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.