Lifestyle

Why lifestyle is very crucial towards achieving our financial freedom? How exactly it affects our process to achieve our goal? How does rich practising their lifestyle and how about the other side? Not clear about the other side? Well, the poor I meant.

 

There are always myths are about the rich and the poor. Rich always are blamed to be too greedy and stealing money from others to become richer and richer. Poor always claim that they are always being discriminated by rich in most of the places. As long we believe that this myths are true then definitely we cant be the rich because we always see the rich is the villain and the poor is the hero.

 

Personally I don't agree with all the myths because I want to be rich and want my family, relatives, friends, and whoever reading this to be rich. Why don't you go back on some history of the rich people where they started with very poor family but ended up with indefinite wealth. No need for me to mention it here because almost all of the top 100 richest person in the universe are from poor family background.

 

 

So, what exactly the main criteria is differing between rich and poor? YES!!! The lifestyle of these two (2) different people is totally different! I believe that some might be thinking that "obviously different because rich spending like nobody business and the poor is spending wisely".

 

If we analyse wisely of this rich people's lifestyle, they have very systematic or proper recording of all their expenses. Why? Spend sometime and read some of my previous articles on Saving, Earning Vs Saving, Levels of Financial Freedom, and lot more. You will find the key elements on how to be rich slowly and steadily. The rich people also practising very systematic book keeping to monitor what is in and what is out. Most of the time, active income from rich people are untouchable or recirculated for investments. Last but not least, rich always allocate some portion of their wealth to be shared with others via charity.

 

How about the poor? Hmmmm.... They don't have proper recording at all, no book keeping, no traceable records, and always rely on active income only for their life. Hence, spend more time to invest on knowledge prior to take action to avoid unnecessary mistakes. Best of luck for us buddies! 

Knowing the Rules

One of key element to achieve financial freedom is via knowing the rules to be rich. We must fully aware and knowledge about the rules in financial matter including banking, taxation, etc. How we can benefit from knowing the rules?

To answer on how we can benefit is mainly on how we can fully utilize the rules to protect our savings or investments. As a footballer, he must know the rules on do’s and don’ts when playing for a team. Before ahead with skills, we must fully aware all relevant rules in any fields. Similarly, we must know the fundamental in finance subject matter then develop the skills as experience grows.

Experience in finance subject matter could be developed directly from own experience or indirectly by reading, attending talks, etc. Gaining experience not necessarily would be something positive but negative as well from both ways either direct or indirect. However, applying both experiences appropriately could lead to awesome results where almost all risks taken are measurable risks and able to minimize it. Rule of thumb in finance subject matter or developing investment portfolio it is recommended to gain as much of negative experiences from secondary sources.

How can we define our secondary experiences to avoid this happen to us while executing our tasks towards financial freedom? As highlighted earlier, we must able to gain somebody else experiences via reading books, attending talks, seminars, chatting, etc. which normally this well-known investor have published their books to be shared publicly so that people can benefit from their previous loopholes.

Gaining secondary experiences can be one of the way knowing the rules in developing investment portfolio where there could be something totally new to us since we are not familiar with the particular investment area. Hence, whatever investment portfolio we’re developing we must know the rules which is must be obviously legitimate in our country and it is halal for Muslims. Again, educate ourselves with knowledge so that we’re always up-to-date with latest rules and always conscious with any potential opportunities.

Credit Card - Part 2 (Balance Transfer)

It is almost half a year I wrote about credit card whether benefiting or harming the owner. Again as explained previously in earlier post about how a knife acts upon it's functionality, we must fully aware of the impacts.

Any of you heard of BT? Never heard this acronym? Hmmmm, how about "Balance Transfer"? Never heard but thinking have read somewhere in newspaper? Great! At least have sensed about it. Now worries for newbies about this jargon because this is not really high linguistic jargon. This is very simple terminology by it's definition where the remaining or full balance from somewhere will be transferred to somewhere else. Where exactly this somewhere? Any idea? Back to the title of this post, from credit card A to credit card B. Why exactly do they have this package in banking business? Do I care? Not really, I'm not even bother why they introduce because this is part of their products and they are free to do so. So, as a consumer or customer we must able to benefit whatever products they introduce into the market.

So, when can we use this BT? There are some criteria normally imposed by bank via this BT program where we may only can transfer certain amount as a minimum amount. First, we may utilize this BT program if we're stuck with cash of any amount to be paid to original bank of credit card A and to reduce the compounding interest. If this is the case, we may not really worry about the rate will be imposed by bank issuing credit card B because the rate will be much much lower than compounding interest from paying only minimum amount. Most of the banks normally have number of choices to choose on the BT plan; 3-months, 6-months, 9-months, 12-months, etc. The rate also may differ among the plan. Hence, choose wisely so that we can benefit at maximum level.

Other than previous scenario, we may have amount to be paid to bank of credit card A but we may want to invest that amount in some alternatives. In this case, any rate imposed by banks are not recommended because we'll be losing our money, unless our investment can give much higher return than rate being imposed by the bank. Let us assume for the worst case where our return not much and lower than any rate offered by bank and what would be the scenario we can consider? In this case try to get whichever plan gives 0% rate and this plan usually very limited and very occasional basis. 

So, we as a consumer or customer always right and try to utilize the maximum possible so that we benefit whatever products being promoted by banks. Banks may have hundreds of strategies to create profit, similarly we create hundreds of strategies to benefit from their own products.