Adulting and Money Management 2.1: The Importance of Research

Author’s note: Please excuse last week’s absence of post. I was not able to better organize my schedule between researching about this article, managing side projects and settling in to our new home. Thank you for understanding. I do hope that the practicality of this post outweighs the lack of publishing several days ago.

This post complements the previous one (Adulting and Money Management 2: “Hooray, I have money! now what?”) that encourages channeling one’s savings into investment.

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Introduction: “Adulting” and Research

The term “adulting” was coined to describe a group of people transitioning from youths to adults, associating the latter with a sense of responsibility, commitment, maturity and trustworthiness.

The Urban Dictionary online defines adulting (v) as:

“To do grown up things and hold responsibilities such as, a 9-5 job, a mortgage/rent, a car payment, or anything else that makes one think of grown ups.”

Research (n) has several analogous definitions, but the one I like most is from Dictionary.com:

“diligent and systematic inquiry or investigation into a subject in order to discover or revise facts, theories, applications, etc.”

I identified adulting with research because being responsible usually entails being aware the effect of certain factors, or what elements would be affected once a decision is made. It requires to be informed of the risks, costs and benefits of each resolution or judgement. As you might have guessed, the best way to achieve this is to gather as much information as possible; and if that can be done in a systematic and efficient manner, all the better.

I never really gave much thought about researching until I bumped my thick head to wall after wall of reality. After the 256th bump, I had to admit that INFORMATION IS VITAL (some say it’s power, others say it’s equivalent to money…); but to be more precise, ACCESSING THE RIGHT INFORMATION MARKS THE DIFFERENCE. Unfortunately, there is no short cut to knowing what the right information exactly is. Even if helpful peers point it out, what’s “right” for them might not be right for you. So really, the only way to do this correctly is to start making inquiries yourself.

Nobody ever told me about this- not even my teachers in college. You’d think that people in charge of molding future economically-oriented minds would consider relaying this message…

(Later on when I reviewed some of my notes, I realized how this message was indeed passed on in the form of riddles.)

Research related to investing

Anybody who wishes to get the most out of what he has to offer will not hesitate to gather the necessary data to choose the best option. They  will not stop at believing hearsay, although they will certainly consider that type of information.

Still, there are others who are too trusting, too optimistic, or simply too lazy. Just like me, they won’t be encouraged to be more diligent in researching until they’ve paid the price… because there are several steep prices for overlooking the process of research, and more so when it comes to (first-time) investing. In my case, these are:

  1. Money-wise: (the price to pay will be) the very amount of capital invested
  2. Emotionally: pride that got too bruised, discouraging any discussion about this experience with people who might actually help
  3. Psychologically: being  too traumatized to “trust” any financially-profitable opportunity for quite some time
  4. Opportunity cost-wise: having less less money, lower spirits and inferior resolve to invest once again. This could likely make one miss the chance to make money grow

What to research? How to research?

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Performing an investigative task could be exhausting, especially when not used to it. Although I dare say that having one’s future at stake is surely an excellent incentive to do so.

From my point of view, I see two main aspects of research: the theoretical side (or the understanding) and the empirical side (the practical, “realistic” side). They require a lot of time and effort to be taken on, so you could be tempted to just focus your energy on one of them. But the truth is, both are too important for any of them to be ignored.

Suppose you’ve already decided how much you want to set aside to make your money grow; also suppose that you’re already sure of which type of investment you want to make; let’s also say that you’re currently convinced by a financial manager about the product/s he offers and that you’re very happy with what you’ve heard.

That’s fantastic because it means you won’t have to search for much more. Be that as it may, IT IS NOT THE SAME as not having to research anymore.

Theoretical research

In our proposed scenario, the main question to ask would be: What is the general understanding regarding the investment vehicle of your choice?

Even if you’re already content and convinced about the product that was offered to you, still it’s a good habit to read and re-read the brochure or any related document.

(Depending on the country where they operate) Most financial management companies are obliged to distribute a written communication, stating the product’s fundamental information to potential investors. This is very important because usually this is where the fine print lies.

To make a long story short: you might be interested to find out about the profitability of your venture, the different kinds of fees and commissions you’d be subjected to, how much tax you’d have to pay once you withdraw your capital earnings, what kinds of risks your investment is exposed to, etc… that is to say: by how much would your money potentially grow? How much would necessarily be deducted to your money once you’ve invested it? Is there any way to prevent it, or at least lessen the deductions to your future earnings? 

The second set of questions I suggest to be asked will surely empower those who are afraid of investing what savings they have acquired. It refers to one’s legal rights and obligations: Is there something in your country’s Constitution that would back you up, should you get into trouble (in the case of scams or bankruptcy)? What are your rights (ie: to invest and make your money grow) and obligations (ie: to pay taxes) according to the law? As for the financial services company, what are their rights (ie: to profit from rendering a service) and obligations (ie: transparency, honesty)?

In anything that you do, KNOW YOUR RIGHTS. ALWAYS KNOW YOUR RIGHTS. Consult a lawyer if you have to.

Empirical research

The most effective way to conduct empirical research would be to actually invest the money in your vehicle of choice. Just like a scientist observing a laboratory rat, you could closely monitor your investment with the help of your adviser.

Well, too bad for us- we can’t all have the luxury of “gambling” with our life savings. So for this type of research, I would mainly ask: What has been the experience of other (usually, older) people in this field?

Even if you’re already content and convinced about the product that was offered to you, talking to those who have already invested in the same product or a similar one could help. Most financial managers will hesitate to recount the negative experiences of some of their clients. So consider this: if you ask different kinds of investors (young, old, experts, newbies), they could only be too willing to warn you about not repeating the same mistakes they made. They may not share the secrets of their trade, but you could surely get some useful tips.

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Another important question to ask would be: What are other alternatives available in the market?

This question will most probably be answered by your fellow investors. But it’s always better to do your very own research. Remember that you want the best value for your hard-earned money. It’s not being greedy, it’s being wise. You’re not trying to outsmart anyone, you’re trying to educate yourself so you won’t be fooled.

Try informing yourself of the one or two better alternatives mentioned by other investors. Visit a financial service company’s office and ask all the questions you might have.

Benefits of research

Having done your research does not in any way reduce the risk of losing part (or all!) of your investment. It wouldn’t help you evade taxes either; but the results of your research will allow you to make decisions with more and better information. As a matter of fact, in the case where your decision turned out to be unfavorable, your research would’ve already provided you with enough knowledge that would orient you towards the most fitting solution.

Some might be wary of spending time to do research, even if it just meant comparing the profitability of different investment tools. Others might even think that they would do better investing their money already, instead of spending time talking to fellow investors. As respectable as this stance is, it is not advisable. Especially not to first time investors.

Undoubtedly, as you acquire more knowledge and experience about investment, you would spend less time and energy doing the basic research. By then, you would be informing yourself of different factors concerning other opportunities. You would know better who to talk to about one option or another. The task itself will not disappear, it will just take on a different turn.

Conclusions

People in the phase of “adulting” are automatically more prudent of their resources. Especially when it comes to their hard-earned savings. After all, that is the very essence of adulting: taking on more responsibilities and being more consistent with the decisions that were made.

One way to make adulting go a bit smoother is by taking time to research before going after one option or the other.

Whenever there is money involved, there is higher incentive to gather the right information. This becomes more evident when, along with the chance to make money grow, there is also a risk to lose part or all of it.

In general, there are two important aspects of research: the theoretical and the empirical. Both are equally important because they complement each other. That is to say, one cannot only mainly rely on hearsay when making an investment decision. And articles that are written in books, journals or magazines do not always play out the way they are supposed to. So one’s best bet would be to do both.

For the theoretical aspect, it would be wise to consult the documentation available in any financial services company. It is also highly advisable to be aware of the legal obligations and rights of both the investor and the investment company before establishing a financial relationship.

As for the empirical aspect, potential investors (especially the first-timers) would do good to talk to other investors. The latter group may not share their secret formula for success but they could warn about common mistakes and how to look out for scams. Lastly, it wouldn’t hurt to know what are the different alternatives that could fit an investor’s profile (those that adapt well to his current situation and future needs).

Researching wouldn’t make the risks go away. It wouldn’t lower the fees and commissions to be paid. Additionally, it doesn’t only take time and effort: some would also say it will make them miss the chance to invest immediately, thus losing money in the process. This type of opinion is respectable, but in the long run it will always prove to be worthwhile to exercise patience and diligence. Most people realize this too late along the way.

-The End-

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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?

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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

Adulting and Money Management 1: “I’m poor, I can’t save money”

The contents of this article are derived from the article, “Ahorran los Pobres?” authored by MJ. (For more information about savings, investment and entrepreneurship, please check the website: Dineromio at http://dineromio.com/)

This is the first part of Colorfulifesite Blog’s series of articles about “Adulting and Money Management”

As I finished reading the original article, I immediately imagined a very practical conversation between Colorfulifesite Blog and Dineromio Blog- or at least between me and MJ. It went like this…

Colorfulifesite (C): I can’t save money because I’m poor.

Dineromio (D): Of course you can!

C: How? Do poor people save money?

D: Yes!

C: Wow! you’re really confident with your answer! What’s your basis for being so sure about this?

D: I had the chance to work as a volunteer in a training workshop involving financial education. It was aimed towards adults who find themselves under the risk of social exclusion. Basically, we’re talking about people who survive with government subsidies worth 400 Euros (Eur) monthly, in a city where the minimum salary is more than 650 Eur, BUT the median salary is 2,200 Eur and the most common amount earned is around 1,100 Eur per month, after taxes.

C: So, if we analyze the income of the group you worked with: the participants of your workshop were earning ONLY 69% of the minimum salary, 36% of the most frequently earned amount and barely 18% of the median salary. Interesting…

D: I know it’s not Baghdad but let’s put ourselves within the context, which would allow us to understand how it is to live with 400 Eur in a city where the standard of living is designed to cost 1,100 Eur.

Our objective is quite ambitious: we wanted the participants to identify opportunities to save money and to manage their squalid earnings to the best that they could.

C: What was the initial reaction of the group?

D: At first, the very mention of the word “savings” produced so much rejection: people squirmed in their seats and there were even some who either laughed ironically or who were annoyed. It seemed to them that the mere idea of making them want to save was insulting.

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The activity proposed the following dynamics: 1) sharing of ideas and advice from the workshop participants’ own experiences, 2) handing out tips on how to lessen expenses in transport, telephone bills, automatic teller machine commissions, etc and, 3) a practical exercise consisting in drawing up a weekly budget (which is the foundation of any change you might want to start in your life)

Except for a few number of cases (approximately 10% of the participants were in dire conditions and suffered from depression and anxiety), the rest of the group were able to detect small changes which would allow them to save “something” on a monthly basis. And such “small changes” could be anything ranging from purchasing generic-branded medicines to starting a small business.

C: This is INDEED encouraging!

D: I read an article by de Boza Chirino, José y José I. Zabaleta. In it, they pointed out that many people belonging at the “base of the pyramid” (that is, the income pyramid, where people who are at its base could be earning as low as 2 USD per day) build their savings IN KIND: a hen to maintain until the time comes for the family to buy medicines, a cow to take care of until school starts (when tuition fees have to be paid)…

What I’m trying to tell everybody is this:

EVERYBODY CAN SAVE. THE KEY IS TO HAVE SOMETHING THAT MOTIVATES US TO DO SO.

C: I actually remember my grandmother buying jewelries and then saying that it’s an investment, in the sense that she could sell them in case of an emergency.

D: I’m going to share with you a small list where I listed different alternatives to start build microsavings (the type of savings accumulated by the people at the base of the pyramid). These are the most frequently-used ones nowadays. I also included their advantages and disadvantages:

1. Informal savings made through family members, friends, “informal” money collector, hiding money under the mattress and savings in kind.

Normally, the person who wants to save requests a family member or a friend to safeguard his money so he won’t have any “temptation” in his own home. Sometimes, he also makes small investments like buying a hen or a goat, which he could later sell.

The main advantages are: the money’s immediate availability (although this is not always the case), as well as the fact that other people manage the risk of keeping money.

The main disadvantages are the high costs and risks this type of savings entails, such as loss, theft, or systemic risks that affect the whole community caused mostly by natural disasters.

Resultado de imagen de poor people saving money

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

2. Rotating Savings and Credit Associations (ROSCAS) are composed of a group of individuals that fill the role of an informal financial institution through repeated contributions and withdrawals to and from a common fund (Investopedia).

Joining this type of association gives high incentives to save, and the members are confident of its strict organization and administration.

The disadvantage is that it can be costly due to its strictness in its rules and regulations; members are also faced with the possibility of the group’s dissolution before having been able to receive the lump sum rightfully theirs. ROSCAS are also susceptible to losses, robbery and systemic risks.

3. Last and not the least, we  always count on banks or Microfinance Institutions where we could open an individual savings account. Banks’ services are highly demanded due to the security it offers, as well as the stability of the organization.

However, the monetary costs (in terms of fees and commissions) are high incentives to NOT save. Also, the geographical location of banks may discourage potential savers because of the need to travel just to be able to deposit a certain amount…

C: Thank you very much for sharing your experience. I’m pretty sure this imaginary conversation of ours has already done its job to inspire our reader to save money. Would you happen to have any tips to make saving less “painful” than how it sounds?

D: Yes, but that would occupy another whole post!

C: I’ll advise my dear reader to keep in tune, then…

Resultado de imagen de saving money is not painful

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

On Opportunities and Other Lessons from Wile E. Coyote

Opportunity (noun / op.por.tu.ni.ty / \ˌä-pər-ˈtü-nə-tē, -ˈtyü-\)

  • a favorable juncture of circumstances
  • a good chance for advancement or progress

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Image courtesy of: Wikipedia

A little flashback…

Wile E. Coyote- the most hard-headed, stubborn, and pathetic cartoon character that I knew of. I didn’t care much about him when I was in my pre-teen years. I was all about the Roadrunner who I considered the fastest, smartest and coolest looney toon (right after Bugs Bunny). 

Everything changed when I went to Spain. Oh, how the Spanish loved the Coyote! (Just as they love Tom more than Jerry, or the fact that they feel more sympathy for Elmer Fudd than for Daffy…). It took me a while to understand their perspective but it was only lately that I began to fully appreciate Coyote.

Exactly several weeks ago, I started to entertain different side projects and I reflected on how this character always saw the glass half-full. Only then did I really see him under a different light- the most determined, creative and hard-working animated creature I have ever seen.

Introduction

Finding a job is generally hard, or at least not easy. Ask anyone unemployed and most probably they’ll give you the same answer, “The company’s not hiring”, “The firm’s actually laying people off”, “I can’t renew my contract because the department has no budget”, et cetera… Added to that is the fact that more and more people are better educated, more highly trained and some of them are willing to settle becoming underpaid just to have a job.

All of these challenges multiply to 20 times more difficult in Paris, under normal circumstances. It should come as no surprise, considering it’s a big city. It houses many international companies who daily face 10,000 times as much qualified people fighting to work with them.

Given the economic crisis/slowdown (whichever makes you feel better), it becomes 100 times extra harder to even land on an interview with the recruiters!

Thus, the day it finally dawned to me that I’ll never get a job in Paris, I stopped all kinds of activities related to job hunting* such as: checking job sites for vacancies, tweaking my resumé, and writing alternative versions of my cover letter.

What I did instead was to meditate on my situation and watch some cartoons. After enjoying a several episodes of the Looney Toons, I started to think about Wile E. Coyote’s unrelenting attitude about catching the Roadrunner.

Following are the lessons I picked up.

Lesson number 1: Change your game plan.

Ironically, the first lesson is something the Coyote never applied in his own life. For years and years for as long as I can remember, he would always resort to dynamites, bombs, anvils or other heavy objects and booby traps to catch the Roadrunner. Not once did he ever think to change his strategy. (For instance, he could bribe corrupt traffic policemen to arrest the other for over-speeding and he can have the bird handed over to him in jail.)

In light of this mistrust towards change, we should not wonder why the famished canine never got roasted Roadrunner on his dinner table.

Back in the real world, I realized how all this time I had done nothing but follow the same routine: look for a job, apply for an interesting vacancy that suits my qualification, tweak my resumé, tweak my cover letter and wait for their response. I believe the only change I incorporated in the last two years is re-sending my application after 15 days of not hearing from the company. This is not so bad. In fact, this is the way people normally find livelihood. But in 730 days, all I got were 5 job interviews.

Immediately, I became aware that I actually have to do something more productive- something that would actually turn in better results. So instead of looking for jobs, I started to look for opportunities- to showcase the quality of my written work, to build contacts, to reconnect with friends and peers from the past, to learn about other fields similar to mine, to discover different fields that have nothing to do with my expertise, to see what others are doing and to be inspired with what pioneering people are developing around me.

Perhaps I could liken my opportunity-seeking efforts to that of sowing. One sows a seed, tends to it, nurtures it and does all that it takes to produce a bountiful harvest. In the same way, I have this blog where I could practice and improve my writing and researching skills. Likewise, my social media activity has granted me access to dynamic people who have very interesting stories to tell, and who have allowed me the privilege of interviewing them. Although, it must be said that none of these transpired in a day.

As it is, this leads us to the second lesson…

Lesson number 2: Do be patient.

Exercise patience in practice- not in speech, not in theory, not in your mind, not as a “what if”.

How many times have we seen the Coyote go after the Roadrunner again, and again, and again until we get tired and turn the TV off without being told to? And during those times when we would watch him go at it yet once again: how often would we see him assembling traps, studying blueprints, constructing weapons? Then after having prepared his equipment: how frequently would we catch him hiding behind a cactus, a boulder, fitting himself into the form of a telephone pole while waiting for his prey to pass by?

Just as the Coyote worked hard to ensure that his ACME materials would work and that the bird would sooner or later pass his way, so does the farmer. For he is certain that he will gain something from what was sown. He also knows that for him to be able to gain anything, he would need TIME to do its work.

Not all that I have sown bore the fruits I expected and there were instances when the seed even turned to be a bad one. Yet I had no way of knowing until it was time to know. I was in no position to rush anybody or anything. Waiting is as much part of any process as the more active tasks. The key is to learn how to wait.

Lesson number 2.1: Learn how to wait.

This is something I had to learn from my own experience because unfortunately, not all of my “targets” move as fast as the Roadrunner.

The best way I learned how to wait is to make sure there is nothing left pending on my to-do list. Why not take a look at yours?

After marking every item with a check, proceed to ask yourself these questions: When did you last visit your dentist? Have you talked to your grandparents lately? What about that coffee date you keep on postponing with your former office mate? It may seem absurd now, but in keeping yourself active you won’t notice whether time is flying fast or slow.

The second best way I spend my waiting time is observing my surroundings. With the internet, I can do this not only beyond my doorstep but also across national and continental borders. By doing this, who knows what other opportunities are waiting to be unlocked?

Lesson number 3: Every result is a valid result.

In this case, the word VALID is not the same as DESIRED. 

Notice how in scientific experiments, all types of results are noted down (if you did an Investigatory Project in high school maybe this will ring a bell). If there is enough occurrences of such outcome, it will be factored in drawing conclusions. Why is this? because we can always learn from the past, and there’s no better way of reviewing it than taking detailed notes.

Do you remember what the Coyote would do if the giant slingshot didn’t get him close enough to the Roadrunner? what about when the canon literally backfired on him? or that time when the rocket took him too far away? He would just keep on trying new equipment until he finds himself fallen in a ravine, crushed under a ton of boulders (or an anvil).

I never take any failure for granted. I write down everything I could describe, all that I could remember and I try to consider them the next time there is another opportunity to seize.

Once I started applying this principle, my motto has since become…

Lesson number 4: No stopping (No detenerse, in Spanish)

Mr Coyote never stopped. He just kept on running and chasing after the bird even if he already hit a wall.

Do you recall how he dealt with the situation after hitting a wall? Aside from smiling at the stars and birds that circled around his head, he would paint a door, a tunnel or any type of passageway that would allow him to cut across that roadblock. 

Lesson number 5: Create opportunities for yourself.

After more than half a year of searching for opportunities other than a 9am-6pm job, I realized I had to do something more and something better. By that time, I have surrounded myself with a fantastic community of entrepreneurs, professionals, freelancers and different types of passionate people who were already giving me various ideas.

From them I learned that just like the Coyote, it is possible to create a door or a path for us to follow. The end is not the end, unless we want it to be.

Frequently, we take the already downtrodden way because it is the safest option. But truly, risks are contained in any decision we make, including when we stay undecided. Having an employment contract is financially less riskier than not having one, that’s for sure. The thing is, everything entails a risk: even signing on a “permanent” job has the risk of being dismissed. If we didn’t want to be in danger of losing it, then we shouldn’t take the job in the first place- is that how we should view life? I’m not suggesting to jump into any venture with eyes closed. Perhaps the solution is not so much to avoid risks but rather learning how to manage them. As the Spanish would say, “Quién no arriesga, no gana” (Nothing risked, nothing gained).

Do you know what the good news is? The good news is that should you decide to build your own lane and find yourself facing a cul-de-sac, you may always go back to pursue the tried and tested trails.

If we truly wish to move forward then it wouldn’t matter whether we crawl or run; it matters that we keep going (thank you, Doctor Luther King).

People who create opportunities gift themselves the chance to achieve excellence.

This is not to say that the road you will construct will be a smooth one. It never was the case for any of my auspicious friends and peers. But by letting their own selves be the engineer, contractor, builder, supervisor and financier of their ambitions, they all took the necessary preparations to face different kinds of risks. Most importantly, they worked hard and consulted with experts on their fields so they could learn how to manage those risks, in case they turn into reality.

Once or twice an impulsive plunge was taken or a hasty decision was made, yes. Then there were times when certain events were so unexpected, they didn’t even account for as risk (like a terrorist attack). Still, they went on. Most of them might not know it: but in striving to succeed, they have achieved excellence. You might be wondering how I knew this. And just to be clear, I did not have a peek at their bank accounts nor did they tell me their net earnings per year.

The excellence I speak of is being materialized far beyond any of their material possessions. The excellence I have in mind is the kind that is reflected not only in the product of their hard work (ie: a product, a service, a deliverable or a client feedback)- it is also mirrored in their speech, their actions and their intentions. For these people, excellence ceased to be a goal and has become a way of life.

Conclusion

It’s been two months since I had the realization of my need to do something more and do something better, other than simply looking for job vacancies and applying for them. I did stop the job hunt for a while, especially because I needed to meditate on what my next move will be.

At the end of the day (or week) I still look for a paid employment. The difference this time is I have become more selective, and I never fail to mention my other endeavors in the applications.

Truth be told, the time I took off the routine helped a lot; taking another course of action proved productive for me. For example, the moments I spent working on my blog doing independent research and writing have given me a certain level of exposure. Thanks to that, I am able to gather a portfolio of work which includes: drafting, analyzing, researching and translating in all the languages I speak. Now I am also more open-minded towards applying for other types of jobs besides the usual ones.

At the same time, I’ve connected with many interesting people who are currently teaching me and sharing their experiences with me. Some of them are even allowing and inviting me to collaborate with their projects!

The sudden burst of activity has become a training ground for me to exercise patience and learn from mistakes. Besides, being in constant motion only convinced me not to stop advancing my personal venture. Above all, I believe that I am creating opportunities for myself and for others. Knowing this gives a more meaningful purpose to every task I perform- to develop something that would serve not only my interests, but that of others as well.

However, no amount of patience, learning, motion and creation could guarantee goals being reached. During my short time in this uncommon scheme, I learned that perfect planning does not always translate to the projected outcomes. Whenever this happens, one’s patience is tested even further but simultaneously, more lessons can be learned, other doors can be opened and the most surprising opportunities could arise.

Lastly, it is worth mentioning the fact that the Coyote still hasn’t got any wins to prove his worth as a role model. Even so, at least his patience and perseverance make him one very admirable villain.

 

 

*My particular, personal circumstances are allowing me the luxury to do this. I do not mean to be insensitive towards other people who are forced to being underemployed and underpaid to support their families. I am also in no way encouraging the unemployed to stop looking for job opportunities and simply “go ahead with what they feel like doing”.

-The End-

Sources:

  1. Merriam-Webster online dictionary, available at: https://www.merriam-webster.com/

On your Marx, get set…

Many people would ask me about my name. There are two versions- both accurate- but depending on my mood, I will tell one or the other. The version that concerns today’s post answers the question “what was my parents’ inspiration?” to choose such name for their firstborn.

Most wouldn’t be able to guess because honestly I don’t give any vibe or any clue about it. But a friend who recently reconnected with me was able to! Jamaica (now that is a beautiful name, don’t you think?), a former Political Science student from the University of the Philippines was unbelieving when she inquired whether I was truly named after mathematician and philosopher- the owner of one of the most magnificent brains ever to have analyzed facts- Karl Marx.

A big shout out to my friend Jam, for giving me that unique “high”! Nobody really thinks of identifying me with Herr Marx when they see me…

Introduction

During freshman in college, I was 100% sure that I’d shift to another course as soon as the year ends. I simply wasn’t “feeling” B.S. Economics and felt it was not for me (where B.S. started to not mean Bachelor of Science). The first semester only convinced me that I didn’t even want to learn how to think like them Microeconomists or Macroeconomists.

Come second semester, and I entered into this class “International Economics I”. I sat down in the fourth row, prepared to take notes, poised to comfortably listen to whatever monologue the professor had to say. To my surprise, he asked the whole classroom, “What do you think is the biggest problem of the world today?” Many people said, “Poverty”, “Hunger”, “Inequality”. When my turn came I said,  “American imperialism”. Huh. The class suddenly went silent, all eyes turned on me and there were a few uncomfortable chuckles. The professor smiled and proceeded to listen to the rest of the class’ opinions.

It turned out that the professor is a hard-core Marxist. In fact, he complied with the class curriculum using a purely Marxist analysis of international economics. My eyes have never been so widely opened as that time. It was that class, that professor and the alternate way to analyze the economy that made me want to finish the degree.

I don’t claim to be a Marxist, because truth be told Marxism is a lifestyle.*

What I do claim though, is that I am content understanding how things stand- knowing where I stand. I am satisfied knowing that I possess the tools with which to counterbalance any information fed to me; and that there is another way to see, think, analyze and to react.

On Poverty and Inequality

The standard lesson taught to me and my peers since childhood is that poverty is “bad”, “unfair” and “must be defeated”. Along these lines, the subject of inequality would arise while wistful looks and stares could be caught among students. Needless to say, I grew up believing that poverty can be defeated and that inequality could be eradicated.

However as a grown-up, Professor Arrizabalo turned my head towards another reality (some of my peers were also able to do so, others were too busy surviving to see) and made me see that in a capitalist system- yes, the one we are thriving in- poverty and inequality are necessary conditions for the system to operate. And it all starts with the everyday task of going to work.

A Toxic Relationship

Perhaps the most applicable lesson from Marx in the 21st century are his reflections on the relationship between the Capitalists and the Workers.

In a very summed-up description: the Capitalist possesses the means of production and hires the Worker to transform them to goods (and services) to be traded. During the production process, the Capitalist incurs in production costs consisting of procuring materials and the Worker’s labor (whose cost is the wage). However, this wage does not equal the value of the good or service Worker has produced; it is less, although in principle it is enough for his maintenance and the perpetuation of other Workers (minimum wages).

Technically, the wage is paid according to a day’s work. Let us suppose that it takes 6 hours to produce a certain good (or service) whose price is equivalent to the Worker’s minimum wage. In this case, the Capitalist will pay what is due to the Worker, will sell the product and will receive the same amount he has spent to produce it. Profit is something unheard of in this case.

Logic says that if this were to be true, there would be no incentive for the Capitalist to enter (and preserve) this kind of relationship.

Therefore, the Capitalist extends the working hours of the Worker to 6 hours more (12 hours in total) in such a way that the value of the finished product is that of 12 hours’ work. However, the Worker does not receive the amount equivalent to the extension of working hours. At the end of the day, he will still be paid what was 6 hours’ worth of wages. With this method, the Capitalist will be able to sell a product with higher value without having to pay for the said increment. In fact, he gets to keep that increment for himself.

Engels wrote:

“Let us assume that these means of subsistence represent six hours of labour-time daily. Our incipient capitalist, who… hires a labourer, consequently pays this labourer the full value of his day’s labour-power if he pays him a sum of money which also represents six hours of labour. And as soon as the labourer has worked six hours in the employment of the incipient capitalist, he has fully reimbursed the latter for his outlay… But so far the money would not have been converted into capital, it would not have produced any surplus-value… The fact that only six hours’ labour is necessary to keep the labourer alive for twenty-four hours, does not in any way prevent him from working twelve hours out of the twenty-four. The value of the labour-power, and the value which that labour-power creates in the labour-process, are two different magnitudes. The owner of the money has paid the value of a day’s labour-power; his, therefore, is the use of it for a day — a whole day’s labour…

On our assumption, therefore, the labourer each day costs the owner of money the value of the product of six hours’ labour, but he hands over to him each day the value of the product of twelve hours’ labour. The difference in favour of the owner of the money is six hours of unpaid surplus-labour, a surplus-product for which he does not pay and in which six hours’ labour is embodied. The trick has been performed. Surplus-value has been produced; money has been converted into capital.”

– Anti-Dühring by Frederick Engels 1877

The remaining value- that is, the difference between the newly-incremented value of merchandise created by the worker minus his wage is the Surplus Value. Once the product is out in the market at a given price, such price minus the cost of materials minus wages is what we know as Profit.

In a few words: there is the Capitalist’s need to develop Capital through Profits and the Worker’s requirement for Wages to sustain himself by the sale of his Labor (labor power) for as long as he lives.

It is easy to sense that the above-mentioned relationship is not one between equals. A short and simplified analysis could help figure this out:

(1) Price of a product = cost of materials  + wages + profit

                                                   27                =            21        +        3         +        3

Should we follow the above assumption regarding the number hours’ labor:

(Where 1 day of labor= 3 units of wage)

Price of a product= 27 units

cost of materials= 21 units

wages= 3 units

profit= 3 units

We have said that it is the acquisition of profit which motivates the Capitalists to enter in a transaction with the Worker, so we will simply transform the equation for an easier viewing (by subtracting cost of raw materials and wages on both sides of the equation):

(2) Profit = Price of a product – cost of materials – wages

                                             3       =      27          –      1         –           3

In this new equation, it’s easier to see how Profits are inversely related to Wages. Wherein, an increase in Wages would undoubtedly mean a decrease in Profits.

Now it is clearer where the interest of the Capitalist lies, and that is to increase profits as much as possible. More particularly, the system requires an ongoing and never-ceasing increase of the capital’s growth rate in detriment of the workers’ salaries (wages). This case satisfies the condition of inequality.

At the same time, this naturally creates and aggravates situations of poverty. In many industries (like in textile, hardware assembly or certain services) capitalists are capable of localizing and hiring the lowest-paid workers to maximize their profits. On one hand, some workers lose their jobs because of this change; on the other hand the newly hired workers become the fresh army of laborers to be exploited. Yet even then, capitalists will still find ways to squeeze workers of their meager earnings.

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Image courtesy of: http://thedailyjournalist.com

The Few Who are Them and the Many Who are Us

The world is full of wonders, but one of its greatest oddities could be the fact that the capitalists who are so few in relation to the workers, have become so powerful.

If we consider the Fortune 500 list, we come to the conclusion that there are only 500 of them in the whole planet, and around 7,461,087,270** of the rest of us. Roughly 500 people hold in their hands the means of production with which they convince the rest of us that we can prosper and progress not only for ourselves but for the generations that would come after us. How did this come to be?

An explanation we could all relate to is that capitalists are able to maintain their power because the workers lack unity among themselves. Such division has been made possible through competition. Just as the capitalist is in competition with the worker due to their opposing interests (profit acquisition versus raise in wages), so are the different types of workers placed face to face one another, defending their varied interests.

Competition also brings about inequality within the ranks of the working class, likewise generating and exacerbating poverty in both its absolute and relative terms.***

Try to remember how specializations in different areas of work have surged in the past decades:

  1. There are not only engineering courses, but also technical ones which offer a more practical approach to a subject.
  2. Within engineering courses: computer engineering and financial engineering have sprouted as new necessary courses
  3. There are not only Economists but Business Administration graduates, Business Analysts, specialists in Actuary sciences, and so forth…
  4. The outsourcing of certain services (accounting, legal, debt collection, client service, invoicing, data mining, etc…) by big companies to find the most cost-effective formula.
  5. … and many others.

The specialization of the working class (referred to in Economics as the “division of labor”) obviously hones different sorts of talents and capabilities according to a specific area of concentration. As a consequence of having unique skills and capacities, salaries also differ not only when comparing one area to another (for instance, informatics versus tourism); but even in the same industry salaries widely vary across levels and niches (like in the financial industry).

As we are but humans, our interests lie in the continuous betterment of our own situation and in maintaining the attained status. We do this not only for us, but for our children and our children’s children. This is why we find it hard to break away from the chains (some of them golden, some of them platinum) of capital. Because honestly, what could we do?

Additionally, it must be added that the power of the capitalists was the result of a historical and social affirmation of their political standing. It took some time, but the capitalists have finally secured its position as the ruling class and it doesn’t seem to be willing to relinquish the title any time soon.

The Communist Manifesto states, ” The bourgeoisie, wherever it has got the upper hand, has put an end to all feudal, patriarchal, idyllic relations.” Such an end signified the beginning of their conquest for control and power.

The “constant revolutionizing of production” (before through machinery and in modern times through information), the continuous market expansion and the discovery of cheaper sources of raw materials (through better transport systems)… these undertakings were accompanied by the possession and centralization of means of production, markets and territories which have aided the capitalists to establish themselves as well as their principles and their values in the four corners of the world. This is how we have adopted the capitalist mode of production; not only “we” as in those who constitute the society, but also “we” as those who take part in politics and policies.

And so it goes, “Each step in the development of the bourgeoisie (capitalist class) was accompanied by a corresponding political advance of that class… The executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie.”

Now returning to the previous question, it may be better to be straightforward and argue that so few capitalists hold so much power because so many (if not all of us) have come to depend on them. Accordingly, this dependency can be projected towards international relations where poorer countries depend on the rich ones for their livelihood, for “protection” and even for “aid”.

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Image courtesy of: http://quotesgram.com

Conclusions

In my university, Marx was considered as belonging to the heterodox school of thought. His ideas were so unorthodox that if anybody wanted to learn his method of analysis, either they would have to get lucky to have a Marxist teacher or choose the elective subject entitled “Marxist Analysis of the Global Economy”. If a supposedly progressive institution marginalized such breakthrough in Socio-Historic-Economic analysis, it would be effortless to imagine how the rest of the society reacts before such an idea (with fingers crossed, perhaps after more than 10 years the curriculum has changed and has paved way for diversity).

Writer L. Genova said that “Reality depends on perspective, on what is paid attention to”. In the case of Marx, he paid close attention to the human beings and their development. Better said, he probed on the factors causing hindrance to human development under the capitalistic regime. His theories are far from being axioms, but they are part of the universe of realities in the domain of Economics as experienced by its main characters- the human beings.

As of the moment, we may not be witnessing the revolution that the Communist Manifesto has called out for. However, we have been granted a lens through which we could see the world differently. Hopefully, we could use this new vision to gradually move forward with better understanding and a greater awareness of the consequences laid before us.

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Image courtesy of: https://twitter.com/openmindschool

 

*Did you know that Marxists speak differently? I believe that in their aim to change/revolutionize the society, they have turned their backs to the standard language because (and this is a personal view) even the historical evolution of the modern language has led to this capitalist society. Therefore, all those who wish to participate in the revolution, would have to change their way of living including the way they speak.

**Actual data at the time of writing.

***Absolute poverty is determined according to a poverty threshold. That is, the minimum amount of resources (typically income) needed for a person to survive. Relative poverty on the other hand places the subject (the poor) within the social, cultural, political and economic context of his habitat. The best example for this is when we say that to be poor in Amsterdam is not the same as being poor in New Delhi.

-The End-

Glossary:

Capitalists (Bourgeois)- The class…  who in all advanced countries are in almost exclusive possession of the means of subsistence and those means (machines, factories, workshops, etc.) by which these means of subsistence are produced.

Profit- The difference between: the price at which a product has been sold minus the costs with which the product has been generated.

Worker- The class of the completely propertyless, who are compelled to sell their labour to the first class, the bourgeois, simply to obtain from them in return their means of subsistence. Since the parties to this trading in labour are not equal, but the bourgeois have the advantage, the propertyless must submit to the bad conditions laid down by the bourgeois.

Labor- the commodity sold by the Worker to the Capitalist in exchange for a wage

Wage- the amount of money which the capitalist pays for a certain period of work or for a certain amount of work. In short, this is the price of labor (or labor-power).

Sources:

  1. https://www.marxists.org
  2. “The Relevance of Marxism Today: Interview with Michael A. Lebowitz”, by Zhuo Mingliang, MR Zine, available at: http://mrzine.monthlyreview.org/2013/lebowitz210313.html
  3. http://www.worldometers.info/
  4. http://www.differencebetween.com/difference-between-policy-and-vs-politics/

Quién lleva a quién pa’ que se acabe la vaina?*

*Título inspirado por la letra del vallenato “Gota Fría”

Sin querer juzgar la decisión de la mayoría, sin querer imponer ideas que pertenecen a una persona que no vive esa realidad ardiente y delicada… Ojalá me perdonen en el caso de haber ofendido sus sentimientos.

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Imagen por cortesía de: http://kaosenlared.net

Parte 1: Opiniones, sentimientos e ideas…

Dado el hecho de que no fue tarea fácil la de recopilar declaraciones sobre este tema tan delicado, quisiera agradecer a las siguientes personas que han tomado el tiempo de reflexionar y expresar sus opiniones para ser además publicadas en este espacio:

Edith Ximena Peña Hidalgo de Madrid, España

Mercedes Sánchez de Bogotá, Colombia

Paola Medina de Istanbul, Turquía

Mil gracias, estimadas señoras! les deseo todo lo mejor y espero que pronto podamos brindar juntas el comienzo de una nueva historia para su linda Colombia.

¿Qué sentimientos ha generado a usted la noticia del acuerdo del cese de fuego?

“Alegría y sorpresa, tantos años de conflicto y procesos fallidos anteriores marcaban un escenario muy difícil. Lograr un acuerdo firme era prácticamente impensable a pesar de los avances logrados en el proceso. Las FARC no han sido un interlocutor confiable y la habilidad de los negociadores y los países garantes ha sido fundamental para llegar a un hecho histórico que me alegra y me hace sentir mayor esperanza en el futuro de Colombia.” (Edith Ximena Peña Hidalgo, 32 años, Economista INJUVE, Madrid)

“Esperanza, por vivir en una Colombia en paz, situación que nunca he conocido; Alegría, por pensar que puedo vivir en un país tranquilo; Temor, por la posible traición de las células que queden de la guerrilla y por los otros grupos (paramilitares, delincuencia común, narcotraficantes) que no han firmado (ni firmarán) un acuerdo de paz; Desconfianza, con la reinserción de guerrilleros en la sociedad.” (Mercedes Sánchez, +50 años, en la búsqueda de empleo, Bogotá)

“Alegría, esperanza, reconciliación y ansiedad.” (Paola Medina, 32 años, Profesora de Idiomas, Istanbul)

“Me ha generado alivio de saber que los acuerdos de paz se siguen teniendo en cuenta como un camino viable para resolver el conflicto armado en Colombia. Me ha generado confusion ver al ex-presidente Uribe, a quién tanto llegué a admirar en una época, hacer campaña para bloquear los acuerdos de paz.” (Anónimo, 25 años, Doctorante en Robótica, Villejuif (Francia))

¿Cómo piensa usted que se debe iniciar el proceso de reconciliación entre los FARC y las víctimas (y sus familias) de la violencia?

“El marco legal, las estructuras institucionales deben reforzarse para garantizar el cumplimiento de los acuerdos a través de programas como el de restitución de tierras, el desminado, la verdad, justicia y reparación integral. Llevará muchos años y recursos lograr este proceso en el que las FARC debe participar activamente y cumplir sus compromisos. Además, más allá de los recursos materiales es necesario un proceso de perdón y reconciliación en el que todos los colombianos estemos involucrados, luchar contra la política de odio, venganza y marginación. Se debe lograr una verdadera reinserción de los ex-combatientes de las FARC.” (Edith Ximena Peña Hidalgo)

Con un reconocimiento real por parte dela FARC, de los crímenes cometidos y un perdón a las familias de las víctimas. También con un castigo ‘negociado’ de acuerdo con los crímenes cometidos.” (Mercedes Sánchez)

“En primera instancia, la reconciliación debe ser asumida primeramente por la oposicion, aquella liderada por el expresidente Uribe quien queriendo ser protagonista juega un papel antagónico desde el principio del proceso de paz y en segundo lugar debe ser promovida por los mismos líderes que menosprecian los acuerdos, eliminando discursos guerreristas donde no hay lugar para política.” (Paola Medina)

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Imagen por cortesía de: https://etnicografica.wordpress.com

¿Cuénteme brevemente qué cosas espera que pasen a partir de ahora?

“El proceso será largo y complicado, en primer lugar se debe hacer efectiva la entrega de armas y la desmovilización total, aunque ya hay disidentes que quedarán al margen del proceso. La refrendación de los acuerdos en el plebiscito será el marco para que los colombianos aprueben el acuerdo en votación.

Paralelamente a lo anterior, que ya está en marcha, el gobierno debe recuperar las zonas ocupadas por las FARC y abandonadas históricamente por el Estado, eso requiere un plan de inversión y fortalecimiento institucional que llevará años e ingentes recursos humanos y económicos.

Las FARC empezarán su transformación en partido político para participar en las próximas elecciones y los disidentes seguirán en facciones pequeñas o en la delincuencia común, haciendo necesario que las fuerzas del Estado sigan combatiéndolas (a menor escala de lo que sucede ahora). El pueblo colombiano irá transitando a una realidad sin violencia que abrirá las puertas a un futuro mejor.” (Edith Ximena Peña Hidalgo)

“Que no haya más secuestros ni extorsiones. Que no haya más coches blindados ni patrullas acompañándolos, por las calles de las ciudades, intimidando a todo aquel que se cruce por su camino, por parte de los mafiosos y empleados del gobierno que abusan de las medidas de seguridad. Andan en coches blindados y con patrullas (pagados con los impuestos de los ciudadanos) para su cuidado personal. Esto último aplica para funcionarios del gobierno.

Que podamos viajar por las carreteras con tranquilidad. A mediano plazo, saber que hay guerrilleros insertados en la vida cotidiana.” (Mercedes Sánchez)

Qué gane el SI, que la oposición se una unidad nacional para la construcción e implementación de la paz, que el otro grupo subversivo ELN (Ejército de Liberación Nacional) siga el ejemplo y se una también por el país y se sumen al dialogo para que de igual forma cese el conflicto con ellos. Y que haya justicia para los gobernantes que de una y otra forma incentivaron y promulgaron con sus discursos y o acciones, a la guerra, à la usurpación de las tierras de los campesinos y que sean ellos los más favorecidos de todo el proceso puesto que han sido las víctimas  principales del conflicto .” (Paola Medina)

Parte 2: Pensamientos de un espectador expectante

I

Ciertas preguntas he de hacer

sin el afán de juzgar.

Solamente intento comprender

las razones y las causas;

y escuchar tanto los motivos

como las dudas.

¿Qué vecino no sueña

con una convivencia pacífica?

¿Por qué un “NO” a la búsqueda

de una nueva vía?

de una nueva vida?

de un nuevo mañana?

II

Pero es triste ver que

quienes ganan y quienes pierden

sean los mismos,

los de siempre.

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Imagen por cortesía de: http://reclutamientoforzado1.blogspot.fr/

Parte 3: Reflexión

Nota del autor: Es cierto es que 1) Nunca he vivido más de 4 meses en Colombia y solamente conocí una parte de Bogotá, una parte de Cundinamarca y una parte de Boyacá cuando estuve allí. Y esos sitios, los he conocido como turista. 2) Nunca he vivido una situación de conflicto y, 3) Nunca he perdido a un ser querido a causa de una situación de conflicto.

Por lo tanto, admito que cuanto más leo sobre este asunto, más preguntas me surgen. Y es esta la razón por la que me limitaré a contar mis impresiones personales, al igual que las dudas que he conseguido formular.

“¿Apoya usted el acuerdo final para la terminación del conflicto y la construcción de una paz estable y duradera? Esa fue la pregunta con la que se encontraron los Colombianos en las urnas el pasado día 2 de Octubre de este año.

Ese mismo día, el periódico español El País cuenta que, “El plebiscito de este domingo ha obtenido unos resultados sorprendentes según las encuestas previas: el 50,21% de los votos ha rechazado la paz, y el 49,78% se ha decantado por el ‘sí’. El 60% de la abstención en la votación…”

¿Deberíamos interpretar que el voto del “NO” estaba expresando la disconformidad al Acuerdo?

Entonces, ¿podemos suponer que la mayoría de las personas que han votado el “No” verdaderamente ha leído el Acuerdo?

***

Hace 3 días, empecé a leer el “Acuerdo Final para la Terminación del Conflicto y la Construcción de una Paz Estable y Duradera” (en adelante, el Acuerdo). Por la primera vez desde mi lectura de “Los Tres Mosqueteros”, he vuelto a sentir una emoción extraordinaria por un texto. La única diferencia es que esa última es una novela ficticia mientras que la primera es un documento con un efecto tremendo sobre las vidas reales de personas existentes y por existir. Ni qué decir, el homenaje que significaría su implementación hacia los que ya dejaron este mundo, al haberse visto aprisionados en un conflicto que lleva más de medio siglo atosigando a Colombia.

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Imagen por cortesía de: https://periodistarural.wordpress.com

La primera impresión que tuve fue de puro agrado. Se debe a que el texto es sorprendentemente claro, sencillo y fácil de comprender. Me refiero a que los que se encargaron de redactarlo se preocuparon realmente para que no se requiera una formación especial ni una educación demasiada elevada para poder comprender el contenido del texto. Además, todos los puntos mencionados en las declaraciones en la Parte 2 se pueden ver tratados dentro del mismo. (Cierto es que echo en falta el Capítulo 3.3; simplemente, no aparece y estoy actualmente en la búsqueda activa de esas páginas.)

Dicho esto, sería interesante saber cuál ha sido el empeño del Gobierno Colombiano para concienciar al pueblo de la importancia de acceder y leer dicho Acuerdo. Al mismo tiempo y en paralelo, habría que ver cuánto esfuerzo ha ejercido la ciudadanía para acceder y leerlo. Basta con una visita a la página web Oficial del Acuerdo de Paz, para comprobar que la administración actual no ha escatimado ni en técnica ni en talento para hacer que dicha iniciativa sea aún más comprensible y que esté al alcance de todos. Pero, ¿cuál ha sido el alcance real de todo ese esfuerzo? ¿Ha llegado esa información a las comunidades más vulnerables y apartadas del país?

De igual manera, fue conmovedor descubrir lo integrador que es cada capítulo y cada punto que conciernen tanto a los ciudadanos como a los antiguos miembros de las FARC-EP (Fuerzas Armadas Revolucionarias de Colombia- Ejército del Pueblo) que han pactado retornar a la vida civil. No solo mencionaba hombres, mujeres, niños, niñas y personas de edad avanzada. Igualmente consideraba las diferentes etnias, las situaciones geográficas, las distintas orientaciones sexuales así como las disimilitudes en sus necesidades, vulnerabilidades y sus potenciales contribuciones a la sociedad.

Sobre todo, el lector tiene la sensación de que se le otorga una consideración especial a las mujeres y niñas cuando se habla de la necesidad de protección de la ciudadanía, cuando mencionan iniciativas sobre la concesión de tierras, o algo tan sencillo como asegurar el acceso a servicios de salud para comunidades marginadas.

Por esta razón, cabe preguntar: ¿Cuantos de los que habitan en zonas rurales/marginadas/de alto riesgo han conseguido expresar su voto en las urnas? De la misma manera, ¿cuántas personas consideradas las más vulnerables en Colombia pudieron participar en las votaciones?

Lo siguiente que salta a la vista es que en más de una ocasión, se aludía en la posibilidad de revisar y en casos necesarios, de modificar las normas vigentes para ajustarse a la nueva realidad tras la firma del Acuerdo.

Entonces, al ponerse en el lugar de los votantes del “No”: ¿sería posible que ellos sintieran inseguridad al ver que podían haber aún más cambios de lo previsto? ¿y que esos cambios inesperados tengan que ver con lo que ya conocen y a lo que ya están acostumbrados? ¿y finalmente, que teman que dichos cambios les perjudique a ellos mientras que beneficie “demasiado” a los que creen que no son merecedores de “tanto” (comprensión, consideración, PERDÓN…)?

El Acuerdo es ambicioso pero esperanzador. Y como cualquier proyecto de esta magnitud, no hay duda de que se necesitarían montones de recursos (dinero, tiempo, esfuerzo y sobre todo voluntad!) para poder llevarlo a cabo. Luego es lógico que se quiera averiguar, ¿cómo se financiarían las acciones que corresponden a los acuerdos particulares, para comenzar a sentar las bases de una paz estable y duradera? (El Acuerdo menciona la posibilidad de aceptar ayuda internacional, tanto técnica como financiera para llevar a cabo dichas acciones.)

Sin querer analizar el Acuerdo en detalle, solamente me queda por preguntar ¿de qué manera participaría el pueblo Colombiano a la hora de llevar a la justicia y después, condenar y sancionar a las personas políticas vinculadas a organizaciones criminales?

Ahora que el mundo entero ya conoce la voluntad de los votantes, muchos se rascan la cabeza, preguntándose por las razones que han motivado los que elijieron el “No”. Pero vistas las cifras de dicha votación, en mi humilde opinión más que preguntar por qué ganó el “No”, quizás es incluso más importante saber por qué hubo un 63% de abstención.

No es cosa baladí, ya que en la parte introductoria del Acuerdo, se menciona que:

“La participación ciudadana es el fundamento de todos los acuerdos que constituyen el Acuerdo Final. Participación en general de la sociedad en la construcción de la paz y participación en particular en la planeación, la ejecución y el seguimiento a los planes y programas en los territorios, que es además una garantía de transparencia.

Además, la participación y el diálogo entre los diferentes sectores de la sociedad contribuyen a la construcción de confianza y a la promoción de una cultura de tolerancia, respeto y convivencia en general, que es un objetivo de todos los acuerdos. Décadas de conflicto han abierto brechas de desconfianza al interior de la sociedad, en especial en los territorios más afectados por el conflicto. Para romper esas barreras se requiere abrir espacios para la participación ciudadana más variada y espacios que promuevan el reconocimiento de las víctimas, el reconocimiento y establecimiento de responsabilidades, y en general, el reconocimiento por parte de toda la sociedad de lo ocurrido y de la necesidad de aprovechar la oportunidad de la paz.”

– Acuerdo Final para la Terminación del Conflicto y la Construcción de una Paz Estable y Duradera, Introducción, párrafos 7 y 8, páginas 4-5

Un artículo de la BBC cita la falta de consciencia de la ciudadanía en la efectividad de las votaciones para lograr cambios en la sociedad. Donde los comentarios más frecuentes son del tipo, “Mi voto no vale para nada.”

Otra razón mencionada por el mismo artículo era el poco tiempo que tenía el pueblo Colombiano para asimilar el Acuerdo.

Además, la meteorología parece que también ejerció un peso significativo, ya que los que habitan en la zona del Caribe fueron devastados por el huracán Matthew y no pudieron acudir a las urnas…

A mi modo de ver, habría que sumar a todas esas razones el hecho de que a lo largo de la historia de la democracia, muchos ya han sido los temas convertidos en lemas electorales y armas de politiqueo. En esos casos, los políticos parece que solo se preocupaban de si un éxito o un hito histórico se quedaría o no asociado con sus partidos. Y entonces, los medios de comunicación se llenan de discursos, entrevistas y declaraciones que poco a poco van asemejándose a una telenovela más que a una agenda seria al servicio del pueblo. Como consecuencia, el mismo pueblo se harta y se convence de que al votar estaría votando por, o mejor dicho, apoyando a un partido político.

Este es el peligro que se presenta cuando los políticos se apropian o tienen la intención de apropiarse de los buenos resultados de la implementación de sus plataformas/propuestas/promesas. Pués no es así. De hecho, el éxito de cualquier programa socio-político se debe a la participación del pueblo, y no a quiénes lo ha ideado porque el “idear” ya forma parte de sus descripciones laborales. Por lo tanto, el éxito de cualquier programa socio-político pertenece al pueblo. (Lamentablemente en los últimos años, está siendo más frecuente la cosecha de fracasos por parte de muchos ciudadanos.)

Últimamente, y en todo el mundo, los políticos han convertido el servicio público en un concurso para saber quién de entre ellos y sus rivales han hecho más (no necesariamente mejor) para el pueblo. Lo que debería ser una parte pequeña de la tarea de los políticos, lo que debería servirles para el marketing de sus partidos ahora se ha transformado en su razón de ser. No se puede negar que esto fatiga a cualquier ciudadano. Ese mismo ciudadano haría bien en expresar su cansancio.

En un entorno democrático se considera el ser “follonero” como un comportamiento normal y frecuentemente el motivo del jaleo es para quejarse. Cuanto más alboroto (entiéndanme, que sea del tipo pacífico y sin violencia), más ruido y más expresiones de descontento, mejor. Son síntomas de una democracia sana, viva, activa. En el momento que reina el silencio es cuando uno debería empezar a preocuparse.

En el caso de Colombia, es importante prestar atención tanto a los que estuvieron conformes, como a los que se opusieron al Acuerdo. Esa es la única manera de acercar posturas y llegar a una resolución. Pero sería muchísimo más interesante sacar lecciones a partir de lo que la prensa internacional ha llamado “la apatía electoral”.

 

-Fin-

Fuentes:

  1. “Acuerdo Final para la Terminación del Conflicto y la Construcción de una Paz Estable y Duradera”, disponible en: https://www.mesadeconversaciones.com.co/sites/default/files/24_08_2016acuerdofinalfinalfinal-1472094587.pdf
  2. Página web Oficial del Acuerdo de Paz entre Gobierno de Colombia y FARC: http://www.acuerdodepaz.gov.co/
  3. “Así han sido los resultados del plebiscito en Colombia”, disponible en: http://internacional.elpais.com/internacional/2016/10/02/colombia/1475372741_072614.html

  4. “¿Qué proponen los que votaron por el no en el plebiscito?”, por CNN Español, disponible en: http://cnnespanol.cnn.com/2016/10/03/que-proponen-los-que-votaron-por-el-no-en-el-plebiscito/
  5. “Las razones por las que el ‘No’ se impuso en el plebiscito en Colombia”, por Boris Miranda, disponible en: http://www.bbc.com/mundo/noticias-america-latina-37537629

  6. “Qué dice de Colombia que haya habido 62% de abstención en el histórico plebiscito por el proceso de paz”, Redacción BBC Mundo, disponible en: http://www.bbc.com/mundo/noticias-america-latina-37539590

  7. “¿Es tendenciosa la pregunta del plebiscito en Colombia sobre los acuerdos de paz con las FARC?”, por Natalio Cosoy, disponible en: http://www.bbc.com/mundo/noticias-america-latina-37239265

Some thoughts on philanthropy

For 5 months, I was given the chance to work as Prospect Research Officer (or Fundraising Researcher) for a prestigious business school just outside of Paris. I worked alongside the rest of the Advancement Team and sometimes also lent a hand to the Alumni Relations and Events (organization) departments. It was the most interesting part of my colorful professional history because: i) it introduced me to the fast-growing world of philanthropy, ii) I met some really great people and iii) the first two reasons combined have given me a different perspective when analyzing situations. Here are some of the thoughts I’ve reflected upon during that period…

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Image courtesy of: http://frankazargives.com

Some people believe that charity organizations should give aid to those in greatest need, wherever they live. Others believe that they better concentrate on helping people who live in their own countries instead.

From a practical point of view, resources are more effective when delivered to those who pressingly lack them. It is perceived to be more useful, as it directly addresses the problem at hand. In an ideal world, the aid that was donated would be equal to the aid received. Yet the fact remains that a percentage of this aid is lost along the way before finding its beneficiaries: conversion rates could be harsh, banks and other financial services companies charge high commissions, there’s tax to be dealt with… In short, there’s a certain level of fungibility in these funds, where aid can become “hostage” to the local context.

That is why not only aid effectiveness should be considered when allocating donations. Costs and benefits also have to be taken into account when deciding how to dispose of available resources. In this regard, economists would try to convert the dilemma into a mathematical formula: see if there are patterns that would lead to the best choice, and try to predict a final result of their analysis.

Still, the choice is not really between helping a population “in need” and one that has “better location”. The question actually lies in how charity organizations manage themselves, whose own funding mostly comes from subsidies, grants and/or donations. As a matter of fact, non-profits are accountable to their donors, binding them to comply with the specifications detailed out by their patrons regarding the use of funds. Oftentimes, they are also required to report about the funds’ impact to the community, or at least to the target population (but this is a subject for another essay). Therefore, the choice of which people to serve does not lie entirely in their hands.

A more balanced approach would seem to be reaching an accord to meet donors’ objectives while respecting the realities of both the organization and the community he wishes to help. This means donors would have to be engaged (at least the major givers) by the organization to take an active part in determining how best to allocate their contribution. The initiative would call for a constant and consistent communication from both parties.

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Image courtesy of: https://educationunderattack.info

This offers a win-win situation because on one hand, regular contact would allow the donors to disclose their motivations for making such a contribution. For instance, they could make the organization understand their emotional connection to the beneficiaries. On the other hand, organizations could take this opportunity to better explain their activities to their patrons. This could be a good moment to make them see that a strong infrastructure and qualified professionals are required to deliver aid to those who are in need; and as such,  funding has to be allocated to these operational aspects as well. Only through communication can the two ends find a middle ground that would allow each of them to carry out their respective mission statements.

A typical philanthropist would think and argue about improving the lives of those in greatest need; while a typical economist would compute the costs in terms of time, effort, phone bills and transportation that result from the continued communication between donors and organizations. Both would have good points to defend their views.

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Image courtesy of: https://intentionalmuseum.com

However, it should be noted that listening is as vital as analysing in any problem-solving situation. Gloria Steinem, co-founder of the Women’s Media Centre explains, “Helping begins with listening. Context is everything… Big problems often have small solutions. And finally, do what you can.”

Sources:

  1. “The Parable of the Fence and Other Lessons”, available at> https://www.linkedin.com/today/post/article/20140404194646-25295057-the-parable-of-the-fence-and-other-lessons
  2. IELTS Essays, Essay Topic sample available at: http://www.testbig.com/ielts-essays/some-people-believe-charity-organizations-should-give-aid-those-greatest-need-wherever