How You Can Save $1300 A Month With $3000 Salary

I am no expert in this but I am very much aware of the importance when it comes to savings. Why is this crucial?

Opportunities or emergencies may arise surprisingly at any time. There will be a time when out of a sudden someone would want to sell their business, a company is looking funds to grow business, or there is that hot property going on auction way below market value!

Hence, It is up to us to ensure that we can grasp the opportunities when the time comes or at least prepare ourselves financially in event any emergencies arise. Here are the ways you can save $1,300 a month with $3,000 of salary.

Travel Cost

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We all have places to go each and every week. Like many, we would have to incur costs to travel to work. I’m staying on a suburb far from the city center, Kuala Lumpur.

It would normally take me more than 1 hour on busy days to work – that is about 28 kilometres (km) per trip, a total of 56 km one day. Below are the costs I incurred per month:

Fuel = $400 ($20 per day)

Toll = $200 ($50 per week)

That would be a high $600 a month! And I ain’t liking it.

Solutions?

I opted to use public transport instead. Since then, travelling cost was cut approximately half! Which is roughly $400 a month now for both car fuel and toll fees.

Not only this help save a lot money but also help to save my travel time and reduce stress of going through traffic jams.

Food intakes

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Another way to save is that I chose to cook my own meal – most of the days normally costs me around $100 – $150 for a month worth of food stocks or ingredients.

Aside that, I would simply buy my daily lunch supplies at cheaper price at a petrol station selling cheap cooked foods where I normally pass through everyday when I go to work – that is if I have too packed of a schedule. Costs me $3.50 per lunch box containing fried rice, an egg and a bit of gravy – pretty cheap and neat right?

But then again, there are days that we have that friends night out or Friday night outings so I wouldn’t mind spending a bit for that particular session since I have already saved a lot of margins on other areas. In total, food supplies would cost me around $150 – $250 a month.

Education loans

Yes, you read that right – education loan payments. I’m still actively repaying my education loans every month. That would cost me $100 a month which is not too high of a burden but still a great obligation to meet.

Phone bills

This would normally costs me $120 for my phone bills and I think that is still quite high for me.

I believe you can try and minimize your phone bills by finding better phone plans. If you can reduce your phone bills by $20 a week, that is $200 extra savings a month! and I’m quite sure there are way more awesome phone plan deals out there.

Home installments

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This would costs me $800 per month inclusive of maintenance. However, now that I rented it out – the rental income I generated with the right strategies gave me an extra boost of $200 – definitely great! Check out 4 Unbelievable Ways You Can Maximize Your Rental Income and 5 Traits of a good property to invest and get good rental for greater knowledge of how you can boost your property investing game.

Life insurance

I focused on life insurance because if ever I am faced with a critical sickness and I am unable to work any longer, my insurance would be able to settle all my bank loans pertaining my debt on properties owned. Not only that, the insurance package would also allow the accumulation of cash value where it would have a certain amount I can withdraw as extra money after certain period has passed – you can say that it is like investing while insuring yourself.

By doing so, I would not have to burden my family members to pay the housing loans if I am cripple and not having enough capabilities to work any longer. It costs me as low as $100 a month and it helped cover so much trouble for me in future to come. So if you find yourself still young and just started your career life, take up an insurance but be careful of scams and take up insurance coverage on areas you deem only important for the coverage you want.

Let’s say if your company already have unlimited coverage for your medical expenses, then maybe you can opt not to take medical insurance – for example. I would suggest you to take up insurance from reputable companies.

Have a read on “MRTT vs MLTT? Get yourself insured before buying a property” to get a good glimpse of general insurance knowledge that can settle all your housing debts in event you can’t work anymore. However, this condition will only work if your insurance coverage is more than your full housing debt.

Be mindful that insurance companies find it hard to consider your insurance applications after you are critically ill because it would be a loss to the company – sad truth unfortunately. So take advantage of your good health and ability to generate income now and apply one before the aforementioned happens alright! :))

Costs breakdown:

Car fuel and toll = $400

Food intakes = $150

Phone bills = $120

Education loans = $100

Home installments = $ 800

Life insurance = $100

Total expenses = $1,670

Amount saved = $3,000 – $1670

= $1,330! 

“A penny saved is a penny earned” 

~ Benjamin Franklin

So what can you do with these much savings?

1. Apply an auto-debit (Standing Instruction) from your salary account into your compounding bank account. Doing this will help you Making money while you sleep – the compounding bank account (ASB) just like Tony Robbins advised in his greatest book, “Money: Master The Game”.

2. Invest the money in stock market.

3. Save all of them as your next home deposit.

4. Give to charity (help people in need). Always bear in mind that Giving to Charity Makes You Richer!

5. Provide some money to your parents or family members as presents.

6. Gather enough money and be ready to launch or buy a potential business.

7. Put it in your flexi-bank account to reduce your monthly home loan interest (yep, that’s what it’s called in banks, flexi-bank loans).

And the list goes on….

But whatever it is, always bear in mind that for every dollar you saved would give you better chances of grasping the opportunities when it comes. Have a read at 5 Simple Ways To Save Money to get bold ideas to save money better.

You can’t simply start saving when the opportunity or emergency happened right there and at that time right? That is insane! If you start saving at that very time, the opportunity would have gone into other people’s hands.

You need time to save money enough to be able to take advantage of the opportunities that falls before you. Never the less, knowing that you are reading this article till the end would mean that you care for your financial securities and your future – that YOU want to make that change! Good luck hustlers!

3 Major Risks Of Renting Properties And How To Mitigate The Risks

So you have decided to invest in properties and are planning to rent it out. You have the capital, the knowledge, and a good sense of where you want to invest now. However, you must also prepare yourself mentally for the major risks that awaits you when the rental starts. Here are 3 major risks of renting properties I consider quite substantial during your journey ahead.

1. Tenant do not pay their rent

This is basically the major concerns of most landlords. Landlords screen out the right tenants – or so they thought, and maybe they get good rental payments on time for few months but things changed after a while. You don’t get back your rental income because the tenants keep on delaying their payments. Worse comes to worse, you don’t hear much from your tenants and their bills dued more than 2 months – you checked your house and found out your tenant is already gone. They stayed at your house for free which is being very irresponsible especially at your expense.

2. The house is damaged/ things stolen

Alright so maybe the tenant has left the house for good without making payments and you think – “well, that’s alright! I can always get me new tenants”. But things just got worse when you discovered that your TV is stolen! Or nothing else was left there unlike when you started the rental except for the built-in items which is really not moveable. These kinds of problems are landlords’ worst nightmares.

It happened to me once. We had a condo near KL and welcomed a new tenant. The tenants claimed that she’s married and will be living there with her husband and children. We screened through their background details and found no problems at all. The payments were going smooth sailing the first few months until we did not received it for a month and contacting her seems unreachable. We decided to go visit the condo and shockingly found that our tv and some of our furnitures went poof!! And the house was like a wrecked ship – not to mention the weird smell being left there. Since then we always opted for good property management companies and have seen better results in terms of home maintenance qualities due to good tenant filters. However, some property management companies are only in for the money ignoring their service quality, hence we always opt for well known companies. It is a bit pricey in their services but help reduce lots of unecessary stresses.

3. Rental income does not cover your monthly housing installments

Whenever you are renting out on properties, the best strategy would be to get rental incomes higher than the installments. This is how you make money out of your investments. This is also a reason why you need to consider your housing investments carefully, that is to buy a property that is not too expensive so that people on majority will be able to pay you rentals that they find affordable and in a way helps you generate extra income out of the rentals. One of my property coach who is also my father once advised me, “when you are investing in rental property – go for the people in majority”.

This simply means that you buy property which can cater to the affordability of most people around that area or country. If you think that area is of high income earners then you may consider buying a quality apartment/condominium because people around there have the financial means.

However, if you find that the people living in that area consists of middle to low income earners then you might as well consider the lower range properties which caters to the affordability of the surrounding society. This way, if you are not earning positive cash flows from the property – at least you can get half of the installments covered, even though that would be our last resort. That’s a way you can minimize your risks to this matter.

So how are you going to minimize your risks during rental period?

1. Hire a property management company to manage your property

2. Research your property in depth before you make the investment in order to get the most out of your returns

3. Get your property insured for rental business purposes (there is an insurance specially designed to protect your property provided by the banks)

All and all, provided with great insurance coverage and the right knowledge – any property investments will be a good investment and a worthy one for sure.

From Abandoned/Auctioned House (Lelong House) Into Cash Machine

Have you been walking passed that same house – that gloomy, window broken, cracked door house for countless times and has never been occupied? You might think there is no hope at all to restore that property into good function – you might have to think twice!

Why are abandoned properties considered an amazing investment opportunities?

Simple, normally an abandoned property is sold below the market value! This gets even better if it is auctioned by the bank because it will be auctioned by higher margins below market value. Even though you might need to incur some costs to repair – hey, you got the house way the market value, meaning you are buying it cheaper than most people bought the same unit in the same neighbourhood. On a side note, “Lelong” is a term called by Malaysians as auctioned house.

According to Leslie Low, an auctioned specialist from Malaysia stated that an auctioned property would offer 30% to 40% below the market price based on The Star newspaper. Who would give you a property offer of 40% below market value? A decent newly launched terrace home these days costs RM 500,000. That means you’ll get an offer of RM 300,000 for the same property type – or even better.

How would you know if that property can make money?

Then you might ask, how do you buy a property that will make good investments? It’s simple! So long as it’s below market value, returns positive cashflows during rent, potential capital appreciation, within your usual place of hanging out or work, good neighbourhood and…. that area have a 5 year upgrading/expansion plan (check with your local developer) – then you are all set!

All the good signs are there already giving you the positive signals. Sometimes only that particular house looked all scary and dark but the other houses looked neat and tidy, that’s a sign of a good neighbourhood. Especially if it’s nearby public transport, malls, offices or any kind of public attraction. All these characteristics will definitely drive high population into that area making it having high demands for basic needs and wants – in our case it’s a roof over our heads. People would definitely need a place to stay.

How much money can an abandoned property make?

That actually depends on many factors. One of it is the marginal percentage below market price you are purchasing it. Let’s say you are buying a RM 500,000 worth of property at RM 300,000 during auction, you already have a capital appreciation gap of RM 200,000 there! Even though that capital appreciation will slowly catch up to the market value once the function of the house is fully recovered – hey, that means you are investing at a lower capital.

Wouldn’t it be great to invest a lower capital and have a high return? Everybody else is investing at higher price but still have a return approximately close to yours. Whose the winner? You are! But you still have to do your homework. You must know how much Return on Investments (ROI) that property makes, the future developments that area will undertake, who will be your target customers, and your overall costs short term as well as long term.

Not all properties can make great returns, what is a good property for you may not be the best property for another friend – always keep the foundations in mind. Have a read on 5 Traits of a good property to invest and get good rental to get general ideas on what is a good property to invest.

What is the best way to take advantage of the capital appreciation and low purchase price?

The magic word is “refinance” your house. The gap between market value (bank’s value of the said property) vs property purchase price = extra cash! There are two ways that I know of which is available in Malaysian and international banks – you can use term loans or an overdraft. Take an example of the same RM 500,000 property bought for RM 300,000 and after some time your property value had a capital appreciation to RM 700,000 because there is a new train station built in front of your neighborhood.  Then you decided to settle your loans fast and you apply “refinancing”.

The banks will reimburse you loans at the current market value of RM 700,000 – this will give you extra money to settle your old loan of RM 300,000 and on top of that, getting extra RM 400,000 (RM 700,000 – RM 300,000) that you can use to settle other outstanding loans (education or car) and you even use the extra money to invest in another property or open a new business!

But always bear in mind that the banks will always win. The amount of loans you get will need to be repaid on top of bank interest. Have a backup plan on how you will repay the bank loans before and after you utilized your loans. A good way to utilize your loans is to use it for matters that will improve your life financially such as settling outstanding loans (to avoid long term interest incur), start a profitable business, or to buy assets that can give positive cash flows in the future which outruns the bank loan installments itself. Good luck fellas!!

5 Simple Ways To Save Money

Financial opportunities are everywhere and it may come at anytime of your daily life – be it when you are ready or not ready. How do you take advantage of this? Sometimes you may be faced with great inconvenience – you needed medications, car broke down, or annual education fees. How do you prepare for this? It’s not rocket science, you have to prepare your savings – cash is king. Here are the 5 simple ways to save money.

1. Apply auto debit/ standing instructions

Every month I have set an automatic debit or as known as standing instructions (SI) which takes away a certain portion of money from my bank account. You would have to arrange the SI service with your associated banks. The best thing is the service have no fees at all! Simple right?

You can have the banks to take away your money at a specific date. So if your salary will come in every 29th of every month, you can have the bank to debit your bank account on the 1st of every month – just make sure you have enough money in your bank account. I would normally have the bank debit my bank account and transfer those amount directly into my compounding bank account. Why is this great? Not only does it feel less painful to save (because the bank’s do the savings for you) but you will be able to save and invest at the same time. Your money is growing every month in your bank account through compounded interest, you get yearly dividends, and to top it off – you make money while you sleep!

2. Withdraw only what you need at start of every month

This is a type of control I set for myself everytime I received my salary every month. I will withdraw fixed amount of cash that I deem necessary for that month – based on my monthly budget. For example,

Car fuel – $ 300

Families – $ 300

Foods – $ 300

Total = $ 900

Hence, based on the example, every month I withdraw $ 900 beforehand and stick very hard to the cash I have withdrew. The balanced money in my bank account will be splitted into savings and the other portion will be maintained in my salary bank account in case if I needed extra cash.

3. Have a piggy bank

Everyday I have allocated the maximum amount of money I can spend. Let’s say one day the maximum I plan to spend is $ 15 only and at the end of the day I still have $ 2 – I will put that $ 2 in my savings box.

This strategy actually helps as another filter on top of other saving strategies I have applied. At the end of the day I will deposit all the money in the savings box into my bank account. Well, it’s actually up to you – you can also try and buy good foods for your family or even give to charities. As the saying goes, giving to charity makes you richer. Do not wait till you become rich to start giving, give until you become rich.

4. Be your own chef, cook your own meal

I have been applying this for one year now and guess what? It is unbelievable how much money you can save! I try hard to cook my meals at home and bring it to office the next day.

I noticed that cooking meals that consists common ingredients saves lots of money and time – it’s a good time management technique. For example, cooking meals that have chicken and broccoli or fish for straight 3 or 5 days and switching ingredients every 1 or 2 days. Imagine if you can save $ 200 every month, that’s $ 2,400 a year!

5. Buy what’s necessary, spend little on wants

Sometimes you need that caramel frappe from Starbucks or that banana buzz from Boosts – go for it, buy it! It’s always alright to spend an extra something each month to make you happy, something that helps motivate you to work harder. Consider it a reward for yourself. However, try as much as possible to limit yourself and avoid overspending on things that can cumulatively cause financial leaks to yourself. You may not need to eat at that luxury restaurant every week, try around once a month. Another way to look at this is to buy on things that won’t burden you such as buying a house that is within your comfort financial zone – not a property that caused too much strain on your financials. All and all, save as many as you can while you can and leverage the savings into assets that can grow you money.