money

Minimum Repayments: That’s EXACTLY how much? How long?

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Once a month my credit card statement drops on the mat, and I get a chance to peruse my spending that previous month. Actually, this month’s spending was quite minimal and mostly anticipated.

(All Currencies: NTD).

First, we had a nice meal at the beginning of our annual break. That came in at $1518 for two, including a buffet, a nicely prepared main course, and 10% service charge. The restaurant is called Dante’s and is located inside the campus of Taipei National University of the Arts! They serve Italian, French and American style cooking with fresh local and imported ingredients. On Saturdays, they are SUPER busy, and the staff need a bit of politeness training… but we go for the food anyway! We’ll go there if you visit me in Tamsui!

Second item on the list was an odd one: a 2-year domain purchase of my business site in Chinese. This was provided by UnicodeDN and cost me the grand sum of $1314. I’m now thinking of adding another with another variation of our company name.

Third is our regular payment: a combined life insurance and investment product from Cigna. I counselled my wife NOT to buy this, but she didn’t buy it for the obvious reasons. She felt that she was helping her sister go through a rough patch! And indeed her sister has done fabulously and gone on to become a local financial adviser, having passed some tough exams (and that’s one thing Taiwanese are good at: setting exams!). We are definitely not making a lot of money out of this one, as in general, such products don’t offer good value: there are just too many ways to take commissions, including a standard commission, unit transfer fees, I’m sure there’s a currency commission, and, most certainly, there is a credit card fee, of course! In fact, once you consider all of this, I’m surprised that we don’t OWE Cigna money for this product.

Fourth and Fifth payments are for two nights in different hotels while we had a three-day trip to some of the mountains around Lala Mountain in Taoyuen County. I’ve included a You-Tube video for you to get some idea what the area is like. Though the first night we stayed at a hotel near the Yi-lan, in a tourist zone area. Quite pleasant on the East Coast overall, I have to say. Then we drove up to the LaLa Mountain area where we stayed at another hotel called MingChih National Forestry Resort. Neither of these was particularly cheap. But getting a chance to stay there was wonderful, and we were lucky to get a vacancy on the spot. We had a little cabin with NO airconditioning… it was VERY cool outside, in fact about 21C, compared to down on the plains where the temperature and humidity were much higher. Total cost: $6170 for both nights.

There were no penalties or interest charges to pay off this month, either. That left us with the grand total of $11,002 to pay on our credit card, or we could pay the minimum balance of $1100. We also earned 551 bonus points to add to our total. Naturally, we paid it off entirely. A quick look at the calculator below showed us why: we saved about $606 doing this, and it would have been paid off in a year exactly.

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How was your August Credit Card spending? Did you spend wisely or blow your budget? Did you pay it off at once or slowly? Use the calculator to find out how much you would spend. Don’t worry, you can simply ignore the British Pound sign and assume dollars or euros.

Flea Markets: Can they be fun?

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It’s fun to try different things when you have your own business. I’d seen a ‘flea market’ in the TV show ‘The Apprentice’, in fact in the first series when the contestants were asked to sell items at a flea market. I’d always wondered what we’d learn about doing that.

Well, on the weekend last, our community had its own flea market, and so we decided to see if we could sell some English Books to passersby. Terry, Christine, and I set out our stall in the main area, with a lot of traffic walking by. Our target market was parents who wanted to buy books for their children, and children who liked books.

Our price points were about US$3.00 for paperback books and $7.00 for hardback children’s books. Generally, for new books, in Taiwan, these prices were already good value. But for English language, American books, the prices were extraordinary value.

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Terry checking the stand to see if the books would stand up or not against the wind. They didn’t.

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“Now where should we put those books?”

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We’re all taking a breather, and reading the books to see what we could sell.

At the start, we all were quite excited: business was brisk as we sold 6 in about 15 minutes. But the next few hours didn’t produce any more sales at all. At about lunch time, we started wrapping things up as we realized the heat of the day was coming and most people would be taking a siesta after lunch.

Overall, we learned a lot about taking part in a flea market, though. We talked it over and here are the benefits of our experience:

1. Pick your product: not all products can sell well in a flea market. People don’t go to them to buy NEW items, but rather items that are second hand usually.

2. Pick your price point: in a flea market, people will readily hand over good cash for junk, but are often reluctant to part with cash for things of value. Perversely, they seem willing to throw away $100 on a piece of junk that they may never use. Yet, to buy a book at the same price, esp. a new one, a great deal, seems weird.

3. Selling books: there are places to sell books, and places NOT to sell books. Most bookstores carve out a real atmosphere for themselves, even 2nd hand ones. A flea market like the one we attended has none. Nada. Zip.

4. Market well!: we originally had intended to do other marketing of our books to our students, but we didn’t. Big mistake. If some of our own students and their parents had dropped by, we might have sold MANY more books than we did.

5. Our profit margins: we didn’t have sufficient profit margins on the books to make the whole effort worthwhile. While we charged a 35% markup on the books, we figured that buying a cup of coffee basically killed any money that we made. We realized that to make any money on books, … well, it’s difficult.

Unfortunately, for #4 above, we failed to market our books to our students and we failed to market our courses and classes to our book customers. This had been the primary set of objectives (not making money as in #5). In this respect, we absolutely failed.

So if I was sitting in the boardroom with Donald Trump, I’m afraid that I’d be the one taking the rap for failing on so many counts! But then we aren’t. We were happy to try this approach, and see what we could make of it. Perhaps we’ll try it again, perhaps not. We’ll see. Did we learn anything? You bet, a whole lot! And it was kind of fun!

Have you ever sold anything in a flea market? How did you approach the whole thing?

Buying a house: saving for the deposit? It does have advantages…!

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With the advent of 100%+ mortgages, borrowers these days find it easy to borrow the money they need to buy the house they want. It didn’t always use to be that way. In fact, up until the recent credit boom, borrowers were required to pay a deposit on the house from their own savings. In fact, in Taiwan, it is still this way. For new houses and pre-construction units, the deposit is actually between 10%-20%, but for second hand units, it is typically 30%-40% of the sale price.

When my wife and I first married, saving any kind of deposit was quite difficult, because we were starting from nothing. We had nothing in the bank after our wedding; so purchasing any property was simply out of the question. If we had been living in the UK or US, it would have been quite simple to go out and borrow the money for our house, our furnishings, and everything else we needed for the house.

Looking back, though, I realized that the fiscal discipline that we learned from saving for the deposit taught us much more about how (dare I say NOT) to manage our cash, cash flow, savings and credit cards. So, today when I was chatting with my good friend, Cindy, about buying a house. She had just moved into her own apartment, and was dreaming about buying a house. But it’s difficult when you are starting out to save money, because even renting a house requires quite a bit of cash.

After I got home, I realized that it was having to save for the deposit that helped us to manage our cash flow much better. It took us over 5 years to save up enough for a house, but we did it! And, at the beginning of the five years, only my wife had a proper job!

So why? Simply, because if you can save a cash deposit, then you have learned a number of important skills for a house-holder:

  1. you can manage your income/expenses carefully;
  2. you have budgeted properly;
  3. you have consistently saved up money;
  4. you know that it’s possible to manage your money without spending it all; and,
  5. by committing your own money to your house, you are making an emotional commitment that having a 100% mortgage may not allow because you are risking your OWN money.

Together, these qualities are more than enough to prepare your for the task of buying and managing your own house. More importantly, with these skills, you are setting your stage for managing your finances for the rest of your life (God willing!).

In addition, when you do purchase your house, you will have a ton of advantages that you didn’t reckon on in the first place:

  1. lower overall mortgage rate than 100% mortgage;
  2. lower overall mortgage payments vis-a-vis if you had paid for the house in a 100% mortage!
  3. a better credit record because you’re not overleveraged;
  4. you’re not overleveraged;
  5. in a tough seller’s market, you’ll have some more ‘protection’ against negative equity situations;
  6. you may even be able to use the savings habit to pay off your entire mortage much sooner saving a lot of interest payments over the term of your mortgage!

So, if you are forced by circumstances to save for a deposit for your house, look on it as an opportunity not a burden! We learned a lot… Seize the chance to save! No matter how hard it is for you to cut back, it will be worth it in the end.

Did you have to save for a deposit for your first house? How much was it? Was it difficult or easy for you to get it together? I’d love to hear how you