Conversation 2: Questions Regarding the Union of European Nations (Part 2)

Disclaimer: the contents featured in the following conversations do not necessarily reflect the author’s opinion.

Two winters ago, overheard in a café somewhere in the north…

Daughter in law (D): I can’t believe those beggars (shakes head). How can they can stomach using their own children to beg for money even during cold, winter months? The parents should be reprimanded, and the children be taken to foster care. And if they don’t want it, then they should go look for jobs.

Mother in law (M): I know. Most of them are Romanians or Bulgarians. Worse is, they form groups of 3 or 4 and pick pockets! I don’t want them here.

D: You know that’s not a politically-correct thing to say, right?

M: I don’t care. They shouldn’t be here. Mind you, I’m talking about the beggars and the pick pockets. Those who are working should stay. But the rest should be deported. They don’t contribute to anything here.

D: Still…

M: No, you listen to me. My friends and I always see a beggar at the entrance of a supermarket back home. She’s there everyday from morning until past midday. So one day, one of my friends offered her to work as a domestic aid. Guess what she answered?

D: Obviously she said she didn’t want to.

M: Exactly! the nerve! I felt really indignant. I wasn’t able to help myself so I told her, “Oh, so you must really be more comfortable begging, rather than exerting extra effort and getting a job, huh?”. She stared at me and I had to keep on walking. I was so mad.

D: I wonder why they don’t want to work. I mean, even if we conclude that it’s more comfortable to just stretch out your arms for people to drop coins in your hands… a job is still more stable, not to say secure choice for the person and his or her family.

M: Me? I wonder why they don’t just beg in their own countries. Romania and Bulgaria are already part of the European Union. They are already receiving funds to develop their economies and to subsidize low-income people. Why would they choose to come here when they could easily stay at their homes and receive government aid? Much like the people in this country, who refuse to be under-employed because their lives are more comfortable in their houses while they receive unemployment allowance…

D: Well, if you put it that way… if they chose to come here despite of what you just pointed out, then the easy answer would be that, the funds don’t reach to where they should. That is to say, those who manage the funds must be pocketing it for themselves.

M: Isn’t a clean, transparent governance part of the requisites to be an EU member?

D: Yes, but the markets promised by those countries are far more important for the Union. You know? so certain countries are more or less assured of having people buy their goods.

M: … (makes a face)

D: So, are we ordering more coffee or what?

*-*

It was the beginning of summer 2016 and four friends were riding the InterRail en route to Brussels…

Friend 1 (1): What just happened yesterday?

Friend 2 (2): Oh f*ck, the Brits voted Brexit, that’s what happened! silly fools…

Friend 3 (3): Tell that to them. I’m sure they feel even superior, if possible.

Friend 4 (4): Oooookay, no need to insult or cause any offense to anyone…!

2: As much as I respect you, I must say, your people are crazy, guillible, a**holes! Ha-ha! I’m sorry, I’ve never been this entertained since last year’s Eurovision…

4: Well, in the defense of my people, I should say, “We know what we’re doing”. But really, I don’t think we do. So yeah, you must be on to something there! Haha!

1: That’s like a big, fat slap on EU’s face, don’t you think? That’s like a really, really bad break up… no, no! It’s the promise of a very ugly divorce…

3: So much for a “union”…

(Everybody snickers)

3: I’m very curious as to how Brussels would manage this situation. I mean, how will the EU stand as a strong competition for other economic blocks when its nations appear divided?

2: You’re in a shrink’s mood today, aren’t you? Could you take a break? We’re on holidays!

4: No, no, wait… she’s right. If you look at it, the EU needs more than all the super glue it could collect to present a united, well, presentation.

1: To project, dude! to project… we’re on holidays from school, not from using our brains…!

4: Yeah, whatever…

2: Hey, the shrink might be right. Just this morning I heard from the radio about how different Northern Europe is to Southern Europe. And not just character-wise, mind you.

1: Now that you mention it, well yes, it makes sense. And wasn’t that the argument of those who were anti-single currency advocates? that basically the difference in the standards of living, reflected in prices, could do more harm than good for those entering in the single currency zone?

3: Actually I wanted to point out the difference between the left-wing Europeans and the right-wing ones. You know, those who want to steer the Union towards a Superstate versus those who aim for Federalism… It’s not enough that all politicians and decision-makers want a better Europe for the Europeans. They have to map out how to achieve that.

2: Yes, we know. The spenders versus the austere ones.

3: Well, you have to spend SOMETHING to guarantee a minimum, decent quality of life for the citizens!

1: Or you could save up for the rainy days…

3: BUT WE ARE IN THE RAINY DAYS!

4: Yeah, well, you can aaaall relax, as there’s no point in arguing. The left-wingers would soon be outnumbered anyway, if not banished from Brussels…

3. So basically you’re saying that we’ll be better off scratching our balls?

4. Or scratching it for each other, if you’re so bent over helping your fellowman.

2: Heeey! I’m the tactless brute of the group! Don’t take that away from me!

*-*

Early autumn last year, an uncle and nephew take a walk in a park…

Nephew (N): I’m really excited! Soon I’ll be living in a different country, with an interesting job… even if the pay’s not the best, at least I get to have this experience.

Uncle (U): Good for you. I hope you meet a nice girl and settle down.

N: I’m not going there to find a bride! But I heard the women are pretty over there…

U: Yes they are. So don’t get married, just hook up with as much girls as possible. He he!

N: (Blushes) Anyway, I feel kind of sad, though.

U: Well, homesickness is normal. But I guess your mother would visit you every month so no need to be sad about missing her! (snorts)

N: No, I feel sad because all through my student life, I was a scholar. All my school expenses were paid for by the government. And now, the thought of “serving” another country makes me feel bad for ours. I really wanted to give back.

U: Hm…

N: Anyway, one thing is to feel bad because of that. Another is to feel awful when I realized that only capital and goods can truly freely move around EU. Movement of labor is still very much restricted.

U: I’m listening.

N: This system is giving young people like me very few choices. Either stay in your country and be bored out of your wits as you’ll be unemployed. Or, go find a job somewhere else in the EU, where you’ll have a theoretical “advantage” above applicants from countries outside of it.

U: There’s the choice of working outside the EU.

N: Yes, but the point is to be closer to home.

U: Okay. Go on. Why do you say the movemet of labor is restricted?

N: For starters, I met recruiters who prioritize candidates from local universities. WHY? Anybody could be just as good as their locally-produced graduates.

U: What else?

N: I heard that I won’t be receiving my social security card for sure at least 6 months. So whatever health expenses I would have during the waiting period, I’d have to shoulder myself. Why? I mean, I can understand if it’s a month, if they want to wait for my tax. But 6 months? I’m an EU citizen!

U: Hmp!

N: I mean, sure, they’d reimburse me for the expenses but it wouldn’t be automatic, I’ll have to wait for some weeks. I really don’t understand. All this would simply discourage foreigners to work in their country. Meh… but, wouldn’t it be more enriching if labor markets were more open?

U: Enriching for some, not all. Especially not for the politicians.

N: Are you changing the subject again because you want to talk about politics and complain about that long-haired guy?

U: Listen. Whenever there’s an initiative or a feasible idea which is good for the general population but is not being implemented, that is because the politicians wouldn’t get anything from it. Think. What would garner more votes? a promise to open up the labor market and toughen the competition for all job applicants? or perhaps a promise to protect and prioritize national workers against “invaders”, threatening to “flood” the labor market with their offer of “cheaper” salaries?

N: Hm…

U: Believe me, if you were a citizen of your future new home, you’d be offered a permanent contract. But you’re not, I mean, you can’t influence elections over there. You mean nothing to the political class.

N: Oh well! I guess the good news is that I could be returning home soon, huh?

U: Not if you find a girl to marry, you won’t! (winks)

-The end-

Click here to read Part 1 and here to read Conversation 1.

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What do Motherhood, Women’s Issues and International Cooperation on Development have in common?

While the smarter lot of you mentally ennumerate the common denominator of these three most important aspects of my life, let me get ahead and share what’s on my mind: MEDDLERS. I’m thinking about meddlers.

1. Motherhood and meddlers

I’ve only been a mother for 20 months, and one thing I can tell you for sure is that there is no “one-size-fits-all” solution to the same problem suffered by babies and mothers. Despite of this fact, there are those who still insist on imposing their beliefs, recipes and answers on other people.

Generally, I’ve observed that mothers are usually open to suggestions. Yet, I can’t help but notice the initial reactions to an advice they reject: insistence, further display of proof on the recommendation’s effectiveness, openly unfair judgement and finally, criticism. Surely, one should not have to go through all these just because they decide not to follow an advice. As for the “well-meaning” purveyors of knowledge… don’t they understand the fact that each of us is molded by our particular circumstances, pasts, beliefs and aspirations? Therefore, the solutions or remedies we end up choosing are adapted to our unique situation.

I always wonder whether “wanting the best” for the mother and the baby is the real reason why some people really force their opinion on others. The way I see it, if somebody truly desires the best for the other, then there must first be comprehension: of the problem, of the context and most importantly, of the diversity. This would allow for a better flow of communication. This would facilitate the process of achieving that “best” for the person in need.

In my short experience in motherhood, I learned that happy babies (a common goal for parents) result from being well-fed, well-rested and being around happy caretakers. Equally important is the confidence with which their caretakers do their jobs: if the caretaker is relaxed, the baby is most probably also going to be relaxed. So basically for me, what would really help mothers taking care of a baby is to feel empowered, to have self-confidence and be convinced that they’re doing a good job in raising a human being. The rest can be learned from books and online fora.

I’m lucky to be living where I am, to have resources that I could tap and people who truly support me. This period of my life would be much tougher otherwise.

2. Women’s Issues: when the champions become the meddlers

Currently, I find that that the foundation of women’s rights movement from the past has been eroded in time. I’m talking about solidarity and compassion. These two characteristics are strongly present in the feminine and have fueled the fight for women’s freedom and equality (equity) with men. Lately I’ve been noticing though, that a lot of arguments supporting the advancement of women’s rights sound more of a modern-day colonization than a genuine concern for our sisters’ well-being and progress. By “wanting the best” for all of us women, the very champions for our rights and development are forgetting that even though women may have the same basic needs and rights, the manner of procuring what they need, and the way with which they exercise their rights (if ever they choose to, at all) should be delegated to them- they know better than us what it means in their own societies to advance and progress. They know better than us how they want to live their own lives.

Consider how women’s rights movements started locally, where women gathered and started the battle for a more just treatment socially, economically, and politically, to name a few. When globalization came about, it was only natural for these initiatives to be projected onto other territories, crossing the national frontiers. Even though the intention was (it still is) noble, the explanation of its necessity as well as the method of implementing it are both flawed. Flawed because I believe some activists skipped a couple of vital steps in order to practice solidarity and compassion: inquiring and then listening. One can’t help but think some simply assumed that women in Sub-Saharan Africa have the exact same concerns as the ones living in Phoenix, Arizona.

From then on, a certain type of mentality has been imposed and women who did not adhere to such beliefs were criticized and in some cases, even marginalized by those who were supposedly fighting for their sake. Ironic.

3. International Cooperation on Development: helping or meddling?

When I graduated from college, the main lesson that really stuck was: “There is not a ‘one-size-that-fits-all’ solution to the same problem experienced by two or more different groups/communities. The answer should always be adapted to the specificities of each situation. “

The goal of exerting efforts towards cooperation for international development is to redistribute resources: from those who have them to those who do not. Obviously. Easy enough to understand. Now comes the dilemma of “how” to do it.

Studies have already proven that solutions imposed by developed countries with no grassroots basis usually end up becoming a waste: of money, time, effort and natural resources. Any Developmental Economist would agree that the solutions must come from a collaborative effort between the one who’s helping and the receiving end. That’s why it’s called “cooperation”, right?

However, it has always been the donor “wanting the best”, the donor’s criteria that seemed to dominate in this field: what they believe is “just”, what they think is “effective”, and what they “know those people need”. Thankfully, times are changing and workers in international cooperation are more sensitive to this topic. More and more, the aid given to a target community takes the form of enhancing the existing, local capacities rather than imposing a foreign technique. There is still a long way to go but awareness of this issue is already a big step forward.

Conclusions

While motherhood is a relatively new event in my life, it has deepened many notions in me, and is currently opening up other aspects of my understanding that I never even thought existed. On the contrary, women and development issues have always been part of my life, having grown up in a family whose bread and butter comes from the intent to make this world a better place.

Knowing what I know, I try to believe that it is truly the sense of compassion that moves people to torturously insist on the reliability of their solutions. I try to convince myself that they simply wish to see in others the same fruitful effects of their applied techniques.

Unfortunately, no two situations are equal. So basing on this, the person receiving the advice may consider that the proposed solution doesn’t fit his situation.

In my constant need to map out methods, this idea occurred to me: within the framework of “helping”, I suggest that under the “advice” category, two sub-categories be opened in the form of advice accepted and advice rejected. Help that was given or offered doesn’t have to end in relaying an opinion and leaving it as that. A person with a real concern to help, to make a change, would see if the other would take up on his counsel or not. And in the case where it is rejected, he would try to find out why; perhaps not to annoyingly try to solve the problem, but to learn.

Advice

Learning would mean the world between the meddlers and the “legit” bearers of help. An informed person in front of another who’s in a dilemma could do more by simply listening, than one who would blindly exert an effort to achieve a change in the situation.

I encourage you to think about it.

Adulting and Money Management 4: The Money that They Owe You

 PayMe.Candle.qkx

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

This article is inspired by several Facebook posts pertaining to the irony that it’s the money lender who feels shame when asking their money back, instead of the other way around. Especially when it comes to following up a late payment.

At first, after a talk with one of my friends, I thought that the main problem lies in assertiveness, or the lack of it. And then I thought that perhaps certain cultures encourage assertiveness, more than others but it really is not the question. I didn’t do the numbers, but it’s clear how what I thought was a cultural aspect in lending money, is actually a very personal choice of each son of a man. That is, the choice whether to “donate” or “collect” the amount of money that was lent.

But I’m getting ahead of myself, because even before a payment could be followed-up, there must have first been a pledge to do so.

I myself have rarely lent money to anyone, perhaps because I give the impression of being riff-raff (hahaha!). But whenever I did, I made sure both parties understood and agreed that the money being exchanged was a loan, and not a gift. And in the case where the money were a gift, I also made that very clear.

Risking to state the obvious, the difference between a loan and a gift is that the former has to be returned to the money lender at a given time, with a given interest rate. The latter is simply to be graciously accepted and appreciated.

Now, the problem with some people is they are easily caught by surprise and instead of thinking twice before lending money, they immediately agree to “giving” something that is to be returned “in the future”, “without haste”. In 98% of these cases, no payback ever takes place.

In the world of adulting, taking time to think before acting is basically lesson number 1. In the more specific town of adulting and money management, this moment for reflection becomes as necessary as breathing. Every cent counts, whether it be a past, present or a future cent of a currency. As thus, lending money means sacrificing having the “cents” today with a guarantee of getting them back in the future. In the case of giving, the former sentence would end after the word “sacrificing” and that would be it.

Personally, what I usually do when asked for a loan is to:

  1. Ask how much they need
  2. How urgent they need it
  3. When can they repay me
  4. How will they procure the money to repay me

If I’m satisfied with the answers to the former questions, I tell them that I’d think about it. Afterwards, I ask myself:

  1. How will lending a certain amount of money affect my budget until it gets repaid?
  2. Will I be alright if I never get to see that money again?

If, after analyzing my own situation, I still choose to lend my money, I make the following very clear when I finally decide to go ahead with the transaction:

  1. I make sure they understand that the money has to be returned
  2. I make sure that we both agree on the date of repayment (with or without interest)
  3. I would make them understand that although I don’t need that money now (and that’s why I can lend it to them), I would need it in the future.
  4. Depending on how much I trust the borrower, I would make him sign an agreement including a clause which mentions a possible collateral

(Are you still wondering why people don’t borrow money from me?)

You might be asking: what if, at the agreed date of repayment, the borrower refuses/cannot/does not return the money?

This is where the importance of assertiveness comes in. Being firm in reclaiming what is his own actually helps achieve the goal. And in the case they still refuse to pay you, then this is where a signed document would be useful.

In some instances, no amount of assertiveness can ever get a borrower to pay up. No matter how many touching, beautiful speeches are delivered, they wouldn’t budge. Because the truth is, the list that I wrote above- it’s just me. In real life, and depending on many other factors, the things I just said would be easier said than done.

So what is best advice I could give? be wise, and before you lend an important amount of money, make sure that your finances are sound enough in case you don’t get it back.

Happy lending!

 

Adulting and Money Management (3.3): The Money that I Owe

Adulting and Money Management (3.3): The Money that I Owe

On How I Acquired Loans Responsibly

The first time I formally owed money was when I took on a store credit to buy a bed. I was 22 years old and just moved out of my parents’ house.

Needless to say, I was very nervous when I signed the papers. I grew up in a family where borrowing money is a big no-no and I have always been told that it could bring a lot of misery and trouble. I’ve seen families fight, children who cut all contact with parents and even friends who stopped talking to each other because of money lent and borrowed to one another. Because of all that, I was afraid to get any kind of credit and was doubtful about my ability to honor the payments. It didn’t matter that I had a one year contract at work, neither that I had 8 months to pay it off, nor the fact that there was no interest rate applied (the store had a special promotion).

Knowing what I know now, I only wish somebody could’ve told me that:

  1. at some point in life, it would be necessary for me to borrow money,
  2. there are ways to not be enslaved by loans and,
  3. it is possible to live happily with debt, if one borrowed money responsibly.

Resultado de imagen de responsible loan

Image courtesy of: http://mzansilive.co.za/

The importance of taking the time to honestly reflect

So far, no debt has financially strained me to a cracking point. I guess the reason is because I think more than twice before acquiring a loan of any kind. All the scary stories and the horrible experiences I witnessed from peers and friends have served as a starting point in each and every debt decision I’ve ever made.

I usually go by the motto, “If you can’t buy it in cash, you can’t afford it”. So whenever faced with a buying dilemma, first I evaluate the usefulness or the value of what I’m going to buy:

-How long will I use/enjoy the item?

-Will its value increase our decrease over time?

-Can I sell the item if I find it of no use to me in the future?

Secondly, I examine my current financial standing:

-Why can’t I afford it?

-Is it a problem of liquidity (availability of cash or other means of payment), or a matter of really not having enough resources to purchase the item?

-Can I perhaps save for it today and buy it in the future? Or would the item increase in price by the time I have enough money saved?

Lastly, I make sure that paying for such debt would not cause a great dent on my future quality of life. Technically, this could be achieved none other than by sitting in front of a calculator, pen and paper (or a spreadsheet) and start crunching the numbers.

When choosing a creditor, go with the one who offers the best terms of payment FOR YOU

You might ask, “How is it even possible to have a debt and live comfortably?”. It IS possible.

The first condition certainly would be to not overwhelm yourself with loans. Borrow only the amount that you are able to return.

Equally important is that this could be achieved if you invest time and effort in searching for a creditor whose terms of payments suit your situation.

Below, I’ve made a list of the most important purchases I’ve made on credit. All of them have one thing in common: I got them at 0% interest rate. This is where the time and effort came in: once I set my mind to getting something extra-special that needs a financial sacrifice (debts make you sacrifice your future purchasing capacity), I start browsing the market (virtually and physically) for different kinds of offer. Personally, I prefer to go to a physical store and talk to the salesperson. I’ve always gotten the best deals through one-on-one negotiations.

Some stores give you the option to determine how many installments (usually in months) you need to pay the credit off. In these cases, I always chose the least possible. The soonest I can get out of the debt, the better.

Past credits to stores:

  1. Bed: 8 months
  2. Thermomix: 3 months
  3. Wedding earrings: 3 months
  4. House appliances (dishwasher, refrigerator and microwave oven): 4 months

Credit card debts (payable 3 months after purchase):

  1. Plane tickets
  2. Hotel reservations

Outstanding debt:

  1. Student Loan

The role of emergency savings

It’s important for me to briefly discuss something about my outstanding debt.

As I’ve said, I don’t pay interest for this loan. So every month, a flat rate gets deducted from my bank account. This would go on until the principal amount has been paid off; and according to the terms I signed, it would still take some time before I see that day arrive. This is to say that the greatest risk I face is the suspension of my steady revenue flow before fully paying the loan; in my case, it will be unemployment.

Truth be told, I actually faced this situation not long ago. I lost my job, but luckily I was eligible to receive unemployment allowance. However that too, was a limited source of income. So when it got depleted, I had to tap my savings- my emergency savings. I had to set aside such amount that would allow for one whole year of payment for this loan while I search for a job. (I simply decided that it would take me one more year before getting back to work.)

Fortunately I am now back to having a salaried employment, and it didn’t take me one year!

Resultado de imagen de responsible debt

Image courtesy of: https://www.agingcare.com

So now, until that debt gets paid off, I consider each monthly installment just as I budget fixed household costs (ie: rent, electricity, water, food, etc…), like what my friend Edward mentioned in this post. At the same time, I exert a conscious effort to increase my savings, especially my emergency savings.

I am aware that most people’s idea of having emergency savings is for it to be used during a health crisis, a natural calamity or the death of a loved one. But emergency savings also have to cover whatever household needs there are when the regular flow of income is interrupted, or reduced.

DO NOT TAKE UP LOANS FOR THINGS YOU DON’T REALLY NEED

Half a year after having a regular job with a stable salary deposited in my bank account, I also started to receive letters from the bank informing that I have automatically secured a 3,000-Euro loan! I also got an instant approval to avail a “golden” credit card from the same bank. To top it all, my husband also got the same letters!

We just threw those in the garbage.

My husband and I could’ve enjoyed the “easy” money back then. But we decided to be frugal and live within our real means.

On Personal Loans

My attitude towards personal loans is even more strict and rigorous than with the formal ones. As far as relationships go, I try very hard not to let money get in the way. Actually, the best way to preserve a relationship is to set money matters aside. But when times get tough, to whom would one go for help? To a friend or family member, right?

In my limited experience on personal loans, I’ve always carefully chosen the people who I plan to borrow money from. They should be financially comfortable enough to lend the amount I will ask, without having to sacrifice their quality of living. They should also be people I greatly trust and who trust me equally. Additionally, I choose those who I believe are unafraid to call my attention in case I forget to pay, or give them the incorrect amount.

It’s very important to be clear that the money being passed from one person to another is eventually going to be returned the other way around. If you’re lucky to have a friend or family member who would insist that the money be a gift instead of a loan, then enjoy! Otherwise, be clear on the terms of payment: interest rate, installments, “deadline”, and so forth. Trust me, it’s not worth losing a loved one over money.

Responsible borrowing

Acquiring loans responsibly takes a lot of time and effort, just like any other “adulting” activity. Although compared with other “adulting” decisions, this will cause a direct and immediate effect on your quality of life in the near future- once the payments set in.

It would seem boring and tiresome but it’s worth thinking more than twice before deciding to take up a loan. Then once the decision has been made, it becomes even more important to take a moment to search for the most suitable creditor and to plan your new budget considering the periodic installments.

Borrowing responsibly also means being prepared for various risks that might mean having difficulty in making the payments (such as being unemployed). For this reason, it’s important to factor in an additional amount in one’s emergency savings when preparing the new budget.

One risk worth remembering is the temptation of acquiring an “easy” loan with seemingly “comfortable” terms and conditions. I have never heard of anybody live comfortably with a loan that was used for something they didn’t really need.

Lastly, responsible borrowing entails mixing personal and financial affairs the least possible. Though when inevitable, another round of reflection, research and budgeting has to be made, all in order to be able to live happily even when indebted.

Resultado de imagen de responsible borrowing

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

Adulting and Money Management (3.2): The Money That I Owe by guest blogger Gino

Foreword by Colorfulifesite admin:

Gino’s experience differs a lot from that of Edward, not only because of the generational gap but because of the way the former decided to approach his debt dilemma. The fact that he has not had time to save enough money to be considered “financially stable” is a great factor in his decision to pay his debts with another loan. Now normally, people are advised against this because as you might already guess, it does pose a risk of entering into a debt cycle from where it could then be very hard to exit. It takes discipline, focus and great will power to not fall into a credit trap. Most importantly, Gino did not only take another loan to pay his initial debt- he also made it a point to earn additional money from various sources of income. But I don’t want to get ahead of myself. Dear reader, learn and enjoy!

***

Karessa asked me why I volunteered to be a guest blogger in Colorfulifesite Blog. The truth is I’m really eager to inform people about how I somehow recovered (slowly) and survived from my personal financial crisis. I would also like to share my experience, in case it could give them options on how to solve their debts.

Resultado de imagen de debt

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

The Backstory:

Several years ago, my friends and I set up a corporation. It was the first business venture of my life. Needless to say, I was new to the corporate world and had not even the fundamental knowledge of things. I just took the opportunity. It was a “strike while the iron is hot” kind of thing. I was excited and impulsive at the same time that I didn’t even bother to educate myself, believing that I could learn along the way. Likewise, I joined the business world without any “financial muscle” because supposedly my contribution would be my skills. (Actually, the majority of the founders didn’t have money to invest. All we had were our Information Technology or IT skills.) This was why we needed an investor to sustain the various costs of this venture: marketing expenses, logistics, employees, and so forth.

One of the founding members met a potential financier who we all thought was an angel investor. After me and my friends agreed on his participation, he gave us a big amount of money as seed funds. We divided the financial responsibility and assigned each one an amount to be paid to the angel investor when the time came. All along, we believed that we would pay him back upon the success of the company’s project. After the papers were signed, the corporation became a legitimate one.

Unfortunately, things eventually started to go downhill due to the company’s internal issues. These issues imploded up to a point where I had to personally borrow money from loan sharks just so I could pay our employees’ salaries. I was confident I could pay the loan sharks, but little did I know that a deeper financial trouble was about to blow up in our faces:

What we thought was an angel investment was actually not. It turns out we signed a document stating that he was loaning money to the corporation, not investing! Furthermore, the terms stated that the loan should be paid within a year.

To top this all off, I have acquired credit card bills as well as other personal debts to settle.

Resultado de imagen de loan shark

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Thankfully, the debt to the “investor” was cleared by the person who invited him to the corporation. Still, I found myself looking at an important financial dent.

The Debt Story:

I had to start getting rid of the accumulated debt I still have. So what I did was that I sold everything I could and pawned some of my belongings. That gave me some “starting money” to do something about my debts.

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Likewise, I returned to my parents’ house to save on rent and started recycling some things, like my old computer. Most importantly, I got help from my family in getting a loan to pay the loan sharks. My mom helped me get loan from cooperatives (Credit Unions) that give a lesser interest rate and a longer period payment plan. Loan sharks’ conditions of payment were tougher than a bank’s, so it was of my great interest to get them off my case as soon as possible. That’s the bad thing about getting a loan that doesn’t require any type of verification such as tax declaration, employment record, etc… Anyway I paid a big part of my debt through those cooperatives.

According to Investopedia,

A credit union is a member-owned financial co-operative. These institutions are created and operated by their members and profits are shared amongst the owners.

… (They) represent an alternative to banks and possible solutions to common complaints about traditional banking institutions… (It is) a savings and loan entity formed by a group of people who share some common characteristics, such as a profession or geographic location. The members of the group pool their money to provide loans and demand deposit accounts to other members. Credit unions are not-for-profit entities that are owned and founded by their members; they function as democracies, with each member having a say in how the credit union is run.

As a matter of fact, we borrowed from 3 credit unions. On 2 of them, my mom was the account holder while the other one is under my younger brother’s name. I did this because they were the only ones who were qualified to apply for a loan.

Part of the money I used to pay the cooperatives was earned through online jobs. I had to work double shifts and with multiple employers. All of these, without counting other jobs, so all in all that required me to work for 10-16 hours a day. I went on getting local contracted jobs too, like designing small business solutions for small enterprises. The pay was small but at least I got something, rather than nothing. (It also helped me build more contacts.)

As I mentioned before, I got some money came from pawning and selling my belongings. Some proceeds from the sold stuff were used to get along with my everyday life. I’m not even talking about spending for leisure; I meant something more commonplace like buying food and paying for fare. This money also allowed me to pay some of my other personal, smaller debts.

Then my father said he will pay some of my debt from one of my mom’s cooperative account and I can pay him whenever I could, without interest. I was relieved!

After that, I got a chance to enroll in an MBA course to educate myself on how to properly run a business. While I was in school I kept on accepting online work and working for local clients mostly to pay my school tuition, my dad, my mom and my brother. To this day I’m still not 100% clear of my debt but it’s more manageable compared to what had happened to me few years back.

-The End-

Colorfulifesite’s Note: Gino has long since learned his lesson regarding the need to be financially literate and equipped before entering a business venture. He is currently a Managing Partner at a couple of startups focused on helping small enterprises get the best adapted business solutions.

Sources:

  1. Credit Unions, Investopedia, available at: http://www.investopedia.com/articles/pf/08/credit-union.asp

What’s on a reader’s mind (2)

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

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

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

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

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

Thank you, Edward!

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

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

This was my reply, dating 8th February 2017:

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

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

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

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

-The End-

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

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

Adulting and Money Management 2.1: 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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