Expenses

This category looks at stuff that we spend money on!

Can you save electricity? Is it worth it?

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When summer comes hot, as it usually is in Taiwan, the local electricity company takes advantage of the extra demand by increasing the electricity price. At this time of year, everyone becomes more conscious of the electricity that their family or business use.

In Taiwan, domestic electricity consumption during most of the year is limited (domestically) to lights, occasional heating, refrigerators and floor fans. Entertainment appliances also comprise a part of the local usage patterns: including pcs, hifi and tv.

In our business, it’s a little different, though. Air conditioning, lights and pcs/printers consume most of the power. There is additional power required for the refrigerator and water machine. Other than that, there’s not much else.

In either case, saving electricity is a case of diminishing returns. Initially changing light bulbs to low-watt long lasting equivalents will reduce power consumption by about about 60%. Cleaning and maintaining newer ACs while replacing older ones will also help reduce power consumption somewhat. Perhaps even substituting notebooks for regular desktops will cut power consumption, as the LCDs use less power, and notebooks are typically designed with energy saving features.

Changing habits can also effectively cut power consumption. Again, though, there is a law of diminishing returns. Closing doors to retain cool air, making sure that obvious ‘leaks’ are reduced or eliminated can also help. Turning off ACs when no-one is in the room for more than five minutes, as well as lights, can help save power. Making sure that computers, or at least monitors, are all set to implement power savings, as well as printers and photocopiers.

But, and for a business, it’s a big but. If you wish to work effectively, and run your business effectively, managing your cost structure is a vital part of an effective defense strategy. However, should your energy policy start to affect your business in a negative way, then you really need to make sure that your priorities aren’t missing the point.

A good example we faced: we replaced all the old incandescent bulbs we could find. The result was a little more expensive than we expected, but it did control our bill effectively. Then we started closing the front door of our office to minimize AC loss. A VERY effective strategy to save power, BUT quickly we noticed that customers weren’t really coming into the office anymore. The customers typically waited to pick up their children after class was finished.

So we started to see that we were losing a vital part of our interaction with customers by closing the door. We compromised by limiting the hours for opening the door, so we could achieve some reduction in the waste, but we realized that we couldn’t eliminate that source of waste WITHOUT our business being affected in a negative way. Unfortunately, the layout of our office area is not optimal for us, but we can’t do anything to change that: it’s rented. More importantly, though, came the realization that the more effort we put into saving money, the less effort was expended on maintaining the business.

We could have gone much further in cutting our usage of electricity but it would have a tremendous impact on how managed our business. We might save about 50% or more of our power budget, BUT we might lose a lot more than the 50% we saved!  What is called for is a sensible policy of energy waste reduction, one that encompasses responsible saving, gradual implementation, and education on both the positives and negatives.

Considering a personal loan? Don’t be too frivolous!

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These days, borrowing money can be as easy as a swipe of the card or a telephone call. Perhaps in some respects it can be just a little bit TOO convenient to get Personal Loans.

So how can you make sure that you aren’t being frivolous, that the loan you want to take out isn’t going to be wasted on something that is bought today and gone tomorrow?

First of all, make sure that the item or service you are purchasing is classed as a ‘big’ or ‘bigger’ ticket item. If it is a loan for something that is used once, like a dress for a wedding, or for a party, it is certainly bordering on the frivolous. After all, you are going to open the door of your closet to look at that dress every day for months, and you WILL remember your loan payments for sure, each time when you make them.

Second, if you have to use a loan, this means that you can’t get the money by saving the amount. Too often, borrowers want the easy out: to get the item without making the effort. Unfortunately, trying to take the short cut leads to a long detour afterwards. Those interest payments will cut deeper and deeper each time you see how much you are paying.

Last, if you are sure of your purchase, and you have decided to borrow rationally (not using your emotions), then it is time to spend a little effort researching better deals, better companies and better rates so that you make an informed decision. Of course, you could use this time to find a better purchase or cheaper price, too!

Practice good borrowing to avoid having poor credit loans. In that way, borrowing money helps you in your life to achieve the things you want, and to avoid the pitfalls of ‘bad’ borrowing. Have you ever borrowed money and regretted it? I know I have: borrowing GBP400 to buy an Amstrad PC, for one. I’ll share that story later.

Sponsored Posting.

Late Fees: Have you eliminated them all?

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It’s not often that I deal with mundane financial stuff these days, but I was reminded yesterday that this is something a fairly disorganized person like myself needs constant practice at. You see, I received a small bill from the water utility company for about US$20 or so.

It was such bad timing that I simply filed it under “Things to Do”, and I forgot about it, until the due date had passed by one day. Woops! Yesterday I had to travel uptown to the water company to pay the bill. I noticed that in the Chinese writing on the bottom of the bill a simple statement saying that, for late payment a 10% surcharge will be added to the next bill.

Annoyed at myself for doing that , I realize that $2 isn’t big in the grand scheme of things, but to avoid late penalties, one has to be on one’s game, and organized. Still, a $2 late fee is much better than last year, when I spent six months paying a credit card bill in parts, instead of in one fell swoop. I could have saved much more than $2, more like $400; and that was despite having the money in the bank.

The root causes of late charges in my experience have been simply poor planning, and poor execution. Poor planning was looking ahead, evaluating the cost-benefit relationship between certain expenses being paid off slowly vs. quickly; and execution was failing to pay bills in a timely manner despite this being an easy and convenient thing to do.

In Taiwan, there is really no excuse for bill paying. The water bill I paid late could be paid in anyone of seven ways: at 7-11, at the bank, on MOD TV, via ATM, via credit card, standing order, and online, not to mention at the water company. Mobile phone payments will soon be possible, too. So, why did I plan poorly and execute sloppily? And how can I resolve to not do that again, esp. since this isn’t the first time?

So here are two suggestions that I have considered trying:

A. Use automatic calendaring

1. make a list of regular payments and bills and their due dates;
2. advance the date by one week or two to build in an appropriate safety margin; and
3. set up your Calendar software to remind you that it has to be paid (and the penalty, too!) for one week prior, three days prior, and on the final day!

B. Autopayments

Alternatively, set up your automatic payment so that you don’t have to remember at all. It’s quite easy to do that for all your bills! You can set up a credit card autopayment, or a standing order on your bank account, too.

So many bills: so many late fees!

Typical bills that may incur penalties or late fees include: all utility bills (phones, electricity, gas, TV, water, taxes – local and national), membership fees for schools, clubs, etc., community fees, credit card minimum payment or payment due dates, overdrafts, student loans, loan installments on houses (mortgages), car loans, secured and unsecured loans, insurance policies on property, family or cars, … the modern life includes a lot of payments that need to be made… make sure your list is complete and paid on time!

What late paying horror stories have you had? How did you manage to fix those bad habits? How much did it cost you?