Kevin O'Bryan

Tag: wealth

  • Figuring Out Finances – Part 2

    Figuring Out Finances – Part 2

    It’s been said that money makes the world go round, but mis-use of it can bring your entire world crashing down.

    Case in point, online shopping is so super convenient but left unchecked, it can create a permanent hole in your pocket and your financial future.

    Money pitfalls will happen and recovering is not impossible but it takes discipline and sacrifice. In this second part to my look at figuring out finances, I speak specifically about debt and some ways I have dealt with it in the past.

    Usual Disclaimer: I am NOT a financial advisor, not even close. In addition, I’m sure you may’ve have read some of these tips somewhere else, however, whatever I have added here is based on my own tried and tested experience.

     

    Pay off high interest debt first

    debt

    This piece of advice is standard fare on any personal finance blog worth its mettle and it’s GOOD!

    Things we consider bad debt – Credit cards, the hire purchase agreement for the sofa that was too good to miss, the high interest personal loan that you took out because you needed that ‘thing’- all are considered bad debt. They are bad because they are usually attained for items that are not gaining value and have ridiculous interest rates and repayment terms.

    So if you have three pieces of debt lined up, your car loan, credit card debt, and a personal loan from your employer at a sweet rate of about 5 %, which of the three would you put major priority in getting rid of first?

    The answer is obvious… Credit Card! Not only is that bad debt but depending on the interest rate and the amount owed, you could be adding an astronomical amount of money to the  existing debt each month in the form of interest payments. Get rid of it by paying more than the minimum balance and most importantly, STOP adding to the debt.

     

    Refinance your student loan

    Many years ago, I was blessed with a loan from the Student’s Loan Bureau (SLB). It was an important means to an end and I was thankful. I thought they were a bit unreasonable at times, but the alternative – loan from a bank – was not an option. Personal loans weren’t being thrown at you then, as they are nowadays.

    After receiving my loan and finishing college, I now had to start the process of repaying it and I had known this from the get go. When I got my first job, I was about 5 months over the grace period that the SLB provides after graduation. I recall making a momentous first payment. It was then that I realized that I had already accrued some late fees.

    Well for some reason – youthful exuberance maybe – I completely missed out on making any more payments for almost a year. Life got in the way, I guess. Anyway, after a very scary call from an SLB representative, I got my act together and I agreed to salary deductions. However because of my malfeasance, there was still those pesky late fees plus arrears on my loan. It seems like a pit that I couldn’t dig myself out of, until someone I knew who had insight into the operations of the organisation, suggested to me that I should get my loan refinanced.

    Refinancing basics

    Basically, refinancing is an option where they recalculate your entire loan, missed payments and late fees included as well as all principal and interest that you would’ve had to pay, into a new total.

    You would then sign a new agreement with the SLB, along with your guarantors to make this recalculated payment, via salary deduction.  That saved my financial life and set me on a track to paying off my SLB, which I did in 2010.

    I recall asking my loans officer at the time, why they didn’t tell us that we could have our loans refinanced and he replied “because we would be doing that all day.” #TheMoreYouKnow

    Shop for cost not just preference

    debt

    If you are planning to buy a car, what do you look at first?

    Your favourite car or the vehicle that fits within the budget you have set aside for a car?

    Rule of thumb is to look at the one that fits within your car budget not just your dream car, especially if you will have to borrow a substantial amount to get it. I know that many people say that it’s ok to purchase a car as long as you can afford the monthly payment.

    But being able to ‘afford’ the monthly payment is relative, especially if this affordability is looked at in isolation. What of the cost of tires, servicing every 5000 km, GAS? Breathing room is good, especially if you’re not paid to drive – as a travelling officer. Apply this to most other things, but particularly big ticket items.

    Save something

    I think we get so caught up in the conversation about interest rates and making your money work for you that we forget the simple power and purpose of saving, period.

     

    Interest rates are a bonus for an activity that will hopefully help you achieve a longer term goal.

    The concept of saving is simple… spend way less, than you retain. That retention will help you in many other ways, just don’t touch that money.

    I know a good interest rate is ideal but I also know that keeping more of my money than I spend is even more important and beneficial. So make a decision about your income, whatever the amount and save some of it.

    Invest when you’re ready

    Once you have saved up some money, consider levelling up and start to invest. It is not just for ‘rich’ people either, as some of us have been led to believe.

    Now is the best time ever to invest on the Jamaica stock exchange, and the recent surge in Initial Public Offerings (IPOs) has created the perfect opportunity for new investors to get their feet wet.

    Randy Rowe over at Every Mickle has some great insights and resources on investing. This article is a good way to dive in as it sets you up with some of the fundamentals of how to get started in investing in Jamaica.

    I only wish that an investment app like Acorns, which is based in the US can become a reality in Jamaica soon and make investing even easier.

    There ends my literal two cents. I just hope that if there is anything that can help you be better, it will stick. If you missed part 1 of this article, read it here

    Be inspired, Be informed, Be Glorious!

    Kevin

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  • Figuring out Finances – Part 1

    Figuring out Finances – Part 1

    I have had a very complicated relationship with money my entire life. As an adult that relationship has gone through 3 stages – Awareness, Humility and Strategic.

    I became aware of the power of money as a child when I realized that some of us had more than others and could therefore do more. As I grew up this idea of the haves and the ‘have nots’ just became clearer. When I came of age and started earning, I was immediately thrust into debt with my student loans and had to learn pretty early how to weigh financial commitments with everything else.

    The humility came when I realized the powerful hold debt can have on us mentally, especially when we’re overwhelmed by it. It is quite easy to fall into debt and sometimes the reasons for doing so are frivolous. It is quite easy to fall into debt and sometimes the reasons for doing so are frivolous.

    I’ve learnt to be more strategic with not just how I spend and prioritize money, but also with how I deal with debt. Debt and how to deal with it has seemingly become a defining part of my adulthood as well.

    Along the way, I’ve learned some valuable lessons and figured out some good ways to simply make my financial journey, better and I’m going to share some with you.
    Disclaimer: I am NOT a financial advisor, not even close. In addition, I’m sure you may’ve have read some of these tips somewhere else, however, whatever I have added here is based on my own tried and tested experience.

    Find Novel Ways to Save Money

    Many years ago, a friend of mine told me that he doesn’t re-spend coins – Jamaican 5, 10 and 20 dollars. Up until that point, I adopted a similar principle but my coin denominations were much lower – Jamaican $1, 10 and 25 cent coins. After that revelation I started doing the same with my larger coins and for a time, I would cash up to $10,000 worth of coins at the end of the year.

    A recent tweet gave me pause and an opportunity to once again, level up.

    Imani is saving $50 dollar bills. So I’ve already started and I’ll go as far as it takes me. These interesting personal challenges allow us to not only test our resolve to stick to something that’s good for us, but help us to automatically save money. I’m not saying this is for everyone. But if you can manage to keep those $50 bills to yourself, do it and see the lump sum you’ll have at the end of the year.

    Always shop around for lower interest rates on loans

    Sounds easy and it is.

    If you are in a borrowing relationship with a financial institution, always check around for better rates – so whether you have a credit card, auto loan, personal loan – don’t neglect this. In fact, you may have loan options underneath your nose, via your employer, through loan sales or special product offers from financial companies. The goal is always to seek lower rates if you borrow.

    Don’t fear credit cards

    They are not your enemies.

    I jumped into a credit card over a decade ago and I’ve never looked back. I remember when I had just applied I was told that I was making a mistake by getting one. But looking back I am thankful that I learned the hard lessons about using this tool early, so that now, I am able to make more calculated decisions about it. What’s even more fantastic now is the variety of cards that are available.

    A while back I transitioned from having just a simple credit card, to having one that gave me a benefit. No longer would my debt just be debt, I would be rewarded for it as well! LOL. Even better, my interest rate went down.

    But in all seriousness, if you want to get a credit card, plan to take the risks with it that you can afford and read all the fine print. Also, if your provider offers, always take the credit card insurance. You only pay insurance on what you owe.

    Know your cut off dates, payment and billing dates, Annual Percentage Rate (APR), annual fees, if any and all conditions surrounding the use of your card.

    Finally, don’t ever let a credit card provider fool you into taking a credit card with a higher interest rate, regardless of the ‘benefits’ or lack of annual fees.

    They may tell you this “The interest rate doesn’t matter if you pay it off every month” but suppose you choose not to pay it off at the end of a month? Wouldn’t you rather be charged the lowest possible interest rate than a higher one? Think about it.

    Save in foreign currency

    This is just something that has worked for me depending on the type of account I’m using, for a number of reasons:

    Firstly, having a foreign currency account, specifically a US$ product, has proven beneficial because with diligent saving, I always have foreign currency on hand when I need it for travel or particular expenses.

    For medium or long term accounts, especially fixed deposit type products, I have found that over time, it’s better to save in a foreign currency because I get better value on my saving. This is even better if the interest rate isn’t that attractive, you’re able to add value to your savings based on fluctuations in the currency trading markets.

    Buy in Bulk

    I live by a simple rule: Never run out of toilet paper at home! I don’t care where you choose to buy it in bulk, just do it. Buy a year’s supply or 6 months supply just always have toilet paper stocked up.

    But this is about more than just toilet paper. I just find it so much more convenient and cost effective to get certain supplies in bulk instead of making purchases month to month. My suggestion on approaching this is to buy basic items in bulk and include more products as you continue to manage your usage. It saves you money and works out in the end.

    There are some more ideas that I will share in my next update, but until then, I hope these are helpful.

    Be inspired, Be informed, Be Glorious!

    Kevin

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