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How to Improve Your Sense of Security in Uncertain Economy

Sense of Financial SecurityPeople are often being overly reactive when it goes to bad situations.

The recession itself is happening largely due to global public reaction toward financial crisis, that is more often than not, doesn’t actually affect them directly whatsoever.

Negative outlook on financial issues cost the community lost productivity, thus worsening the effect of the financial crisis.

As a major part of your community, you, in whatever way possible, need to feel secure about your financial stature.

Why? Because if you feel secure about your financials and your life in general, you will be able to affect the community surrounding you.

Sense of security

Improving personal sense of security has never been this important in the past decades.

Sense of security is driven by facts and assumptions. The more you assume, the more insecure you will be. The more you identify facts, the more secure you will be.

Sense of security = know more facts and less assumptions.

Assumptions can be ‘altered’ into and identified as facts – no matter they are right or wrong – if you increase your knowledge through learning from reliable sources.

Facts also related to control. If you want to feel secure, you need to gain (and regain) more control on your life based on a set or series of facts.

Financial sense of security

In term of finance, assumptions leave you unguarded.

For example, consider these statements: “Stock A will go up in 10 minutes.” “Real estate B will increase in value.” etc.

The problem in the above example, is due to the fact that nobody can guarantee the above statement. Any guarantees on such would be classified as misleading, even illegal.

On the other hands, facts can secure your personal finance and help you see things from the right perspective.

For example, consider these statements: “I’m getting a 10% rate of return on my investment.” “The foreclosure houses I bought make me $150 positive cashflow per month.”

Warren Buffet, the maestro of investment, do all of his investment based on intrinsic value – the facts – not based on the floating stock value on stock exchanges – the assumptions.

Again, it is all about control. “Sure things” improve control, hence reducing investment risks.

How to improve your financial sense of security these days

You need to get more facts about personal finance. You will eventually find out that there is a certain consensus between personal finance experts about some of the best practices in managing your finances.

Such knowledge you acquire should be enhanced with tools that can help you with a more exact (and measurable) facts. For example, the use of Savings Calculator to learn how much you would receive within a period of time can provide you with a measurable fact that allow you to decide what’s best for your personal finance – finding savings account that yield you more, finding new investment that can increase the speed of your money, and so on.

Nevertheless, your diligence in increasing your financial knowledge will determine how secure you feel about your personal finance, and how well you cope (and thrive) in today’s economic crisis.

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New Year, New Hope: Plan Your Finance to Yield the Best Return

Finance InstitutionForget what some people said about how bleak the year 2009 is. The truth is, all we need right now is financial planning.

The premise – plan your finance well, and it will deliver you from financial woes that hit many who unprepared in 2007 and 2008.

The significance of financial planning in 2009

Financial planning has always been important.

Unfortunately, not all people believe the fact, until they were hit by financial problems. ‘Thanks’ to recession, the financial problems are magnified – due to the recession, financial planning has never been this important in the history of the mankind!

Particularly in 2009, financial planning is probably your most important task to do, either for your business finances or personal finances.

Creating a form of safety net or save haven for your money and finance will not only help you survive the recession, but also triumph over it.

Even better, you need to find a way to utilise all financial knowledge and tools you have to yield the best return for every penny or cent you have.

Here’s several plan ‘items’ you should consider thinking about.

Plan #1: Saving and deposit account – forget about it! Says hello to precious metals

As we know, banking and financial institutions are one of the hardest hit in today’s recession. In the US, the Fed squeezes record-amount of fund to keep those institutions afloat. Why? One of their fear: People rush to close their accounts.

However, in my opinion, that’s what you suppose to do – forget your saving and deposit account.

I’m not suggesting you to close your saving and deposit accounts – they are important parts in diversification. What I’m suggesting you is NOT to put too much money in them.

With the rising inflation in every part of the world, your saving and deposit accounts interest rates are becoming more and more insignificant.

You need to get back to what all the money in the world should base upon – gold and the other precious metals. Although the price of the metals are sky high, they are one of the safest investment forms today.

Plan #2: Utilise your credit cards better

Unlike most financial planners suggest, I suggest you not to cut your credit cards.

Instead, I recommend you to consolidate your credit cards – transfer your existing credit cards to lower APR ones or to credit card issuers that offer the most perks and rewards.

How to know which ones you should transfer balance to or apply for, invest some time to browse the Net for reviews and recommendations on credit cards issuer. Credit card sites offer alternatives you can consider, including which credit cards are good for what purposes.

My favourite credit cards story is that of my colleague’s – he shop for his business needs with his business credit cards. With tens of thousands dollar month after month business spending made on his credit cards, he is enabled to vacationing regularly and staying in luxury hotels, courtesy of his business credit card issuers – a win-win situation for credit card issuers and holders.

Plan #3: Cut bad debts, utilise good debts

When I say ‘utilise your credit card better’ in plan #2 above, I think credit cards as your ‘bridging’ in your financial planning. That being said, avoid using credit cards for loan purposes, as the interest rates are high.

Instead, cut any debts related to credit cards. In fact, cut any debts that are aimed to people with low credit scores, such as payday loan. Not that payday loan is not useful – it does in certain circumstances – but you should consider a lower interest loans that brings positive cash flow to your pocket.

Happy holiday and happy planning!

You need a break somehow, and be prepared for the coming 2009. Remember the butterfly effect I mentioned in my previous articles – what you do and think about your finances will affect your community – being positive is contagious, and it will eventually end the recession somehow.

I wish you have a happy holiday and happy planning!

Image by Zach Alexander.

Don’t Live Cheap – Live Smart

SaleThe credit crunch and global economic crisis push many people to live cheap and below their mean. Although sometimes doing so is not a choice, in most cases, people do actually have choice.

Why people tend to life cheap?

One of the most common routes people take to tackle any negative financial issues is live cheap. This is a simple human behaviour. People tend to act cautiously, often in paranoid-like ways, whenever they hear negative issues, especially those that involve money.

As you might already know, the fall or stock markets worldwide is mainly caused by negative sentiment and outlook on the economy. This is a strong indicator that people these days are more sensitive to any movements in the economy, in a negative way – they are tend to be overreacted to negative news, and overly cautious to positive news.

Why live cheap is not a good idea

Living cheap might hurt your ego and drown you in negativity even more. People do need a form of achievement in their life, and these days, maintaining their lifestyle is arguably the best achievement of all.

Living cheap might also worsen your state of personal finance. For example, if you ‘skimp’ on your daily meal, you might get sick – you and I know that getting sick these days is the least thing you want to have.

Ultimately, you have to stay healthy and pumped up to face the current money problems and issues.

Ways to live smart, not cheap

There are actually ways to live smart, not cheap today.

Smart shopping

Retails hit hard in recession today. The logical action? They do prolong promotional campaigns and release coupon codes to keep consumers ‘near’.

You can easily access money-saving codes from many sites on the Net, that allows you to shop online and off line for less.

With the high season of Christmas nearing, you can expect more promo and discounts from retailers. Again, you can access Christmas Sale news from the Net to learn what kind of perks you can have from your favourite retailers.

Smart traveling

With the rise of gas prices, traveling costs you considerable amount of money. You can invest in a scooter that consumes extremely less gallon per mile than any other motorised vehicles. If you also want to better your health, you should consider bicycle.

Related to smart shopping, not only promo codes, many retailers online can have your purchased items and goods to be delivered to the comfort of your home. This service will dramatically cut your traveling cost.

Smart living

In everything you do to survive today’s recession, I suggest you to keep this words in mind:

Your health is your money.

Living cheap and in constant insecurity will eventually bring your health and morale down. They will definitely affect your personal finance, either now or later. So, take any benefits of today’s situation to maintain your physical and emotional welfare.

Image by timparkinson.

Does Short Term Financial Fix Can Really Solve Financial Problems?

Most people would do anything to solve financial problems, as financial problems almost always come along with relationship problems.

As money is still a taboo topic today, financial problems are getting worse by not having a constructive and honest conversation about money.

An article by Psychology Today explained that although money is an emotionally loaded topic, it is still taboo topic to talk in family conversation. The result, as financial problems strike, is that most family ‘blindly’ take any financial help on sight, often in the form of unsecured loans.

Personal loans, mostly short term, are often viewed as a solution by family facing financial hardships. Come in the form of payday loans and cash advances, personal loans offer short term remedies for those financial problems.

This is where the problem lies.

Personal loans themselves are actually useful and purposed to help people. However, taking loans without proper money knowledge will eventually make the financial hardship even worse. This, in turn, creates a general opinion that personal short-term loans are negative and should be avoided whenever possible.

I viewed the negative reputation of personal short term loans is a misled perception. The high APR is often considered as the main culprit of many financial hardships, thus receiving negative reputation. The facts often prove the otherwise. The limited knowledge and wrong mindset of the borrowers are the actual culprit.

Personal loans as short term financial fix

Most personal loans are installment loans – a certain amount of loan should be paid back at the definite due date until all the total amount are paid off. This, in itself, is actually helping borrowers to cut the headaches and avoid late payment penalties. Some personal short term loan providers are even allowing you to pay off loan whenever you can, thus limiting the amount of interest paid.

Although short term loans are notably higher in APR than traditional loans, the fast approval and low credit score-friendliness are strong appeals for people and family with immediate need of cash.

Short term loan CAN solve financial problems

Short term loans, with the right attitude and knowledge, can solve financial problems, as well as relationship problems.

I suggest you to learn about the good debt and bad debt. Good debts put money in your pocket, while bad debts take money from it. In other words, use your personal short term loans not as your source for personal shopping and debt clearing, but for cash management enhancing purposes, such as securing profitable side business deals.

As long as you understand the concept of good debt and bad debt, short term loans offer options for your personal finance management endeavour.

Comparing Plans for Your Personal Finance Endeavour

Your personal finance always require budgeting and planning – you always want to know and prepare for your savings account, rainy day account and investment account, as well as your credit cards, insurances, mortgages and other expenses.

Now let us focus on three of the most common expenses – credit cards, insurances and mortgages.

What does credit cards, insurances and mortgages need have in common in your mind? Yes – you want to know which plans are giving the best value for you.

To know which plans are the best for you, you need to compare them – comparing plans is a necessity and often providing a sense of security having several plans on the table for you to choose.

Money plans comparison website

The best place to look for credit card, insurance and mortgage plans is finance and money related websites. is one of the financial authorities I often visit to compare plans, as well as to search for financial updates and news.

You can fulfill you need to compare mortgages, insurance quotes and credit card quotes.

The comparison itself is self-explanatory. For example, I like to compare car insurances. I found a comparison of three car insurances recommended by, along with the details, such as no claims discount and charge to pay monthly. You can always to to the insurance website directly to learn more beyond what is recommended by

To highlight – the websites also offer you five RSS feed that you can subscribe to. My favourite is personal finance news and tips, delivered to my Google Reader. Another feature that I recommend you to join is the newsletter subscription. The newsletter is a good way to stay informed on news and updates on money and money saving tips.

Comparison websites aid you plan your personal finance

Knowing which plans are the right ones for you give you an assurance of what to expect and to pursue in your personal finance planning.

If you are keen to plan your personal finance better, use not only financial comparison sites, but also shopping comparison sites and other similar sites.

I recommend you to seek authority websites only, to avoid bias and misleading information. It’s too often I found from the Internet, that the comparison site is biased, and allegedly recommend the plans that will make the site owner more money than the other plans. Although, in my opinion, this is unethical, there are actually hundreds, if not thousands, of sites offering biased comparisons – avoid those sites!

Assure yourself and plan better now.

What is Threshold of Perception for Money?

In physical terms, the threshold of perception is the limit at which you start to feel something. A change of a tenth of a degree might not make you feel warmer, but you could feel a change of a full degree. Some people are incredibly sensitive and aware to such changes, others are not.

In many ways, people have similar thresholds with regards to money. You can see it in yourself when there is a small error on your bill, or you forgot a coupon for something you wanted to buy. For some people, every single cent is important, where for others, amounts of up to a few dollars in either direction aren’t worth noticing.

If you have a high threshold of perception for money, you need to be aware that those little amounts can add up. The few dollars in bank fees each month might not seem worth your notice, but if you let it slide for a few years, it can easily eat up hundreds of dollars. Unclaimed expenses are another issue. It might not seem worthwhile to pursue claiming each insurance expense or seeking reimbursement for every work-related expense, but those costs add up over time, taking hundreds or thousands of dollars that could be put to more beneficial uses.

So, work at lowering your threshold of perception when it comes to money. It might seem silly when you look at the individual dollar amounts, but when you add them up over time you will definitely see results. Taking the time to notice the smaller amounts can be time well spent.

Online Payment Processing – Simplicity is Key

Bryant Welch, a clinical psychologist, lawyer, professor and former executive director at the American Psychological Association, wrote that life in a globalised world is complex and uncertain, but the human brain craves simplicity and assurance.

No matter how negative the effect of simplicity (and everything instant) is, people does crave for them, due to the fact that human brain always wants to avoid misery and to pursue happiness.

Why simplicity in online payment processing is important for customers

You see, people start leaning toward online shopping for the same reason: simplicity.

You always want to shop from the comfort of your home. Their main consideration is always on order and payment processing. They want a secure, yet simple system to process their order and payment. They want quality and fast services.

Customers have to consider several things in deciding to shop online: how much they will save, how convenience the purchase will, and how peace of mind can be achieved.

Online businesses have to address those issues to win business from potential customers. To achieve this, online businesses must have an integrated and automated online payment processing system that is simple to use.

Where to look for reliable payment processing solutions

In payment processing system, simplicity is key. Setting up merchant account, processing online payment, processing orders and shipping, and so on is a complex operation, although not as complicated as the offline counterparts.

Choosing the right solution will not only helping you win customers, but also helping your back office operations.

There are simple payment processing solutions on the Net, but only a few offering you an integrated solution. My suggestion is for you to seek a company that can handle most, if not all, your payment processing needs.

Partnering with a company that offer you an all in one solution to manage financial processes, such as recurring billing, eCheck processing, online payments, credit card processing, direct debits and cash disbursement will only do good for your online business.

The best way to look for such company is through searching for testimonials and recommendations from the Internet. Reviews on financial-related blogs, forums and social media may be your best bet to find such solution.

Locus Pocus

If you have something happen to you, do you blame it on yourself, or blame it on external causes?

It’s an odd question, but an interesting one as it deals with your personal locus of control. But, that’s jumping ahead. Let’s start with defining a locus of control.

In psychology, the locus of control is a scale that defines a person’s beliefs about what causes good or bad results in their life. For example, you might know someone who always blames themselves when things go wrong, or someone who credits only good or bad luck for what happens to them. People like these define either end of the spectrum on the locus of control. People who blame themselves for everything in their lives have an internal locus. People who blame higher powers, luck, or the environment for occurrences have an external locus of control.

Now, it’s worthwhile repeating that this is a scale, not an either-or proposition. People can display different characteristics of either locus for different issues. The big question we’ll ask here though is: What is your locus of control with money?

When you can’t run out of cash, is it because you had bad luck and needed to spend more than you had thought? Or is it because you forgot to plan ahead and have an emergency fund? Knowing your locus of control with regard to money can help you to plan in ways that work with your financial psychology as opposed to against it. And a plan that you can work with is a plan you’re more likely to follow.

Don’t let your psychological beliefs get in the way of you being financially successful. A good financial plan can help to protect you against both internally and externally caused problems.

Tax Returns and Found Money

We have an odd attitude towards tax returns and pretty much any money we get from the government. As this money falls outside the limits of our regular salary, it usually hasn’t been allotted to pay any particular bills, and isn’t needed for day-to-day expenses. So, what do we do with it? We spend it with the same attitude we would towards a lottery win.


Let’s dissect this choice into a few important points.

Where does a tax return come from? While it seems like a large lump sum, a tax return is actually a return of money that you overpaid to the government. It means that the government got a hold of your money and held it for months until you filed a return to get it back. This money isn’t found, it was yours to begin with.

Why do we blow the money? Not all of us do, but the problem with tax returns is that they are the gateway to spending more. Perhaps you use your tax return for a vacation, but then need to pay for extra airport taxes and fuel fees from your regular money. Or perhaps the tax return is a payment towards a home renovation, but you need to pay the balance of the amount yourself.

What is our best use of that money? Since a tax return is viewed as “found money”, many people don’t put much thought into how they can spend it to best benefit themselves. While a vacation can be the most benefit, maybe saving the money so that you can replace an aging car when the time comes, or using the money to pay down debt is better. Just because you receive money you weren’t counting on doesn’t mean you shouldn’t maximize the value you get for it.

So, whether it is a tax return or some other type of found money, you need to think carefully on what you do with it. Don’t get caught up in the giddiness of having extra money, instead, treat it like any other paycheck and use it in whichever way benefits you the most.

The Psychology of Budgeting

I confess, I am an optimist.

Not a wide eyed and naïve one, rather I am a cautious optimist who tries to plan ahead for things. Sadly, my optimism does someone lead me to underestimate things.

A recent study from the University of Southern California called “Will I Spend More in 12 Months or a Year? The Effect of Ease of Estimation and Confidence on Budget Estimates.” suggests I am not alone in letting optimism lead me to underestimate things, at least in the short term. The research indicated that consumers had a tendency to be over-confident when making estimates for short-term budgets. However, when making long-term budgets, consumers tended to be much more cautious in their estimates, as they acknowledge the greater potential for unexpected surprises.

The study does concede that monthly budgets function quite well for relatively predictable monthly bills, but when it comes to estimating more open-ended costs, our optimism can be our enemy.

Lead researcher Gülden Ülküman says, ‘When budgeting, it seems to be wiser to assume that one’s knowledge is unreliable.’ What are the applications of this? Well, as a starting point, you might see budgeting software asking you questions to make you question your assumptions and feel less confident about the estimates you make when compiling a budget. How can you make use of this knowledge? Well, to start with, let your inner pessimist come out and play when compiling a budget. We’re often taught that a negative attitude can cause us problems later on, but it appears that in this instance, pessimism is the winning strategy. As an optimist, I hate to concede them the point, but it’s hard to argue with science, especially when it matches what I have seen in the real world so very well.

Negotiating and Culture

Firstly, my thanks to Million Dollar Journey and their entry Confessions of a Car Salesman which discusses negotiating techniques used by used car salesman. Reading that blog got me thinking on the topic of negotiation.

Through my travels, I have often been fascinated by cultural attitudes towards negotiation.

In a number of places in the world, prices are flexible. They can be negotiated, bartered or otherwise influenced. Some individuals are raised in a culture of negotiation. They always try to talk their way to a different price.

Many of us in North America have been raised in a culture of price tags. What we see is what it costs. We look for sales and can try to maximize our value through those, but ultimately, we pay the listed price. Now, is this bad? Not necessarily. It means that in day-to-day life, you don’t have to worry about negotiating. However, in a few remaining areas of North American life, negotiating is common and almost required. These areas include buying cars, arranging salaries and asking for raises, and buying houses. Also, in a not so coincidental way, areas such as these are ones in which many of us feel uncomfortable.

Why do we have issues with negotiating? There are a multitude of reasons. First and foremost, for many of us it comes down to issues of appearances. If we negotiate, we can feel poor or vulnerable. I have had the privilege of witnessing master negotiators at work, and they let no sense of shame interfere in their bargaining process. They will claim poverty, starvation, the need to support a family and many other items as they push the price in the direction they want. Frankly, a good negotiation between two skilled parties is a fascinating spectacle. Not all negotiations are showy and loud though, everyone has a different style of negotiating that can work for them.

We need to look past the “price tag culture” in which many of us have been raised in order to see the benefits that lie in negotiating. A fraction of a percentage point lower interest rates for a mortgage can lead to savings of thousands of dollars over time. A few well placed words can cut hundreds or even thousands of dollars off of a car. Price tags make simple things like shopping trips to the grocery store faster and more convenient. However, by accepting prices on the larger ticket items, we often might be throwing our hard-earned money away.

So, look past any insecurities you might have on the topic, and examine the benefits you might receive from negotiating. Rather than sacrificing any self-esteem, you might end up thousands of dollars ahead for putting in a little time. As a good starting point, take a look at the entry on Million Dollar Journey, it can help you see just how easily we get sold up on prices, and how we can turn those tricks to our own use. Remember, sometimes you CAN look beyond the price tag.

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