Category: Debt & Taxes

Would You Ever Steal…. From Your Own Future?

debt
Debt can bond or restrict your future.
Photo by Simon Cunningham

There’s a deadly epidemic that hardly anyone talks about. No, it’s not Zika. It’s happening mostly to Indian subsistence farmers (but please read on to see how this relates to you). And what’s causing their deaths is not a virus but debt. The livelihood of the vast majority of rural Indians depends on subsistence agriculture. Because of this, they are very vulnerable to weather conditions (that affect their crop yield) and also susceptible to market conditions (for the extra amount they produce to sell to the market). When they have misfortunes, moneylenders quickly come to their aid.

There are also times when a subsistence farmer is allured by a promise, such as an advertisement of a service or product claiming to improve their standard of living. Whether the promise is real or false, many are tempted to go into debt to improve their quality of life. But for them and for many others, debt can spiral out of control and sadly, the only way out that many of them see, is to take their own life(more…)

Refinancing – Where to Start and What They Don’t Tell You

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Short-term teaser rates versus long-term effective interest rates.
Photo by Hans Splinter

Before you refinance your housing loan, please think carefully about all the factors which may affect you. Many of these factors I covered in a previous post.

A lot of them will appear in your contract (mostly in the fine print). But I find that very few loan consultants will take the necessary time to explain all the fees and terms. At times, refinancing could be a very frugal and prudent decision. And at other times, it can mean trading short-term gain for eventual long-term pain. Below is one of many real-time up-to-date loan aggregate search platforms.  (more…)

Factors to Consider and the #1 Question to Ask Before you Refinance Your Loan

home money
Refinancing is all about costs versus benefits.
Photo by Mark Moz

For the first time in decades, the SIBOR rates (these affect your mortgage loans) rose significantly higher than LIBOR rates. This implies that interest rates in Singapore can go up as a result of factors other than what the US Fed does. SIBOR stands for Singapore Interbank Offered Rate. It is a daily reference rate based on the interbank interest rates at which banks lend to one another.  At 1.06% (3-month April SIBOR), this key benchmark rate is 2.5 times higher than the 0.4% in 2014.

As mortgage loans are based on SIBOR, many people are wondering if it’s time to refinance to seek a lower (teaser) interest rate. But you don’t get something for nothing (at least not typically in the finance industry). So you need to consider the costs versus the benefits. Lenders, loan officers, and bank advertisements will entice you with interest rates, but what they never advertise is all the fees and restrictions. Here’s a countdown of some things to consider before happily handing over your signed loan documents to an eager loan officer. (more…)

4 Things to Invest in that will Make You (Not Your Financial Planner/Broker) Wealthy

investing conf
You’ll never hear these tips in a financial seminar (because these tips won’t generate a commission).

It seems that everywhere you look, there’s some guy hosting a free seminar who’s going to tell you secrets on how to pick winning stocks. Sometimes these talks are hosted by financial services companies like RHBInvest and Phillip Capital. Or, they are given by notable “experts” in the field, like Mark Lin and Nicholas Tan. Other seminars are held by financial education companies, like Wealth Mentors, where much of what they teach could be found in a good book (free, from the library).

As a former financial educator who was not tied to an investment company or to selling certain products (and therefore, I had absolutely no conflicts of interest), I can honestly say that for the vast majority of people, these seminars won’t benefit them. They will mainly benefit the organiser(s). So what should these people invest in? (more…)

Why Banks are the Tallest Buildings and Lamborghini Drivers are Poor

easy credit
Note to MAS: don’t just put a limit on unsecured debt, put a limit on credit card & loan solicitors!

In every city, usually the largest and tallest buildings are bank buildings. This should give you a sense of how much influence and profits they have. They are often much bigger and more prominent than government buildings. Many of them make the majority of their money through personal banking services, such as through loans and credit cards. Although just about every religion forbids usury rates (i.e., excessive or abusive interest rates that unfairly enrich the lender), banks somehow are able to issue credit cards with 26% annual interest and nobody seems to object.

I recently attended a talk in which a Singaporean economist said that about one-third of credit card balances in Singapore are revolving/outstanding. This means these debts are subject to the outrageously high interest rates. The sad thing is that once your balance is subject to these high rates, paying off the principal becomes extremely difficult because the interest just keeps growing exponentially. (more…)