Boosting your assets

It is a sad fact for most people that saving all that money in the back does not give the same buzz as spending it on a new pair of shoes or that hand phone you have been eyeing. Many of us feel like there's no point in sorting out our finances until we get higher pay or decide to invest in something such as a car or even a home. However, it's never too late to start taking control of your financial situation. Upping your financial knowledge does not, and will not make your life boring either. On the contrary, it will empower you with confidence and help you make the most out of your hard earned cash.

Budget
Make a list of everything that you earn and everything you spend on. Make sure what's coming covers what's going out with left over for savings. Do not restrict yourself too much or you'll never stick to it- ensure you give yourself enough to spend every month with reason. Software such as Microsoft Money or Quicken can help to get you organized and keep track of everything. Always know how much you spend and avoid unnecessary buys.

Create an emergency fund
Set up an emergency fun account by setting aside some money each month (depending on how much you earn monthly). Setting up this account will enable you to fix that broken fridge or your malfunctioning PC without having to dip into your savings.

Have a dream
Motivate yourself to save by giving yourself a reward once you have saved a certain amount (don't overspend though). Give yourself something to work towards to make it all worthwhile.

Pay yourself first
Make yourself a must-pay expense. When paying your monthly bills, add yourself to your list of creditors & set up an automatic transfer from your current account into your savings account. Soon you won't even miss the money and it will become a pain-free way making sure you save.

Balance the books
Keep receipts from any big purchases along with withdrawal and deposit slips from the bank each month. When you receive your monthly bank statement, check whether everything adds up. This will give you a feel for how much you are spending.

Don't ignore bills
If you can't afford to pay the bills, don't hope they'll go away. Ignoring the bills will cause you extra stress than not being able to pay for it in the first place as well as incurring extra late-payment charges. Call the company that you owe money to work out an installment plan so that that you can pay off your debt in manageable segments.

Don't get held back by debt
There isn't much use in starting to save and invest if you have debts waiting to be paid up. Be brave, sit down and lay out all your debts in front of you. Next, resolve to pay off at least the minimum amount and a chunk extra every month until you are clear. Don't go credit card crazy!

Don't just pay off the minimum each month
Otherwise you'll be effectively throwing money out the window through the interest charges you incur. If you are putting unnecessary items such as clothes and nights out on your card and can't seem to pay it off each month, then you have to face the fact that you are living beyond your means. Try adjusting your spending.

Don't get too comfortable with your account
Make sure you are getting the most out of your bank account. Different people need different things from their bank, so it doesn't mean that you have to bank at a certain place just because someone you know does. Pick up brochures or speak with the counter service personnel on service charges, savings plans, etc to make sure you're getting what you want. If you are very busy or travel a lot, take advantage of phone or Internet banking- it's cheaper & faster!

Don't go to the ATM too often
You are likely to spend more if you constantly run to the ATM. Work out how much you need to spend each day on food, socializing or transport. Then make one visit to the ATM every week. This should make you think twice about spending on unnecessary extras. If you don't have the money, don't spend.

Don't just leave your money in the bank
Don't invest all your savings in one place. Here diversification is the key word. Spreading your savings between several types of investments- fixed income, stocks and shares, mutual funds, cash is the safest way to invest long term. When investing, don't touch your money for at least three to five years- this is the time when you'll start seeing higher returns.

Wise up
When investing in stocks and shares, never just hand over the responsibility to your broker or fund manager. Do some homework and monitor the business that you have invested in, as well as the economy in general so that you know for yourself about what's happening. Read the paper or surf the Internet for a fast and easy way to update yourself.

Don't go overboard with renovations
Don't be too enthusiastic and go overboard with renovations. Spend only 10% or less of your property's value on renovations.

Save a little every day
Make your own breakfast everyday instead of spending that RM3 on roti canai and teh tarik at your office cafeteria. Take a bus home instead of a taxi. What's the incentive? By popping the RM 3 you saved, you'll have over RM 1000 by the end of the year. Think about THAT!

Saving money isn't all that hard. All you have to do is to think about where you want to be and what you want to do in a few years. Will your finances allow you to do so? Review your monetary situation now with the future in mind so that you can afford to anything your heart desires.

EPF Withdrawal to Reduce / Redeem Housing Loan

This withdrawal allows you to withdraw your Account II savings to reduce or redeem the balance of your housing loan taken from a financial institution approved by the EPF for the purchase or construction of a house based on the followings conditions:

• Individual purchase; or
• Joint purchase with spouse, family members or other individuals; or
• Assisting spouse to reduce or redeem balance of housing loan.

Withdrawal Eligibility
You are eligible to apply if you are:

• A Malaysian citizen; or
• A Permanent Resident; or
• A Malaysian citizen who have withdrawn your savings under Leaving The Country Withdrawal before 1 August 1995 but subsequently returned and re-contribute to EPF; or
• A Non-Malaysian citizen (Expatriate) who became a member of the EPF before 1 August 1998.

You need to have savings in your Account II and you must also have not reached 55 years of age on the date the application is received by the EPF.

However, you are not eligible to withdraw for the purpose of:

• Renovating, repairing or make extension works to an existing house and for personal use; or
• Overdraft loan; or
• Loan taken from individuals.

Amount Eligible to Withdraw
Minimum amount of withdrawal is not less than RM500 and the maximum amount of withdrawal is subject to the balance of savings in Account II or the balance of housing loan, whichever is lower:

TYPE OF WITHDRAWAL
Individual/Assisting Spouse	Joint Withdrawal with Spouse / Family Members / Other Individuals
Total balance of housing loan; OR All savings in Account II subject to the minimum withdrawal amount of not less than RM500 and total balance of housing loan.	Total balance of housing loan; OR All savings in Account II of all applicants subject to the minimum withdrawal amount of not less than RM500 and total balance of housing loan.

You can choose to determine the amount you wish to withdraw from your savings in Account II, subject to the maximum amount you are entitled to withdrawal by completing "Surat Akujanji Pilihan Amaun Pengeluaran".

Frequency of Withdrawal
Withdrawal application can be made once a year from the date of last housing withdrawal. You must also have minimum RM500 balance in your Account II.

Enquiries
If you have any enquiry or require further information regarding this withdrawal please contact:

• Any nearest EPF Office
• EPF Call Management Centre at 03-8732 6000
• Short Messaging System (SMS) – Type EPF and send to 36373

Please quote your EPF membership number or your Identity Card number and the type of withdrawal that you have applied for when you contact the EPF. You are encouraged to contact the EPF directly for assistance and advice.

EPF Withdrawal to Purchase a House

This withdrawal allows you to withdraw your savings in Account II to partially finance the purchase of a house either via:

• Individual purchase; or
• Joint purchase with spouse, family members or other individuals.

This withdrawal also allows you to purchase a house from a developer, an individual or public auction.

Withdrawal Eligibility
You are eligible to apply if you are:

• A Malaysian citizen; or
• A Permanent Resident; or
• A Malaysian citizen who have withdrawn your savings under Leaving The Country Withdrawal before 1 August 1995 but subsequently returned and re-contribute to EPF; or
• A Non-Malaysian citizen (Expatriate) who became a member of the EPF before 1 August 1998.

You need to have savings in your Account II and you must also have not reached 55 years of age on the date the application is received by the EPF.

Amount Eligible to Withdraw
You can withdraw your savings based on the following, whichever is lower:

• Individual Purchase
  The difference between the price of the house and the housing loan
  with an additional 10% of the price of the house
  OR
  All balance available in Account II
• Joint Withdrawal with Spouse, Family Members or Other Individuals
  The difference between the price of the house and the housing loan
  with an additional 10% of the price of the house
  OR
  All balance available in Account II of all applicants subject to the maximum eligible amount as stated above
  If you obtained a full housing loan (100%), you are eligible to withdraw as much as 10% of the price of the house OR all balance available in Account II, whichever is lower.

If you purchased a house by cash, you are eligible to withdraw as much as the price of the house with an additional 10% of the price of the house OR all balance available in Account II, whichever is lower.

You can choose to determine the amount you wish to withdraw from your savings in Account II, subject to the maximum amount you are entitled to withdrawal by completing "Surat Akujanji Pilihan Amaun Pengeluaran".

Frequency of Withdrawal
This withdrawal is only allowed for your first house only. However, if you have made a withdrawal previously to buy your first house and subsequently have sold the house, you may withdraw to buy a second house. Proof of sale of the first house must be produced.

After making this withdrawal, you are eligible to withdraw your savings to reduce / redeem the housing loan for the same house once a year.

EPF Withdrawal to Purchase a House

This withdrawal allows you to withdraw your savings in Account II to partially finance the purchase of a house either via:

• Individual purchase; or
• Joint purchase with spouse, family members or other individuals.

This withdrawal also allows you to purchase a house from a developer, an individual or public auction.

Withdrawal Eligibility
You are eligible to apply if you are:

• A Malaysian citizen; or
• A Permanent Resident; or
• A Malaysian citizen who have withdrawn your savings under Leaving The Country Withdrawal before 1 August 1995 but subsequently returned and re-contribute to EPF; or
• A Non-Malaysian citizen (Expatriate) who became a member of the EPF before 1 August 1998.

You need to have savings in your Account II and you must also have not reached 55 years of age on the date the application is received by the EPF.

Amount Eligible to Withdraw
You can withdraw your savings based on the following, whichever is lower:

• Individual Purchase
  The difference between the price of the house and the housing loan
  with an additional 10% of the price of the house
  OR
  All balance available in Account II
• Joint Withdrawal with Spouse, Family Members or Other Individuals
  The difference between the price of the house and the housing loan
  with an additional 10% of the price of the house
  OR
  All balance available in Account II of all applicants subject to the maximum eligible amount as stated above
  If you obtained a full housing loan (100%), you are eligible to withdraw as much as 10% of the price of the house OR all balance available in Account II, whichever is lower.

If you purchased a house by cash, you are eligible to withdraw as much as the price of the house with an additional 10% of the price of the house OR all balance available in Account II, whichever is lower.

You can choose to determine the amount you wish to withdraw from your savings in Account II, subject to the maximum amount you are entitled to withdrawal by completing "Surat Akujanji Pilihan Amaun Pengeluaran".

Frequency of Withdrawal
This withdrawal is only allowed for your first house only. However, if you have made a withdrawal previously to buy your first house and subsequently have sold the house, you may withdraw to buy a second house. Proof of sale of the first house must be produced.

After making this withdrawal, you are eligible to withdraw your savings to reduce / redeem the housing loan for the same house once a year.

Buying Your Dream House

So, you decided to buy a house. Good move, but there are a lot of factors you need to consider before deciding on what type of house to buy. Here are some suggestions that you may want to consider to ensure your house-buying experience is a smooth one.

Everybody has his or her own idea of a dream house but rule number one is to buy a house within your means. This is to avoid you from ending up in a difficult financial situation. It is advisable for you to come up with a budget based on the amount you can fork out to pay for the down payment and the amount you are willing to commit for your monthly loan payment. Factor in the amount you can withdraw from your EPF savings for this purpose. You also should know that a year after the first withdrawal, you are allowed to withdraw from your Account II EPF savings to reduce your housing loan on yearly basis.

You may want to note that apart from the down payment, you will also need to pay legal and stamping fees for your Sales and Purchase (S&P) as well as Housing Loan Agreements. These dues can be troublesome if you do not set aside enough money for them.

Once you have decided on the budget, you can start looking around for a suitable house. Remember, location of the house is another important factor. If you plan to stay in the house for a considerable length of time, then get a house in a location that you would feel comfortable to live at. But if you are buying the house for “investment” purposes, then a location where property values can appreciate rapidly is, perhaps, more appropriate.

You also have the option to either buy a new house from a developer or buy a completed one from its owner.

Perhaps, buying a brand new house is more desirable for most as the price is most likely at the lowest but you may have to wait for up to two years for the construction to complete. In the meantime, you would have to keep up with your monthly rent as well as service the interest on your loan periodically until the full loan is released (upon completion of the new house). Buying a completed house on the other hand, has less “waiting” time but you may have to set aside some money to carry out some repairs or renovation works.

Please take note that you cannot use your EPF savings to pay for repair and renovation works.

Then again, you may not find the house you like that fits your budget. You may decide to defer your purchase so that you can save more money (on your own and through EPF). It is up to you but you must also consider that prices of houses will also increase.

Alternatively, you may also lower your “expectation” and settle only for a house that you can afford now. It will not be so bad at all. You can sell the house later and use the proceeds to buy your dream house. You may be happy to note that EPF does allow members to make withdrawal to buy a second house, provided that you have sold the first house.

Prudent Spending

Nowadays without prudent planning, it would be really tough for us to survive in this society especially with the inflation or rising cost living.

What does RM100 get you if you are a young executive in Kuala Lumpur? I think you could not do much about it except for your normal routine transportation and meals. Some might finish it within 1 day or 2 but some are able to survive with it for a week, why is that? The reason is because it depends on how do you spend it and the way you choose to live with.

You can make your money stretch further if you learn how to manage it carefully, such as:

Know what you want to do with your money
Be transparent with your own financial status. Ensure you know how much is left at the end of the month after allocating money for your monthly expenses such as rental, car installment, petrol, meals and other necessities.

Know where your money goes
Be aware and alert where your money goes and make sure you do not spend on unnecessary things. Things like clothes, shoes or accessories are endless favourite buying products. There are always new trends, fashion and style, so if you do not know how to limit yourself, then all your money will be gone in the wind.

Know your spending habits
If you found that you have not much money left to spend at the end of the day, then you might want to look into your daily expenses, grocery bills and households item. Check whether there are any items that are not necessary to purchase.

You should also look out for some of the warning signals of bad spending habits that will lead to real money problems:

	You use your savings to pay current bills
	You delay payment of some bills which you used to pay on time
	You take out new loans to pay for old ones
	You defer your loan repayments
	You prefer to pay by installments when buying everyday household items
	You owe more than you earn at the end of the month
	You buy on impulse even though you know you can't afford it

Develop a prudent spending plan
Establish your monthly total income, total up all the fixed monthly bills, repayments, daily living expenses and etc. Place aside a fixed sum of money that is enough to handle emergency or seasonal expenses. (Income tax, Insurance renewals, etc)

Spend wisely and within your means
Ask yourself this question whenever you want to spend on something, 'Is that a need or just a want?' Do not spend on unnecessary thing.

Reserve some money for your future
If you found there is no surplus left after deducting all the expenses, you might need to review your list again. Try to cut down the expenses by Do-It-Yourself. For example, making your own breakfast or cook more often, exercise at home or park instead of paying to join the gym center and etc. You may want to cut down utility bill by monitoring the use of your water and electricity and also restrict calling at peak hours.

It is always a matter on how you plan and spend your money and not how much you earn. Besides that, we always have to learn how to tight on thrift.

Remember Cash Is Best - Always pay cash in any transaction (other than buying a car or house). Do not fall for hire purchase schemes, however attractive they may be. The tactic or philosophy is - if you cannot afford it, you do not need it! Paying by credit cards in advance merely postpones the payment - until month-end.