A Good Eye Opener...

[rusem]

(For those who hasn't read this yet...)
Asset or Liability


THE BASICS OF CASH FLOW

There are those who e-mailed me asking about the basics of cash flow. I'm really sorry that I assumed everybody already understands it. Anyway, by demand ... here it goes...

May isang bata... joke lang.

The basic is. What pattern do you see if you will get a P100.00 bill and monitor where and how it is transferred from 1 possessor to the other? How does it flow? The pattern for a typical Pinoy is.

You earn from your work, you spend it on food, gadgets, clothing and other basic needs. Before you reach the next payday, paubos na yung pera mo. But that's ok payday is just a few days ahead and it doesn't matter if I run out of money, I am expecting money again any time soon.

This cycle goes on and on and you make some sidelines or create other ways to earn but it seems that money was never enough. (I am tempted to explain further pero usapan... basics lang).

So you can't leave the job that you have because a week without work would affect the cash flow you have to support your family and needs. As much as you wanted to accept another job, the gap would make you pay less for a couple of days, which makes you a slave to your boss.

At least, you have a job to support your needs.

So to illustrate...Cash is flowing inside your pocket.

Years have gone by doing your monotonous routine.

Question... what if you get fired? Or you were forced to retire because there are new and younger people ready to take your place. What would you do?

As an OFW, Makati Executive, Top Salesman, Engineer, Attorney, Teacher, etc... What if it all ends? The sweet cash that enters your pocket every 15 th and 30th suddenly comes to a halt.

There are two things you can buy with your money... An asset and a liability. To describe each... An asset brings money inside your pocket; a liability takes money out of your pocket. Another way to see, it is that an asset if you buy one, will bring the money you spent for it back to you 2 or 3 folds. A liability, when you buy it will not give your money back at all.

Sa ilocano... idjay ti kwa... djak maawatan... (joke lang po, seryoso na kayo eh...)
Sa madaling salita... kapag asset, maibabalik ang pera , pag liability, goodbye sa pera...

Ang problema kay JUAN DE LA CRUZ, habang may trabaho ipon ng ipon at bili ng bili ng liability!

I have seen OFWs get back to the country with gold chains at kung pwede lang limang shades ang isuot ng sabay-sabay gagawin nya eh... dvd, component, jackets, clothes, inuman, pulutan, party, pabango... hindi na makalakad sa dami ng bitbit...

At s'yempre mga empleyado natin dito sa bansa na lingo-lingo bago cell phone at mags ng kotse.. hindi na nga magkasya ang damit sa aparador, tapos pag umaga sasabihin.... wala na akong maisuot.

Guys, esep-esep... what you bought... will it bring money back to you? I know what you have in mind... you have to enjoy what you worked hard for. That's right, but think of something that will last... think of your future.

I have seen the worst of people who were abogado de kampanilya, executive secretaries of top rank business men, people who worked for big companies, earned a fortune and got a big retirement pay by the millions... Now.... Wala na.

Why? Because of their cash flow... went in... went out.

I need not to mention basketball players, actors, singers, etc... Check what is their career path... next after acting, singing and playing... POLITICS. Kasi, 'yung million na kinita nila, puro liability ang binili.

Going back... all the liability they bought, ibinenta ng mura! I'm wearing a gold chain now, which I got from a seaman... he bought it for P35,000 and sold it for 8,000 to me. Hindi po asset ang alahas! Bakit? Totoo na tumataas ang value n'ya pero kapag gutom ka na, kahit palugi ibebenta mo! (wala bang aaray?) Cell phones... dvd players etc. pati bahay at kotse... that's the cash flow of most OFWs...

The question is ... "WHAT IF THE INCOME STOPS?"

Sa Pinoy, ganito: anak... mag-aral kang maigi, at pag tanda namin... ikaw na bahala sa amin ha.... Hindi po ba maling-mali...

You have to establish something today that will take care of your future.

Teka, teka... eh ano ang dapat gawin para hindi mangyari yan?

You must create a source of income that will continually make money flow inside your pocket. Start a business! While you are working as an executive or an OFW, or a professional... START A BUSINESS and MASTER that business till you get out of that company. Parakapag tumigil ang income mo sa kanila... may susuporta pa din sa iyo hanggang pag-tanda mo!

Now don't tell me to invest my money on pensions and plans... NO WAY! Narinig n'yo na siguro yung .... Naku ayaw ko na magbanggit.... 'yung mga nagbayad at hindi nakapag-claim... sila pa ang dinimanda at nag-piyansa!!! HUWAG MO I-ASA ANG PAGTANDA MO SA IBA! GUMAWA KA NG SARILI MONG BALON NG PERA! KAHIT MALIIT PA 'YAN, SARILI MO AT HINDI KA AASA SA IBANG TAO...

Imagine yourself when you reach an older age... (aruy ko,,, baka yung iba sa inyo about that age... tabi tabi po...Ako po sa mga nagtatanong... I'm 37 years old. Naabutan ko pa si Michael Jackson at hinele po ako ng nanay ko sa mga kanta ng hagibis...). You have money that the company gave you as your retirement pay... what will you do?

You can consume the money till your old... eh kung hindi umabot? Masamang damo ka pala... at hindi ka kaagad kinuha ni Lord. Eh pang age 65 lang yung naipon mo na budget.

Or maybe, you can start a business and use the money for capital... Kapatid... 9 out of 10 businesses, FAILED... yung isang magsa-succeed, gagayahin pa ng kapitbahay mo instead na mag-franchise sa 'yo... think! At age 50, you are struggling trying to make a business work! What if it fails?!




Eh ano nga ba ang sagot?

The answer is, stop buying liabilities and instead buy assets now. I don't care if it is a banana-Q store, balot, ice candy or a sari-sari store, etc... start now! Because, your experience here will teach you what to do in the future. It's so hard to struggle in business when you are 60 yrs old.

You have to create a source of income separated from the source of income from your work. That when the time comes that you have to stop working, you will have your own source of money! Create assets, start a business that will be there to support you and your family. I AM NOT TELLING YOU TO QUIT YOUR JOB! I'm telling you to start a business while you're working and stop spending your money on liabilities and start putting them on assets!

Ang pera kapag pinambili mo ng LIABILITY... hindi na babalik... ang ASSET... BABALIK.

Teka... masama ba bumili ng mga magagandang gamit? Hindi! Siguraduhin mo lang na ang pambili mo nun ay galing sa asset mo. The business has to be prioritized! Mawalan ka man ng trabaho, may negosyo kang palalaguin.

If before, nabubuhay ka naman ng iisa sapatos mo, huwag mo baguhin 'yun... dati, nagdyi-jeep ka lang... 'wag ka na munang mag-FX...

Create assets and lessen liabilities. Invest and learn now... mag-negosyo!

Eh anong negosyo? Any, as long as you think it is work and doable! I am still looking for partners for my HOME MASSAGE SERVICE! SPA MAGIC! And my business CAR MAGIC is still franchising... (joke lang ... baka sabihin nyo nag pro-promote lang ako eh...But I AM PROUD TO SAY THAT ALL MY BUSINESSES ARE ORIGINAL AND ALL ARE GRAND ASSETS!

I started all my businesses with a very small capital. If I used that money to buy a gadget, new shoes or any liability... baka wala lahat ng negosyo ko at wala na akong makain ngayon.

Again, I hope that this BASIC CASH FLOWarticle helps.... I wish all of us become financially free!



FROM UNKNOWN AUTHOR

[squatt3r]

this is one of the most popular forwarded email in my inbox :-)
diba nga kung may naisuksok...may mahuhugot.....na pera

[wildthing]

merun pang isa akong comment .... sa negosyo ang dapat mo lang gastusin para sa iyo (kahit na liabilities pa bilhin mo) ay ang profit and NEVER your puhunan.

most ng kakilala ko na nagfail sa negosyo nila kasi started buying things (both needs and wants) using the whole money they have (kasama ang puhunan)....thinking na yumaman na sila....eventually they failed kasi dumami ang utang nila (used up puhunan) and ubos na rin ang pangbili nila ng itetrade para mag-roll ang negosyo.

[nerner]

Nice thread/advice or whatever you call it. I am inspired..

Anyway, Question: is it advisable to start my own business after i graduated? even without work experience or anything...

[cutedoc]

parang puro trabaho ata, pano at saan mapupunta ang kinikita?

as of the moment im single, living with parents, i spend what i earn, i have my share of obligation to our home, hough its not as much(grocery and food lang) my objective is pretty simple, in 100% of i got from my net income, 65-70% goes to savings, the rest is mine, i should somehow enjoy what im working for, what if i die tomorrow(which i almost did) how am i able to enjoy life to its fullest, but i should take in consideration that i need to have my own money as i settle down and thats where the savings goes=)

back to cash flow, i have that game yet i havent played it yet

[empy]

sino kaya si unknown author? did he follow his own advice and is now writing anonymous emails from paradise island?

[the_wildthing]

Of course some assets end up worthless. Think Enron stock.

For me the basics of cash flow is allocation/budget. x% long term savings/investment (retirement), y% medium term savings (college for kids, future biz), z% short term savings (big ticket items), a% goes to monthly expenses for needs (including insurance premiums), whatever is left goes to wants, which, sad to say, is almost nil. 2 CD or 1 DVD na lang.

[oldblue]

Nice thread/advice or whatever you call it. I am inspired..

Anyway, Question: is it advisable to start my own business after i graduated? even without work experience or anything...

puwede naman siguro. the best teacher kasi sa business, is not your work experience or your schooling (both of these comes in secondary na lang), but
it is failing/bankrupting your business. That's the best teacher!!!

[rusem]

yeah, that enron thing. prompted lot of companies to revisit their code of business ethics... anyway tama rin si cutedoc, SOMETIMES we could give in or reward ourselves, after all we worked hard for it. but what we should have is firm grasp of reality na we shouldn't spend beyond our means. And that's the bitter pill, we filpinos should swallow, especially us who's from B-C class... So the next time the urge to splurge descends us, maybe we should think first if what we want to spend on is either a NEED or WANT?
my 2 cents

[empy]

puwede naman siguro. the best teacher kasi sa business, is not your work experience or your schooling (both of these comes in secondary na lang), but
it is failing/bankrupting your business. That's the best teacher!!!

i don't know about you, but i would rather make sure that i knew enough about the business i was going into, and had proved to myself that i could manage an organization effectively, before giving up career opportunities and life savings to start a business.

if it took me years of work experience to get that skill and knowledge, then so be it.

learning through failure works, but it's also the most expensive way to learn.

[Flagg]

Here's a little secret to staying rich:

Spend only 10% of your net income (after all necessary living expenses)savings on wants. If you can't afford your current want, wait until the 10% gets there. The remaining 90%, you invest.

Something di ko ginawa kaya in debt ako ngayon...

[oldblue]

i don't know about you, but i would rather make sure that i knew enough about the business i was going into, and had proved to myself that i could manage an organization effectively, before giving up career opportunities and life savings to start a business.

if it took me years of work experience to get that skill and knowledge, then so be it.

learning through failure works, but it's also the most expensive way to learn.

me kasi parang nag-work lang ng less than a year sa isang american company based here tapos nag-business. tapos nag-business ako 5 years na. had 3 branches within those years then came last year, sabay-sabay banat sa 3 branches ko. I learned more in business in this 1 year of uncertainty, compared dun sa 4 years na good-running business ko

cashflow talaga important. gross-expense = net, naku wag masyado intindihin yan dahil sigurado psychologically pa lang bankrupt ka na. skills and specializations, dont worry about that also. if you do that, then it's not a business, it's a job.

now i'm preparing myself psychologically na to hire and to maintain people more intelligent and more skilled than me. next step ko na'to.

[oldblue]

Here's a little secret to staying rich:

Spend only 10% of your net income (after all necessary living expenses)savings on wants. If you can't afford your current want, wait until the 10% gets there. The remaining 90%, you invest.

Something di ko ginawa kaya in debt ako ngayon...

the secret of staying rich: only work to learn. but make money work for you.

[empy]

me kasi parang nag-work lang ng less than a year sa isang american company based here tapos nag-business. tapos nag-business ako 5 years na. had 3 branches within those years then came last year, sabay-sabay banat sa 3 branches ko. I learned more in business in this 1 year of uncertainty, compared dun sa 4 years na good-running business ko

so if it only takes you a year of working to learn the skills to be a successful independent businessman, then my hat's off to you. i know that i couldn't do it. the point is, it might take longer for different people, and it also depends on the market and sheer luck as well.

iba naman yung sitwasyong sinasabi mo eh. you had a year of expansion where you doubled in size, which is always a challenge to manage, but apparently had the skills to keep it going successfully. i don't call that learning through failure, unless i'm missing something. you obviously already had the skills....compared to someone else who might not be as sure of themselves.

[Eismann]

Does luck(for those who believe in it) have a bearing on any business? Let's say we follow what's in the book to the letter and still fail. Does luck have something to do about that?

However small the business is, maybe attitude, skills and knowledge will not be enough to run it to full success. I'd like to think aloud that a "big hand" is out there somewhere to make the business a success...may it be big or small.

But the concept is correct to start early in business. The question in my mind is maybe there are people built just for employment? And maybe they're already contented with what they have that they don't want to aspire for all these material things anymore......

[CVT]

Does luck(for those who believe in it) have a bearing on any business? Let's say we follow what's in the book to the letter and still fail. Does luck have something to do about that?

However small the business is, maybe attitude, skills and knowledge will not be enough to run it to full success. I'd like to think aloud that a "big hand" is out there somewhere to make the business a success...may it be big or small.

But the concept is correct to start early in business. The question in my mind is maybe there are people built just for employment? And maybe they're already contented with what they have that they don't want to aspire for all these material things anymore......

IMHO, luck plays a magical role in business. If you've studied the basics and you've executed them to the letter, it doesn't necessarily spell out success. It's just a gameplan for proven successful starts in the past.

Kaya kami,- living within our means ang strategy, especially since we're salaried people.

[CVT]

i don't know about you, but i would rather make sure that i knew enough about the business i was going into, and had proved to myself that i could manage an organization effectively, before giving up career opportunities and life savings to start a business.

if it took me years of work experience to get that skill and knowledge, then so be it.

learning through failure works, but it's also the most expensive way to learn.

Agree here .

Learning through experience (failure) will definitely make you stronger, but is very expensive. Kaya the best start is to execute based on steps taken by successful starts in the past, as appropriate in your business. Ironically,- this is not a guarantee for success.

Well, I guess the biggest worry is, failure occurring late in the day....

[silhouette]

make money work for you.

Correct! Rich Dad Poor Dad.
Don't work for money, let money work for you. Invest, invest, invest...that is kung kaya.

[ehw953]

im currently reading rich dad poor dad's "Retire Young Retire Rich" i find this book very inspiring... it really provides good advice... but in some ways when im reading it, i feel na pure western type of philosophy on business tinuturo nya... it says na we should invest on stocks... madaling sabihin pero what i know is manipulated ang stocks lalo na dito sa pinas... kaya basic thinking ng tao is stocks are very risky and talo ka din sa huli... sugal din ang stocks eh...
pero the book also teaches some reality lalo na yung what poor dad would teach his children and the rich dad would teach "rich" children..

sorry masyadong OT hehe

[coiter]

But the concept is correct to start early in business. The question in my mind is maybe there are people built just for employment? And maybe they're already contented with what they have that they don't want to aspire for all these material things anymore......

I agree on this. di naman lahat may interest magbusiness. kung wala rin puso mo sa gagawin mo, you'll never succeed. some people would rather aspire to climb the corporate ladder.

but I also agree on investing in fast moving assets, but not necessarily a business. it's the usual advice, don't spend beyond your means, save for the future, make your money earn, etc.