Counting Potatoes

Farming Fear

There's a nasty nasty joke being played all around the world. And sadly, we are the butt of it. This is no Fear Factor. This is real. We live in a fear farm and we are the crop.

From the moment of our fertilization to our funerals, our lives will be subconciously directed, influenced and permeated by fear. and it's not even the simple and less costly type of fear our ancestors have to deal with like the fear of hellfire and damnation, today's line-up of fear factors are somewhat more earthly, tangible and commercialized. They dont get delivered via thundering sermons from the raised pulpit either but through engaging jingles, funny scripts, and serious, credible, paranoia provoking infomercials.

We may find them funny or outrageously senseless at first, but as time can move mountains, streams and even continents through its consistent and persistent action, so can advertisements over time move billions of minds all over the planet to spend on more and more things unheard of and uneeded before. Sooner or later, we catch ourselves singing that commercial jingle. Then, before we know it, we're looking at our underarms in the mirror contemplating whether its a tad too black and hairy.

Speaking about which, here are some products, services and what nots I've compiled which have made our lives so much more expensive over the years.

1. Anti Black Underarm Deodorant and Armpit Shaver

Evolution or God has dictated that most girls should have hairs on their armpits. Some nutty capitalist felt he had a better sense of aesthetics and declared armpit hairs taboo. Afterall, if you could convince women that armpit hairs shouldnt be there and if you could include women with armpit hairs in men's nightmares, there's bound to be a huge huge market that's going to be created over time.

And now that most women are already shaving their armpits - out comes an advertisement that says "regular shaving can cause black underarms". So now, black underarms are included on the list of taboos and a new product is launched to combat specifically this.

So first it was smelly underams [which was considered normal from time immemorial to about 60 years ago], then it was hairy underarms, then black underams.. I wonder what they'll come up with next to further fan the insecurities of women regarding their armpits?

Porous underarms?

Wrinkly underarms?

O_o

2. Mineral Water

Bottled water... 30 years ago, they would've been as ridiculous as canned earth. But now, one sees them regularly in grocery shelves along with carbonated and fruit drinks. Now, they're even trying to sell us ponkana sweat [ if they can sell bottled sweat then that's it, we're really fucked up]

Bottled water... They are an undeniable proof of the power of media in our lives. If capitalists can convince us that we need to buy even water, then there's no end to what they can persuade us to buy..

Pretty soon they might be selling fresh air tanks that we can plug into our home ventilation systems..

Or scented bathwater..

Or little pills we can stick up our ass to serve as fart deodorizer..

We would go.. Pfffffftttttt....

Then the whole room would smell like a field of roses... [ farting would actually become romantic] Some pills can be made to hum love songs as they disintegrate.

3. Snack to Burn [Diet Food]

Saw this ad just the other day.. Snack to burn.. Burn calories even as you eat..

Weird.. Back in biology class, I thought the whole point of eating was to stock up on energy. 99.9999% of all living things on earth eat to survive, no wonder we've fucked up the planet big time. We eat just so we can burn the food we have eaten earlier in the day.

Isn't it ironic that while 70% of all the people in the world are dying of starvation, the rest are eating food just to burn the food they have just consumed?

Meanwhile, the US government is paying its farmers subsidies just so they wont have to plant anything in their farms [to avoid flooding the world market and lower the price of foodstuff].

God must be pretty confused by now thus the swine flu outbreak.. He must be thinking.. Hmmm... Maybe I should just start all over again?

4. Ringtones

Ringtones.. People actually buy ringtones.. Chris Rock predicts that pretty soon, a merger between big telecom companies will occur and we'll suddenly find ourselves choosing between cellphone models that have no ringtones installed.

Right in the middle of conversations, people would then just suddenly fish out their cellphones and go "Hello? Hello?", smile foolishly at you and say "he he, i'm just making sure no ones calling"

5. Whitening/Tanning lotions

How to make money in selling skin lotions 101:

Make White and Yellow people want to have golden tanned skin..

Make Black and Brown people want to have pinkish white skin..

With everyone going bonkers about their skin color, you can then sell skin lotions like pancakes.

I wonder if anyone ever notices that beauty commercials seems to be always about being something that most people are not? If the country is 95% brown people, then infuse it with ads about women with pinkish white skin. Don't put chocolate brown models on the pedestal else most might end up feeling pretty satisfied bout themselves.

6. Liver Aid, Calciaid, Omega 9, Good bacteria, Good Cholesterol, L-carnitine, the 5 signs of good nutrition, etc.

Not a day or even an hour passes without our being reminded of the weird sounding chemicals, amino acids, compounds, vitamins or minerals that our bodies might be missing. We are slowly being boiled in fear of our bodies and health.

With all the facts and figures flying around about the correct way of living, it makes one wonder how the human race has gotten this far without these wonder drugs. How did Einstein ever become a genius without promil?? How did some people live to be a hundred years old without Haveitall or calciaid??

I think it is only in this century that people are becoming intimately aware of what is going on inside their bodies, the 1,001 things that could go wrong with it and the wonder drugs that could deal with it.

7. Credit Cards

Several decades ago, living life in perpetual debt was considered plain stupid. Now we see pictures of smiling women weighed down by multiple shopping bags, grinning guys driving a brand new car brought on credit, ecstatic couples smugly reclining on a brand new sala set, watching a movie on a brand new ultra slim LCD tv, all brought by a swipe of their plastic as if these are as life should always be. They don't bother to show the pictures of these people slumped over their desks, mascaras smeared from crying or arguing with each other on how to pay the bills.

The smiling and happy faces seems to have convinced most of us that living a life in bondage to the bank is ok and living way way beyond our means is perfectly normal as long as the credit limit supports it.

We constantly live in fear. Fear sowed by the uneding deluge of advertisements everywhere and everyday of our lives. Fear of rejection brought about by black underarms, smelly feet, dark skin and thousand of other fabricated insecurities. Fear of death and our health thus the multi vitamins and minerals, mineral water, omega 9 products, enriched baby milk, anti osteoporosis pills, etc, etc, etc. Fear of the future, thus the insurance packages, college plans, exam reviews and health coverage. Fear of boredom, empty spaces and failure thus the trappings of wealth and entertainment provided by the reliable plastic.

It may be covered with an icing of happiness, beauty, comfort, health and security but scratch the surface just a little and you'll find out that most of our decisions about money are ruled by simple fear. Fear deliberately planted on our minds so as to farm our hard earned money.

Consummerism has become the new religion and Brands, the new sheperd of men.

Oh well.. At least its better than living in constant fear of being chosen as the next human sacrifice to appease the rain god. Ehe he

ps. Forward this blog to 50 other people or the fleas of a thousand camels will infest your armpits tonight.

	Farming Fear

Controversial Views on Philipine Politics: Tatsulok

A song by Buklod goes, several presidents have already come and gone but Juan is still homeless, dirtpoor and landless. Another Buklod song - tatsulok (triangle), made popular by bamboo recently, speaks of the struggle not between socialist and capitalist ideals, not between race or nationality but between the poor masses and the rich few.

Back in our college activist days, in the heyday of raging hormones, pristine ideals and naive ideas, such lines were enough to transform otherwise peaceful and slightly naughty college students into testosterone driven, rage fueled social zealots. Everything then, it seemed was the government's fault.

5 years later, with the idealism of youth tempered by the harsh realities of life outside college, with the dreams of the liberated masses buried under the heaps of monthly bills, grocery receipts and taxes, and the cry of the oppressed drowned by the cry of our wailing children, we realize..

Damn! Juan has been getting the better end of the deal all along! That bastard! He he

There you are working your ass off day in and day out to pay for your children's education, for the roof over your head and its utility bills, kissing everyone's bottom for that coveted promotion and saving like crazy for future medical expenses, and to top it all, being taxed heavily by the government for its pro-poor programs..

Juan, all the while, is getting free education (which he usually dismisses as useless), free or ultra-low cost housing and land, free medicines, free groceries,
free surgeries, etc, etc, etc...

Juan does not finish his schooling because he finds it too hard, yet gripes about the minimum wage he receives from his labor intensive job.

Spends like crazy on fiestas and birthdays and drinks with his buddies 5 days out of the 7 in a week and yet complains about the lack of government help for education, health and housing and gets teary eyed whenever he thinks about the family he just can't seem to support.

Sits on his ass all day long waiting for those damn community workers who were supposed to bring xmas groceries, or those nursing students who usually give out free food as a graduation requirement, all the while muttering why these people never seem to bring enough.

Impregnates his wife yearly, scoffs at condoms and contraception, brags to his friends about his sexual conquests and cries on TV about the fact that he can't feed or send his kids to school.

Rails against the injustice of the rich and the middle class having more money than them, and yet cringes from the very things that's needed to achieve the same level of success - education, financial wisdom and hard work. Relying instead on the government and corrupt politicians to give it to them on a silver platter.

Some Juans have grown quite comfortable living off the fruits of our Christian guilt, scratching on glass windows to be given scraps of fastfood, scratching car paints when rebuffed, stealing mobile phones then relying on sob stories to explain the fact why he did it when caught, asks for compassion from those well off and hates poorer neighbors who begs for the same from him.

Our government may have its own share of faults for the state our country is in and the rich may indeed be getting richer while the poor becomes poorer, but this does not negate the fact that there are also Juans out there who have overcome such roadblocks to success given the same odds. The maker of baguio kropek, buko juice brand, the founder of SM, and countless other Filipino workers abroad can testify to this.

For most of you reading this blog, dig deep enough and you'll find an ancestor who decided to work with what he had, who took that leap of faith just to change his lot in life, who created his own luck by believing in educating his children, who saved something out of his daily earnings, who learned how to manage money and to take risks. Who saw a way out amidst the dreariness of his life.

He lived in the same hovels as the other Juans back then, had the same meager education, did the same crappy jobs and had the same corrupt government.. And yet, he was different and he made a difference by breaking the chains that held generations of his family in financial bondage. More than joining the cry for change of those Juans around him, he changed himself.

It's not material wealth that draws the line between the rich and the poor not just in our country and everywhere else but wealth in mindset, drive and character.

	Controversial Views on Philipine Politics: Tatsulok

Controversial Views on Philippine Economics: On Financial Literacy

One of the biggest myths being perpetuated by our elders today is the lack of good opportunities left in our country and the need for our youth to fly to other countries in order to have a better shot at life. Brings to mind people jumping off the sinking titanic, he he.

Because of this, the Philippines have become a vast human factory churning out batches of nurses, engineers, domestic helpers, caregivers, etc while our economy has grown used to its dependence on remittances.

Add to this our local call center agents, medical transcriptionists, digital animation artists, etc working for foreign companies and you'll get a picture of the kind of country our President is so proud of..

A nation of workers toiling their asses off year in and year out for foreign companies and now being laid off left and right due to the current global financial crisis.

So now we're back to square one caught with our pants down by the financial crisis rocking the world, wondering what the hell happened to the golden days of immigration and overseas employment.

On the other hand..

Ever noticed the growing number of Indians riding around in scooters with umbrellas on their laps? How about the growing number of Chinese retailers who cant speak a word of Filipino hawking their wares in divisoria?

For them, the Philippines is a land paved with gold or to be more specific, paved with Filipinos willing to make them rich.

After all, in a land of workers, capitalists don't have much competition right?

Consider the following examples:

1. We send thousands upon thousands of sons, daughters, mothers and fathers to work their asses off in foreign countries. These people then send in their money monthly to sustain their dependents here.

What do we do?

Yup! We spend it all! To pay our bills, to improve the house, to buy a car, to get the newest gadgets, to pay for plastic surgery, to purchase signature clothes and lastly, to educate our sons and daughters so that they can follow our footsteps.

If this is indeed the rat race life, then the Philippines must be one hell of a rat lab where Pinoys earn to spend and capitalists sell and get rich.

2. We've all heard of songs lamenting the fate of our poor farmers and longing for the day where the farmers will rise up and take what's rightfully theirs. Well here's what I've seen with my own eyes..

Farming is basically 1/3 back breaking work and 2/3 mind numbing boredom as the farmers wait for the plants to grow. Now instead of putting this 2/3 sitting with their thumbs up their asses time to good use however, (working as a part time carpenter, plumber, market retailer, etc), most Pinoy farmers seems very much content to while away their time drinking brandy or beer, playing jueteng or lotto or gossiping about this neighbor and that.

Moreover, because by harvest time, they have accumulated much debt, pinoy farmers seem to prefer selling their produce for pennies to chinese middlemen rather than stock them and wait for the price to improve, or process them and sell them for more.

Instead, these people live a life of collecting debts (beer, gambling, etc) during the growing season and more beer, gambling, etc during harvests.

\

The Chinese, on the other hand, buys the produce for pennies, stocks or processes them and sell them for substantially more (sometimes to the same people, he he) when the harvest celebrations die down.

3. Supermarket vendors aren't much better in this aspect. I mean, what is the sense of selling your goods for a 10-15% mark-up and then using your hard earned profit to pay for a 10-20% interest loan??!

Most of these people just can't seem to resist buying cellphones, house furniture or fiesta goods on installment, paying for their children's tuition through exorbitant loans and loaning start-up capital through micro financing. Moreover, most don't even save what little profit they have leftover so that they can free themselves from this vicious cycle - opting instead to splurge it on fiestas, bdays and xmas celebrations.

Indian microfinancers must be thanking their gods for creating people like us, he he.

4. They market, get the contract and outsource the work to us. We chat our throats dry servicing foreign clients, type our thumbs raw making medical reports for doctors half a world away, strain our eyes making garments or electrical circuits for foreign companies and get paid on an hourly basis.

We look for other jobs when dissatisfied with our salaries, they think of new ways to profit, look for more clients and employees to increase their margins. They wait for their ROI's, we wait for our 13th month pay, they think more than they work and earn even when asleep, we work like automatons and spend like crazy on vacations.

I could go on and on but I think you see the picture. The problem with our economy isn't the lack of opportunities but the lack of a mindset capable of seeing and taking advantage of them.

We're trapped in a mode of thinking where money has to be earned by working for other people rather than money being created through wise investing, innovating solutions, or creating businesses around needs.

Our country has more natural resources than Japan, is more strategically placed for commerce than Singapore, had more decades of peace and order than Vietnam or Korea and has more English speaking people than India. Why then are these countries much more prosperous than ours?

I think the answer lies in the basic difference of how we perceive money. They invest, we spend. They look for business opportunities, we look for high paying jobs. They create and innovate, we manage and supervise. They make their money work for them, we burn ourselves out working for it.

The Philippines isn't poor in opportunities. It's we ourselves that's lacking.

	Controversial Views on Philippine Economics: On Financial Literacy

10 Creative and Proven Ways for Pinoys to Save Money

Hmmm... Yahoo seems to be fond of posting money saving tips in the homepage these months. Problem is, I don't think they can be of much use to most Pinoys as most don't have credit cards to cut in half, mortgage loans to negotiate or cars to try alternative fuels or car pooling on.Hell, most pinoy's dont even have any credit standing, houses or cars to speak of! All the credit score they are aware and concerned about is their sari-sari store credit score.


So it got me thinking, why not make an article focused on how pinoys can really save money during these trying times?Something that can be of practical value to all cash strapped brothers out there braving the economic winter?


Note: the following is a compilation of proven money saving tips gleaned from family stories, personal experiences from college and experiences of friends.


1. Jeepney 123

Rising fuel prices and the subsequent rise of transpo fare didnt pose much of a problem to Bok when he was in college. The cost of passenger fare might've have risen to P7.50 from a measly P2.25 during the few years he was studying in college with his allowance remaining rock solid at P6000/month, but the net effect of it on his transportation budget was zero.


See, his principle was very simple... Don't pay your fare if you can't afford it. Just pass off the other passenger's fare as your own and make damn sure your "innocent" expression passes the test when the driver starts asking who the hell didnt pay.


2. Bus ABC


The 123 technique might not work well in the case of bus rides. Buses, after all have specialized fare collectors so you can't take advantage of the traffic distracting the driver in this case. Not to worry though, bus fare collection systems have their own inherent weaknesses that a money-challenged passenger can take advantage of.


First, find another seat as soon as the fare collector checks where you went after hopping on the bus. If you're wearing a cap or a jacket, remove it. If you have reading glasses or a fake mustache in your bag, wear them. This is so that you can disrupt the memory system the fare collector has in place.


Next, look around your new seat for used tickets, preferably those that have not been marked or had their edges torn. This will serve as your fare. You then tuck this in your wristwatch strap and you're good to go.


The last step involves falling asleep throughout the duration of the trip.Failing this, you can also pretend to be asleep as the fare collector goes around to check the tickets. Just make sure you dont get in the same bus on your way home, he he he


3. FoodCourt Scavenger


I see poor people making do with gruel or a combination of rice and salt on the TV everyday and I wonder why they don't make use of their ingenuity and creativity when it comes to feeding their families.


Some claim they work in the trash heap all day just so they can take home P30, enough to buy 1 kilo of rice for the whole family for the next day. Sometimes, you see these kids crying from hunger or mothers getting teary eyed because they couldn't earn enough to feed their kids well.


Here's a suggestion:


A. Loan enough money to buy a decent set of clothes and shoes from the local divisoria. Better yet, buy 2 sets.Cost:P500,

B. While you're at it, buy a second hand bag.

C. Take a bath (very important), don the clothes and go to the nearest foodcourt preferably around noon or evening.

D. A good reminder at this point is that you should act as if you're there on serious business, scout the territory without being too obvious and choose the food you'd like to bring home.

E. Sit unnoticed in a recently vacated table and place the leftover food ( must be of substantial quantity ) on the tray, bring it over to the store indicated on the plate and request that the food be packed to be taken home.

F. Do the same for the food on 2-3 other tables (must be from different stores).


This way, you can feed your kids (with quality, delicious food) and sell the rest to your neighbors enabling you to pay back your loan.


G. Ask your kids what they would want to eat the next day and choose a different Foodcourt this time.If you have no fare to get there, refer to numbers 1 and/or 2. He he.

H. If nobody wants to loan you the money to buy new clothes, please refer to the next number.


4. Laundry Shopper


This one takes a bit more planning than the first three tactics described above. For one, you must be careful when it comes to choosing your shopping area. Too far and you'll stick out like a sore thumb, too near and the original owner just might come across you in the street.


Being a laundry shopper also involves a bit of recon before the shopping. You must have a clear idea of what the schedule of your target shopping line is. Make one mistake and you just might find yourself being pounded into the dust by irate owners. He he, got several clothes several years ago that got lost this way. Note though that to be a laundry shopper you must have a talent for estimating and choosing clothing sizes, pant sizes and even underwear sizes. Remember, there are no fitting rooms for this type of shopping, hehe


5. Church Footwear Section


Need some nice shoes to go along with your new clothes? Well, the local church just might be able to help you. Just go over the shoes off area and choose from among the options there. If you don't find a size that fits, try going another day, time or even a different church.


6. The Wedding Crasher


Ever wondered about people, who nobody knew, eating at wedding receptions? bride's family is too shy to ask about them, groom's family assumes these people are part of the bride's family. Result? A perfect cover for eating great food for free!


I know of several people, mostly my cousins, who tried this during periods of financial drought. They say that all it takes is a thick skin and a well rehearsed answer when asked about their relationship to the newly married couple. A small price to pay for food and infinitely better than eating rice sprinkled with salt wouldnt you agree? He he he


7. Crying Ladies


For snacks, the same people mentioned above would wear their serious/sad faces, go to funeral homes and pretend to be the deceased's gradeschool or highschool classmate or something, make small talk with the people there, all the while munching on free crackers and sipping on free coffee.


8. Memorial Homes


Years ago, I've had the opportunity to talk with the cemetery's security guard about his job. Apparently, cemetery security guards, or at least, those assigned to Sto. Nino Memorial Park, are too scared to make their rounds at night.

Which led me thinking..why not use those big big mausoleums as shelter for poor families? After all, It's concrete made, has good roof, solid walls, good floor, etc, etc. Why settle for lean-tos, nipa huts and under the bridge dwellings when these sturdy concrete structures are just waiting there for someone to move in? best of all, there's no rent or threats of demolition!

Of course, then you'll also have to contend with the 'multitudes of people' up and about the vicinity at night. He he he


9. Pirated Cable TV

Why pay monthly for cable TV service in Manila when you can just as easily get one for a one time fee of P1000 or so? The neighborhood where we used to live had such option. Just pay the right person a thousand pesos, choose from among the different subscriptions, gold, platinum, etc and he will climb up the utility line, rig a splitter right off someone elses' cable line (with the specified subscription) and voila! Cheap cable, he he

Impossible you say?? Illegal might be a better word, he he

10. Iron Master

Ironing clothes is one of the most energy demanding tasks in any home. Clothes iron run at about 1800 watts per hour. That's about P15 per hour and about P500 in additional electric bill every month if you spend an hour everyday ironing clothes.

Here's a cheaper alternative..

1.Buy a flat piece of roofing metal.

2.Place it on your roof or garden.

3.Bring it in every noon and 'iron' the clothes on it everyday.

4.Bring it out again if you need additional heat or better yet, iron the clothes outside.

So there you go. Practical, proven and highly applicable ways of saving money during financially troubled times. He he, feel free to add your suggestions.

	10 Creative and Proven Ways for Pinoys to Save Money

The Red Queen and The Rat

“It Takes All The Running You Can Do, To Keep In the Same Place”





It’s an interesting phrase that can be found in Lewis Carroll’s book “Through the Looking Glass”. Aside from that, the “Red Queen Hypothesis”, is actually an evolutionary theory concerning the advantage of sexual reproduction as well as the evolutionary arms race of competing species. Interesting theories in themselves, (brings to mind a group of guys in a bar all looking at the same girl) but that’s for another story.

The phrase strikes a deep chord though, one of fear, not of the unknown perhaps but of the unexplained. Because no matter how high or how low our regular salaries or profits are, at the end of the month, most of us inevitably find ourselves back in square one (with the question WHY?? somewhere in the backs of our minds) - waiting for the bills to arrive, the rent to come due, and the groceries to run out. It’s like going round and round a monopoly board with expenses instead of properties on the boxes. Groceries, baby formula, rent, electric bill, telephone bill and so on and so forth. You pass go, collect your 500, and the torture goes on.

Kiyosaki actually used another term to describe this phenomenon, “The Rat Race” - which basically describes how Yuppies (young professionals) expend their lives locked in a vicious cycle between earning and spending, living to eat and eating to live, or as Madam Rempillo would probably say it – “Isang Kahig, Isang Tuka”.

Consider our lives seen through the eyes of a pet hamster:

His mater graduates and lands his first job.

His master gets his first paycheck = Treats parents, friends and girlfriend, buys an Ipod and a new 3G phone.

His master becomes a regular employee = Gets his own apartment or condo (now has to pay rent, electricity and buy groceries).

His master becomes eligible for his first credit card = makes it a hobby to furnish apartment or condo using credit card (acquires the following in succeeding months - large screen TV, Dual Core laptop, trip to Boracay, aircon, microwave oven, new wardrobe, etc). Now he has to pay for his monthly credit card bill on top of the rent, the groceries and the utility bills (which have also risen substantially because of the new appliances).

His Master gets a pay raise or a promotion = Buys a sleek looking, brand new car on loan. Now master has to include payments for car and budget for gas and maintenance in his monthly budget on top of the payments for the credit card, the rent, the groceries (which are also increasing in monthly volume) and the utility bills.

(if you may have noticed, this is starting to sound a bit like the drinking song “may pulis sa ilalim ng tulay”)

By this time, his master is making a substantial amount of money every month. Moreover, his master has begun looking ahead and has started building up a savings account. The monthly expenses may have bloated to gigantic proportions and the credit card and auto loan may extend well into the future, but as of now master seems to have it all under control. Or so he thought…

His master falls in love with the girl he has been sneaking into his apartment and is now planning on getting married! = master now has to save money for the upcoming wedding on top of the car loan, the credit card loan, the car’s gas, the car’s maintenance, the rent, the groceries (which has grown to include condoms, love candles and massage oil) and the utility bills. Of course, master can always use his already substantial savings.

His master gets married and moves in to a bigger apartment or buys his own house = Thank God the girl master has married has her own job! Master and missus though now have to pay for the bigger apartment or a house loan, have to sell the old car for a bigger one, gets another car loan, furnishes new house with credit card and so has to pay for all of this on top of the credit card payments for the wedding and the honeymoon, the utility bills and the groceries.

His Master impregnates his woman and now has a kid = by this time, master and missus are now very busy with their work in order to qualify for a raise or a promotion. After all, they have to save up for the kid’s education and his monthly needs on top of the car payments, the house mortgage, the gas, the groceries, the car maintenance, the house maintenance, the utility bills, the nanny salary, etc.

“It Takes All the Running You Can Do, To Keep In the Same Place”

Although the master looks tired, he is laughing with his wife as they watch the master run round and round in his hamster wheel. Hamster looks very silly, they say.

Hamster continues running and thinks to himself:

“LOOK WHO’S TALKING!”

A friend once said to me “it’s not what you earn, it’s what you spend”. This said after spending the whole afternoon window shopping and coming home with only a ballpoint pen as his purchase. He sure did hit the nail right on the head with that one.

**

Note: I have originally meant to discuss several options in this blog that will enable people to get out of the so called “rat race” but I guess I got carried away by the hamster’s story. Oh well, that’s for another blog then.:)

	The Red Queen and The Rat

Down the Golden Brick Road

Maybe it’s just as well that I use children story references in a Blog that’s supposed to talk about money. (I started with “Alice in Wonderland”, the Red Queen and the Hamster in the other blog, might as well do the same on this one, he he) After all, weren’t we somehow taught about money when we were just kids? The ant and the grasshopper (the value of saving money), the golden goose (money management), the turtle and the rabbit (the value of perseverance and long term investments), the Fox and the Crow (protecting oneself from scams), etc, are all surprisingly still very applicable to our present day money problems.

If you were not listening then, then perhaps your present day money worries should compel you to listen to them now. So curl up and fix yourself a hot cup of chocolate drink, or a bottle of beer, or whatever you think is best. Maybe you just need to take a trip back in time to finally find your way to the golden brick road.:)

The Ant and the Grasshopper

…tell you what.. maybe I’ll just skip the story and get straight to point.. Let’s not embarrass ourselves any more than we have to, he he

The Ant and the Grasshopper story is basically about the value of saving for the rainy season. Grasshopper played all summer while little ant stocked up on his food inventory. Along came the rains and grasshopper ended up living with the ant and eating little ant’s food. Little ant probably ends up being eaten by grasshopper as well but that’s beside the point. (Beware of grasshoppers that come knocking at your door!)

Anyways, the moral of the story is to always save enough for the rainy days (rainy days in our case are retrenchments, retirement, emergencies, etc.) Easier said than done!, you might say and you will be right. If saving money were so easy, I wouldn’t be writing this blog now, wouldn’t I? Moreover, you wouldn’t be spending your time reading “children stories” too, right? he he

The problem with saving money doesn’t stem from the fact that you don’t earn enough, it stems from the fact that you spend too much. Consider your monthly salary and your monthly expenses, better yet, write them down. Because if you don’t have any money left at the end of each month, then maybe its time to start dissecting your expenses and trim it down.

Your accomplished list will look more or less like this:

Income (from work): (your salary less the taxes)

Secondary Income (from raket, gig, part time job, parents, etc): (0 for most, for those still being supported by their parents, you lucky bastards! He he)

Residual Income: (Income you get even without working): (interest payments from bank account, stocks, etc) (substantial for a few, minimal for some, and a dream for most)

Expenses:

Rent or Mortgage Payments: (usually a fixed amount)

Food Budget: (The kryptonite of my budget, have a bad habit of spending more as money becomes less to ward off depression, he he)

Utility Bills: (water, electricity, cable, cellphone, telephone, internet, LPG or gas, etc)

Groceries: (this includes your midnight snack inventory, your toiletries, dog food – for the dog, household supplies like detergent, bleach, etc)

Transportation Budget: Unless you work at home like me.:)

Loan Payments: For your credit card, for the loan shark, for your mortgage, for the car, for your implants, etc, etc.

Entertainment Budget: For the trips to the mall, for the gifts for your girlfriend, for the pirated DVDs you buy, for the trips to you-know-what places, for the concert tickets, etc, etc.

Ok, so now comes the hard. Remember the EQ test shown in TV commercials a while back? Remember the marshmallow and the fact that the baby isn’t supposed to get it? Well, for this discussion, that baby is you. Financial stability after all is intimately related to deferred gratification or the lack of it.

So if you want to save money, keep your hands off that marshmallow!

If you got enough balls to ask your boss for a raise though, you can skip the rest of this section. If not, let’s roll up our sleeves and find a way to trim down those expenses. (Let’s worry about the lack of balls later).

Expenses

Rent: Do you really need such a large or expensive place? If yes, maybe you can rent out the extra room instead? If not, then maybe its time to look for a cheaper pad.

Food Budget: Eating out is expensive, cooking your own meals is not. At least, up to a certain extent. Also, this will also enable you to put your neglected refrigerator into good use.

Utility Bills: Turn off that Aircon, make sure the room is adequately sealed, use it sparingly or at least dial it down a few notches, remember this adds at least P3,000 to your monthly bill. Buy your own washing machine instead of having your clothes laundered, this may cost a lot initially and will cost you extra for the electricity but you’ll eventually recoup your investment after a few months. Think about subscribing to a lower cost internet, phone, cellhpone or cable TV plan if you don’t use these that much. Use internet calls instead of long distance calls. Use florescent lights instead of ordinary ones, they use much less electricity. Conserve water, flush your toilet bowl once a week, he he. By reducing your utility bills alone and paying them on time (to avoid interest charges), you can save as much as P4,000 monthly.

Groceries: Buy in Bulk, This not only saves you several trips to the convenience store (transpo cost), it also gives you the opportunity to rack up your shopping points, get discounts, join promos, etc. prices in convenience stores are also way higher than those in shopping malls.

Transportation Budget: Get your car in tiptop shape, it may cost a lot initially but you’ll recoup your expenses through less gas (higher efficiency engine), less maintenance costs and less major repairs. Carpool with your neighbours, friends and anyone else who are interested. This way, you get to save gas money without sacrificing your convenience. Budget your time, this saves you from having to take a taxi because you are already late. Ask for a discount if there are no more seats on the bus, he he.

Loan Payments: Remember that credit cards charge at least 3% in interest rates every month. Consider it as your little loan shark. This means that for every P10,000 purchase, you pay P300 in interest charges every month non withstanding late fees and other hidden charges. Pay in cash if you can afford to do so or try to pay off your credit card loans as soon as possible.

Entertainment Budget: Ehe he, if you’re a girl, find a boyfriend as soon as possible and make this item HIS problem. If you’re a guy, bash your girlfriend on the head with the “equality between the sexes” line. Buy plastic flowers instead of real ones and reuse them every valentines, he he he. Kidding aside, have a definite schedule and a budget for this item monthly.

You save 50% or more on your rent, say at least P2500, at least P3000 on your food budget, more or less P4000 on your utility bills (especially if you have deactivated your aircon), at least P500 off your grocery expense, at least P1000 off your transportation budget, At least P500 from loan payments, and last at least P1000 off your entertainment budget.

That’s at least P12,500 monthly that you can direct to your savings account! P150,000 a year! Which brings me to my next point: How much should you save and how much you should invest?

The Golden Goose

Remember the story about the goose and the golden eggs? Well, for this discussion, consider everything that comes in the income portion of your income statement as the golden eggs (salary, dividends from investments, interest from time deposit account, profits from business, etc). The golden goose (or geese for grammar’s sake) on the other hand are the money vehicles that are making this cash influx possible (stocks you own, business, your job, etc). Stephen Covey calls them the p/pc or production and production capacity.

The rule of the game is actually very simple (you can write this down): DO NOT KILL THE GOLDEN GOOSE. Instead, make it fat, make it grow, sing to it, encourage it to flirt with other Ganders (male goose) on a regular basis, anything that’s going to make it lay more golden eggs.

Now that you have the eggs DO NOT PUT THEM ALL IN THE SAME BASKET or diversify in financial lingo. This means put some in your regular savings account (4-6 months worth of salary), put some in a time deposit account, set aside some in insurance or college finds (for your kids), and invest the rest in money vehicles.

WHY? You may ask. After all, keeping it in the bank seems perfectly fine. Well, the answer lies in the fact that you actually lose money in the bank in the long run.

Consider:

The banks pay you 1-2% in interest for your money in their savings account and 4-5% for your time deposit accounts. This means that your P100,000 savings will earn P1000-2000 in a year’s time. A P100,000 time deposit account on the other hand will earn P4000-5000 pesos in a year’s time.

Your P100,000 peso savings then becomes P102,000 (if kept in a regular savings account) or P105,000 (if kept in a time deposit account). Not bad right?

Wrong! The average annual inflation rate is more or less 7%. This means that the peso loses 7% of its value (the amount of good that it can buy) in a yearly basis. Taking the inflation rate into consideration, this means that your P100,000 is actually worth only P93,000 the following year. Add the interest your bank has given you and you still fall short of what you have actually deposited. (P98,000)

Money vehicles are those options that will give you a return for your money higher than the inflation rate (7% interest rate of higher). What are these?

Stock Market: When you buy a stock, you essentially get to own a small piece of a public company. Consequently, you also get to share in its annual profit (dividends) and the value of the stock itself increases over time. The big question here is: will the company grow and make a profit? If not, you lose a lot of money. Market volatility aside, stocks offer some of the highest possible returns for your money (10-20% if you’re good). You will just have to mitigate your risk by learning about the ins and outs of the market.

Bonds Market: When you buy a bond, you agree to lend corporations or the government money at an interest of course. You earn money by cashing in your bond before or when it matures. Because this is a low risk investment, the returns are also lower. (8-10% for usual bonds)

Mutual Funds Market: When you buy a mutual fund, you are essentially pooling in your money with other investors. Your money is then invested in several stocks, bonds or other mutual funds. For most people, this is a lot safer than investing in stocks because the risks are dispread out over several stocks, bonds, etc.

Take note that the more effort you put in and the higher the risks are for the money vehicles, the higher your possible returns. This is why the highest returns are realized when you do business. Consider the following simple examples:

Sari-Sari (Convenience Stores): Convenience stores usually mark up the price of their products by 15%. This means that the Ligo sardines you have just bought for P10.00 is actually only worth P8.50 if you buy it in bulk from the supermarkets. For the sake of simplicity, let us assume that complete inventory turnover (all products bought are sold within a time frame) is once a month and the inventory value is P100,000. This is a P15,000 or 15% gross profit monthly or a gross interest of 180% every year!

Of course, then you’ll have to contend with Inday and her irritating habits, you’ll also have to pay for the rent, the utilities and the personnel.

Microfinancing: Have you ever noticed those dark colored guys with the weird accent (DVD/VCD?) making daily rounds in the supermarket carrying their lists and their umbrella? They usually have red colored scooters they use to move from place to place.

These guys lend money at an interest of 10% every month. They don’t require collaterals, papers, or anything and they usually loan out amounts in denominations of P10,000. Imagine P100,000 loaned out to 10 different people at 10% a month. This is a 120% interest in your money in a year’s time!

Then again, these guys have to contend with irate fish vendors armed with bolos and knives in a daily basis. He he he.

The Turtle and the Rabbit, The Fox and The Crow

Always keep in mind that since the rate of return for your money is always ALWAYS proportional to the risks you have to take, get rich quick offers and those that generally sound too good to be true are ALMOST ALWAYS scams.

Use your head and don’t stretch your neck out too far. Slowly and surely ALMOST ALWAYS beats the fast and dangerous approach to managing your money. Remember that money isn’t as much as a tangible thing but a product of the mind and making it more about mitigating risks than taking them head on.

In Ayn Rand’s words “Money Will Not Serve the Mind that Cannot Match It.”

So use your head before clicking your heels.

See you down the golden brick road!!

	Down the Golden Brick Road

The Devil Wears Plastic

Unlike before when the devil comes to you whispering in dark halls and eerie nights, today’s devil comes with an application form and beautiful sexy sales reps. It doesn’t have the traditional horns and spiked tail but it does have a smooth finish, a new age look and is 3-1/2 inches long by 2 inches wide. You don’t even have to rub it to get the dark genie out ready to grant you your three wishes in exchange for your soul. All you have to do is SWIPE it.

Swipe the Tears Away!

Yup, for some (and this is a growing number), swiping the plastic has indeed become the new opiate or elixir, a temporary way out of the regular hustle and bustle of life, a small taste of luxury, and perhaps a good exercise guaranteed to drive away those negative thoughts brought about by boredom, quarrels with a loved one or financial pressure.

You don’t have to asses, to consider or even to think before pulling out the plastic. In fact, most of the people behind this innovation will even go to extraordinary lengths to discourage you from doing it. The only question they want you to answer is: DO YOU WANT IT? If yes, then proceed to the cashier. If you’re having second thoughts, then perhaps the 0% INTEREST, LIMITED STOCKS ONLY, LIMITED SALE, 50% DISCOUNT OR FREE GADGETS will help you forget the objections cropping up from somewhere in the back of your sane mind.

Yup, impulse shopping has never been easier and consumerism never more profitable. However, it is not the presence of this little devil in our wallets that’s bad, its how our mind evolves or adapts to this magic card that’s dangerous.

Wants over Needs

Plastic has blurred the lines between wants and needs until both are almost indistinguishable from each other. Consider… the definition of basic needs encompasses a person’s need for food, clothing and shelter. The post industrial or information age has given us some additional ones like education, insurance, utilities, etc. Of course, even our basic needs are subject to moderation. Food may be needed but caviar, fillet mignon and restaurant food is not. Likewise for the other needs.

Needs are defined as such because we cannot survive or live well without having them, and because of this, financial stability is its cornerstone. This means that although we can spend some of our money on entertainment and wants, we should always keep the big picture in mind – enough money to raise a family in the future, enough savings to cover emergencies, enough money to build a house or enough savings to live on comfortably without working in the event of medical emergencies, etc.

Needs (like a house) however are more often than not big investments, one that needs a lot of preparation, planning and sacrifices. Wants on the other hand are oftentimes small or medium sized expenses like buying a large screen TV, a car, new set of clothes, eating out, going on a vacation to Boracay, etc. Because of their ease of acquisition and ability to provide instant gratification, wants oftentimes overcome our needs. Impulse wins over caution and what feels good becomes confused with what is financially right.

EQ Deficiency Syndrome

Plastic tempts us to focus in the now and because of its easy instalment plans, it gives us the power as well as the means to give in to our weaknesses and desires almost immediately. It discourages growth and maturity that comes from saving, financial planning and deferred gratification. Because of this, a growing number of plastic infected people are finding their will to resist these financially debilitating temptations getting weaker and weaker. After all, a little shopping every now and then wouldn’t hurt right? Yup, but how much do these shopping expeditions total in a year’s time and what long term plans have you sacrificed for these small trips?

Abstract Electronic Money

With Plastic, it becomes a lot easier to think of money as an abstract thing. The fact that we don’t see it makes it easier for us to believe that things are easier to acquire than usual. After all, isn’t it much easier to buy an Iphone using a credit card wherein you don’t see any money changing hands than having to withdraw a thick roll of bills and having to hand it over to the cashier?

The sad fact is, electronic money is just as hard to come by and is just as valuable as real money. You may not see it, but you’ll have to work just as hard to earn it in the long run. Everything adds up somewhere down to the last cent. So you may indeed spend more than you earn, but you definitely cannot earn more than you work.

No, you don’t get to read about these dangers of using plastic in the fine print you sign, you dont see any government warnings on the cover or need any psychiatric score to be eligible for it . All they need before getting you to sign the contract is an assurance that you wont check out before cashing in. As with any other contract with the devil, you have to read between the lines and bite beneath the sugar coated glaze to fully understand what you have gotten yourself into.

The Devil’s Contract

At the surface, the use of plastic may seem like a simple, safe and easy way of doing monetary transactions. Scratch the surface and you will see that the target of this card is not so much as to give you a safer and easier way of spending, but to capture something more valuable, your mind.

Like the TV ads of cosmetic products that have moulded our perceptions regarding beauty, plastic ultimately aims to control our perceptions regarding money - how we spend it, where we spend it and how much we spend of it. Hence, the American dream, the Model Yuppie, and the image/comfort conscious culture that permeates our society. Everywhere you look, you see ads about happy people walking around with shopping bags, grinning yuppies with sporty looking cars and sleek cellphones, and blissful women decked out in signature clothes and branded footwear.

Plastic sells not a different mode of doing monetary transactions but a different way of thinking, one that involves getting what we want before even earning the right to have it, one that is focused on emotions, insecurities and weaknesses instead of logic and one that sacrifices long term stability to short term superficial gratification.

Here’s the Real Contract;

Instant Gratification to Long Term Slavery

Plastic gives you the power to satisfy your every want for a price: months or even years of work in the future. Buy now, pay later. What this means is that because you gave in to your impulse, you lose a bit of freedom in directing your financial path - at least in the short to medium term future. Your salary for this month will go to paying for your indulgences during the past year and not as savings for your plans for the next year.

Short Term Wants VS. Long Term Goals

A big screen TV, a microwave, a new cellphone and other non essential things take the place of long term savings, money to build a house, send the kids to school, help your family, be financially stable, etc. The more we use the plastic, the harder it becomes for us to keep our eyes on the goals that really matter and the things that will help make our lives a LOT easier in the future. In the end, plastic replaces financial freedom with financial slavery.

Get Less for More

Interest charges and hidden fees make us pay more for things that could’ve cost less. What’s the difference of buying a Cybershot camera now using your plastic and buying it a year from now using cash? The answer is price and time. You pay more for the gratification of being able to use it right away. That's the power of money working against you!

Don’t be fooled by the 0% interest gimmicks you see in most stores too. Yes, you indeed pay 0% interest to the store you bought the product from, but you will still have to pay your credit card company its 3% monthly interest. It’s confusing yes, but that’s the name of the game.

Miss some payments and you just might find yourself paying more than double the price of your purchases because then the interest rates skyrockets from 3% to more than 20% - some people even spend most of their lives paying the interest without touching the capital - A hefty price indeed to pay for instant gratification.

We may call ourselves civilized and urbane, laugh or deride those people committing suicide bombings over in Iraq, but isn’t plastic-swiping induced financial suicide much the same thing as suicide bombing using C4 plastic? At least they get their 40 virgins, we on the other hand, end up with 40 credit collectors, he he. This brings me to my next topic.

The Hidden Strings of Plastic

Plastic in itself is not bad, as with any other tool, it is how we use it that determines our fate. As with any other weapon, the best way to make sure that you don’t blow your brains out or unintentionally slice off your appendages is to get to know it better. In this case, maybe it’s best to start with how financial companies profit from your use of the plastic.

Merchant Fee: Merchant fee is what the retailers pay for every customer purchase done through a certain credit card. Usually, the more people there are using a certain card the higher the merchant fees the retailer has to pay. This is because it wouldn’t have been possible for a sale to take place without that credit card in between.

Annual fee: Annual fee is what we pay for the right to hold on to our credit cards on a yearly basis. This could range from P1,000 to P2,000. That means that even without using the credit card, we still have to shell out some money. Think of it as some sort of an insurance premium.

Monthly Interest: Monthly interest is what we pay the credit card companies for loaning us the money to buy the things that we want. In our country, this could range from 2.5% to 3.5%+ per month. Of course, should you miss out on some payment dates, this could jack up to 20% or more on a monthly basis. Keep up the non-payments and pretty soon you may find the interest amount dwarfing your original debt. This is because, the higher your credit risk is, the higher the interest rates you will have to pay.

Late Fee: On top of the increased interest rates, we will still have to pay late fees should we miss out our payment dates.

Overlimit Fee: Go above your credit limit and the banks will fine you a corresponding amount. Of course, seeing that your credit limit is usually far greater than your monthly salary (thus low low chances of paying off your loan in less than a month), the banks will also be looking forward to charging you with their monthly interest.

Cash Advance Fee: Should you use your credit card to withdraw money from ATMs instead of outright purchases, you will be charged the cash advanced fee which will be included on top of your monthly interest payments.

The annual and hidden fees alone are enough to warn you about the dangers of using your plastic irresponsibly. Add to this the interests rates that are proportional to your credit risk and you will see the full extent of the potential financial quicksand you could find yourself into.

In this sense, do you think it would be in the credit card company's interest if you pay on time? What about if you spend less and save more? However big your income stream may be, unless you can leverage your credit card spending, this plastic will act much like a financial leech sucking away your financial strength.

Free Money

A news article just recently featured a story about a glitch on a Big store's credit card application program which accidentally approved high credit limits to all applicants. As the plastic rolled out, people were dancing in the streets and splurging like there's no tomorrow - all the while shouting FREE MONEY!

Free money? What happens when the credit card bills roll in? Unless these people file for bankruptcy, there's no way on this earth that they can avoid paying up eventually. Free money is much like garbage magically disappearing in a puff of smoke.

The Credit Death Row

Should you find yourself out of luck and out of money to pay off your credit card debts, the worse thing you can probably do is to run away and pretend that everything’s ok. Why? Because the banks have already perfected the art of collecting money from debtors who run away while you haven’t yet perfected the art of hiding. Short of getting a new name, acquiring a fake visa and passport, forgetting your family and everyone close to you and having a plastic surgery, there is no way that you can run away from the banks. Add this to the fact that the interest rates they use increases the more you hide and you will just find yourself in deeper shit than if you confronted them in the first place.

So… what to do?

The very first thing you should do if to do damage control, take charge of the situation and salvage whatever you can from the mess. Nothing’s going to change the fact that you’re in the shit pit anyway so better start crawling towards the light one small inch at a time.

Lifestyle Change

Einstein once said that you cannot solve a problem using the same level of thinking that got you into it in the first place. What this means in financial terms is to take control of your finances and minimize the spending that got you into this debt. If you’re accustomed to spending more than you’ve earned, then no amount of financial help is going to have much effect unless you strike at the root of the problem – learn how to spend less (considerably less) than what you earn and find ways to earn more.

Take a jeepney instead of a taxi to work, move to a smaller place, sell some of your things, work for that promotion, etc. (read more from the blog: down the golden brick road). By doing this, you can set aside an amount of money that you can use to pay off your debts or open new earning opportunities. Moreover, this would also enable you to gain some credibility when you say that you can pay off your debts – thus you become less of a credit risk and you can negotiate for better terms.

Take Out Smaller Interest Loans

Credit cards charge some of the highest loans you see in the market 3%-20+% monthly. What this means is that by taking out loans from other institutions and using it to pay off your credit card debts, you can save a lot of money from the lower interest rates. This means that you can concentrate on paying off the principal and ending the cycle of debt faster than if most of your money goes into paying the interest charges.

Here are some sources of loans that charges lower interest rates:
1. Salary Loans
2. Personal Loans – from family, friends, etc.
3. Government Loans (SSS. GSIS. Etc)

Note: Don’t take out a loan from those charging a higher rate of interest than your credit card company. An example of this is taking out a loan from a loan shark [5-6] (20% monthly interest) to pay off your credit card debts. Otherwise, you’ll find yourself in deeper trouble.

Negotiate with your Loan Officer

Talk to your loan officer as hiding from him may result in your debts being transferred to a debt collection agency wherein your will be charged with higher interest rates and have less room for negotiation.

Make a systematic plan on how you will pay off your debts with accurate estimates on how much you will be able to pay monthly, bring proofs that you will be able to do what you say so that you can negotiate for longer repayment terms as well as a lower interest rate. Banks have to recognize the fact that it is better to recoup all their losses than to force you into bankruptcy and running wherein they will have to spend extra in filing charges and hunting you down. As long as you sincerely show that you are willing to pay off your debts and that you have the means to do so, you will always be able to negotiate for better terms.

Finally, Stick to Your Promises

Make sure that you will be able to do exactly what you have promised and that you will always be able to pay on time. This improves your credit rating as well as lets you avoid the higher interest rates you will incur should you miss out on a payment.

Using Plastic Responsibly

An ounce of prevention is worth a pound of cure.

Perhaps the best way to avoid the pitfalls in credit card use is to learn how to use it responsibly. Use it not as a short term solution for boredom, insecurities, instant gratification or discomfort but as a tool for taking advantage of new opportunities, enhancing safety or as some sort of insurance against emergencies.

Of course, one cannot always avoid using credit cards for small transactions like purchasing groceries or eating out; remember though to always keep the amount you spend to something that you can easily pay for in less than a month. This will minimize the hidden fees and interest charges.

By using your credit card responsibly and by paying your credit card bills on time every time, you also improve your credit score and this adds to your credibility when taking out large loans that you can use to build your house, send the kids to school, etc. in the future. As always, better credit rating means lower interest rates and bigger loans.

You can also use your credit card as a standby source of money in case of emergencies. This way, you can always be sure that you’ll have money when you need it.

Last but not the least; you can use your credit card in financing income generating opportunities which will be able to generate a higher rate of return than the 3% interest rate that you will have to pay. A simple example is taking out a 3% credit card cash advance loan to finance a small business that will be able to give you a 10% rate of return. You pay off the 3% and keep the remaining 7% as profit.

In the end, it all boils down to the numbers. Will you use the rope this plastic gives you to climb out of your financial hole and into a better place? Or will you use it to hang yourself?

	The Devil Wears Plastic

The Day after Tomorrow

Dollar’s Decline

“The American dollar had a great fall.. and all the king’s horses and all the king’s men, could not put the American dollar together again.”

It' certainly seems like it as the successive interest cuts by the Fed are not doing much in boosting confidence for the US economy. Unless meaningful changes are instituted to heal the trade deficit (more imports than exports) and federal deficit (more government spending than government profit) of the United States, currency values will continue to fluctuate and the markets will remain volatile.

After adjusting to the massive fall of the peso 10 years ago wherein it’s value declined from P25/1$ to more than P50/$1, it seems that we are again in for a currency roller coaster ride as the Dollar loses its value yet again because of the twin deficits of the US economy (Trade and Federal). From a peak of P56 per dollar three years ago to today’s P39 per dollar, many of us Filipinos (especially those with dollar dependent salaries) are wondering what the future has in store.

What exactly does a lower dollar mean for us?

1. Lower Remittances: Perhaps the fall of the dollar is most obvious to families dependent on remittances from abroad. Whereas before where a $1,000 remittance could mean P55,000, the same amount translates to only about P40,000 in today’s exchange rate. This is a P15,000 loss from the value of the dollar from 2 years ago!

2. Bad for Dollar Based Salaries: Dollar based salaries like those in call centers and medical transcription offices will also feel the crunch of the plunging dollar. After all, the currency exchange rate will start eating into the profit margins of these businesses. This could mean retrenchments and less pay raises for this year and perhaps even next year (depending on how the US economy performs)

3. Bad for Exports, Good for Imports: A weaker dollar means imports becomes much cheaper and thus foreign made products becomes a lot more competitive in our market. This should mean that consumer electronics, the price of oil, Swiss chocolates, and anything else foreign especially US made should become cheaper in the next few months. (the downside is, this does not seem to be happening as importers are still very happy with the sudden increase in their profits)

Moreover, exporters lose and this includes one of the primary exports of our country which is labor. Overseas Filipino Workers will be clamouring for wage increases (thus lowering the demand for Filipino labor) and our abaca, coconut, and other export products will cost more dollars to purchase and yup, this will include Philippine ebay products that locals sell through the internet.

4. Bad for US based Filipino Workers and Graduates planning to go Abroad. As the economic crunch hits the lower and middle class citizens of the US, US politicians promising their constituents more jobs and higher salaries, bad news is, there are only too much job openings in the US. This may result in Filipino workers there being sent home and their jobs given to US citizens.

5. Bad for Dollar Based Saving Accounts and Investments: Ouch! This one really hurts! After all, never in our wildest dreams did we expect the dollar’s value to come crashing down this quickly. As such, many Filipinos have invested in dollar savings accounts or stocks to protect themselves from the volatile peso. Now a $5,000 account is only worth P200,000 as opposed to last year’s P250,000. A P50,000 loss!

Some US politicians are saying that the lower dollar will actually be good for their economy as this will make US products a lot more competitive in the global market and thus generate much needed jobs in their homeland. As foreign corporations flock to the United States though to buy up suddenly cheap US businesses, I wonder how much of the United States will be left owned by American citizens after all of this is over?

Meanwhile, the Philippine government is touting the strengthened peso as proof of their success in boosting the economy. Hello! The peso increased in value because the US dollar’s value fell through the roof not because of your profound economic plans!

As the world becomes more globalized in terms of economy while the internet becomes a stronger business medium, I wonder how people in developed nations will fare in having to compete with the extremely cheap labor of developing countries? Globalization, after all is not just about products but services and while earning $1,000/month over there may put you below the poverty line, its certainly more than enough to live on comfortably over here. Would they have to lower their salary expectations in order to compete with us?

Capitalism, taken to its logical conclusion would tend to equalize the opportunities and benefits across borders. The only question is, will we become the capitalists or the hired work? For the short term though, I guess we’ll just have to contend with a medium to long term lower dollar value.

	The Day after Tomorrow