Should You Pay Off the Car Loan Early?

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My son recently bought a car of his own so he can use it when he goes to Rutgers University. The journey began earlier in the summer when he starts hunting for his perfect car. But I brought him down to earth by explaining the process especially applying for an auto loan.

So he started applying for a pre-approval loan through several banks and he was rejected because of his lack of credit history. One bank approved a loan under pre-condition with high interest rate. He was shocked of how difficult it was to buy a car.

I stepped in and helped him to get the loan from the car manufacturer using co-signing. We were able to get the loan with low interest rate. We were quite happy with the loan condition because of low monthly payment and there is no penalty for paying off early. The car dealership finance manager asked if we plan to pay the loan off early. That is a very good question of which I’ve thought of when I had two car loans prior to this.

There are pros and cons when it comes to paying off loan early. The obvious pro is that you get to be debt free early. This is especially true for someone who hates to carry a debt. But that does not mean that you will be totally debt free because everyone carries other debts (i.e. mortgages, credit cards etc.). Another benefit of paying off the car early is that you get to own the car early and you are not required to have a comprehensive full insurance coverage, which is an added saving.

Other Obligations

Let’s address the elephant in the room. The car payment is big chunk of anyone’s budget. Besides our daily obligations such as grocery bill and fixed cost, car payments can be a big portion ofour our monthly expenses because of the condition of the loan. Unlike a mortgage which could be 15 to 30 years loan, auto loan is usually 5 or 6 years loan. That means that monthly payment could be high depending on how much you are borrowing.

You can opt to pay more every month so you can pay off the loan early. A mortgage will reduce its monthly payment when you pay more upfront. BuyAuto loan is fixed every month regardless how much you pay more. The only benefit is that it will reduce the period of repayment by several months. So paying more every month will not likely to make a dent on your monthly obligations.

Affordability

Before going through this point, everyone should ask the question why would they need to have a new car on their driveways. Cars today rarely break down. The quality of the cars have improved dramatically that most will last 10 years before breaking down. Are you ready to absorb another cost when the benefits of owning a car rarely outweighs the costs?

If you can afford to pay for the car then the answer to paying off early makes sense. It is highly recommended that you make a proper budget to ensure you can afford the car payment. Once you are aware that you can afford an extra payment, paying more on the principal will help. However, as I alluded to above it will hardly make a difference in the long run unless you pay extra every month.

The Return

My son was able to get a good rate on the car loan. After paying off the loan in 72 months, it will only cost him $1,500 for the entire loan. If he pays off the loan early, it may lower the cost by a few hundred of dollars. However, he could repurpose the money for something more beneficial. For example, if he invest the $7,200 (assuming that he pays $300 every month for the next 2 years) with an average monthly return of 12%, he would have made a profit of about $2,000 by the end of second year. Obviously this is being optimistic but history shows that it is possible to obtain 10% return annually based on conservative stocks. Keeping the money in investment will continue to grow year on year.

However, if you have a high interest auto loan then it may makes sense to pay off the loan early. This should only be done if you can actually afford to forgo the money otherwise that you can use it for something else. Another option to minimize the cost of the loan is by taking a personal loan from a bank with lower interest rates.

Everyone’s financial situation is different. Paying off the auto loan early may make sense if you have a large outstanding debt or if you have the means to do so. It is important to consider if paying off would benefit in the long run. The best way to manage any auto loan is simply not to have it. If you can continue to use your existing car for a few more years there is no reason to obtain a shiny new car with a large price tag.

How to Channel Stress

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I recently took a virtual workshop at work on the subject of leadership. One of the question that came up was how to deal with stress. I’ve never really given much thought on stress because I deal with it head-on. But as I consider the question more I realized that I have using stress by channeling it into something more production. In the workshop I remember the answer I gave to the group, “without stress, life is boring!”

So what is stress? Stress is a feeling when we feel uncomfortable when we are not able to solve the problem at hand. Or that we feel of failure if we are not able to complete the challenge satisfactory.

It is true that without stress, our life would be uneventful. Just imagine that sitting in front of TV for the entire day relaxing because we are stress free. Instead of thinking of all the things that require us to work on we just stare at the TV and not moving an inch. I don’t know about you – I know I can’t sit more than 2 hours not doing anything because I become restless and feel useless.

Stress is important and can help us if we know how to use it to our advantage. We can channel the stress and convert it into something productive. However, needless to say that if we less stress overtake our ability to handle them, then it becomes dangerous. To me stress is like the grass on my lawn. I know the lawn is pleasant to look at when it is green and lush. However, if I fail to mow it every few weeks, the grass will grow longer and weeds will start taking over.

Plan and Produce

No one in the modern society can say that they were never stressed. There is always something that would need our attention. Paying bills, getting ready for tomorrow’s project or even getting kids ready for school can be stressful. Most of us would take the easy way out by getting them done grumpily. Over time we would think of them as chores and start to hate them. My solution is plan ahead, get them done and learn from them. As an example, instead of making the same school lunch for my kids everyday I would plan ahead the night before on what to make. Instead of rushing in the morning to get it done, I would get the ingredients ready so I can jump right on to it. I challenge myself by making healthy lunch because not only my kids need it, it is also because I believe I can do it.

Keep Brain Active and Healthy

Sometimes we do feel tired after a long day of work. It is not because of all the work that we do but it is because of all the brain activity required. During my time-off I would usually spend most of my time doing housework inside and outside the house. By the end of the day my body ache because of all the physical activity involved. Even after a full night sleep my body would continue to ache the next day. However, it is entirely different when I work on my full-time job. I actually feel more exhausted at the end of day because of responding and solving problems at work. After a good long sleep I feel more refreshed because I was able to re-energize my brain. The stress of challenges at work actually help in keeping my mind healthy.

Stress Helps Us to Innovate

Stress can actually help us innovate. Think about it – stress is a result of difficulty in solving a problem. However, if we continue to solve the problem the same way we did it before it becomes a chore. Instead, we should find new ways to solve the problem more effectively. I work for the reporting function at HSBC. Every month our team must complete a series of reports within a week. Instead of doing the same thing every month, our team continues to make improvements on our process to complete the reports more effectively. We use macros in Excel to repeat the steps; we build templates to making data changes easier. In short, don’t use stress as an excuse; use it to help you to be better.

Everyone takes on stress differently. Some may deal with stress negatively and some may take it as a challenge. I am the latter. I never like monotony because life becomes boring if we repeat the tasks everyday. I have been working professionally for almost 30 years now and I have my fair share of challenges. Most of the challenges come with different level of stress. Over the years I have learned how to face the stress and I believe I have been successful in using it to help me.

Is This a Start of Another Journey?

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I’m over 50 years old and I believe I have enough life experience to be a mentor. However, I consider myself as an introvert and rarely put myself in front of people and advertise myself. But my inner-self continue to nudge me to do better by helping others. With that being said, I’m on a new journey to become a Life Coach.

The bigger question that anyone who reads this may ask, “Are you qualified?” After much pondering and self-reflection, the answer is unequivocally “Yes!”

Stress and Mental Health

Mental health has become a big issue in recent years and anyone who may have experienced it continue to have lingering effects. I consider myself to be mental-health free because I love my life. I learned from experience how to tackle some of the stress away and I have a loving family to walk the life journey with me.

Career Advice

Another angle that I have expertise is my work experience in corporate America. I started as a lowly entry-level employee at Arthur Andersen. After spending over 5 years at Andersen (renamed from Arthur Andersen), I went to Citigroup where I spend 13 years going through all kinds of changes. This year will be my 7th year at HSBC and I love where I am. Over the years I learned to go through the intricacies of corporate world and be successful. Having said that, I believe I could be a great help for anyone who maybe interested in “making it” at big corporations.

Happily Married

Finally, I’m happily married to my wife of 24 years (that’s a quarter of lifetime!) There are ups and downs in our marriage but none came close to be severe enough to end our marriage. My wife and I learned to enjoy each other company and we learned to cherish each other. Without these commitments we would not have lasted so long and have 3 young adult children.

Enough of my self-proclaimed successes. Now let’s put my experience to work by helping other. As I continue to investigate how to “sell my service”, do keep a look out as I provide more tips on how to enjoy life (after all, that’s what my blog is about!) If you are interested in being my first client or if you need anything on the subjects that I noted above, please do let me know.

Let’s the journey begin!

Why Cryptocurrency Should be Killed

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If you are following the financial markets, I’m very sure you have seen or read about cryptocurrency. It is a digital currency that was created and became public available in 2009. The value of cryptocurrency is volatile and has gone up and down within a very short time period.

I’m not going to try to explain what it is because I do not have the necessary understanding how it works other than that it requires a huge amount of computing power to solve a mathematical problem. Even if I could, I would not be able to explain it in this post. For a full definition, please refer to Wikipedia on Cryptocurrency.

My career has always in banking and that means traditional ways of managing value of money. Cryptocurrency is on the other side of money where there is no value but entirely speculative. There continues to be a lot of arguments cryptocurrency is the way of future. I don’t disagree with new technology and new methods and valuing certain materials, but I do not agree with cryptocurrency and I believe it should be killed.

Before you jump on my throat in defending the existence of cryptocurrency, please consider my points below. After reading them I hope you agree with me that cryptocurrency is not an optimum solution.

Value

Cryptocurrency such as Bitcoin does not hold any value and it is entirely speculative. The value exists when the traders buy or sell at an expected value. I understand that today’s money such as US dollars no longer pegged to gold, but the value of a single dollar can be pegged to other currencies and allow each currency to be exchange with one another. If you watch the value of Bitcoin in the last several years you will notice that its “value” swing wildly. As an example, if a dealership is willing to accept a Bitcoin and sell a car that costs $20,000. The same Bitcoin coin could worth $50,000 or $50 the next day.

Lack of Regulation

The regulators are slow in catching up with cryptocurrency. It is not because they do not understand or know of its existence. It is because they are no able to regulate it when its value lives in the cloud on a database. Additionally, now almost everyone can create their own currency have it publicly traded. We all know about Bitcoin. Now there is Ethereum, created by a teen as a hobby and Dogecoin as a joke. Additionally, cryptocurrency is preferred payment in the darkweb where online crimes take place.

The End of the World

Yes, you read the title right. Cryptocurrency could mean the end of the world. No, I’m not referring to how one could use Bitcoin to buy a nuclear bomb. I’m referring to how cryptocurrency could plunder the world into darkness because of the resources it uses to operate. For example, Bitcoin uses 13GW (gigawatt) of energy per year. It is as much as the entire country of Netherlands uses in a year. With the continuous stream of people jumping on the bandwagon to mine the coins, its use of energy will continue to go up to the point that it will overwhelm the power grid. The natural resources around the world are finite which makes mining of Bitcoin unsustainable in the long run.

Shortage of rare earth minerals is another concern as computers components are being gobbled up by the miners. Mining cryptocurrency requires a huge amount of computing power to solve the mathematical equation and to do that miners are using computer graphic cards to do the heavy lifting. There is a shortage of microchips and graphic cards worldwide today. This resulted in artificial increase in prices of these components. The downstream effect is a lot of consumers are having difficulty getting these items. It could mean life or death to some if the supplies of this commodity dries out.

Another shocker that I read recently of a new cryptocurrency on the block. Chia (no, not the chia pet) is a new publicly traded cryptocurrency. This currency can fill up over 3.6 EB (exabytes) of hard drive in just a few weeks. For illustration purpose, personal computers 30 years ago used to come with a 40 MB (megabytes) hard drive. It took that long for personal computers to come with 2 TB (terabytes) of hard drive today. Network servers usually contain petabyte of hard drives. Now imagine just a week to fill up 1 EB of hard drive.

I understand that how one would be interested in cryptocurrency because of its potential wealth that it could generate. However, I truly believe that cryptocurrency could be the downfall of modern society. The harm that it causes the environment alone should be the reason why cryptocurrency should be outlawed.

Anyone who is into cryptocurrency should heed the old saying that “If it is not broken don’t fix it”. Cryptocurrency is not revolution but it is a fix that no one asked for. Albert Einstein regretted his decision when he discovered nuclear energy because of its risk posed to the world. The creator of cryptocurrency, Satoshi Nakamoto, is claimed to have disappeared after he release his white paper. As of today, his identity remains unknow. Perhaps he felt the same as Albert Einstein.

Why is it so Difficult to Lose Weight

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I would be lying if I say losing weight is like a walk in the park. All of us know full well the it is like putting on a battle gear and facing off a formidable giant. However, like David and the Goliath, you just need to find the achilles heel.

I have been trying to lose weight for the past several years. I am by no means overweight but I need to maintain my diet due to my overall health condition. I can tell you that it u is not easy. There are too many temptations and too many convenient food around us.

My wife is a fitness instructor for the seniors and sometimes it seems she is also fighting a losing battle. In the past year she actually gained weight instead of losing it even though she teaches virtual fitness classes. On the other hand I was able to maintain my weight even though I sit at my desk working virtually. Why?

After giving much thought I believe there are a few reasons and all of them are due to motivation and personal drives.

Sacrifice

My wife’s weakness is her love of chicken wings and snacks. Given the opportunity she could eat a few of each. On the other hand I consciously avoid eating these food because of high saturated fat and low healthy contents. While I don’t deny that I like certain foods fall in these categories I vehemently avoid them at all cost.

Activities that Pay

Once every two days I would use the elliptical machine and focus on working out my arms and abs. My wife is an instructor who mainly focus on aerobic exercises which is good for the heart and breathing. She is not strong on arms or abs. To effectively loose weight we need to have both aerobic and strength exercises.

Be Conscious of Self

Knowing that you are overweight is really the main driver in losing weight. Looking and the mirror and realizing there is a problem will help with the motivation. Some people who knows they are overweight make conscious decisions not to have mirrors in the house. I personally would use the mirror and tend to focus on getting the six pack and I realize that the journey is far from over.

We’ve been thought that we should never fight a losing battle. However, if we equip ourselves with the right tools and with the right mindset nothing is impossible. The real question how driven are we in losing the weight.

How Do You Become Debt Free from Credit Cards

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Getting in debt is as common as getting a cup of coffee in today’s modern world. The debt that most people incur continue to be increase at a faster rate that the money that they can bring it. The end results is personal bankruptcy is on the rise, especially in difficult times like these as more people are borrowing more on credit.

Increase in debt can be attributed to several factors. If we dig deeper we can all point out to the creation of credit cards as the major factor. Credit cards was introduced by Diners’ Club in the 1950. The premise of credit card is it allows consumers to purchase items by borrowing short term from the issuer of the cards with the agreement to repay back in the near future.

Most adult consumers today have at least 3 or more credit cards. If each card carries a credit limit of $5,000, a person can easily be in $15,000 debt or more easily in a very short time. The major problem with credit cards are that they allow the borrowers to carry forward the balance to future dates as long as the borrower continue to pay a minimum balance every month. The interests that credit card carry is usually high and the more the person borrow the more the person will have to pay in the future due to compounding interests.

As more and more adults continue to borrow from credit cards, the likelihood for the borrowers to pay off the debt becomes more and more difficult. This post is to touch on several strategies on how to become debt free. There are a lot of articles out there describing how one can be completely debt free in a very short time. However, I can tell you from first hand experience that this is close to impossible unless you are very discipline in your expenses.

I remember when my son was growing up he told me that we will never borrow money from the banks and will be debt free forever. In an ideal world this is possible. However, in today’s modern world, being totally debt free is a dream. Regardless how well we plan our finance, carrying certain debt is unavoidable. The question is how do we control our debt before it becomes out of control.

Get to Know Your Own Finance

Before we incur any debt, you need to be aware of your current finance. That includes if you have any outstanding debt, your current income and if you have any disposable income. Based on you current asset, you can easily determine if you are able to purchase the shiny new car you always dream off or if you can treat yourself to a vacation in the Caribbean. One way to find out if you can afford to make such purchase is by doing a detail monthly budget. Keep in mind that it is a budget and it should be used as a guide. My past experience showed that budgeting rarely work because there is always unforeseen circumstances that make sticking to the budget impossible.

Pay Off Credit Card First

Credit card debt is considered short term debt; mortgages and car payments are considered long term debt. Long term debt must always be paid off first; any leftover money that you have should go to credit card debt because they have high interest rates. The longer the debt the more expensive it is. To prevent from incurring any more debt, I recommend that you place the credit card with the highest balance in the drawer so you are not tempted to use it again. Once you finish paying off one card, continue paying off another card using the same strategy.

Consolidate Balance

One other option to managing paying off credit card is by consolidating the balances of the credit cards into one. You may consider using some of the debt consolidation services available online. Some do carry some fees so it is important to do some research and try to understand the terms and conditions. Consolidating the debt in one account allow paying off the credit card manageable. Some services allow you to negotiate a lower interest rates depending on your credit history. This will allow you to save thousands of dollars in the long run.

Use Cash Only

Credit cards are necessary evil. They are convenient especially for emergency use or if you need to purchase something very expensive. However, more and more people use credit cards to make all purchases; carrying cash around is no longer a practice. Using cash allow us to limit our purchase because we can tell how much cash we have and if we are able to afford the purchase.

Cancel the Credit Cards

Don’t be tempted by all the freebies or low interest rates that credit cards offer. They are designed to entice consumers to open an account. Instead of opening more credit card accounts, you should close or cancel the accounts as soon as you pay off the debt. Keep only one or two the most for any purchase that require a credit card. The added benefit is it allows managing monthly payment easier too.

There are a lot of apps out there which will help you manage your finance and expenses. However, I find that most require personal information and require a considerable amount of time to manage all the inputs. While they may help, I believe the time investment is too high to worth the effort.

There is no real magic bullets when it comes to managing finance. Reducing debt simply falls into two main categories, avoid temptation and be discipline in paying any outstanding debt as soon as possible.

The Difference Between Saving and Investing

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All of us want to grow our hard earned money. So at early age we were taught that the only way is to open a savings account and save everything in the savings because it will grow. However, as finance continue to progress, this advice no longer applies. For one, the interest rates are so low and the rate of return is so minuscule that it defeats the purpose of saving money in a savings account.

Don’t get me wrong. Saving money in a savings account has its benefit too. For example, it is usually the source where you can use to pay for your daily expense or your “rainy day” funds. What you should not do is to use your savings account as your retirement income. Another other option to grow your money is to put the money in an investment account. History facts indicate that the money in investment account grow at a faster rate that what you have in the savings.

I’m not going to defend one over the other because both have its pros and cons. The better strategy is to have both. The question is how much you put in both. There is no right or wrong answer because it depends on personal lifestyle and your current condition. For example, if you are now in dire situation where you may not be able to afford food on the table, putting money in the a investment account is not advisable. However, if you have sufficiently money saved to last 6 months should you lose your job, then you should consider move some of the funds to an investment account.

Risk

Investing in stocks (or any financial instruments) carry a higher risks than saving your money in a savings account. The major risk is a potential loss in value. On the other hand, the money you save in savings account will not lose value unless there is hyper-inflation in the economy. While the risks in investment exist, the pros sometime may surpass the cons. The best strategy is to invest only the money that you are willing to loose. You should never borrow money to invest and never invest your entire life savings in any investment account.

Rate of Return

Banks usually guarantee a return on the money you save in the savings account. These are called interests. However, the rate of return depends on the interest rate controlled by the Federal Reserve Bank. The interest rate today is at 0% because the Fed is trying to stimulate the economy by making borrowing money cheaper. On the flip side banks are offering less interests for existing savings account and that means the rate of return for the money you save is also less.

The rate of return on investments continue to on an upward trend despite the negative trend on the economy. As an example, a $6,000 dollars that I invested in a traditional IRA account in early March has a balance of $6,400 today (early June). Assuming that there rate of return is the same for the remainder of the year, that is equal to almost 20%.

Liquidity

Money saved in a savings account is considered a liquid asset. That means that it can be easily changed into cash and be used immediately. Depends on the type of investments, some assets are not easily converted into liquid asset. Examples such as retirement accounts (i.e. 401K and IRAs). Withdrawing money from these accounts could involve penalties and high tax rate. Money invested in stocks can be converted to cash but usually take several days depends on the banks or brokerage firms. If you are in an emergency, it could mean life or death.

It is important that everyone of us should consider these factors and understand one’s financial condition to determine what is the right mix when it comes to putting money in savings account and investment account. Both accounts have pros and cons. If you are interested in growing your hard earned money, putting the money in investment accounts is a “no brainer”. However, if you want to have a peace of mind and willing to forgo the potential income that investment accounts may bring, savings account is your only choice.

Stocks Buyer / Seller Remorse

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A Wall Street sign is pictured outside the New York Stock Exchange in the Manhattan borough of New York City, New York, U.S., October 2, 2020. REUTERS/Carlo Allegri – RC2HAJ9BI6XP

If you have been following the stock market, it has been swinging wildly from one end to another end. All of us who are in stock investing obviously want to make money by buying low and sell high. However, for the past several weeks it has been a lot more difficult. Looking at my portfolio, most of my stocks (particularly in the equity) are on the negative side.

The question that I am trying to answer today is when do you actually buy or sell the stocks. It is very difficult to predict what the market would do consider because of my factors. Even though some of the businesses are doing well, their stocks are not. While some stocks continue to do well even the market condition says otherwise.

If you follow my blog, I put a majority of my investment in safe stocks such as Microsoft and Apple. The other holdings that I have are ETFs which are relatively safe. One third of the rest of my assets are in stocks that swing wildly; these are the stocks that I am willing to buy and sell and these are the stocks that I plan to make most money from.

The past several weeks have been difficult because majority of the stocks that I plan to sell are being depressed. Not only I am not making the money, if I sell them today I would incur some loss. What strategy should we use when it comes to these holdings?

There were a few times when I realized that some stocks I bought went up enough to make enough profit. Immediately after I sold the stock, the stock continue to climb. Conversely, there were some stocks went up to a level that I thought it was worth to buy. Instead, those stocks continue to come down to a level that I’ve ever seen before. Is that what we call buying / selling remorse? All I know is I feel like kicking myself on the behind.

I don’t think there is one way to deal with the fluctuations. Some would argue that you need to study the company, understand its market share and consider its prospect. Unfortunately, not all of us have the time to really study each indices. Even if you spent those time studying them there are not always spot on. One good example is the NIO, the electric auto company from China. For the past several years NIO was a good buy because of its prospect. Its stock price went up as high as $63. The first quarter of 2021 showed increased sales and that’s good news. Instead of expecting the stock price to climb up it continues to drop.

The strategy that I continue to follow is quite simple: Hold. The portfolio that I have continue to include companies that are more stable. Some companies such as those in the pharmacy are not as stable but they make up a small percentage of my holdings. The risks of my portfolio are considered low. My only option is to continue to hold these holdings and hope they will go up.

I would love to hear your strategy when it comes to dealing such uncertain market conditions.

Do These 5 Things with Your Money Now!

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We are a spend culture where we tend to buy things we don’t need to satisfy our “wants” but we rarely think if they meet our “needs”. Obviously the money and our available disposable income is finite. Once you spend it, there is no buyer’s remorse. Some things you can return but often than not they come with a cost.

Today I’m not going to talk about what we can spend because that defeats the purpose of my blog, which is to plan for retirement. My goal as a financially responsible person is to be able to save enough so I can retire comfortably. That is easier to say than actually doing it. The best advise I can give is to start small and hopefully you will get a snowball effect whereby the money you save will continue to grow exponentially.

You are reading this probably you are very interested in investing your money or how to plan for retirement. Trust me it is never too early when it comes to these two subjects. I wished someone told me earlier or I could have been a millionaire (on paper) today.

Retirement Plan Contribution

Without a doubt, investing in retirement plan such as 401K plan or IRAs is the most important thing that any of us should do. The retirement plan will be your only source of income when you retire. If you still believe that Social Security benefits will be available by the time we retire, you will be in for a big surprise. The last time I read that Social Security Administration will be bankrupt by 2030 – that means all the contribution that we gave to SSA from our paychecks will disappear.

The retirement plans are what I consider out-of-sight/out-of-mind. Contributing to these funds is so seamless that you would hardly notice that it was taken out of your paycheck. The real benefit is the retirement plans are tied to stock market and historically it has been going up since the stock market was tracked. Naturally the amount you invested in the retirement plans will only go up. To give you a perspective, the average price Dow Jones index increased by a whopping 13,484% since 1930.

Investing in Stock Market

With the interest so low I’m not going to recommend saving your money in a high yield savings account. In the last several years, my combined savings in PMMA and CD of nearly $70 thousand only earned less than $200 annually. The money I invested in stock markets for the last 3 years in Robinhood has grown in value by almost 45%.

Investing in stock market has its risk but if history tells us anything, the risk can be mitigated if we understand it well. Additionally, my portfolio is telling me that the benefits outweigh the risk. So don’t wait. The earlier you invest the likelihood the value will increase is high. Before jumping head first, do read some of my posts earlier on how to mitigate the risks and what new investor should do.

Save in College Savings Plan

This is extremely helpful for anyone who have children. The college savings plan, also known as 529 account allows investor to invest in certain fixed funds and allow it to grow in value. When you need to pay for higher education, you can withdraw it without penalty tax free, as long as it is used to pay for education purpose.

The great thing about the 529 account is you can set it as recurring investment every month, again another out-of-sight/out-of-mind investment vehicle. My son started going to Rutgers University and I can tell you what a life saving the 529 account is. I believe the fund for my son account grown at least by 40% since I started investing 10 years ago.

Pay Off Credit Card Debt

Paying off debt is always the first advise any financial planner will tell you and it is no brainer. Debt, particularly credit cards, has interest rates that are usually high. This kind of debt eat in your disposable income by making the loan more expensive. For illustration purpose, the expensive handbag you purchase may have cost $4,000. By not paying the credit card in full, the cost of the handbag could become $6,000 depending on when you pay the debt off.

The biggest downside of not paying off credit card debt is the lost of income. Instead of paying off the interest on the credit cards, you could have used the money and invest in Apple stocks. Imagine the amount of money you could have made by investing in Apple stock 20 years ago. I did a quick calculation and its stock went up by about 3,900%.

Shop Smartly

This goes to back to my opening remarks, the “want” and the “need”. We all need a car for transportation purpose. However, do we need a car for convenient purpose or for self-image purpose? For example, a small SUV cost about $30,000 in today’s market while a Tesla Model X costs up to $90,000. The difference in $60,000 could be invested in stock market and let it group. There are just too many consumers who all into the “image” trap and never thought of their own personal finance. Most did not consider the additional cost of insurance and maintenance when it comes to expensive cars like the Tesla.

Understandably that purchasing something we don’t need gives us a sudden satisfaction. However, the feeling will go away very quickly and we are stuck with a huge debt that will need to be repaid.

When You Eat Matters!

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Trying to lose the extra pounds? Or maybe thinking of getting ready for the summer? What you eat is important. When is you eat is also important.

Sometimes when we so focused on our food we tend to have a narrow view. We always count calories and constantly trying to figure out what to eat. Because of that we tend to overlook important success factor when it comes to losing weight: when to eat.

When my kids were growing up, we built their habits by reinforcing certain rules. One of the rules was keeping a set daily schedule. My wife and I followed a strict regimen when our kids were young. For example, we would woke them up at a certain time; we would prepare meal at the same time and we would getting them ready for bed around the same time. The reason is we as human are habitual beings; we tend to thrive if we follow certain rules.

That is the same for our bodies. Our bodies are more efficient if they follow certain rules and know what to expect. Over the years we conditioned our bodies to metabolize the food at the same rate; our bodies would become well oiled machines. However, if we introduce certain food at different time, our bodies would need to adjust to the new regimen and the efficiencies that we spend years building would need to be rebuild.

Why does this matter? Simply put, our bodies would metabolize the food intake at different rate. Any food that is no longer needed would be converted into fat and stored in body cells. That is when we start putting in more weight. Let’s take one great example from Covid-19 pandemic. Majority of us are staying at home when the pandemic hit. Our daily activities ceased to happen and most of us would eat at different times as there is no longer a need for us to follow the set schedule. Compounding with the extra food that we eat, the weight starts to add up.

Another major reason that we gain weight is eating after the last meal of the day. Dinner is considered the last meal that anyone should consume before they go to sleep. Experts agree that prior to eating, we should refrain from further eating at least 3-4 hours before resting. This would allow our bodies to properly digest the food within limited activities during the night. During this period our bodies will continue to require energy and in turn continue to burn the excess calories. However, if we go to sleep immediately after eating our bodies would continue metabolize the food but instead of converting the food into energy, all the food would become fat.

Next time if you are wondering why you are not losing weight, consider the time when you eat. Keeping a strict schedule is as important as what you consume.