Stay ‘strong.’ Shed the ‘depreciating’ debts

During tough times, opportunities abound. Reason is pretty simple, really. Not many new businesses are starting and even existing ones scale back or close down due to inefficiencies. Thus, identifying a niche and starting it during tough times meant that there are fewer competitors, cheaper too most probably. For properties, there are definitely sellers who overstretched themselves. During good times, they do not feel they were overstretched as they were able to rent out their properties easily. Now, imagine if half of the units remain vacant for 3 months? Or even when rented out, the rental was down 50 percent? Yes, we get a motivated seller. Read here: In a slowing market, sanity returns.How true.

What about those credit card statements? When was the last time we looked through and identify those we should not have spent? Most of the time, there are lots of them. We missed it because it was not spent using cash. Even worse, we overspent what we usually earn every month, thinking by next month everything would be back to normal. Well, that was what many thought before everything spiralled towards one being declared a bankrupt. Read here: Bankruptcy before property,not after property, perhaps 

I used to love the Nissan Sunny my father handed down to me and drove it for 13 years, until the speedometer reached 700,000km. Yes, 700,000km. With regular services and maintenance, a car lasts a long time. Yes, even a second-hand one unless we are extremely unlucky or we still prefer to buy something which is already known to be unreliable. Do not worry too much about loss of face. Without driving at least a Segment D car, there’s little need to feel that we have ‘arrived.’ Read here: Sen wise, ringgit foolish Oh yeah, even when we can afford such a car do note that it will lose 50 percent of its value in 4 years’ time? Thus, buy one when we have lots of spare cash, okay? Delayed gratification. My Nissan Sunny was traded in for a Proton Persona which has been my favourite ride for over 5 years (80,000 km currently), especially against the many ‘floaty’ Segment B cars around.

Last but not least, what about those times when we felt that we deserve a break with a cup of latte in a nice café? After we ordered the latte, we ordered another slide of cake to go with it? Haha. Yes, even when we are using cash, we may miss out all these ‘small’ items which will accumulate into a big one. Imagine just 4 times of the above scenario, it would already be around RM100 per month! Doing it 12 times per month for 10 years is already RM12,000 ‘loss.’ To earn RM1,200 ringgit in interest, we need to put RM30,000 into FD for 12 months! Save one-third to have two-thirds when we retire  Pretty crazy, then why are we doing it? These days, I really have cut down my Starbucks trips by half. I seldom order any cake to accompany the latte too because I needed to cut some weight too. Haha.

What goes up must come down. Ringgit was once the top few performers in Asia. Today, it’s down. I think it’s clear that with China’s continuous slowdown, more bad news are coming. Yes, even for some currencies perceived as stronger. It meant that the overall sentiment is likely to be negative for some time and it’s so important that we gain something from this current loss in confidence. What has gone down will start to recover in future, look to China for signs and not primarily the US. If the same benchmarks are used for all countries, there’s no way some developed countries are rated so high. Be savvy about this; rating agencies are all from developed nations too. Happy reducing what ‘depreciates’ before we lose more than what we could gain.

written on 16 feb 2016

Next suggested article: Doing nothing is not a strategy

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