The TRAP of the modern credit card.

Credit Cards: Legalised modern loan sharks that can change the value of your purchases after you have bought them.

Instant gratification, or the idea that you need to get what you want now, has increasingly made people turn to buying things on credit. Basically, this means buying things we cannot afford.

Marketing strategies that prove too enticing and too good to believe.

Nobody really bothers to read the fine prints in transactions for 0% instalment purchases. But, what is the catch really? You need to look no further than how credit card companies earn their money:

Fees, Fees and more Fees.
A zero instalment plan sounds like a really good idea! Who wouldn't like the idea that you could buy a big ticket item without having to pay a huge upfront cost? But note the processing fees for transactions when you swipe that card. If you end up missing a month of repayment, it might start a spiral of debt you cannot afford because when you cannot pay, they raise the interest.

Many end up just repaying the minimum interest while the debt snowballs. 

People used to buy only things they can afford. How that have changed.

It may seem good to use credit until unforeseen circumstances like losing your job/illness can push people to financial trouble.

Until next time,
K.C.

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Related topics:
1. About K.C. What is my story?
2. My 3Cs to money/investing
3. Why you need to set aside money for savings first

The Socio-Economic Status that got every Singaporean so triggered

A post on facebook about the Singaporean Socio-economic status went viral and drew huge reactions from the public. I shall let the pictures do its talking:

Apparently the text in an assessment book for secondary 3 Social Studies students.

The texts in the assessment book are not in the MOE textbooks. But what is the big hoohah about this?  The implications and implied meanings goes to show a social economic divide between the "upper/richer" class compared to the "lower/poorer" class based on stereotypes.

The Straits Times also similarly published an article "New study finds clear divide among social classes in Singapore, Dec 29, 17'" in which it listed certain points such as:

1. Singaporeans who live in public housing have fewer than one friend who lives in private housing.

(This implies that the rich and poor seldom mix together)

2. People who study in elite schools also tend to be less close to those in non-elite schools, and vice versa. (People tend to engage only "their own kind")

And the divide is growing.

There are many reasons why the two groups' gap are getting ever wider. This is because the predominant concerns, goals in life, experiences and several other factors like jobs tend to be very different. This inevitably causes them not to engage and interact much with one another.

Rich Getting Richer, Poor Getting Poorer
Articles like these only serve to fuel and stir up emotions against the rich, but are they to blame for being rich?

Contrary to popular belief, the rich does not become richer because they exploited the poor. The poor also does not become poorer because the rich exploited them. The simple truth is that there are certain factors influencing why this is the trend although they don't correlate to one another.

Usually, the poor become poorer because of a lack of access to information, making poor decisions because they did not know the options available to them (including very bad financial decisions). The rich got richer not necessarily from exploiting the poor. They merely made better decisions because they had access to the right information, resources and networks. These made sure they made more right decisions that wrong decisions.

Can the poor(er) get rich(er)? 

Jack Ma was an English teacher in 1995 who got exposed to literally "new" technology that was non-existent in China at that point of time: The Internet. He took action and set up Alibaba into what it is today. Granted that it wasn't a guaranteed success, the fact that he got exposed to new knowledge changed the way he thought. He saw that there was a gap to be closed and that the internet would be where he could set up a business. He was never a programmer/technical geek but he knew how to access these information to his benefit.

What will our response be?
For the longest time, we have already known that there is indeed a divide. The question is what we could do to ensure that we at least to not lose out.

Take investments for example. It is true that the richer have greater access to platforms and tools that we as normal retail investors would never be able to access. However, in this age of information technology, the barrier to knowledge is not that far anymore. It is only whether we pay attention to the available information to us and act accordingly on them.

As Jack Ma himself puts it, "if you are still poor at 35, you (probably) deserve it."

Get rid of your excuses today.



Until next time,
K.C.

If you like this post, you might like our facebook page as well.

Related topics:
1. About K.C. What is my story?
2. My 3Cs to money/investing
3. Why you need to set aside money for savings first

My mum spends $600+ a month on gambling, and she tells me she has no money!

My mum always tells me she has no money and asks me whenever I forgot to pass her the allowance for the month. My sister gives her $500, and I give her $300. This gives her a combined amount of $800 per month. I was checking some bank details about her medisave deduction when I found out, she spends a whooping $600+ on 4D and Toto combined in the last month. To be exact, the amount was $638.92!

A quick math and that comes up to 80% of the total amount we give her!!!!!!!!! Although she doesn't work, my sister has her own family and I eat outside. Apart from the utilities that come up to around $100+ per month, my mum shouldn't have much to spend on.

But if we give her $800 a month, each year is $9,600. Imagine spending $7,680 on gambling alone!

SHOCKING!

As I tried to calm myself down and refrain from scolding her (which I was able to do), I immediately turned to writing this blog post.

There are two reasons why I think she gambles so much:

1) People of her generation play as much as well.
How do I know? My ex-gf once complained to me that her Dad spends hundreds of dollars per month on gambling 4D alone but has no money for her school fees. My mum tells me of stories how one uncle struck it rich and won a whooping $190k on gambling 4D. No wonder she started to buy more despite that it is well-known that the probability of striking a lottery is very slim.

For example, with the TOTO, you have a 1 chance in 13,983,816 of getting the Group 1 prize. That doesn't seem to deter anyone.


2) It is one of her few hobbies.
Besides watching tv, as a housewife my mum has not much hobbies, besides hogging the radio at certain timing to eagerly hear the 4D results.

Local lottery tickets. Would you spend $600 a month at a chance to strike gold? Source: Straits Times

My action plan:
Oh you bet I am so gonna do something about this. Hopefully it is not blasting my mum for spending so much on gambling when she doesn't have much money.

Just 2 weeks ago, I told her of my plans to save up and invest REITS and stocks. She seemed open to the idea, and in fact she remarked:

"Oh, why don't you put the $300 per month you give me into that (investing) as well?"

You Bet from now on I will. LOL.

Oh, next time I hear "I don't have money from her, I might be a little pissed."

Anyway, it is a good reminder for me as well not to be gambling or spending on unnecessarily things. Not especially when you just almost break even each month.

Until next time,
K.C.