What’s on a reader’s mind (2)

A very dear reader from Canada wishes to share his experience in “adulting” and money management.

However, before I move on to divulge his wise words, let me first mention how I have never met anybody online as kind and as frank as Mr. Edward Hillyer. We met in Facebook. We have a common friend who used to actively publish politically-flavored posts in his wall. It was in the comments’ section where we started out politely arguing about the different topics we enjoy. Now I believe that I may proudly say that we are friends… friends in the sense that I would seek his advice, and he would generously give it; friends in the sense that he would tell me nice stories about his childhood and his family, and I would ask him for more similar anecdotes.

I used to be reluctant in having a social media life but with a great discovery like Edward, I believe it’s worth all the trouble of meeting the weird and creepy people that roam around the internet.

I thank this dear friend for supporting my blog through actively participating in its Facebook page, as well as in my personal page.

I truly hope that you can learn as much from him as I do.

Thank you, Edward!

(The following comment originally appeared in the Colorfulifesite Blog’s Facebook page, dating 6th of February, 2017.)

My first comment on adulating [sic]* and money: If you have ever had a credit card, you will have noticed how a little here and a little there, (ten dollars for a pair on sunglasses, 20 dollars for a new top) will cause your receive your credit card bill with shock. How could just a few dollars here and a few dollars there add up to such a large bill? On the door to my father’s office was a quote ‘It all adds up’. You see this in your credit card bill that shocks you each month. This is the reality, it all (even small amounts) add up. With this knowledge as a given, why not be smart? It 2 +4 = 6, then 4 + 2 also = 6. This information is reversible. If you save a few dollars here, and a few dollars there, IT ALL ADDS UP, just as spending does on your credit card. This is a given. If you save money in your daily life, it will add up.

This was my reply, dating 8th February 2017:

Thank you for this simple yet monstrous truth, Edward. My personal experience with credit cards is quite nil because having been raised in a frugal household; we have always tried to avoid expenses (present and future). We only borrowed money if we didn’t have any other option at all. But I had a similar experience with my day to day life before my husband and I got married. We had good jobs and were living in the city center. So the temptation to get a beer here, have a bite there, etc… was always near. And we would usually give in to the “little” ones, until we realized that the 3x a week trips to have tapas at 2 EUR a glass of beer (we would end up having 3-4 glasses each) would sum up to 192 EUR a month! Imagine how much that would be in a year! So we started to save small coins and also stopped eating out too much. This was one of the ways we were able to save for our wedding (for my part, I was able to save for my dress, shoes, earrings and head accessory). Yes, we’re proud to say that we financed that marvelous celebration of our lives!

In a reply to one of my posts, (this time, in my personal Facebook page dating 22nd February 2017), Edward recounted an advice given to him by his father. Honestly speaking, I wasn’t prepared to be blinded by the light.

I joined Les Grands Ballets Canadiens at 17 years old as an apprentice. I was paid half the salary of a corps de ballet dancer ($75.00 a week). I managed on that fine. It was tight, but I did it. However, after three months with the company, they tore up my old apprentice contract and gave me a corps de ballets contract. I wrote to my father with excitement. ‘My salary has more than doubled. I now earn $155.00 a week!’ My father expressed his pleasure but mentioned… ‘If you got by on $75.00 a week, this means you could now save one whole salary each week.’ What a brilliant observation. However I did not follow his advice. I adjusted my standard of living to my larger salary. I had not ‘adulted’ yet. In youth, there is a tendency to spend all the money we have before our next pay day. It really does not matter what the salary is, we will be out of money by pay day. I was poor, then rich, then poor, then rich, then very, very poor, and now I am financially independent. Like others, I have been through it all. And, I learned from it all. When the endless value of money is recognized, we will prefer the money (security) to the fancy shirt, the latest shoes, the newest gadget and the expensive restaurant. I used to live in a three story house on two acres of land with a swimming pool and three cars for two people. Clearly I had far more than I needed. What do two people do with an acre of land each? Why would two people need three cars? Why would two people need three stories? I was working two jobs and was sick with the work. I felt I needed to reward myself for working myself to the bone. How very stupid of me. I earned $90,000 a year and was always broke before pay day! Now, I have no car, no smart phone, no cell phone, no television, no house, no iPad, no IPod, no MP3 player and no cell phone. What do I have? financial security and peace of mind. The value of this is far greater to me than any material thing.

*Edward’s computer would automatically and stubbornly replace the term “adulting” with “adulating”, and so he spent the whole time with the latter word. Colorfulifesite edited the rest of the typos.

-The End-

Don’t hesitate to comment on Edward’s ideas, or share your own experiences in “adulting” and money management!

Remember that you can write to: colorfulife@outlook.es, or use the Comments’ Section below, or you could also use this blogsite’s Contact Page to tell us your stories. Thank you!

Adulting and Money Management 2: “Hooray, I have money! now what?”

To read the first part of the Adulting and Money Management Series, click here.

Money management becomes tricky as we grow older. To prove my point, try to remember when you were younger and you used to be so determined and focused to save whatever money you had. It could be to buy “that shirt”, “that book”, “that pair of shoes”, or even just to “put it in the bank”.

Didn’t you use to scrimp on buying snacks at school? didn’t you keep those envelopes containing cash- from your godparents- so you wouldn’t be tempted to use it? didn’t you try to outsmart your parents, siblings, or other family members to cover some of your expenses so that you could have more money, faster?

By the time we enter into adulthood, we start to be distracted from goals such as saving money or even increasing our income… There are just so many nice things to buy, a lot of delicious new food to taste, and look at all those places where we could travel- am I right?

Imagen relacionada

Image courtesy of: http://www.jocelynrish.com/

I don’t have the capacity to address all the above-mentioned concerns. However today, in the name of “adulting”, allow me to shine a spotlight on investment as an alternative to increase the money you have saved. And as a possible choice for investment, this post will also include a short discussion about Mutual Funds.

The completion of this second part of the Adulting and Money Management Series would not be possible without the very dependable Mr. Arnel Martil. His professional aid/opinion/words/common sense/truthslaps have truly made this post not only satisfactory, but also very beneficial to the reader.

Thank you very much, Arnel for your help!

-*-

Colorfulifesite (C): Arnel, what’s the difference between saving and investing? Which would you say is more important between the two? For instance, let’s say that I just received an inheritance or a huge bonus. Which should be my priority?

Arnel (A): The big difference between savings and investments is time.

Savings is usually money you set aside for short-term goals.

One reason you might want to save now is so you have some money to invest later. Money deposited into a savings account is usually very safe but would only earn a small amount of money in return. Another great thing about a savings account is you can get your money out of the account whenever you want.

When you say saving, you are just putting your money in a bank or as a reserve. It’s as if you’re hiding it under your pillow. It is a “parking place” where the “principal” or the amount you’ve saved is safe; it provides money for short term goals as well as emergencies.

By investing, you allow your money to grow. 

It accumulates money for long-term goals. You could lose your principal, but you have the opportunity to earn more money.

When you invest, you set your money aside for future income, benefit or profit to meet long-term goals. When you invest your money, there is no guarantee that your money will grow or increase. The earnings or losses from investments are usually more than what you would make or lose in a savings account. Investors recognize that it usually takes a long time to earn the big bucks, so most of the time they are in it for the long haul.

C: What would you say is the NUMBER ONE enemy of the people who are currently saving money? What’s the most effective technique you’ve applied to make sure you or your family could save?

A: Inflation is one of the downsides if we rely only on saving. It is an increase in price that makes a “market baskets” of goods and services more expensive over time- a silent killer of your finances. (Note: inflation reduces the value of your money because with the same amount, it can purchase less goods and services than before.)

For us to beat inflation, we should invest in investment vehicles like bonds, stocks, mutual fund, UITF or Unit Investment Trust Fund* (see Glossary at the end of the article for more information on terms with asterisks), or real estate. As an adviser, we do not discourage saving money in a bank account because you can recover and use that money 24/7 in case of an emergency. But if you want something for long term, like if you are planning for future education or personal retirement, invest in a vehicle that allows your money to grow if done right… annual returns of 50% is possible.

Regarding saving techniques, it really depends on the person’s budget; it should be such that his lifestyle wouldn’t be compromised. 

C: The most typical advice is the 20-60-20 rule, where 20% of a person’s income should go to savings and investment, 60% on essential expenses and 20% on discretionary expenses a.k.a. wants, rather than needs. (For some insight on budgeting and saving, see Colorfulifesite Blog’s post on making ends meet, here and proving that you could save, here.)

A: Just remember that the bottom line is saving for your future.

C: Suppose I’m now ready to invest- will it make sense for me to borrow the money I would put in the investment vehicle of my choice?

A: As an adviser I would say, before you decide to invest, you should settle your debts first.

You must start paying off the ones with small interest, and little by little, proceed by paying loans with bigger interest. The reason for this is you might have difficulties if you prioritize the debts with bigger interest, because there’s a tendency it might be too much for you and it could lead to you not being able to continue paying.

Once the debt is settled, you can then start to save and invest.

C: In my opinion, borrowing money can be a useful tool for money management. But it can also spell disaster for anyone who misuses it. Under the context of making your money grow, I believe that it only makes sense to take a loan when:

You are 100% sure that you could pay it off, interest plus principal, without sacrificing neither your current lifestyle nor your future prospects. (More of this on this series’ next post!)

A: You can be financially independent at any income level, but one should develop a certain behavior and discipline when saving and not to spend too much. However big your monthly salary is, even at 100 thousand per month, if your mentality is all about spending and spending, the end result will be an impoverished you.

C: Now, I noticed that mutual funds have been “a thing” for quite some time. What can you tell us about it?

A: Mutual funds are pooled investments which everyone can participate in. In the Philippines, it could be with capital as little as Php 5,000.00 (Colorfulifesite advises for you to consult your bank or financial adviser for the minimum capital requirements in your country).

It is a good investment option because they do not require much effort and time compared to others (e.g stocks, one’s own business). A professional fund manager handles your mutual fund. All you need to do is put in the money. In a mutual fund, you will become an investor, part-owner or shareholder of blue chips- nationally recognized, well-established and financially sound companies- where a mutual fund company has invested in.

Where I work, or in any mutual fund, historically in 5 years’ time, investment has been seen to double.

That’s why, we advice to lock in 5 years if people want to invest in a mutual fund.

C: I guess the time has come for me to share my own investment experience. You see, I invested a little money that I had before. Just like in a mutual fund, I was asked to lock my capital for a minimum of 5 years. I could put in more money, but I couldn’t withdraw it until after that period. However, when time came for me to recover my investment, I simply got the capital back! I was told by my adviser that it was due to the financial crisis. Now, what was I supposed to do with that? Of course I was happy I got the whole of my capital back, that I didn’t lose any money. But what a waste! I could’ve invested it in another product and at least earn 5% from it.

A: Maybe the investment you did at that time had an insurance added-on.

There is a product called a VUL** or Variable Universal Life Insurance where, aside from saving for your future your principal earns interest and it offers protection. It’s a sort of 2 in 1 product: life insurance ***plus mutual fund.

It is also a good investment since the money you save will grow and accumulate. The advantage of investing in any VUL products is it offers insurance or life protection, so in case the family breadwinner or the income generator has suddenly run out of time, his remaining family members would not suffer.

May I ask which company you invested in? How come the result was only a break even after 5 years?

C: The truth is, I remember which company it was, but I don’t remember the conditions. I think the problem was, I didn’t take it too seriously at that time… (facepalm)

A: Before you choose any type of investment, you must first do a background check of the company: their historical performances, how many years have then been operating- is it at least 10 years or 20 years?- so you could avoid scams. There’s no investment where you could earn money speedily, like let’s say, double your money in 2-4 weeks. There is an investment principle where we are advised to apply the RULE of 72****.

C: What can you say about my experience? Or worse, what can you say to those who lost money in their investments? Undeniably, many people are afraid of investing, and are afraid of the term “finance”, due to the crisis that hit us…  

A: As an adviser, I would say that before entering any investment scheme like stocks, mutual fund or UITF, you should first build the foundation of your investment by securing a life insurance, because the return on the investment tools I’ve mentioned is not guaranteed… In the case where a person secures a life insurance, if something happens or let’s say he or she will be “taken out of the picture”, there’s assurance for the surviving family members or beneficiaries that they wouldn’t be burdened or worried about how to go on with their financial life.

Life insurance could also help pay loans and other liabilities. It could be used to fund obligations like college education, car loan, house or lot… at least there will be money to pay them off. If the insured breadwinner dies, at least there will be resources to supply his surviving family’s needs.

C: That is a very interesting concept you introduced there, Arnel. In fact, an article I read explained it like this: When you don’t have assets built up (as young people do in their early-work life), you are most vulnerable. In case of an emergency, your family will have nothing to fall back on. So a life insurance is a good way to provide financial protection to your family even in your absence.

In another article, I learned that one of the wealth-building strategies we didn’t know about is to incorporate the use of whole life insurance as a strong basis for a solid investment plan. In fact, Investopedia defines this just the way you explained it:

Whole life insurance is a contract with premiums that includes insurance and investment components. The insurance component pays a predetermined amount when the insured individual dies. The investment component builds an accumulated cash value the insured individual can borrow against or withdraw.

A: If your investment of choice includes an insurance feature, it’s hard to say that you end up “losing” or “earning less”. There’s a guaranteed face amount***** or insurance amount in case of death, plus you can avail of riders****** or additional benefits like critical illness, hospital expenses and disability benefits. You could benefit from it in the long run.

C: Going back to my mishap… Needless to say, my experience made me afraid to invest again. So I just keep my money in a bank. However, it does make sense to also invest some of it especially if I were to increase the value of my money.

What are my other options? I’ve thought about bonds and stock options. But the truth is I know nothing! What advice could you give me?

A: All investments involve taking risk. It’s important that when you go into any investment in stocks, bonds or mutual funds you have a full understanding that you could lose some or all of your money in any one investment. There is really risk in investment, and there’s no guarantee.

It is often said that the greater the risk, the greater the potential reward in investing, but taking on unnecessary risk is often avoidable. An investor’s best alternative to protect themselves against risk is by spreading their money among various investments, hoping that if one investment loses money, the other investments will make up for those losses. This strategy, called “diversification” which can be neatly summed up as, “Don’t put all your eggs in one basket.”

Once you’ve saved money for investing, consider carefully all your options and think about what diversification strategy makes sense for you.

Diversification can’t guarantee that your investments won’t suffer if the market drops. But it can improve the chances that you won’t lose money, or that if you do, it won’t be as much as if you weren’t diversified.

Just don’t put “all your eggs” in a bank because imagine if you have 2 million Philipine Pesos (Php) saved in a bank then all of a sudden, it gets bankrupt. Take note that the maximum loss that could be covered by banks in the Philippines is 5oo thousand pesos…

Or suppose that a depositor has millions of money in a bank during times of economic and financial uncertainties. Imagine if the bank discovered that the depositor died- accounts will automatically be frozen, no cash withdrawal could be done and to top it all, the money is subject for estate tax. 

I must say that it would be the main difference between investing in a bank or in a financial services company like where I work (he he): one advantage about investing in a financial services firm is that the client has the possibility to choose that all proceeds may be free from whithholding and estate taxes. Unlike in banks, where the gains an investor acquires are subject to those two taxes, aside from the “normal” ones the government would require.

This is not to discredit banks, but just to put things in perspective with your readers.

C: Let’s say I finally dare to invest in mutual funds. Should I also diversify according to my objectives? For instance, I want to save for a down payment to buy a house? Or I’m thinking of saving for my son’s college education? That’s already 2 objectives.

Won’t I end up paying more than I should, or in other words: won’t I end up earning less than I could? 

A: The answer depends on when you will need the money, your goals, and if you will be able to sleep at night if you purchase a risky investment where you could lose your principal.

For instance, if you are saving for retirement, and you have 35 years before you retire, you may want to consider riskier investment products, knowing that if you stick to only the “savings” products or to less risky investment products, your money will grow too slowly—or, given inflation and taxes, you may lose the purchasing power of your money. A frequent mistake people make is putting money they will not need for a very long time in investments that pay a low amount of interest.

On the other hand, if you are saving for a short-term goal, five years or less, you don’t want to choose risky investments, because when it’s time to sell, you may have to take a loss. Since investments often move up and down in value rapidly, you want to make sure that you can wait and sell at the best possible time.

Time is money.

As we would say in my company, “The best time to invest was yesterday, the next best time is today. And the worst time is tomorrow. Because sometimes tomorrow becomes never.”

-The End-

Mr. Martil is a financial adviser in a leading international financial services company. He is a loving husband and father to his family. Likewise, you were able to witness what a kind and reliable friend he is- generous enough to spend time with Colorfulifesite Blog and answer some of the very basic questions about investment and mutual funds.

Glossary:

*UITF- Unit Investment Trust Funds (UITFs) are ready-made investments that allow the pooling of funds from different investors with similar investment objectives. These funds are managed by professional fund managers and are invested in various financial instruments such as money market securities, bonds and equities, which are normally available to bigger investors only. (Source: http://www.bdo.com.ph)

**VUL-Variable universal life insurance (VUL) is a form of cash-value life insurancethat offers both a death benefit and an investment feature. (Source: http://www.investopedia.com)

It is a life insurance policy that combines the features of variable life insurance and universal life insurance. Where the former constitutes a fixed premium insurance policy that provides a return based on the income performance of an investment portfolio. While the latter combines the benefits of an adjustable premium, adjustable coverage term life insurance, and a savings account. (Source: http://www.businessdictionary.com)

***Life insurance- Insurance cover that serves two major purposes: (1) to substitute for the insured’s income if he or she dies, and (2) to qualify the insured for favorable tax treatment. The policy holders buy insurance cover from an insurance company, and pay specific periodic amounts (premiums) for the term (duration or life) of the policy. If the insured dies before the this term is completed, a guaranteed sum (the face amount of the policy) is paid to one or more named beneficiaries. If the insured survives the term then, depending on the type of the policy, he or she may receive the full or a part of the face amount of the policy. (Souce: http://www.businessdictionary.com)

****Rule of 72- The “rule of 72” is a simplified way to calculate how long an investment takes to double, given a fixed annual rate of interest. You divide 72 by the annual rate of return you receive on your investments, and that number is a rough estimate of years it takes to double your money. For example, $1 invested at 10% takes 7.2 years (72 divided by 10) to turn into $2. (Source: http://www.usatoday.com)

*****Face amount- Sum of money for which an insurance cover is obtained, usually shown on the top sheet (face) of the policy. In life insurance, face amount is the sum paid on the policy’s maturity date, on the death of the insured, or (if the policy terms permit) on his or her total disability. (Source: http://www.businessdictionary.com)

******Riders- Additional clause, document, or slip of paper that adds, alters, amends, or removes the provisions of an associated or attached agreement or contract (such as an insurance policy) or a negotiable instrument. (Source: ww.businessdictionary.com)

Sources:

  1. Investopedia
  2. Business Dictionary
  3. “How Do You Make Money from UITF Investing?”, by Fitz, Ready to Be Rich Blogsite, available at: https://fitzvillafuerte.com/how-do-you-make-money-from-uitf-investing.html
  4. Unit Investment Trust Funds, available at BDO website: https://www.bdo.com.ph/personal/trust-and-investments/unit-investment-trust-funds
  5. “Doubling Your Money: The Rule of 72”, by Wes Moss, Advice IQ, USA Today, available at: http://www.usatoday.com/story/money/personalfinance/2015/04/25/adviceiq-doubling-your-money/26339307/
  6. “The #1 Wealth Building Strategy You Don’t Know About”, by Paradigmlife Blogsite, available at: http://paradigmlife.net/blog/the-1-wealth-building-strategy/
  7. “Are You Building a Strong Foundation for Creating Wealth?”, available at: http://www.firstpost.com/investing/are-you-building-a-strong-foundation-for-creating-wealth-2682980.html

Garage Sale Diaries 2: Online Version

Author’s note: I used the webpage http://www.leboncoin.fr to sell my second-hand items.

Image courtesy of: http://www.arkhen.net

The online version of my first garage sale is shaping up to become more like an opportunity to reflect on human behaviour- mine, primarily.

This mini-project has enabled me to reflect about myself.

The first on the list were my intentions when I decided to take this on. Of course, the main objective was to earn a little money while getting rid of things that are already of no use to us- most especially baby’s equipment. I’d be lying if I said I didn’t need the money. I’m not desperate, but if I can earn a little to cover some costs of moving from one country to another then I’ll go for it!

I made it a point to price the items a bit higher than if I sold them to friends. I thought it would also leave room for negotiation in case I like the buyer. Is this my little way to have fun? by taking this small chance to manifest the control freak in me and having a valid reason for it? I had a good laugh meditating at this first of many thoughts.

The second realization I had was that through this type of exchange, one gets a peek at the human psychology in a very candid way. It might be due to the anonimity, mixed with the  honesty system. I invite you to read on and see what I mean:

The first item I ever sold was a hair dryer. It was a little more than a  year old and I can tell you it has only been used exactly 5 times. I got so many inquiries about it and after receiving each text message or each email, I would refer to the potential buyer as a “she”. What a surprise to discover that most of them were a “he”. I was very surprised! more so because the guy who finally bought the hair dryer had really short hair… (Oh, and the cheeky monkey tried to make me lower the price even more. Tough luck!)

When I told my husband about this strange phenomenon, he explained it wisely enough by reasoning out it’s a cheap Christmas gift. And if it works perfectly, then it would clearly suit the girl’s need.

I tried to fight the stuck-up girl in me from judging the situation. I’m not confirming that the buyer would truly give the used hair dryer as a gift; but as I tried to picture myself receiving a second-hand or pre-loved present, I didn’t think I’d like it.

Further along my daydreaming, I imagined myself thinking that the giver is stingy, that he or she doesn’t appreciate me much for giving me a cheap pre-used hair dryer and that I would definitely think twice the next time I get a gift for that person.

Immediately, I felt (I still do) so bad for being so superficial and not having any excuse for it. Sorry but there’s no childhood trauma, nor a family tradition that could explain why I’m this shallow. The only thing I could say for my part is that I would not give a second-hand gift to anyone, unless the recipient himself tells me he doesn’t mind, or that’s what he wants.

For a while, I tried to reflect upon this from a different angle- the gift’s utility. If someone gave me a pre-loved item as a gift, will I use it? or will it just be stuck in a cabinet gathering dust? In the case of the hair dryer, I had to admit to myself that it is a useful gift. Winter is settling in fast in the Northern Hemisphere- many people still want to wash their hair and not freeze afterwards, including me!

Lesson learned: price tags say little about what a gift represents. The real question for the buyer/gift giver is- was it a bargain or a waste of money?

The next two items I sold together were Leo’s first bathtub (the foldable type) and the seat. This time around, I made sure people would make a good deal out of them. I figured that if future parents are scouting for second hand baby equipment online, it’s because they’re making every cent count.

My husband and I bought a couple of things from Leboncoin for our son, but mostly we got brand new items. It made a dent on our wallets but we thought, “This is our first baby!”. And hard as it is to explain, it’s exactly because of this that I understand why some parents would prefer to get pre-loved items and save their money for other things.

Gigoteuse/Turbulette d'hiver 3 mois- 9 mois

Image courtesy of: http://www.leboncoin.fr

Personally, I would not buy second hand baby equipment from strangers. I’m annoyingly scrupulous about these kinds of things. Funnily enough, I believe that is precisely why I made sure the equipment were in good condition.

Lesson learned: Empathy arises in the most mysterious of ways.

The third item I was able to sell was a black dress. I priced it very cheaply because truth be told, it was bought by one of my very good friends L! Just like what happened with J, I didn’t hesitate to let her be the new proud owner of that robe de fête because I know how much she would care for it. Besides, with my new-mom figure, I can’t deny that it would look so much better on her!

It must be said though, that my experience in online selling is as varied as the amount of people who have inquired about the items I’ve put on display. So without boring you with the details of our interaction, I shall simply list below the interesting observations I gathered from this social experiment cyber vide grenier.

1. People may adopt irritating attitudes when contacting the seller: asking for a discount, requesting for the item to be sent by mail or worse, demanding the seller to go to their place to deliver the purchase. I tried to never lose the opportunity to exercise patience and politeness towards these people. But I also made it a point to be firm about my terms and conditions.

Lesson learned: somehow, it’s so much easier to exercise assertiveness when you can’t put a face on the person receiving your message.

2. Others don’t really know what they want.I learned how to detect them and didn’t lose time entertaining them when they start telling me about their lives and why they think they should buy the item or not. But if they make inquiries about the item (price, quality, brand and other characteristics), then as a seller I have the obligation to reply truthfully. Leboncoin works based on an honesty system and so far it has worked well for me.

Lesson learned: unless you’re really in need of money, entertaining undecided online buyers for pre-loved items is a waste of time. Turn your efforts into something more useful like better describing the item on display.

3. Before uploading pictures and details about the items to be sold, I should have tried to put myself into the shoes of potential buyers. This would have allowed me to think about the questions I would ask in case I get interested in anything: “How do I know this is an authentic (brandname) polo shirt?”, “What other payment options do you offer aside from cash?”, “Is it possible to meet up with you halfway between my place and yours for me to pick the item up?”, “What guarantee do I have?”, “What happens if this doesn’t work?”, et cetera, et cetera…

Lesson learned: at the end of the day haste only brings half-baked results and more work than expected.

Humidificateur Ultrasonique

Image courtesy of: http://www.leboncoin.fr

4. I admit that even before I sold anything, I was already prepared to keep the stocked items back. Somebody else will always offer a better price, a better quality or even a more convenient way of delivering the item to the buyer. So it should not come as a surprise if there are items left unsold.

To solve my dilemma about space and storage, I made a mental list of which friend will receive such and such item if I failed to sell them.

Lesson learned: even the best laid plans do not lead to the most ideal results. 

-The End-

Endnote: Please excuse the shameless plugging!

Garage Sale Diaries 1: In-Person Version

Ver imagen original

Image courtesy of: http://northernconnectionmag.com/

Rewind back to 24 years ago in Binakayan, Kawit, Cavite (Philippines):

I tried having a garage sale when I was 8 years old. I was suddenly obsessed with having a lot of cash, so I collected all my nice things and took a long, good look at them: a neon-green plastic jewelry box with its lock and key, a super-hero themed coin bank, a black and pink striped jumping rope (a boy from my class bought it for me so I could give it as a birthday gift to another girl, but I kept it anyway; he didn’t seem to mind when I told him) and my 60+ bead-shaped plastic “kisses” (a.k.a. aroma beads).

Ver imagen original

Image courtesy of: http://scentdeals.com/

I thought they would be irresistible to all my friends and in my mind, I was already projecting sales of up to 50 pesos!

Sad to say, the enterprise was not successful because when my first customers arrived asking how much things cost, I realized I couldn’t put any price on anything on display! The thought of my jumping rope being used by Beng-beng or my coin bank being filled with Dan-dan’s filthy coins (I meant that literally, that boy was not very hygienic) didn’t sit well with me. Quickly I changed my mind and gave up my dream of having 50 pesos for the day. But that was okay, I forgot all about it as soon as we ran out to play. I think we ended up climbing a guava tree that afternoon…

Fast forward to when I’m 32 years old, in Paris 12ème (France)

*Note: Garage sale is called vide grenier in French. This literally means “empty attic”.

As I carefully picked clothing too bulky to be brought back to Madrid, I remembered the exact moment I purchased each of them: the very first black coat I bought as “serious” office outfit, the white blazer I got for a wedding I couldn’t attend to because I got sick, the pencil cut skirt that was wearable during all the 4 seasons, the little black dress I purchased on sale for a New Year’s Eve party and the maroon dress I got “just because”.

Hard as it was for me to part with them, I saved myself from getting too emotional by offering them to my friends first. I didn’t mind selling them at a very low price- what mattered was that they were going to the hands of someone who would appreciate and take care of them as much as I did.

My husband criticized me at first because he considered the prices as a big joke. I said of course I could’ve sold the items at 5 times more expensive but my conscience wouldn’t allow it. Each item must be at least 5 years old, was purchased either on sale or in an outlet store and was very much used back then. I just took care of my clothes really well. (My secret? I brought them to the dry cleaners instead of washing and ironing them myself.)

Anyway, I sent a text message to my friend J (we’re both petite women, so I thought maybe she’d like to check the stuff out). She was thrilled and agreed to come to our house.

She came, brought Leo a gift for his 1st birthday and got me a box of chocolates. This garage sale started out pretty well, wouldn’t you agree?

So, after the customary “how are yous?”, “fine and yous?” , etc… she proceeded to try on the clothes. She loved almost all of them because she purchased 6 out of the 10 items I was selling. J was also very shocked at how low I priced each clothing. But I explained that they were really used clothes. They just don’t look it because I really paid attention not to wear them out.

She was so happy with her purchases, she asked me to go with her the next time she went clothes shopping! She even said that she has never dressed so elegantly for work. I was truly, very glad. That honestly made parting with my clothes much easier, seeing that my friend was so happy. She looked beautiful, of course. But what made her more beautiful was the look in her eyes when she saw herself in the mirror wearing my pre-loved stuff. It’s as if she couldn’t believe what she was seeing! And that, dear reader was the cherry on top.

Ver imagen original

Image courtesy of: http://rcmuret.footeo.com/

I wholeheartedly bade farewell to my precious clothes and sincerely wished my friend the same confidence and poise that they used to give me.

Why am I disclosing all this?

First of all because as obvious as it might sound, garage sales are truly a great way to rid oneself of things we don’t want or need anymore. Even if the sole purpose is just to de-clutter limited space (we can’t all have Kylie Jenner’s mansion now, can we?), this is a great way to do it.

Second of all, it is worth mentioning that people are big on acquiring second-hand items in France. When not buying, people wouldn’t hesitate to get usable furniture or decoration left on the street. You see, some really generous (or desperate) folks would leave their possessions on the pavement for the rest of us to freely pick up: baby strollers, cabinets, bedside tables, books, kitchen appliances… once or twice I even saw toilet bowls.

However, we’re talking about things that I really did love. So the “love” in “pre-loved” isn’t just a term. It really described how I felt about those clothes, explaining why I made sure they went to very good hands.

Truth be told, I wouldn’t have gone back to Madrid with any of them. Had my friend not purchased anything, I would’ve sold them online at a higher price. But I’m currently selling other things that way and the dynamics are totally different (more of this later). As I’ve said earlier, it seems I made the right choice because I disposed of them immediately and my friend was able to shop without the hassle of actually doing it the traditional way.

My husband told me that I might as well have handed the clothes for free, if I were going to sell them so cheaply. What he doesn’t understand is that there’s a reason why a “symbolic price” is called as such. The psychology of the person who acquires something differs when it is freely offered to them, compared to when they have to give something in exchange.

Another reason I’m sharing this is because garage sales are another fun way to bond- aside from sleep overs, dinners, movie nights, shopping trips or drinking sprees.

Several years ago, a friend also held a garage sale in her house. Her aim was to make more space in her closet, so she invited family members and some friends to take a look at her stuff (for some reason, I ended up not paying for anything I got). And it was there where I got the idea to hold a garage sale for friends.

I believe this is a good idea especially if you’re trying to sell anything with sentimental value because you wouldn’t want just anybody to go to your house and try or test them, would you? At least that was how I felt about the whole ordeal.

When it comes to your friends being your “clients”, you can easily slip in a few snacks, some gossip tidbits from your common circle, talk comfortably about anything that comes up and it’s even nice when they stay for a while longer even after the purchase.

Additionally, I would like to let people know how much joy the whole process gave me: from the day I had to text my friend, to the moment she came to our house (bearing gifts, too!) and finally upon seeing her so proud of herself for having acquired such nice items at a very low cost… I know I made my friend happy and at the same time, she knows she’s helping me a lot with our packing problems. It’s a win-win situation.

Lastly, when I compare this experience to my first intent of garage sale a quarter of a century ago I realize that the reason why it didn’t happen was because I really couldn’t make do without those bibelots. They may be junk to anybody else, but for me, the jewelry box was magical, the coin bank was cool, the skipping rope gave me super powers and the aroma beads multiplied themselves when flattened with a pencil… In short, they were irreplaceable objects back then.

This time around, I had to be practical and admit that clothes are expendable. To give you a clearer idea of my point: I would never sell any of the books or comic books I had here in Paris, may they be bought, salvaged from a park bench or originally brought from Madrid 3 years ago.

Tips

Before ending this entry, I would also like to share some tips I got from this personal experience namely regarding garage sale and pricing.

But before that, may I first suggest that you be very clear on why you’re having a garage sale. Is it to de-clutter your wardrobe? Perhaps you want to make space for new stuff? Or maybe just like me, you’re moving and doesn’t want to bother with packing bulky stuff like winter clothes. It is also possible that you simply wish to raise funds for something new to purchase!

This is a very important step because the reason you’re doing it will determine the rest of the things you’ll have to do to make the garage sale: the choice of items to sell, the pricing, the choice of how to hold the event, etc…

Ver imagen original

Image courtesy of: https://enlightenedcustomer.wordpress.com

In my case, I wanted to get rid of some of our things and at the same time earn a bit of money to pay for the boxes we have to send to our new house. But I also wanted the future customers to find real value on what they’ll buy from me. I want to be part of that group who does what’s in their hands to curb excessive commercialism. I would like to contribute to a more sustainable, less aggressive model of consuming in my own little way…

Having said that, below are some of the tips I promised earlier:

On garage sales

  • Gather all the objects you want to get rid of.
  • Separate them in groups according to: very good condition, good condition, slightly impaired and very impaired.
  • Donate the very impaired ones. People buying second hand items are most probably not first-timers and they would be pissed off if they discover they’d been outsmarted. Admittedly, many people sell very impaired objects. My husband once got a vacuum cleaner that never worked. But I would suggest you save yourself the trouble of potentially facing a non-content buyer.
  • Itemize the objects and write a brief description about them.

On pricing items in your garage sale

  • Search for the items you’re selling and find out how much they cost when brand new. From there, price your products according to their condition, how many times they have been used and how much do you think they are in demand.
  • Ask yourself whether you’d buy the same second-hand objects at the prices you just set. Be very honest with your answer. Also, ask people around you for their opinion.

After you’re all set, I believe you are now ready to announce your garage sale via SMS, group chatting devices, social media and of course- through word of mouth!

Tune in next week for “Garage Sale Diaries 2: Online Version”.

Chomsky’s quote on Neoliberal Democracy- a reflection

“Neoliberal democracy. Instead of citizens, it produces consumers. Instead of communities, it produces shopping malls. The net result is an atomized society of disengaged individuals who feel demoralized and socially powerless.

In sum, neoliberalism is the immediate and foremost enemy of genuine participatory democracy, not just in the United States but across the planet, and will be for the foreseeable future.”

-Noam Chomsky

Ver imagen original

Image courtesy of: http://institutomz.com

I finally found time and space to write about this quotation by Professor Noam Chomsky. I was supposed to have done this sooner but three things happened and they’ve prevented me from complying with the scheduled pipeline of posts:

  1. I was waiting (in vain) for any type of reaction from any type of person about this quotation. I wanted to know whether they could relate to it, whether reading it made them stop to think about their lifestyle, or whether they thought I was simply going nuts… As you might’ve guessed, I did not get any response. Not one “Like”, not one “Huh”, niente. So I did what I usually do when in a situation of no-data: I started people watching (and sometimes, unintentionally eavesdropping). More specifically, I started to closely observe people when they exit different stores (bakery, grocery, shopping mall, cafés, restaurants, bookshops, cinema, theater, concert hall, gym, cooking lessons, etc…). Luckily, I live in a quartier with varied shops and services so it was easier. What’s more, Paris has been generous with the “non-rainy” weather so it was a perfect time for me to walk my son and do my semi-research.
  2. Chomsky is not easy to read. Chomsky is not easy to read. Chomsky is NOT easy to read.
  3. The life of an 11-month old baby happened every single day.

Below is a rough description of what I found out; rough because information was gathered only through observation, and rough as well due to the short time I dedicated doing such people-watching activity. I do not claim to write universal truths. Rather, I claim to document some conclusions I gathered from the dispersed and even random observations that sometimes presented a pattern.

Thank you for your understanding, dear reader.

I have decided to slice Chomsky’s quotation in different parts and present my corresponding reflections about them. You may proceed to “Conclusions” should the whole text be too tedious for you. I do hope to have tickled your brain.

“Neoliberal Democracy”

Neoliberalism (noun): a policy model of social studies and economics that transfers control of economic factors from the public sector to the private sector. It suggests that governments must limit subsidies, make reforms to tax law in order to expand the tax base, reduce deficit spending, limit protectionism and open markets up to trade. It also seeks to abolish fixed exchange rates, back deregulation, permit private property, and privatize businesses run by the state (Investopedia).

Democracy (noun): Form of government where a constitution guarantees basic personal and political rights, fair and free elections and independent courts of law.

In other words, in this environment it would seem that the chosen leaders of states limit their economic participation to being of service to the market which eventually results to the benefit of the capital (as opposed to their sworn oath to serve the people).

Consider how fast governments react when faced with a financial crisis, as opposed to situations when they have to manage a humanitarian disaster… For instance, how long did it take “Brussels” to rescue national banks during the debt crisis, and how long did it take the same institution to disburse aid in countries which received and hosted refugees?

Ver imagen original

Image courtesy of: http://themarketsoul.com

Thus, these first two words- neoliberal democracy- seem to be referring to democracy designed to serve the market, and ultimately the capital. It is where citizens choose (or denounce) their leaders, who in turn pledge to serve them (or are ousted from their post) but whose allegiance is highly questionable due to the interests they fiercely protect once they hold office.

“Instead of citizens, it produces consumers. Instead of communities, it produces shopping malls”

The heart of Chomsky’s quotation is based on the wide-spreading habit of consumerism: there comes a point where consumers lose their humanity trying to keep up with certain standards of living promoted by reality shows, celebrities and glossy magazines, to name a few influencers. Communities are slowly being dispersed as individuals (even when they are in the company of friends or family) scout shopping malls, online stores or traditional shops to acquire and accumulate… only to realize that what they bought only a week ago is of “no use”, “fashionable”, “à la mode“, “cool” anymore, making them want to acquire and accumulate some more. Likewise, think about how in most cases the items people buy not only go quickly out of fashion, but they also require OTHER products for their maintenance and protection. The same goes for the wide range of services offered for such ends.

Apparently, this neoliberal-flavored democracy makes sure that private consumption is highly encouraged; as it is proving to be a very effective tool to energize (or recharge!) markets and satisfy capital (ists). (Financialization is of course THE tool, but that subject belongs to a separate post.)

Notice how progress is usually equated to abundance- simplified by mechanisms such as credit cards and periodical payments that encourage fast-paced and immediate consumerism practically anywhere in the globe. An important part of the immense middle-classes subscribe to this behaviour.

Ver imagen original

Image courtesy of: http://www.capsweb.org

Try to honestly look at the society you live in and evaluate whether individuals are convinced of this mentality. It’s easy to see how, when elevated at a national level, this psychology could lead to the conclusion that accumulation of material objects is the most important indicator of advancement in the society: the more goods and services one can get hold of, more successful is the person!

Therefore, as it is only natural for people to aim for progress and betterment of their lives (and of their households), they will catch up on this trend and enter the vicious cycle of acquisition, accumulation, isolation, desperation… But this is getting ahead of the topic.

“The net result is an atomized society of disengaged individuals who feel demoralized and socially powerless”

When giving in the urge to consume (read: to buy), people usually feel an immediate burst of happiness. Suddenly, the touch of the latest mobile phone, the feel of a new shirt or the shiny glare of a jewelry excites the heart. It gives the similar euphoric sensation of having reached a mountain top, or having passed an exam- SUCCESS. Yet, unlike the more lasting satisfaction of overcoming a tough challenge, the contentment one receives from buying lasts only a very little while. After the feeling is gone, people are once again defeated by the longing to buy some more (after all, there are not many people who would climb the same mountain peak twice in one month or who would request to do the same test just for the thrill of it).

This cycle would go on and without noticing, the buyers become trapped in their own bubble of possessions and accumulation that they find it hard to see outside of it. And so it goes: branching out but never seeming to stop, forming layers of veil around the consumers’ eyes, blinding them further. This inevitably results in isolation and eventually, in desperation.

Ver imagen original

Image courtesy of: https://daily-dose-of-art.com

An exception could be made for those who consume culture (meaning: those who buy AND make use of books, magazines, board games). The same could be observed for people who acquire services related to entertainment, health and well-being: they seem to at least be more in contact with society (social media included). Without exactly entering in their psyche to draw conclusions on how they feel, people who consume culture at least do not seem too disengaged from society. Rationally speaking: they would be aware of current political, social and economic happenings around, about and beyond. They are able to form opinions, share them and perhaps learn (if they are open-minded enough) from others who have opposing ideas and experiences. This is a participatory activity. This is engagement. This is empowering.

With regards to demoralization, it’s not easy to directly blame it to an individual’s lack of social engagement. For it cannot be denied that there exists a risk of demoralization both in being socially detached as well as being too attached to a cause.

As for powerlessness: further reading on Chomsky is necessary to know what he means with being “powerful” or “powerless”. Because: who among the normal, everyday Joes, Janes, Josés, Abduls, Rajahs, Pierres, Célines, Paolos, Ciaras, Zhangs, Tangs, manongs and manangs truly feel powerful in relation to their societal ranking?

“In sum, neoliberalism is the immediate and foremost enemy of genuine participatory democracy…”

Ver imagen original

Image courtesy of: http://bcrw.barnard.edu

It should not be a surprise for the professor/activist to conclude that neoliberalism merely gives an illusion of freedom. Indeed it facilitates access to goods, services and even to opportunities! but in reality, it traps citizens into a cycle of constant buying and accumulating.

To quote a part of another post from this blog:

Georg Simmel used fashion as a fantastic example to explain my point: “The elite initiates a fashion and, when the mass imitates it in an effort to obliterate the external distinctions of class, abandons it for a newer mode- a process that quickens with the increase of wealth.”

Notice how the middle-class have lately become quite busy purchasing the now-accessible goods and services (most of the times with the now more-accessible credit) which make them feel like they’ve reached a higher echelon in society- cars, properties, branded clothing, lavish celebrations, vacations overseas, and so on… All the while consuming, they don’t seem to notice how the economic gap is actually widening, not slowly diminishing. Something inside me says that this phenomenon has been successful in somehow placating conflicts that could possibly stem from the common people.

Why not take the system “by the horns” and turn it to favor the majority? People can start consuming more culture, health and/or well-being to improve their personal growth and at the same time stimulate participation in the immediate and more global community.

As long as democracy is the scenery, the people still hold a slight (if not marginal; if not illusionary?) “power” over deciding the fate of the societies they thrive in. As long as freedom of choice, speech and expression are not yet punishable by law, people still have the chance to play this game and win something from it.

“…not just in the United States but across the planet, and will be for the foreseeable future”

For a long time now, the United States has always been considered as a model for success, crediting a democractic system that boosts opportunities. And if democracy has been painted as the ideal situation to flourish, then it is only normal for the rest of the world to look up to its greatest champion (?). It is only befitting if other societies applied what the Americans are doing to enjoy that kind of freedom (with opportunities, of course).

Ver imagen original

Image courtesy of: http://www.wakingtimes.com

Therefore, it should not be a shock if people are all around are being converted into hasty, impulse purchasers and that communities have been replaced by shopping malls, cafés, Apple stores, internet fora discussing about Pokemon Go tips, and so forth. Observe how ads try to convince buyers that patronizing such and such product is liberating (think of a perfume brand), or it makes one a responsible parent (think of a tire brand), encouraging socializing (think of dating websites), empowering (think of an energy drink), etc… It does seem that purchasing is a very important manner with which to enjoy the freedom a democratic system offers.

Only lately (and perhaps this is because of the ease with which information is accessed- thanks to technology!) Scandinavian countries are redefining what an “ideal situation” is, to include wealth redistribution when referring to progress. This results in a society with the habit of making decisions for the common good. For example, the citizens willingly pay higher taxes (which means less disposable money for consumption) in exchange for benefits that their family and others could enjoy. Of course, the Nordic Model is not without challenges and controversy. Still, it is worth mentioning and hopefully also of emulating.

Chomsky might have had a vision when he pronounced the last part of his statement. Evidence is just around the corner. Thankfully, nothing is permanent and information keeps flowing, just like power politics. So even if it will take time to materialize, this humble blogger is defying the professor’s prognosis by predicting that there will be societies to challenge the current world order and new generations will resist conforming to the numbing comforts of neoliberalism. The phenomenon will not be totally global, but resistance will prevail and it will traverse frontiers and eras.

Conclusions

Within a neoliberal democratic environment, citizens supposedly feel powerful as they “hold” the keys of their future. They vote for their leaders, express their discontent and can even denounce the same leaders they once trusted. However, the said leaders propel the citizens to slowly but surely succumb to the comforts offered by consumption, as they limit their economic participation to guaranteeing smooth markets and satisfied capital (ists). Eventually, the need to keep filling the void in people’s lives through purchasing plus the requirement to maintain, repair, protect and care for their acquired possessions begin to bait them in a vicious cylce that engages their time, and their interests until they lose such time and interest for others- for the society. In this case, their power to shape the future of their societies become limited to protecting their own interests without regards to how their neighbors are faring. They become isolated in their constant need to possess and to amass.

However, consumerism may take different forms; there exist other types of goods and services to buy and enjoy. By supporting products that enrich ones’ perspectives and encourage ones’ interest for diverse cultures, ideas and experiences, the citizens who were once trapped in their own “comfortable” world could gain exposure. They could have the chance to share, live and win something from this game designed to benefit only a few.

If this trend is to be supported by the new breed, if it continues and is spread throughout borders and generations, then genuine participatory democracy can be enjoyed by more and within a longer period of time.

Ver imagen original

Image courtesy of: http://tecnologia-educativa-alma.blogspot.fr

 Sources:

  1. “Market Democracy in a Neoliberal Order: Doctrines and Reality” by Noam Chomsky, available at: https://chomsky.info/199711__/
  2. “How I see Economic Inequality, Part 1”, by Karessa Ramos, available at: https://colorfulifesite.wordpress.com/2016/04/30/how-i-see-economic-inequality-1/
  3. Investopedia
  4. Author’s notes