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| Translation: Is there anything left in your salary? |
I remembered writing a post about poor priorities and debt traps. It might be a good thing to finally write about dumb ways to deal with one's paycheck. Take note that this is a harsh post that I felt needs to be written. It might sound harsh but I felt like I need to be harsh in this post. Sometimes, I feel the need to be so harsh especially when I believe financial mismanagement is a reality. Let's get started with dumb ways to deal with your paycheck
Paycheck arrives and it's time for a lavish blowout
One of the most common reasons why some Filipinos run out of money is payday blowouts. Earler on, I wrote about the problem of payday blowouts. I think this is a very common thing. The first thing that comes into one's head on payday is to eat out. Instead of thinking about paying one's bills such as rentals and utilities--peer pressure comes to mind. These people will start to call someone a killjoy. It may be fellow employees who waste the money together (such as going to a restaurant that's too expensive) or the lone "hero" or "heroine" to bangka (treat) people to a huge feast. After that, the money is definitely consumed.
One of the biggest problems is blowouts happen by the baranggay. Baranggay is a Filipino word for a village in both the Tagalog and Visayan dialects. I think about how somebody gets pressured to blow out. The one who offers the blowout just can't say no. Even worse, they may be eating in a very expensive restaurant beyond one can afford. Some people who are eating out aren't even offering to pay the meal. It's one thing if fellow employees all contributed fairly for the meal. It's another thing if only one person shoulders all the burden. This can cause somebody to "solve the problem" by borrowing money. In turn, this adds up to the debt burden.
Going gambling instead of paying bills and setting aside money for investment
I wrote an article about the irony of not investing but gambling. There are so many excuses not to invest such as "not enough money" (and now one can start o invest in an index fund for as low as PHP 1,000.00 for a start) or that the returns aren't fast. Of course the returns aren't going to be fast. It was never meant to be fast. Stocks don't go up or down that quick either although the volatility is higher than investing in bonds. Still, we know stocks are more stable than cryptocurrency. Gambling is a very common vice that's very hard to remove, right?
I think about the thrill of gambling. It's because gambling promises "biglang yaman" or instant riches. Some of the most common forms of gambling before Axie Infinity came are betting on horse racing and cockfighting. Even worse, people tend to bet money that they want but can't afford. Worse, somebody even starts using their paycheck as a source of money to pay gambling debts. One may even bet their whole paycheck hoping to get somebody's paycheck. The problem is that gambling is a game of chance. It's not like the stock market where prices go up and down based on factors like economic factors, company performance, industry performance, and public perception--all of which will affect supply and demand. Some will end up buying appreciated stocks for some reason.
I think about the thrill of gambling. It's because gambling promises "biglang yaman" or instant riches. Some of the most common forms of gambling before Axie Infinity came are betting on horse racing and cockfighting. Even worse, people tend to bet money that they want but can't afford. Worse, somebody even starts using their paycheck as a source of money to pay gambling debts. One may even bet their whole paycheck hoping to get somebody's paycheck. The problem is that gambling is a game of chance. It's not like the stock market where prices go up and down based on factors like economic factors, company performance, industry performance, and public perception--all of which will affect supply and demand. Some will end up buying appreciated stocks for some reason.
Putting all the money into investments
One of the rules of investments that I learned is, "Invest the money you don't need now." In short, there's a budget for investing. It's pretty much like, "Paid bills? Check! Now let's see how much is left." This money can be put into an emergency fund. Yet, some may foolishly end up investing all the money at once into investments. It can be very hard to liquidate. Another is the lack of market timing such as buying when stocks are too high when you can't afford to. In short, investment is money that you're willing to set aside (for now) for later use. It's not using the money you need now.
What I decided to do is to put aside a certain sum. Make sure that I still have money for daily uses. I suggest getting into index funds. Seedbox, ATRAM, and GInvest are some of the alternatives. GInvest purchases are used in either ATRAM, or Bank of the Philippine Islands (BPI) for a start. The Philippine Stock Index Fund and the ALFM Global Multi-Asset Income Fund are by BPI. Meanwhile, the rest are by ATRAM. I think it's best to save up first before investing. Though, one may start by choosing a single fund (I suggest those linked to stocks such as the Philippine Equity Smart Index Fund) for a start. Maybe, make it a habit to drop at least PHP 1,000.00 maybe on every payday or every end of the month. Though, it might be suggestible to see which investment is on a dip to take advantage.
What I decided to do is to put aside a certain sum. Make sure that I still have money for daily uses. I suggest getting into index funds. Seedbox, ATRAM, and GInvest are some of the alternatives. GInvest purchases are used in either ATRAM, or Bank of the Philippine Islands (BPI) for a start. The Philippine Stock Index Fund and the ALFM Global Multi-Asset Income Fund are by BPI. Meanwhile, the rest are by ATRAM. I think it's best to save up first before investing. Though, one may start by choosing a single fund (I suggest those linked to stocks such as the Philippine Equity Smart Index Fund) for a start. Maybe, make it a habit to drop at least PHP 1,000.00 maybe on every payday or every end of the month. Though, it might be suggestible to see which investment is on a dip to take advantage.
Investing into other get-rich-quick schemes aside from gambling
I think about other get-rich-quick schemes aside from gambling. I guess one reason why so many fell into the Axie Infinity scam is because of the promise of getting rich quick. Some people fell for Charles Ponzi's scam because of that reason. Pyramids and Ponzis recruit gullible victims into joining them. Cryptocurrency has become yet another form of a get-rich-quick scheme. I remembered writing about the problem of play-to-earn scams (which Axie Infinity is part of), why I don't recommend investing in cryptocurrency, and paid-to-watch ad offers. These are offers that are too good to be true. It's also common sense that you pay to play and not play to earn. It's common sense that you pay to watch not get paid to watch. The reversals in cost accounting make me wonder where did those who run the show get the cash to dole out?
A deadlier side of get-rich-quick schemes would be crime dens. It might go from joining a small gang to dealing with drugs. I heard how some people deal with illegal drugs because they want to get rich quick. It might go as far as to offer one's paycheck into a drug den to produce the drugs for sale. These people would invest the money in other criminal activities beyond pyramids, Ponzis, and cryptocurrency. No surprise that the Netflix documentary Cyber Hell: Exposing an Internet Horror even talks about how cryptocurrency was the preferred mode of payment. I even wrote a review of the Netflix documentary Trust No One: Hunt for the Crypto King. Trust No One even talked about how a crypto scam actually caused a lot of money. One of them even lost his life savings. I wouldn't be surprised if gangs now use cryptocurrency to hide their activities. Either way, stay clear of these get-rich-quick schemes as they're ran by criminals.