Renting a house - the only option for now.

Sometimes I find that many from the Baby Boomer generation are quite clueless with some of the issues that the current generation face.

Quite recently I was having a chat with an uncle and he was shocked when he learnt that we were paying RM2000/pm as rent for our house. He asked why I did not buy a house instead. The house I stay in has a market price of about RM1 Mil. Paying about RM2000pm, I can only afford a 2+1 condo costing about RM400K in the outskirts of the city with a down payment of around RM40K + extra charges around RM20K upfront for lawyer's fees, etc.

I guess most of them do not realise this because many of them already have a house which they bought a long time ago when owning a landed property was not a dream but something you could achieve with a bit of hard work.

Now, if I wanted to buy a landed property around PJ, I would have to cough up around RM6K every month for nearly 25 years. More than half my salary and I will be probably be retired long way before the end of 25 years.

In other words, I can only dream of a house in Kelana Jaya, PJ. So renting is the only option for now unless I come by some good fortune.

Found this great link which asks you: "Are You Financially Ready To Buy A House In Malaysia?"

Non-payment of loans by older generation hurting future generations

It is a bad time to be a fresh University student in Malaysia today. The National Higher Education Fund Corporation (PTPTN)has announced loan cuts of 5% for students in public institutions of higher learning and 15% for those studying in private institutions of higher learning. This came into effect last weekend.

Apparently the main reason is that many borrowers have not repaid their loans. I know that there is a similar situation in the UK as well. According to PTPN Chairman, Datuk Shamsul Anuar Nasarah, the total PTPTN loan repayment received up to August 31 this year was RM5.37 billion or 45.62% instead of the RM 11.77 billion, the corporation was supposed to receive.

I know a number of fresh graduates either do not have a job or are poorly paid, if they do and they have an excuse. However, I suspect that there are several people earning huge salaries who have not bothered to pay off their debts. I am not sure what are the reason but if you are one of them, please pay off your loans as you are seriously hurting the prospects of future generations.

And for guilty Muslims out there, if you are concerned about the issue of petting dogs, wearing hijab or other current issues, you should be aware that Islam also takes the matter of debt very seriously and Muslims are urged to avoid it as much as possible.

Financing a car

One of our friends was recounting how they bought a car and to finance it, took out a loan. The interesting thing was that their decision was based on the advise of the salesman at the dealer where they bought the car. According to them, the salesman made it sound so attractive and that they were the best deal around. However, as they later found out, that was really not the case.

It's not surprising as I also financed my previous car - Proton, with a bank recommended by the dealership. Talking to a few other friends also confirmed the same thing. That is apart from a few other guys who were wiser because of prior experience. They had done their research and went with a lender that gave them the best deal.

It's amazing with a wealth of information at our fingertips on the web we still depend on the salespeople at dealerships for our financing. There are numerous sources on the web that can provide comparisons between the various offers available.

If you are looking to finance car purchases, do check out the the car finance section of the Motors Today (http://www.motorstoday.co.uk) website. They have links and information relating to loans, insurance and a link to HPI, a UK Company specialised in checking the histories of used cars.

They also a car tax calculator that will show the tax payable for the next three years. As for insurance, the company has paired up with Money Supermarket so that you can instantly compare quotes from leading UK motor insurers.

Myvesta Foundation Individual Voluntary Arrangement

Today Chancellor Alistair Darling has asked banks in the UK to be more selective in lending. Debt is an issue of concern here with consumer debt soaring to record levels (£1.35 trillion, according to a BBC report).

A lot of people in serious debt often see bankruptcy as the only way out. They think they have no choice. However, according to the Myvesta Foundation, a lot of these people would prefer to avoid bankruptcy if given an option. Entering into an Individual Voluntary Arrangement (IVA) with creditors to repay some of what they owe over a sensible time period is a rather attractive option. Often people would rush into commercial IVA organisations after watching their ad on TV. If you are considering bankruptcy or thinking of an IVA, call Myvesta at 0800 1116 885. You can even chat with them online for free.

Myvesta UK Individual Voluntary Arrangement (IVA) were developed in conjunction with a firm of auditors and chartered accountants. Customers would be provided with a unique solution that best fits each person. FYI, the Myvesta Foundation was created to fill the need for qualified, compassionate debt assistance that worked for consumers. Their founder, Steve Rhode himself went through personal bankruptcy in 1990. he came up with this service to provide real help to people in trouble. Their website carries a number of free and helpful information about almost every topic related to debt issues.

Control teenage spending

My kids are still small and I am spending a fair amount of money on them. When I told some of our older friends about this, their reply was "wait till they become teenagers" or something to that effect.

It seems that a lot of teenagers have a problem with handling money. In many cases, I can see that the fault lies with their parents. Most people don't spend enough time with their kids and because they feel guilty, think they can make up by giving their kids money. Teaching your kids to be prudent with their money will definitely help them in the future by establishing smart financial habits.

One great way to teach teens how to manage their money is by using Teen Prepaid cards. With these cards, the parent remains in control. The parent can monitor the spending habits of their teen and can even suspend it if needed. It can prove to be useful in emergencies as the card is a convenient way to give teens money electronically.

Some of the cars can actually teach the kids to instill work ethics. For example the cards from PAYjr's Allowance and Chore System can be a way to pay their teens based upon completion of household task or other goals.

Finding the best online savings account

I am not sure about you guys, but a lot of people prefer to their money in their savings accounts as a risk free investment. However, a lot of people complain that earning on the money saved is quite low. There are so many banks around that promise you the best interest rates that choosing the best one can be prove to be quite a headache.

Compare online banking savings accounts and find a new savings account or checking account that earns more interest today with SavingsAccounts.com

This new site focuses on the direct to consumer online banking industry. They promise to help you find the perfect online savings account. Even though it is still in the early development stages, the site is a great place to learn how to earn better interest rates. They do this by comparing online banks and finding one offering the highest interest rates. This will be based on your specific account features that best suit your individual needs.

When I last checked, HSBC was the most attractive with interest rates for savings accounts as high as 6%.

Loans for people with bad credit

When you start a family of your own you start building debt in so many ways - for buying a car, buying a house and so on. In our case, it was worse because we were working at different place, me in Kedah in the north of Malaysia and my wife in Kuala Lumpur. We had to maintain 2 separate houses and we also had our own cars. We also decided to buy an apartment on a loan which we have to repay for 25 years.

This caused a severe strain on our finances. We were fortunate because both of us were working. However, things would suddenly turn up that we had no chance but to borrow money (using our credit cards). Like the time my wife had to go for a Caesarean birth. We decided to go to a private hospital and as you know these places are not free or even cheap. Fortunately our bank credit history was good.

We are still in the process of repaying of our house loan. Thank God! we got rid of both our car when we came to the UK, otherwise we would have been paying for that too.

I am sure many people are in a similar situation and maybe worse. Some of these people come under what is known as a bad credit history. Whenever we apply for a loan, our credit history is reviewed. If you have a bad credit history, you may have to settle for a bad credit loan, which has less favourable terms including higher interest rates. There are several Loans For People With Bad Credit. This includes Bank loans for financing your business and Secured loans for people with bad credit but who have property, among others.

Teenage debt

Just read this really worrying news in the money news section of the Lombard Direct website.

According to the report, 50% of teenagers in the UK will be in debt by the time they turn 17. This was the part of the findings of a poll carried out by the Personal Finance Education Group (pfeg). Another finding which really surprised me was that "one in 20 young people in the UK think they do not have to ever pay back money borrowed on a credit card".

Are they really that stupid?

By the way, Lombard Direct is part of the Royal Bank of Scotland Group. It was established in 1995 and is one of the largest and most respected financial institutions in the UK.

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Loans for home improvements

Winter is nearly over here in the UK and this is the time of the year when people usually take up loans for home improvements.

This can be a big project like adding an extension to the house or a small one like refurbishing the bathrooms. Often all this are reasons to take up a secured loan or home improvement loan. Secured loans are usually the most popular and refer to those loans that are backed by property of some sort that is used to guarantee payback if the person defaults on the payments.

It is now normal to refinance mortgage to reduce the total amount we might end up paying. People often decide to go for remortgages as they have become wiser with their finances. They don't stick to one company anymore as they realise that mortgage rates fluctuate along with the economy.

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More than one credit card

How many credit cards do you really need?

I have just one credit card. It's not a platinum card or even a gold card, it's a basic card, which I signed up for during a promotion.

It's really surprising when I learn that people have 4 or 5 or even more credit cards. I mean, why do you need to sign up so many for? if you spend more, then maybe you should upgrade to one with a higher credit limit.

While I was writing this my wife came over , read what I had written and said "I have 3 cards". So I posed the question to her.

Well she listed out the reasons:
- Lower credit limit of the first lead her to take a second one. She just couldn't let the first one go because of the loyalty points she had already accumulated.
- 0% balance transfers also help to reduce the interest on the cards.
- The third card was taken up during a promotion in order to grab some prizes, plus it didn't have annual fees, meaning free for life.

Some credit cards companies even offer cash back for credit card loyalty.
Just remember to compare credit card offers.

Take care not to fall in the credit card debt trap. Use them wisely.

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