if you aren't saving 50%.
• This means... Spend your money in pesos. Watch your expenses! Just because you work in the US it doesn't mean that you spend the way the Americans spend. Same in any other country. A good tip is to convert each expense to pesos all the time so you can gauge if the item is cheap or not. Live simply while you are working overseas. Always keep in mind why you are there.
• Watch what you send. When you work overseas someone is taking care of your children. It may be your spouse, your parents, your brother or sister. Agree on what you are going to send on a monthly basis and make sure its within your budget. Nothing more! Save the rest and invest it if you can.
• Don't spoil your kids. Most OFWs are so guilty about leaving their children that when they see them they take them on trips or shower them with expensive gifts. Stop that! Always remind yourself and your kids why you are doing what you are doing. How can you save when you spend all your money when you go back home! You go back to work and start from zero again! Useless!
• Lastly, tell the rest of your family that you are not made of money and that you don't want to keep working overseas forever. They can't always rely on you for their needs. I know! I know! Easy to say hard to do. Hey! Nothing in life is easy but if you are strong enough to leave your family to work overseas, you must be strong enough to tell them that they can't keep relying on you!

To the millions of OFWs who leave their spouse and kids behind. I salute you! I don't think I could do what you do. I'd love to hear your stories. Email me on hoover@barongroup.com.ph

No pain, No gain.

Today I want to tell you a story about a man I know who started out as poor and worked hard all his life and managed to achieve a level of success in his life. When he started his family he promised that his kids would have the best things in life and that he would do everything in his power so that his kids would not suffer the hardship that he had experienced. He raised his kids with the best he could afford - the best schools, best clothes, best everything. The kids were sheltered from all the hardships in life. All would be ok except for two things.

The business of this man is not doing well because of the current economic situation. And, since the kids have grown up sheltered they have no desire to work, no hunger to be successful and no capacity to earn money.

He has a big problem. He has enough money for him to survive. The problem is he can't keep supporting the lifestyle of his kids. They are so used to the best now they can't afford it.

This man had a proven formula for success - Hard work, Perseverance, Patience, and to never give up when there is a setback. He will probably survive and become a success again but he never taught this proven formula to his kids. He never let his kids experience hardship. He gave them the best. He spoiled them.

This would be fine if everything in life is always up but life is never like that. We love our kids so much that sometimes we don't want them to feel any pain. The problem is when they don't feel pain they will suffer later in life.

Don't let this happen to your kids. Make sure your kids experience hardship and setbacks in their life. Make sure they know the value of hard work and perseverance. A little bit of pain in life will ensure they gain later in life.

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

In a debt spiral? huwag ka magtago!

Just got a call from a friend of mine who says that the credit card companies have been calling her non-stop trying to collect the 'utang' she owes. She doesn't have the money to pay so she’s doing what most people do - HIDE. My friend is in what they call a debt spiral – forever living with debt.

I have been on both sides. I have borrowed money and I have lent money to people. I know what it feels like to be behind on payments and I know what it feels like when delinquent borrowers don't answer my calls or texts!

There is one thing that lenders hate more than people who are late in paying and that is, people who HIDE! Look, if you borrowed money, the least you can do is pay it back! My mom always told me that 'your name is more important than money. Money can always be made if your integrity is intact but if your name is gone it’s much harder to make money.'

Take it from me... A lender will appreciate it more if you don't hide even if you have no money to pay and in most cases they may even help you by lowering interest payments and waiving charges.

Here is a basic step-by-step system on how to get out of a debt spiral:

• Commit. Make a promise to yourself that you will pay-off your debts.
• Stop borrowing! You can't borrow to pay off another loan. You are just creating a deeper hole for yourself. Tell the truth and tell everyone to give you time to pay off your debt. Don't be scared of threats of legal action. After all you can't squeeze blood from a stone. Panicking and borrowing to pay off other loans will cause more harm than good in the long run.
• Stop Spending! Just because you stopped paying your debts it doesn't give you the right to spend. Your priority is basic needs like food, shelter and transportation. After that it’s paying off debts! No new clothes, no texting, no going out! Sell unneeded assets. Look it’s probably all of this that got you in debt in the first place. You have had your fun now it’s time to pay it back.
• Work. Take a part time job. Work overtime. Do whatever it takes to make extra money so you can pay off your debt faster.
• Make a promise and pay. It doesn't matter how much. It could be 1 peso per day. As long as your lender is seeing your commitment to pay then they will help you. Make your payments achievable so that you don't break your promise, most people are so scared of their lender that they make promises they can't achieve. It’s better to under promise and over deliver.
• Negotiate. You only negotiate once you have re-established your credibility and have made consistent payments. Negotiate to waive penalty charges and additional interest or even to lower the loan itself. Just make sure you keep paying.

If you want help to get out of the debt spiral email me on

hoover@barongroup.com.ph.

Zero Interest is never Zero Interest.

I was reading the newspaper yesterday and noticed the huge amount of zero per cent instalment sales that are being advertised by stores selling laptops, desktop computers, phones and other electronic gadgets.

Let me tell you something about zero per cent. It’s not zero per cent, it never was, it never is and it never will be! I'm going to give you a quick lesson about the behavior of retailers and distributors of electronic equipment - all they want is to 'turn' their inventory as quickly as possible. This means that they are after the quickest possible sale and to collect the money as quickly as possible so that they can buy more inventory and sell it again.

With this in mind do you think they are willing for you to have possession of their product and have you pay for 6 months or 1 year without interest? No way! This is where the credit card companies come in. Long ago they said - ' hey we can make your products sell faster if you do it on instalment basis, we will give you the money up front and collect from the buyer but this is what you have to do...'

• Step 1 - give us a discount on the retail price on each product. But we will still charge the normal retail price. We get the discount. Electronic equipment has high margins on their products so they said yes.
• Step 2 - if our earnings are still not enough then increase the price of your retail price. We get the increase in price. Do you really know the price you should pay for a TV or computer or cell phone? Price variations for these types of electronic products are as different as night and day so they said yes.

Why do they do this? Because credit card companies know one very important fact. Most consumers don't see the total price. They only see the glitzy advertising campaign with all the 'beautiful' people using these gadgets and then... The MONTHLY instalment price! Then they say... Hey I can afford that! It's so cheap lang a month!

Case in point, I was all set to buy my wife a new computer with the best specifications for Christmas last year. We saw a branded desktop computer for only PHP5k a month 12 months to pay. I was about to get lured into the same trap when I happened to walk into another store to compare prices. The lady said she can have the same computer built for me for 20 per cent less with all the same parts if I bought cash. This led me to research more and I ended up getting a computer with HIGHER specifications for HALF the price!

So what's the lesson here?

1. Never buy on instalment. Even on zero per cent. If you look around a bit more I guarantee you can get the same product AT LEAST 10 per cent cheaper on CASH basis.
2. If you can't buy it in cash, YOU CANT AFFORD IT. Generally speaking there should only be 2 times you should be borrowing money in your personal life - to buy a house or a car. And I’m not 100 per cent comfortable on the car.

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

Is jewelry is a good investment? I don't think so.

'I buy jewelry because it’s a good investment, it appreciates in value.'

Today I’m going to irritate people who buy jewelry with this reason. For the average person, jewelry is not an investment.

Jewelry is almost always 'mispriced'. What does this mean? When you want to buy jewelry for example for a wedding, from a jewelry store, or jeweler, you almost always buy it more expensive than what it’s worth. Why? Because of the jeweler's 'patong' and design.

What happens when you want to sell it? As a general rule, people don't sell their jewelry unless they need money fast. Why? Because of the emotional attachment people have with their jewelry. Either it’s a family heirloom or gift or you love the design. You just can't sell it! So when you do need to sell it or pawn it, it is for a price that is heavily discounted.

So unless you own a pawnshop or a jewelry store, jewelry is really one of the worst 'investments' you can buy.

Jewelry is also very hard to value. Have you ever tried to buy a diamond ring and try to decipher what quality the diamond is? VS, VVS? Do you know the corresponding value? What about the size? How many karats? Most people don't.

How do you know if the gold jewelry you bought is really 24k? What about the proliferation of fake diamonds?

What's more, there is no official market for buying and selling jewelry like the stockmarket for stocks hence the huge price differences.

Finally, I'm a great believer that if an asset doesn't generate income it's not an asset. And as far as I know you can't generate income from jewelry. Stocks generate dividends, bonds generate interest, property generates rent. Maybe you can rent your jewelry out! So what happens? The jewelry sits in your drawer or safe, not doing anything productive like other assets.

Don't get me wrong. I love a nice watch (which I got from my in-laws) and my wife has a small jewelry collection but it’s not part of our asset list and it’s not something we depend on for our retirement.

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

What type of parent are you? It's your choice.

I didn't manage to write a blog last week because I was so busy with the wedding of my brother. Weddings are a great family event but a very expensive one. Weddings are a perfect example of the great difference between wealthy families and poor families.

In wealthy families, the newlywed couple often receive cash gifts, houses or cars from their parents. This provides the newlywed couple with a great start to their life together.

In poor families, the newlywed couple receive nothing and often are in debt because of wedding costs and the increased expenses that result from being married. Plus the fact that most newlyweds still have to support their parents or siblings after the wedding.

I'm not trying to state the obvious here! My message today is for the parents, especially those with young kids. Today you have a choice! When your kids get married, are you going to be the parent that gives your kids a great head start in life? Or, are you going to be the parent that has to suffer the SHAME of having to ask your kids for money? Even after they have their own family.

I know you what you are saying... I love my kids and if only times weren't so tough I could save. Listen, in the Philippines, times will always be tough. So you have to find a way to save in good times and in bad.

Luckily, you don't need much to in order to give your kids a great head start in life. Only buy your kids toys and gifts on birthday and Christmas. That's it. The money that you save from the weekly or monthly toys you buy for them should be saved. These days we are lucky, because of the imported toys from China, we can buy toys for as little as PHP50 to 100 pesos. So what happens? Our kids end up with more toys than they need!

What if you could save PHP100 a week and invest it until your kids get married? Say, 20 years from now. Invested in a mutual fund at 12% per annum compounded, you will hand your children a check for nearly PHP375,000 on their wedding day!!! What a wedding present that will be!!! Your kids will never remember that PHP100 peso toy you gave them but they will never forget the great headstart that you will give them in their new life together.

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

Nice House, Bad Investment.

Before I start my blog I just want to send a greeting to the millions of people who made bets in the recent 300+ million lotto draw - sana binili mo na lang ng pagkain, nabusog ka pa!

For some reason over the past few days I have been talking to people who are so proud about the 'investments' they have made in the homes they live in - the upgrade to a bigger house, the furniture that they buy, and the renovations they have done. Then yesterday I read a Sam Milby article about his 'investment' in his new house in Pasig. With new renovation, brand new furniture, swimming pool and even a mini-cinema! It was a very beautiful house but I want to make it clear that when you 'invest' too much of your money into your home its not a good idea. Here's why:

• All your eggs in one basket. When most of your net worth is in one asset it becomes very dangerous. Rather than have one nice property, why not consider other investment property that can generate you good passive income.
• Depreciating Assets. Buying furniture and other electronics are not investments they are depreciating assets.
• More expensive to maintain. Having too beautiful a home not only costs you more to build but also costs more to maintain.
• It’s so nice you can't or don't want to sell it. You have put so much effort in your house that you fall in love with it and no matter what price people offer you, you don't ever want to sell it. Sayang kasi eh! Rule number 1 when you buy assets. Never fall in love with an asset! If you can never sell your house you can never unlock its value and turn it into cash for retirement.
• Hard to liquidate when you need money. Having a beautiful house is great as long as you have a steady income. But what happens when you suddenly lose your job or your business starts to slow down like what is happening right now. What then? Well ask someone who is trying to liquidate a fixed asset in a hurry and they will tell you that you can never ever get the price you thought you would get.
• It's just like a car. What do you do when you buy a second hand car? You ask, how old it is? How many km. has it travelled? Is it well maintained? Is it important if it has nice mags, spoilers or maybe a nice stereo? It is but how does it affect the price. Not by much! Its the same as a house. Not too many people care if your toilet is made from Germany or if the tiles come from Italy, or if the furniture is imported. What's important? Location and maintenance.

So what's the point. Live simply in a 'good' house. Maintain it well. Don't add the spoiler or the mag wheels. Invest the difference in something that can make you 'passive' income so you don't have to work so hard!

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

What defines you?

Thanks to my wife, who dragged me to 'Confessions of a Shopaholic', I just watched what is probably the best movie about saving I have ever seen. Don't get me wrong, it was very funny but it also has a great message especially in these times. I mean it explains easily why buying stuff you can't afford can make you happy in the short term but sad in the long term. But the best part of the movie was that it allowed me to understand the mentality of someone who loves to shop. There was a line in the movie the best explains it. It goes something like this - 'When I shop the world gets better and then it’s not... So I need to shop again.'

I have long held the belief that 'the best things in life are free.' I don't have the urge to buy things to make me happy because the things that make me happy don't cost too much. Now of course in reality nothing is free, you still have to spend even for food or transportation but some of the happiest times I have ever had are the times simple and cheap times spent with family and friends. I don't even remember what we bought, or how expensive our meal was. In reality it didn't matter. It was the time that we shared that was important!

There was this part in the movie where the father of the shopaholic was willing to sell his most prized possession to help his daughter pay back her debts. The daughter says something like - 'Don’t sell that dad. That defines you!' To which her father replies - 'Nothing defines me except you and your mother.'

Now the question I’m going to ask you is this. What are the 5 things in your life that define you? Write it down; post it on your Facebook or your Friendster. I'm going to go out on a limb here and be subject to criticism again but if most of what defines you are material things then you better look at yourself closely and assess if you are truly happy.

I'll leave you with one of the last things that were said in the movie which I found hilarious but true - 'Instead of a relationship with a credit card I have a relationship with someone who loves me and never declines me.'

Saving tip for the week:

• If you can afford it buy an energy saver. I have talked to two electrical engineers who say it does work and I have personally tried it out in my home. I saved PHP1000 on my electric bill. But of course make sure your usage doesn’t change.

If you have any saving tips, share them with me and I will include it in my newsletter.

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

Bakit pareho pa rin ang net take home mo?

Just met up with a client who I had finished a customized financial plan for, she has been working for about 7 years now and has been finding it hard to save, in fact she has very little savings to her name. This lady works hard and is slowly 'moving up' in the company she works in.

My question to her was, "when you started working, how much was your salary?" She said, "minimum wage". At that time minimum wage was around PHP275 a day or PHP6,000 a month. I asked her, “what her salary is now?" She said, "PHP15,000 a month."

I said to her, "now go back 7 years ago... If I told you back then that you could have PHP15,000 a month, what would you say to me?" She said, "if I had PHP15,000 a month all my problems would be solved!!!"

I told her. "But you do have PHP15,000 a month now. How come you still have the same problems? If I said that in a few years you will have PHP20,000 a month would your problems be solved?" She said again, "at PHP20,000 a month all my problems will be solved na talaga, makakaipon na ako."

Guess what... If you continue to live the way you do, no matter what salary increase you have, you will always have financial problems!

In this particular case, you can say to me that my client wasn't able to save because the price of goods has increased. My answer is simple mathematics. Inflation has averaged around 5% compounded over the last 7 years. At that rate, her salary should only be around PHP9,000 a month. What happened to the PHP6,000 a month?

The fact is this, if you are getting a promotion your salary is rising faster than the increase in the price of goods. The problem is this; most people who get a salary increase suddenly have more things they want to buy. Suddenly they go out more; suddenly they need that new cell phone or dress. All of a sudden, they have more friends and relatives borrowing money from them.

So here are my tips for what to do when you get a salary increase.

• Save half and invest it. Spend half. So if your salary is PHP10,000 and you get a PHP2,000 increase. Save PHP1,000 a month and spend PHP1,000. Think to yourself, I only got PHP1,000 salary increase.
• Don't tell people about your salary increase. I'm sorry to say this but the more people know about your salary increase the harder it will be for you to save. I know you want your family to be proud of you but its not always wise to tell them about your increase.
• Don't change. A salary increase doesn't give you the license to change. Live the same way, be the same person. You don't need more material things to be happy. Live a financially organic life (see my previous article).

For those who have been working a few years already with no savings you have to ask yourself this question. 'Bakit pareho pa rin ang net take home mo?'

Saving tip for the week:

• If you eat in the mall, buy your drinks inside the supermarket.

If you have any saving tips, share them with me and I will include it in my newsletter.

For more information on how I can help you email me on

hoover@barongroup.com.ph.

Wow 130 million Jackpot!!! Taya na!!!

This week I have read 3 articles on the newspaper about Lotto. There is an amazing jackpot tomorrow. PHP130,000,000!!! That's a lot of zeros! Imagine if I win! I better go and buy a ticket... Hold on! Before you go out and buy a ticket, I'm going to give you a dose of reality. Do you know the odds of winning Lotto? It’s 1 in 14,000,000!!! Do you know what this means? It means that on your way to the lotto outlet there is a much greater chance that you will die from getting struck by lightning (only 1 in 2,000,000) than buying the winning ticket!!! So stay at home na lang. It’s safer.

So what does this mean? Am I saying that you will never be wealthy? Wala na bang pagasa yumaman? I'm here to show you a better way, with much better odds of winning. I can almost guarantee that you will be a millionaire.

Do you gamble on lotto every day? PHP10 on the 6/42 and 6/45 draws? PHP20 on the 6/49 (Super Lotto) draws? If you play every day on all of the Lotto draws you spend about PHP110 a week.

Now you are saying... It's a small amount of money... ‘wala yan’... How can that make me rich? That money that you spend on Lotto, invested in a mutual fund with an annual compounding return of 12% over 30 years is PHP1,380,422.95. What do you want the guaranteed PHP1.3m or the PHP130m that will NEVER happen! When you buy a Lotto ticket you are literally just giving the money away. It’s better to just spend the money on something worthwhile like food. At least with that busog ka pa. And don’t fall into the ad campaign that you are giving to charity. Most people who play Lotto are the poor who need the charity. Let the wealthy give to charity. But I tell you what, the wealthy don’t play Lotto!

You have to change the way you are thinking. 'One time big time' mentality is just not going to work anymore. If you genuinely want to be rich you have to save your money and invest it. Get yourself a piggy bank. And instead of going to the lotto outlet to buy a ticket, put the money in the piggy bank. Remember... small amounts of money invested on a regular basis can make you rich!

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

The Right Team

Tomorrow is the start of the 'love' month, so I was thinking what I would write that would relate to saving and investing? Here it is... you CAN'T be wealthy if you don't have a good team, a family who supports and helps you achieve your financial goals. There is no way you can save if your husband or wife spends like crazy. There is no way you can save if your kids always ask you to buy stuff for them. Your family has to cooperate.

Do you know the number one reason for failed marriages? For fights between husband and wife? Yip you guessed it. MONEY! Normally it's a husband or wife who spends too much or doesn't earn any money. The problem is always the same.

I'm not a marriage counsellor but I know that a financially successful marriage needs both husband and wife to have:

• the same financial goals.
• the same attitude toward hard work and earning money
• the same attitude toward saving, spending and investing
• total transparency and trust with money related matters

If your marriage does not have the above then you better talk about it right away.

For people who are looking to get married. Take some time to do this BEFORE you get married! Sometimes people who are in love tend to forget to talk about the financial side. Remember a marriage here in the Philippines is lifetime. So choose wisely!

I have personally advised friends not to go through with the wedding or delay it if their attitudes and goals about money are not aligned. And I have personally witnessed failed marriages for those that did not heed this advice.

Of course a happy marriage is not all about money, without love there can never be a lasting marriage!

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

Sink or Swim

Just got off the phone with a friend. She was crying because she just found out that her younger sister who was attending college, the first in their family to do so, is pregnant! She was crying because she had slaved away all those years borrowing money and working two or three jobs just to make ends meet and now her hope is lost.

You don't know how many stories like this I have heard! I told my friend that she should have invested the money on herself. She was the hungry one. It was her and not her sister who was the hope of the family.

The general rule is you can help if you have money to spare but don't borrow money to help someone else.

I know a lot of people are going to get mad at me for what I just said. But please give me a chance. I'm not against people helping their families and friends, but if you are going to go into debt just to help someone out, it better be a life and death scenario.

Unfortunately in this day and age, 'utang' is so easy to do. But everytime you borrow money I want you to remember that you are borrowing your future. You are spending money you haven't even earned yet! So before you borrow money to help your family and friends here are some things you should consider:

• Ask yourself this question. If the roles were reversed and you were the one who needed money do you think this person would do the same thing for you?
• Tell the borrower to exhaust all other means before getting money from you. Give them ideas like finding odd jobs or selling some assets.
• Borrow ONLY for health and education emergencies and only for your immediate family.
• Never give money to people who can earn money by themselves but rely on you for their money.

I'll leave you with something to think about. Two people are stuck in sea. There is no help for hours. One person is a stronger swimmer than the other, but the stronger swimmer can only keep one person afloat. If the strong swimmer tries to help the weaker swimmer they will both drown. But alone he/she can survive. What should the strong swimmer do?

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

Back to Basics - Being 'Financially Organic'

If you have been reading the newspaper, Germany’s 5th richest man, Adolf Merckle and French money manager Thierry Magon de la Villehuchet recently committed suicide due to the global financial crisis. Their sudden suicide has really made me think. These people did not kill themselves because they were not going to have enough money to feed their families but because the loss has hit their pride, honour and identities. I can definitely understand their pain because I have had to learn the hard way myself. But isn't this a case where money (and all its material possessions and status symbols) has begun to control our lives, and to dictate how we feel about ourselves.

Like the health industry where the best food to eat is now fertilizer free, pesticide free and, preservative free we have to be 'financially organic'. We have to go back to basics.

What does being 'financially organic' mean?

• It means remembering what is truly important in our lives. What are we really working for? The best question to ask yourself here is if you learnt you were dying tomorrow, what would you do and who would you spend your last day with? There aren't many people I know who are dying, saying, “I wish I had spent more time working!”
• It means living simply and doing without all the 'financial pesticides' in life. Robert Kiyosaki calls them 'doodads'. The best question to ask yourself here is if tomorrow you lose your job or your business closes down what would you keep that is necessary in your life? (This has happened to me). Hey our grandparents and great grandparents lived happy and simple lives without all the stuff we have today! There are so many simple and cheap joys in life. As long as we are with 'true' family and friends, and, we have the 'basic' necessities what more do you want!
• It means not going after money for the sake of making money (and all the material possessions and status symbols). You have to remember there are other important things in life – your health, your relationship with family, your god, and your friends. Hey what's the use in having a lot of money if you have poor health and no family and friends!

This financial crisis has shown us one thing. You can work your ass off and make lots of money but not everything is in your control and you can lose it all no matter what you do or how good you are. So if you aren't grounded in what's truly important then you might end up like one of those billionaires who committed suicide.

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

May you all reach your money goals in 2009!

2009 is here and most of us have had a good long break. I'm sure during these holidays we have at some point in time thought about money, particularly what will happen to us in 2009, from a money perspective. The problem is most of us STOP at this point! We just think about saving and hoping to become rich 'one day' and then realize it’s too hard to do anything about it. 'Bahala na!' is a common expression I hear.

Now I could go into a very detailed step-by-step way of how to do a financial plan but I would bore you silly and you still wouldn't take any action! So I'm going to give you a 'baby steps' strategy of how you can get started:

• Get a piggy bank. Or a box or container to put money you have saved in. Don't buy one! Make one if you have to.
• Set realistic goals. Something that will be easy for you to do, so you can get into the habit of saving. I don't care if it’s PHP5.00 or PHP10.00 per day! Just get into the habit of putting away something for your future EVERYDAY!!! In time when you realize that you can actually save, you will start to put larger amounts into your piggy bank. Hey PHP10.00 every day is still PHP3,650.00 in a year. And over 30 years compounded at 12% every year is PHP880,864.30!!! That's using one coin everyday!!!
• Remind yourself DAILY. Put an alarm on your cell phone or a note on your mirror. Just make sure that you are reminded daily that you need to save for your future.
• Don't touch the money! Invest it. Put the money you have saved into the piggy bank. When the piggy bank has enough money, put the money in a savings account that you don't touch or better yet, invest it in a mutual fund. You can start a mutual fund account with as little as PHP500.00.
• Get a Money partner. A money partner is someone who will keep you motivated to save money when the desire to spend the money is so strong. This person of course should also have the desire to save or is already a 'saver'. Hey, if you can't find one, email me and I will keep you motivated!!!
  

That's it. I wish you all the best in 2009. May you all reach your money goals this year.

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

Na Libre Ka? Invest Mo!

Whenever I finish an investment seminar, one of the questions I almost always get asked is - how can I invest when I barely have enough money to save? This is a fantastic question and one where I had to dig deep to find the answer. I found it while talking to one of my good friends. Like most people, during these times of economic hardship, she lives on a very strict budget so that what she earns covers all of what she has to spend for herself and her family.

What surprised me is that despite the tough economic conditions of today, she found a way to save! I was so fascinated with her system that I wanted to teach it to all my clients and seminar participants. Let's call it the Libre Method of saving.

The Libre Method works like this. The key criteria we have here is we have to first have a piggy bank (i am a huge fan of the piggy bank). Now let's start. I know you pretty much know what you spend each day on different expenses. For example, your daily transpo may cost you PHP100 a day and you know your lunch or snacks may cost PHP50 per meal or perhaps you buy you child a gift every week and spend PHP100.

Now what if on any given day instead of you going home the usual manner someone decides to offer you a ride saving you PHP50? What if on a given day its someone's birthday and decide to treat you for lunch saving you another PHP50? What if someone gives your child a gift saving you PHP100? What do you do with the money you just saved?

Normally you use the money that's left in your wallet and spend it on something else.
Today I'm going to ask you to do something different. Instead of spending it, I want you to save it and put the money in your piggy bank. (BTW, piggy banks love notes more than coins!) And every month, I want you to empty the money from there and invest it. Simple as that. Na libre ka? Invest mo!

Do you know that saving PHP50.00 a day over 30 years is nearly PHP3.2 million at 12% compounded return?

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