Category Archives: Tipid

Tipid – Saving by minimizing expenses

How to Spend Your 13th Month Pay

Merry Christmas!

It’s that time of the year when Filipinos are happiest.  Many are eager to receive their 13th month pay to buy presents for family and friends, and to splurge a little on gadgets.  For some, there are extras, perhaps even a 14th and 15th month pay.

How do I spend my 13th month pay?

How do I spend my 13th month pay?

How do you use it?  I strongly suggest you think a little beyond the holiday season, Christmas presents and merry making.  Why don’t you….

  1. Plan

Close to 70% of people who get large amounts of money go broke within 5 to 7 years.  This is because many people are so unfamiliar with having a large amount of money.  Plan how to use your money, and budget how much you want to spend for Christmas and how much you want to allot for more productive use.A good rule of thumb is 10% for your spiritual community, 20% for your future, and 70% for your expenses and lifestyle:

  • 10% for your eternity
  • 20% for your maturity
  • 70% for your family

And then you plan further.  How do you spend your 70%?

  1. Protect Your Family

Have you considered what would happen if the Lord decides to call you home early?  What would happen to your family?  You can be healthy today, but what if tomorrow, you meet an accident?  Will your family go hungry?Buy SUFFICIENT life insurance coverage.  There are inexpensive options available, such as term life insurance.  P6,000 annual premium at age 25 can buy you P1M coverage.Combined with some mutual fund investments, P3,000 per month for 10 years can  buy P1.2M of life insurance at age 25, slowly growing to more than P4.8M coverage ( or P3.8M cash benefit) by age 60.

Learn about protection, savings and investment in free seminars,  like the SAVING YOUR FUTURE seminars on Practical Money Management from IMG.

  1. Eliminate debt

The typical Filipino makes strange financial decisions.  Most save in banks where their money earns 0.20% per year (that simply means if you put P100,000 in the bank on Jan 1, then by December 31, the bank will give you P200 interest after withholding tax), but borrow from the “friendly Bumbay” at 5-6, or from the “sosyal” credit card company at 3.5% PER MONTH.

Pay your credit card debt. By paying  credit card debt you effectively invest your money at a rate at least equal to the 3.5% they charge you.

Read more about How to Invest by Paying Your Credit Card, and earn an equivalent compounded annual growth rate of approximately 51%

  1. Invest

Investing is increasing the value of your assets using your existing resources, like time and money.  While some consider investing a science, there are enough elements of creativity involved, I prefer to think of it as an art.Investing in your greatest asset – you – is probably your best investment.  You probably invested hundreds of thousands of pesos in your formal education (elementary, high school, college) so you can get a good job, and work for money.

Invest in your financial education, to learn how make money work for you, and to gain financial wealth and spiritual abundance at the same time.  Join the TrulyRichClub.

Start by taking a crash course in stock market investing.Invest in safe investment vehicles to build your retirement fund and your children’s college funds. Equity mutual funds and UITFs are good starting points.

  1. Setup Your Emergency fund

Setup your emergency fund, normally three to six months of your living expenses.  Emergencies are for emergencies or unexpected large expenses such as medical emergencies or temporary unemployment.  Sale in malls are not emergencies, even if your dream shoes are on sale at 70% off.

Keep your emergency funds in savings or time deposits.

  1. Indulge

Spend a little on yourself.  Save specifically on little pleasures for yourself, maybe an occasional vacation or adventure.  Save for your future, but  treat your present self every now and then.

A note on the 10% for Eternity

Share your blessings  to your spiritual community and to the less fortunate.  Remember we are merely managers of of God’s wealth.  Giving actually makes you feel more blessed, and appreciate the abundance of God’s universe.  Giving makes you win in all areas of your life.  In other words, TrulyRich.

Bobet Prudente is a financial coach and Senior Marketing Director at IMG TrulyRichMakers.  He is a member of Bo Sanchez’ TrulyRichClub .  He conducts regular FREE Saving Your Future seminars on Practical Money Management Techniques in Quezon City.


How to Invest by Paying Credit Card Debt

Do you have credit card debt?

If you have credit card debt, one of the best gifts you can give yourself is to pay your credit card aggressively. Paying high-interest debt is actually a very good investment strategy, sometimes “earning” you more than 50%

It isn’t enough to just pay the “Minimum Amount Due” every month. Create a payment plan, put it in writing, and attack your credit cards, starting with the highest interest credit card first. If the cards have the same interest rate, choose the one with the lowest balance.

Cut up your credit cards!

Aggressively pay your credit cards starting with the card with highest interest rate.

What happens if you just pay minimum? Let’s take a look. Suppose

  • you have credit card debt of P20,000 in one credit card
  • you do not add any more debt to that one credit card
  • your monthly interest rate is 3.5% and
  • you normally pay only the minimum P500 per month for this card
  • you keep your other credit card payments constant
Paying Minimum

Paying only the Minimum Amount Due will often increase your debt

After the first month, your P20,000 debt incurs 3.5% interest or P 700, and you pay P 500 only, so your ending balance is P 200 higher at P20,200. After 12 months, you would have paid P 6,000, but incurred P 8,920.39 in interests! Hence your ending balance after 12 months is higher at P22,920.39. Your debt and P 6,000 payment actually lost you P 2,920.39 or 49% loss!

But what if you decided to save an additional P10 per day or P300 per month to add to your credit card payments. That isn’t much, right? Instead of paying the minimum P500, you pay P800.

Pay more than minimum

Paying more than minimum, at least more than monthly interest, will reduce your credit card balance.

Because you are paying P800, or more than the interest (3.5% of balance), your debt actually shrinks every month. Specifically, your P20,000 debt will shrink to P18,539.80 in 12 months. This means your twelve P800 payments totalling P9,600 earned P20,000 minus P18,539.80 equals P1,460.20 or about 14.6%* !!!

But what if, when you get your 13th month pay, you use part of it to make a large payment on your credit card debt? What if, after deciding to save an extra P10 a day or P300 a month, you paid P7,500 on the first month?

Balloon Payment

Making a balloon payment reduces the interest rate

The balloon payment of P7,500 substantially paid the balance of your P20,000 debt, so after the P700 interest, first month ending balance is P13,200. Hence subsequent interest per month dropped initially to P450 then lower every month.

So your debt shrinks faster every month, up to P8,758 after 12 months! This means your P7,500 plus P800 every month totaling P16,300 earned P20,000 minus P8,758 equals P11,242 or about 69%* !!!

But let us make a real plan. Can you save P33/day instead of P10/day? The P23 difference is about the price of a cup of coffee at the cafeteria, or that modest ‘turon’ after lunch. That translates P1,000 per month. What if, in addition to your P7,500 on the first month, you add the P1,000 to the original P500, and pay P1,500 per month?

Aggressive Payment

Aggressively paying your credit card debt will enable you to quickly retire your debt

Wow! Is this for real? The P7,500 initial payment reduced the balance to P12,500 plus P700 interest increased the first month end-balance to P13,200. But the aggressive repayment at P1,500 per month very quickly reduced the balance to P1,022.81 after the 11th month, enabling you to fully retire the P20,000 debt after only 12 months!

Just think about this. Your P23,558.61 in payments earned you enough to fully retire one credit card with P20,000 beginning balance. That is like earning P20,000 on P23,558.61 in one year or 85%! Where can you find an investment that gives you 85% in a year?

After 12 months, it is time for your 13th month pay again. Time to start retiring your second credit card or next P20,000 debt. It will be easier for the second card. If you were paying minimum of P500 on your second credit card, you can then pay P1,500 more ( what you were paying for the first credit card ).

Pay high-interest debts! It is one of the best investments you can make!

* Strictly speaking, the effective interest rate is the same as the credit card rate, approximately 3.5% per month, or a compounded annual rate of approximately 51%.

Learn more about Practical Money Management Techniques in our FREE Saving Your Future seminars in

Related topics

Can you Save a Little to Save a Lot?

Cut costs on the things you don’t need now, to get the most important things you need in the future: kid’s education, house, car, dream vacation, retirement and health care fund.

You can make a fortune by making small changes today.

Do you drink softdrinks? Twice a day? Everyday?
Do you buy hot coffee? Twice a day? Everyday?
Do you smoke? A pack a day? Everyday?
Do you have your hair fixed? If straight, curl it. If curled, straighten it. Every month?
Do you eat junk food?

Think about non-essential sale items. Many buy P 1,000 non-essential sale items per month. Times 12 months is P 12,000.

Is P 12,000 a large amount for savings? It probably is!

Think about softdrinks. Softdrinks probably cost P 20 per can. Twice a day is P 40. Times 30 days per month is P 1,200 per month. Times 12 months is P 14,400.

Is P 14,400 a large amount for savings? It probably is!
Is P 20 a small amount to save? It probably is!

Think about cigarettes. It probably cost P 50 per pack. Times 30 days per month is P 1,500 per month. Times 12 months is P 18,000.

Is P 18,000 a large amount for savings? It probably is!
Is P 50 a small amount to save? It probably is!

Think about junk food. Junk food probably cost you about P 100 per pack per day. Times 30 days per month is P 3,000 per month. Times 12 months is P 36,000.

Is P 36,000 a large amount for savings? It probably is!
Is P 100 a small amount to save? It probably is!
Learn more about financial literacy, attend our Free Financial Seminar

But if we do not want to completely give up softdrinks or junk food, or cigarettes or non-essential items, maybe we can just cut-down? Half the annual amount is still a lot of money!

Resolve to cut down on a lot of small expenses. Small savings many times, over the days, over the months, over the years will allow you to save a lot of money!