Sweeping Under The Pouring Rain and Emergency Fund

Last Sunday I was enjoying a cup of hot mocha latte at Starbucks while watching the rain outside. I saw one guy sweeping the water away from the walkways and stairs. It seemed like a futile thing to do because the rain water kept on pouring down and when he got to the end, he had to come back and swept again.

What would you have done in that situation? If this was your own house, you would probably have waited until the rain had stopped before began sweeping. Well, I would anyway.

We often do not like doing something that seems futile and has no immediate or apparent results. For example, building a sizable amount of emergency fund. There seems to be countless emergencies popping up draining away our emergency fund, and we keep on trying to replace the depleted account. It may feel futile and sometime we just want to give up.

When you want to give up, remember the lesson from the sweeper. He kept on sweeping because he wanted to minimize the risk of people falling down due to slippery walkways or stairs. It was not futile because it was about minimizing loss and risk.

When we build our emergency fund, it is also for minimizing loss and risk. We reduce the risk of falling back into debt. It is not a futile thing to have a money cushion in the event of emergency or unexpected situations.

If you are still struggling to build your emergency fund, don’t give up! You are on the right track and sooner or later you will get there. Press on!

Learn and grow!
Inge Santoso, B. Com, CFP®

My Luck with Starbucks

Yesterday I went to Starbucks to buy Starbucks’ 11th Anniversary mug. I had a voucher that entitled me for 30% discount. The price of the mug was quite expensive, Rp 75,000, and after discount it would be Rp 52,500.

While I was there, I was offered to get Starbucks Reward Card with a minimum balance of Rp 100,000 and only for yesterday, I could get a free beverage (Mocha Cookie Crumble Frap tall size). I thought it was quite a good offer and I certainly could use the discount, so I agreed to get the Starbucks Reward Card for Rp 100,000.

When they entered my purchase into the cash register, somehow the total amount came out to be Rp 130,000, instead of Rp 152,500. I told them that the amount did not seem right and they also agreed with me, but they had to follow the cash register. I ended up paying only Rp 130,000.

I considered myself lucky when dealing with Starbucks because yesterday was the second time that I got something extra from Starbucks. Last time, I got an extra free drink because of another error.

I put away Rp 22,500 into my lucky note stash to remind myself that sometimes I am just lucky! 

Do you have similar experience? If you do, please share in the comments.

Learn and Grow

Inge Santoso, B Com, CFP^®

Credit Card and Airport Lounge

One of the reasons I have a credit card is free airport lounge access. A few years ago, gold card could get you a free airport lounge access. Nowadays you need to have at least a platinum card or higher (titanium, privilege, emerald or whatever they want to call it) to have a free access. If you have a gold card, then you may be able to use your reward points to get access.

Is it really free? No!

If you are paying a yearly fee for your platinum card at about Rp 600,000 to 750,000, then it is not really free.

If you carry a balance on your credit card and you are paying interest, then it is definitely not free. You are actually giving subsidies to those people who pay their balance in full every month.

If you are offered to apply for a new credit card just to get an airport lounge access, be smart! Ask yourself how often you are going to use the facility. If you travel less than 10 times a year, then you'd be better off just paying cash Rp 50,000 for one time access. If you only want some 'free' food available in the airport lounge, it is better to get a proper and more delicious food somewhere else.

If you have a credit card that give you free access to airport lounge, then use it and enjoy yourself! If you have access for two, then get acquainted with someone new and use it to make friend.

Learn and Grow
Inge Santoso, B Com, CFP^®

Take Care of Your Finances Before Going Traveling

If you have a plan to travel overseas for more than a week, please remember to take care of your finances.

If you know that you have bills due to be paid while you are overseas, you need to arrange the payments, either paying them online or delegating the task to someone that you can trust. If you have automated payments by debiting your account, then you do not need to worry about it. Just make sure that you check the amount when you get back from the trip.

Please remember to pay your credit card bill because the late charge and interest are punishing. I know one bank charges Rp 150,000 just for late charge. Imagine if you are only using your credit card to buy one mocha latte at Starbucks for Rp 31,000 and you get to pay Rp 150,000 late charge – Aaaarrhhh! Pay your credit card bill early!

This month, I paid all my credit card bills on the same day as when the e-statement arrived because I plan to go on a trip. I do not want to cut it too close because I will only come back one day before it is due. Better early than sorry!

What about savings? I have an automated system to save and invest my money, so I am covered. Every month, my account will be debited and that money will go straight to saving and investment account. Automated savings makes life easier and you can have more time and freedom to do what you want.

How about you? What do you usually do before going traveling? If you have some tips or comments, please share.

Learn and Grow!

Inge Santoso, B Com, CFP^®

Credit Card Fraud

Yesterday a friend shared a story with me how her credit card was fraudulently used for online purchases. She always tracks her credit card transactions, so when some unknown charges came up, she could act fast and block the card before further damages were done.

When she called the bank to ask about the charges, she was told that they were apps purchases at iTunes store. She started to get suspicious because the only time she used it was buying an app for her niece a few months ago. Her niece might have purchased apps without knowing that these purchases would be charged to her aunt's credit card account. 

After checking with her niece, her suspicion was confirmed. She had bought some apps from iTunes store thinking that they were free because they were featured in Apps Gone Free. Well, they were only free for a day, not forever!

Since the amount of credit card charges were not too big, my friend paid the credit card charges in full and asked the bank to replace her card, instead of disputing the charge. Sometimes disputing the charge can cost more than simply paying the balance. (You can read my story here)   

What can we learn from this incident?

• Track your credit card expenses 
• Get your bank to notify you for any credit card expenses above a certain amount (you can set the amount yourself). The notification is usually sent by SMS just a few seconds after the transaction occurs.
• Do not leave your credit card detail saved on website or online store. It may be inconvenient to enter your credit card detail for every transaction, but it is definitely safer, especially if you have youngsters using your gadgets. 

Do you have any similar experience or want to give more tips? Please share in the comments.

Learn and Grow!
Inge Santoso, B Com, CFP^®

What Can An Old Childhood Toy Teach Us?

Yesterday while shifting stuff at family storage, I found this driving simulation toy from my childhood. I did not quite remember whether I got this for my 11th or 12th birthday, but I remembered the process before getting this toy.

The toy was displayed in a toy store just opposite our old house. I regularly came to the toy store just to see what was new and interesting. When I saw it, I really wanted to have it. In the 80s, something like this was already a very technologically advance toy. The screen on the right displayed the road and when you turned the steering wheel, the car moved from left to right. I could not remember whether the speed changed by shifting the gear. Anyway I was quite obsessed in getting this particular toy.

I told my parents that I wanted this toy for my birthday. They tried to persuade me not to buy it because it was quite expensive. I said I wanted it and I gave them several reasons why I wanted to get it. One of the reasons that I told them was that I could use it to practice my driving skill so I would be ready to drive by the time I reached the age of 17. When I think about it now, I realize how ridiculous the reasons and excuses that I gave to my parents. Yet they still bought me the toy.

I played with it for about a week or so, and I just got bored with it. I did not think that I would lose interest that fast, but it happened. It went to the storage and I just found it again after more than 20 years. I showed it to my 3 year old nephew and he was not even interested in it, the iPad certainly had more appeal to him than something like this.

What can we learn from this?

Sometimes we are still like little kids. We want something so bad and we start making up reasons why we need it. We build a strong case about why we need and have to buy it now. Even the most ridiculous reason seems reasonable and acceptable.

We can be so stubborn and do not want to hear other people’s advice or recommendation although they can see it more clearly than us. Sometimes they just keep quiet after a while because they can’t be bothered speaking to closed ears and mind. So if you still have friends who are honest with you about your silly purchases, be glad you have them around.

Remember that the excitement often occurs during the wait, and we simply lose interest after we have it. Why not just keep waiting to keep the excitement going on and on? Hahahaha In a few months, we will be enchanted by different or newer toys anyway. At the moment, I am excited thinking about getting a MacBook Pro in December…I’ve been waiting for more than two years…perhaps I will buy, perhaps I will wait for the next and more advanced MacBook Pro.

Learn and Grow

Inge Santoso, B Com, CFP^®

Things You Need to Know When Going to Investment Seminars

Have you ever been to an investment seminar?

I like going to those free investment seminars and gatherings because I get to know many different products offered by various banks and financial institutions. If you are interested in learning more about financial products, you can come to these events with some cautions.

Although it is often called a seminar, more often it is more about selling investment products. Even if it is a financial institution’s consumer gathering about economic outlook, at the end, we are often told about some new product offerings.

Sometimes we get emotional when hearing the special offer available that day.

For example, for the first 7 people who open an investment account with a minimum balance of Rp 100,000,000 will get a cashback of Rp 300,000. You can use the money to trade, but you are not allowed to withdraw for the first three months. We feel like we are getting some free easy money, but when you really calculate it, it is not really worth it.

If you are loaded with lots of money, that amount may be a spare change for you and it does not matter where you put it. However if you are not, you need to think about the opportunity cost of putting that money there. You need to think whether there are better alternatives for you. 

What do you need to do if you come to these seminars?

1. Come with a clear goal in mind – is it just to learn about an investment product? Then come to learn and do not buy anything.
2. Ask a lot of questions. If you do not understand the product, do not invest in it.
3. Get a second opinion from someone outside the seminar, preferably those with financial knowledge and unrelated to the financial institutions that are offering the products. If you have a trusted certified financial planner, you can ask him or her.
4. Be skeptical, especially if they are offering something that is too good to be true because it often is. If they are saying that it is a no-risk, high return investment, then run away as fast as possible because nothing is without risk. The higher the return, the higher the risk.
5. Do not get pressured by the account officers or sales people, especially if they say that if you do not take action now, you will miss out on the profit. Let it go! There will be other opportunities to make profit!

Just like reading books, financial blogs, going to investment seminars can help you to be more knowledgeable about financial products. Use the opportunity to learn and may what you learn take you closer to your financial goals.

Learn and Grow

Inge Santoso, B Com, CFP^®