Author Topic: Becoming Financially Free  (Read 19236 times)

MissChievous

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Becoming Financially Free
« on: September 05, 2013, 08:15:32 pm »
Hi, ladies. And guys, if there's any.

I have made a decision to become my own financial planner. I figured in educating myself more, I minimize the risks of investments and I am eliminating agents to do it for me. I want to do it by myself.

How about you? What are the steps that you take in order for you to be financially free? Do you have specific plans on how to get to your ultimate dreams? Do you consult financial planners or take the risks by yourself?

aquacharly

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Re: Becoming Financially Free
« Reply #1 on: September 06, 2013, 12:24:17 am »
I am financially free.
I handle my accounts myself.
I trade myself directly real-time on  The NY Exchange, though I am based here in MMla, through the Charles Schwab platform.
I trade through a broker for local stocks, limited. --  but these are stocks I sit on for at least 3 years.
I buy where US$ are cheap & bring it here to convert.  (sorry, can't share that)
I like to do currency deals nga.


What steps did I  take to  become financially free?

1.  Got a very good education, with honors -- so medj mataas entry rates ko & got really good breaks.
     I really work hard pa ha.

2.  I save. 
     I saved, mula pa bata ako --  kahit say P20 lang yan give sa akin - save!
     Everything, charge to parents and Lola. 
     Pag short my siblings --  I lend them money.  They always come to me kahit mas bata ako & sila dictate ng  interest & repayment date (no, never 5-6), but turn-over/volume was big. Hehe. We are 8.
     8.  years old pa lang ako -- may AFPSLAI &/or accounts na ko with my Lola (thank you, Lolo)

3.  Ma racket ako noong bata.  I will follow up rent collections through phone, help my Lola/Aunts sa businesses nila, do office work,  invest in 1-time deals or events ...  To earn more to save.
     Pag the relatives will give cash for performances during reunions/parties -- o, kapalmukz perform!
     But hanggang family lang yan ha. Don't think na umabot ako sa pag entertain sa you-know places.

4.  I always live below my means.  But maswerte ako --  my Lola spoiled me; now hubby does --  So my funds are all mine.

5.  Hindi ako papasok sa racket or business na hindi ako hands-on/in control
     I always study well "The Winning Line" & the "Profitable Exit Line".  And I watch/manage expenses tightly.

6.  I listen to & learn from/get advice from SCRUPULOUS successful business people

7.  If I make a profit, I spread it around/share (Teka, HINDI PDAF racket/business ko ha!) --  Goodwill leads to more opportunities

8.  I don't invest in get-rich-quick schemes.  But prefer to invest in income-generating hard assets like Real Estate to flip or lease; heavy equipment to lease out/operate.
     
9.  I don't go into loans/mortgages/financing.  CASH has power & perks --  kaya my real estate & heavy equipment  purchases are all good.

10.  Maswerte ako wala akong parent/sibling/in-law na naka sandal sa akin/sa Amin ni hubby.   That sure drains, just saying. 

11.  Ginamit ko cocote ko - learned from the mistakes of others -- that one must early on set Standards, para hindi basta Bulaga! Na-in love ka.  To  later find out, too late, na  he does not possess the qualities & skills to be a good padre de familia, husband & father. 
I trained myself to see beyond the guapo mug, sweet talk & trappings of wealth na hindi  kanya but sa parents nya. 
Nothing can set you back as much as an inappropriate husband, just saying. Impt ito, very.  Better to be single than kumuha ng batong ipukpok sa ulo mo mismo per my darling Lola.

12.   I don't gamble.  Max casino $500 per day, max 2 days per trip.  Mahjong: 3 hrs; P20/game.

13.  Every effing day, I mind my portfolio & secret accounts.  I work to max earnings, every effing day.

14.  MOST IMPORTANT:  I have great faith in that:  God helps those who help themselves.
He sure is very generous.

Oo nakakapagod.  So, I can't say I'm financially "free".  Financially independent, yes.  Financially secure, yes.  But,  well, better tired than financially dependent/a Loser (sorry, but that's just my opinion).   
I  am a tired self-empowered woman with the power of Self  Determination.  But happy ako.
 Maswerte din ako coz my husband is very self-empowered; he doesn't care about my own assets/secret accounts/etc  --  he spends for 80percent of everything. 
     

« Last Edit: September 06, 2013, 12:40:27 am by aquacharly »

MissChievous

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Re: Becoming Financially Free
« Reply #2 on: September 07, 2013, 09:33:16 pm »
^  Sis, grabe ka. Nasa dugo mo na ata yung pagiging entrepreneur ever since you were small. Natuwa ako sa you don't gamble. Pero do you play mahjong? Lol, Php20 is big na ha. I usually go for 10-20 lang. With my mother and titas lang. Kami2 lang, bonding activity lang namin.

Anyway, thanks sa mga tips mu ha. I am just starting out kasi. So, I am willing to learn (i attend lectures and I want to be a certified financial planner) and I am willing to discipline myself in saving and investing. I hope I can be financially free soon din.

I am starting from scratch kasi. Na wrong move ako. I make loans just so mapa utang ko family ko. Hay. And that's a big no-no. I am feeling the burden now. Kaya I closed my coop account so I wouldn't have to loan na. And I need to discipline my family too. Teach them the importance of saving up. Tsk tsk. Iba na talaga pag nakaugalian na. I am hoping to set out a different financial setting for our future generations. I've learned from my family.

Swerte mo sis sa family mo and sa husband mo. :) Maybe I could talk to you din when I have financial concerns.

aquacharly

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Re: Becoming Financially Free
« Reply #3 on: September 08, 2013, 12:25:14 pm »
^SIS, isa pa yan:  do not a borrower nor lender be.  IMO.

Hindi na talaga ako nagpapa utang.  Hubby and I  both do not, ever.  Kahit na Kapatid yan.  Buti pa, bigyan mo na lang a certain amount, and forget it. 

Sa businesses namin, I turn over a 1-time big amount to  the employees coops.    My personal funds ha.  They manage that as a lending fund.  They charge interest & share the interest earnings equally among all employees on Jan. 31.  The deal is: the companies will never never give Loans/advances.  They are all covered by SSS, PagIbig & PhilHealth -- don kayo umutang.

Yeah, I play mahjong:  3hrs max 2x max a month.  Grrrrr my titas & cousins/siblings coz I really stop after 3 hours.  There are months I have no time to play. But I try to, to keep myself "cultured". Hahaha.
(My pre-school and Grade School kids play Pusoy --  hubby & I deem it good training for "reading people", tactical thinking & memory training.  But of course --  we stress the stup1dity of people who pour their ego & lose their common sense  & funds  in games.  They play for points that buy simpe tasks from each other. Hehe, another lesson:  everything has a cost/consequence)

Actually, financial freedom/security/preparedness starts with minding the little things that add up.
Some derisively call it kakuriputan.  Everything in moderation is good, though.
One should be astute to determine which one should scrimp on vs what expenses are no-brainers.
Education & health are no brainers -- you just gotta spend for the best you can afford.
Food is important --  but most pricey unnecessary yummies are not necessary & contribute to unhealthy lifestyles. 

Always tell yourself:  Sacrifice immediate gratification for big-time future success.
And, yes, listen to successful people -- but be wary.  Always think for yourself, and hands on your money.


chichi143

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Re: Becoming Financially Free
« Reply #4 on: September 09, 2013, 05:58:58 am »
I study a lot. Coz if I won't, I'd end up with less cash.
I attend seminars. I recently met a financial adviser who plays 'Cashflow (by Kiyosaki's)' and invited me to it, he said he could see a lot of potential in me while we were chatting on FB because he saw my comment's on his friend's status about investing in stocks.
i read a lot about investments and stock market nowadays too.
This month, I am going to sign up an account at COL too. :) (excited)

Specifically, I liked: Rich Dad, Poor Dad by R. Kiyosaki, Think Rich, Grow Rich by Larry Gamboa.

And grabe ang daming information na nakuha just in a short span of time.
Where was I 5 years ago when I started working? :(
Siguro if I started saving or investing my salary since then, I might have a million na.

But hey, better late than never right.
I love this thread. ^_^

anyways, quick question to sis aquacharly (I admire u sis, can u be my financial adviser? lol)
dun sa: 9.  I don't go into loans/mortgages/financing.  CASH has power & perks --  kaya my real estate & heavy equipment  purchases are all good.

So you don't suggest getting a house loan in buying a property?
I'm thinking of getting a house loan and then pay the loan using the money i'll get from the property. Gusto ko sana parang small building na gagawin naming apartment type.
« Last Edit: September 09, 2013, 06:09:03 am by chichi143 »

lonelymiss28

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Re: Becoming Financially Free
« Reply #5 on: September 09, 2013, 08:02:35 am »
i would say i am financially free. i am always a saver as far as i can remember. if ever i would have money i will only spend 10% of it for luho and the rest sa savings na rin.

nicola_juliano

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Re: Becoming Financially Free
« Reply #6 on: September 09, 2013, 09:21:04 am »
I'm starting to save since 3 years. 5 years na ako nagwowork. Handling a home based business. Have a piggery (1st time). But I want to have more businesses. The problem is, my family do not have experience in handling businesses so I don't have any coach to rely on. I'm planning to start a second business really soon kaso di pa tapos ang coding. It's an online business kasi I'm using my experience as a IT pro. I wanna try other businesses pero hindi pa ako sigurado kung i-pursue ko kasi as I said earlier, wala ako experience and mentor man lang para turuan ako. However, I really feel inside that like you, may dugo akong business woman because since elementary, nagbebenta ako ng stationaries sa mga kaklase ko before, Grade 4. And nung bata ako, when my mom leave us in my lola's pwesto sa market, I helped her to sell yung mga daster at shorts.

I wanna keep and join this thread. Pasali! I need to learn more.

aquacharly

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Re: Becoming Financially Free
« Reply #7 on: September 09, 2013, 08:34:48 pm »
CHICHI143.   Personally, I don't borrow to invest.  The more I won't borrow to buy a house for personal use.
Always, always, unahin ko business requirements before a house loan, even if I had to rent a house or stay on top of my business premises.


BUT 
IF you have the required equity (hindi mo na need to  loan for this 100%)  and your amortization is near your current rental cost --  assuming, you do not offset this with higher transpo cost (Kasi lumayo your residence) --  go ahead, loan IF both of you spouses work.  But that's just my opinion.

In your case, if I got it correctly --  you want to buy a house to rent out as apartment units.
IF you will not require a loan to cover your equity, transfer costs & improvements/conversion to apartments costs --  loaning the balance MAY BE okay.
PUSH THE NUMBERS, numbers don't lie.
Do a simple sensitivity test --  at what rent rates and at what occupancy rate will you need to meet your amortization costs maintenance cost + taxes?  IF hindi mo yan na meet -- pano mo pay your amortization?  Be truthful, not hopeful, about what kind of renter you can attract -- depends mainly on your location.  Basta, the less people occupy your units --  the better in the long run, less wear and tear, less gulo.

I will share an example with you, na kinopya ko din lang.

Bo.Kapitolyo is not usually on my portfolio. BUT I got a very good deal over a year ago --   from a family needing cash coz they were immigrating to New Zealand.  I had the old house stripped, converted to studio units and extended to accommodate more units.  Each has it's own Meralco meter.  I provided  1 kitchen with an 8cuft ref & 1 banyo per 4rooms.   Pati yun dating garden na pababa - nalagyan ko ng units.

Strictly for single occupancy, all women.  They do not entertain there at all, and hardly anybody cooks there.  I require a 4month deposit that is returned 1 month after departure.  The units are furnished with a single bed, a no-door single cabinet & a clerical desk.  They can bring in a TV, sound system, DVD, aircon  --  but no cooking appliances.  I put in CCTV & a lady guard. 
I have a housekeeper, who maintains the common areas, and can clean their rooms (for a fee). 
In my contract -- I/my rep can check on the rooms anytime during office hours, with no need for advance notice
Laundry for clothes is not done on the premises, a Lavandera picks up & delivers - or they do it elsewhere.

The guard is a must coz doon sa friend ko -- nagkaroon sya ng renter who is a "walker" at doon sa room nya dinadala her effing clients. Yuck.  The other women complained kasi magugulat may all sorts of guys coming and going, or using the comfort rooms -- kahit madaling  araw. To avoid that, I don't mind spending for the guard, basta they feel safe; and nobody else is allowed entry kahit nanay pa nya.

So, it depends on your location,  kasi mas maganda returns on single occupancy small units with own meters.  Yan, puede mo loan - lalo na if Cubao, Bo. Kapitolyo --  mga accessible, no baha areas close to business centers.  Hindi ma trabaho din, less wear & tear/maintenance costs kasi no individual kitchens and bathrooms.  Walang gulo. 

ikaela

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Re: Becoming Financially Free
« Reply #8 on: September 09, 2013, 10:10:07 pm »
Subscribing. Would like to be with everyone on their journey to becoming financially free. :) My goal at this point in my life is to have more time with my family, so I'm searching, searching, searching for means of passive or semi-passive income. Currently studying stocking trading/investing. Also started construction on a new biz. Hope these will bear fruit!
« Last Edit: July 10, 2014, 08:46:04 am by ikaela »

gelay18

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Re: Becoming Financially Free
« Reply #9 on: September 10, 2013, 12:18:39 pm »
Quote
14.  MOST IMPORTANT:  I have great faith in that:  God helps those who help themselves.
He sure is very generous.


touch ako dito sis!  galing mo talaga sis aquacharly "IDOL" talaga kita  ;)

mommycute46

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Re: Becoming Financially Free
« Reply #10 on: September 10, 2013, 01:14:10 pm »
10.  Maswerte ako wala akong parent/sibling/in-law na naka sandal sa akin/sa Amin ni hubby.   That sure drains, just saying.

Malas yata ako dito  ;D. I have parents that always ask for support--pang gamot, pang check up etc. I have siblings that always ask for allowance, fare, emergency etc (minsan every sahod-Ouch!) I work hard to finish my course and ended like this. I cannot even pay my personal debts  from relatives when I was still studying. I don't want to have this "utang na loob" for the rest of my life so I really wanted to pay them now that I'm working.

Worst, I have a partner who cannot even land a decent job (unless pag aralin ko ata) high school graduate lang kasi. Yes I admit, this is my biggest mistake not being able to choose my partner very well. Hindi pa naman kami kasal kaya naiisip kong magkanya kanya na lang kami para yong anak ko na lang ang iniisip ko. I'm tired of arguing his employee minded brain when he cannot even find a job on his own.


lonelymiss28

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Re: Becoming Financially Free
« Reply #11 on: September 10, 2013, 06:53:25 pm »
^may mga kilala akong mag-asawa na yung lalake di nakapag tapos ng elementary pero they are well off. they have a business na pumatok. for me it helps na may pinag aralan ang isang tao but its still up to you papaano mo papayamanin ang buhay mo.

MissChievous

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Re: Becoming Financially Free
« Reply #12 on: September 10, 2013, 10:51:32 pm »
This month, I am going to sign up an account at COL too. :) (excited)

Specifically, I liked: Rich Dad, Poor Dad by R. Kiyosaki, Think Rich, Grow Rich by Larry Gamboa.

And grabe ang daming information na nakuha just in a short span of time.

So you don't suggest getting a house loan in buying a property?
I'm thinking of getting a house loan and then pay the loan using the money i'll get from the property. Gusto ko sana parang small building na gagawin naming apartment type.

I did sign up for COL, pero I haven't deposited monthly yet. I'll try to invest in MF na lang because I don't have the time and knowledge to handle stocks on my own. Siguro if after some time na stable na yung healthcare ko and MF, saka na ako mag sto-stocks. :)

I am reading Think and Grow Rich too right now. Ganda ng book, nakaka motivate.

I wanna try other businesses pero hindi pa ako sigurado kung i-pursue ko kasi as I said earlier, wala ako experience and mentor man lang para turuan ako. However, I really feel inside that like you, may dugo akong business woman because since elementary, nagbebenta ako ng stationaries sa mga kaklase ko before, Grade 4. And nung bata ako, when my mom leave us in my lola's pwesto sa market, I helped her to sell yung mga daster at shorts.

I wanna keep and join this thread. Pasali! I need to learn more.

Congratulations on your other businesses! As for me, I am planning to go into the money business -- stocks and MF's. Dito, I don't have to exert a great effort sa pag o-organize ng business. All I have to have is the discipline to set aside a certain money every month na pang invest.

Sis Aquacharly, ang galing mu naman sa mga finances mo sis! Do you also also invest in MF's and stocks? Or sa business ka nag sti-stick?

aquacharly

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Re: Becoming Financially Free
« Reply #13 on: September 10, 2013, 11:55:39 pm »
MUSCHIEVOUS --  I no longer do MFs --  I don't do well when I don't control it.  The ROIs there don't meet my portfolio cut-off. 

My hubby and I de-stress (Lolz, para maiba  iniisip) by trading directly on the New York Stock Exchange, real time through the Charles  Schwab  platform.
Alam mo kasi, when you own businesses -- it's hard to switch off.  Que bakasyon, que anong oras, que saan ka - bitbit mo.  You can't be a go-go person daytime & in your off hours turn into lazybones.  Nope, we are what we are --  so to relax, iba naman activity.  Better trading than going drinking, going to casinos or whatever.  Once in awhile, fine; but don't get into a TGIF mentality if you wanna be financially successful.

Local stocks -- these are stocks I sit on for 3-5 years.   
But there was a time,  I made a career out of these.  But I almost got burned when I couldn't unload a stock manipulated by a crony of a president (not Marcos) --  that one that crashed BW1set -  the brokerage I used then attended to their vested interests first.  It was insider trading at work.  Ever since, I have little  faith in the local stock market.  My local portfolio is royal blue chip lang. 

Now, the NYSE is better playing ground.  Kung baga, pa talasan na lang ng pangamoy.  You gotta read a lot of financial/economic/political news -- assess and go trade on your hunches. 
I tried trading before through HSBC HK --  bw1set din.  Palpak advise, kupad reaction.  I lost some there, but not that bad to burn me.  So, I will do it myself, or just sleep.

MISCHIEVOUS, IMO, there is no such thing as an investment that does not require constant attention & working on.  Even money left with a bank can get lost, even simple pre-need plans get lost.  Nothing beats being hands on and watchful every effing day.  Sure, it's tiring.  -- so you must know what you're getting into & why you're into it all.  Otherwise, your greed (or negligence)  overrides your better judgment & you will get burned & lose it all. 
« Last Edit: September 11, 2013, 12:06:51 am by aquacharly »

joban99

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Re: Becoming Financially Free
« Reply #14 on: September 11, 2013, 12:56:00 am »
How can one be financially free? Simple, just read and follow aquacharly's posts. hehe.. :p Pero seriously aquacharly, idol kita dito sa girltalk. My wife and I are OFWs  here in the Middle East and our kids are here with us as well. But since this year, Ive really been wanting to get into business and have a business in the Philippines so I can raise my family in the Phil. Iba talaga pag sa Philippines ka and raising your family there. Its really hard to be financially free in the Philippines if you're just an employee kaya you need to have businesses and other types of passive income.

Actually aquacharly, Id like to ask your advice on me and my wifes plans. I have two plans and would like to ask which one would you advise.   We have a bank loan until the end of 2015 and on 2016  I plan to take another loan (as the bank loan rates are much lower here) and then I plan to send my wife and kids home to the Phil and Ill stay here to pay off the loan and my wife will use the loan money to buy a franchise. Were thinking of getting a franchise as weve never had a business and a franchise is a good way to go if you have the money and dont have business experience.

So my question is do you think we should get a loan worth 1M and get a small franchise or a 4M loan and get a bigger franchise na medyo kilala na? Kasi if we get a 1M franchise Im sure we wont be able to make the money we make with getting a 4M loan and as its not known baka the chances of success are lower as well. But if we get a 4M loan, Im also a bit scared that if the business doesnt go well, malaking malaki ang loss namin. What do you or our other sisses suggest? Thanks. :)
« Last Edit: September 11, 2013, 01:02:55 am by joban99 »

aquacharly

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Re: Becoming Financially Free
« Reply #15 on: September 11, 2013, 02:42:54 am »
JOBAN99,  IMO, the best return any P5Mio or less franchise yields nowadays here in the  Phils is 20%.

My advise is, you crunch the numbers & breakdown into components:

How much will your family require to live the lifestyle you think is best for it?
What will the relocation require?  Buy a residence? Buy a vehicle?
Find out what the requirements are to raise kids here, and triple  check the costs.

Your single income must afford your  answer to the above, plus a portion of the loan  amortization. 

Now for the franchise:
1st:    do not go into business with no equity -- even if your interest rate is low.
2nd:  A franchise cuts down on the pre-operating requirements & helps with crucial decisions like location,, Fine .
BUT you still require business acumen, management expertise, & financial discipline to make it profitable.  Is your wife up to all that? She will be the 1 in place, and running the show -- do not think it will be doable to Skype your hands-on management in. 

Then, since you have dependent kids & have a loan --  you must have a contingency fund set aside.

Hwag ka ma sisilaw sa low-interest loan. 
It's a loan  & must still be repaid, even  if your business does not succeed.

Am I discouraging you?
No
What I am trying to say is:  crunch your numbers well; do your cash flows & sensitivity tests. 
What is the minimum your business must earn NET to be able to meet your loan amortization? 
     Keep  in mind, ang business has low months ha. 
Will your salary be enough to meet all your family's needs?
     Kasi  sa mga studies ko:  once you piggy back personal needs on the business -- dyan na beginning of the end.
     Dapat, give the business space muna to grow --  so you can repay your loan ASAP &/or plow back  earnings to expand the business or invest in whatever to make your business more profitable. 


nicola_juliano

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Re: Becoming Financially Free
« Reply #16 on: September 11, 2013, 10:51:11 am »
Natututo ako. Clap clap clap. Gusto ko matutunan yung pagpapaikot ng pera. A lot of successful entreps do that. Sana matutunan ko din yun. I don't have financial bg and I just studying on my own. I share what I learn to my boyfie. Nagkukripots na din sya unlike before.

chichi143

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Re: Becoming Financially Free
« Reply #17 on: September 11, 2013, 11:39:07 am »
thanks for answering my question sis aquacharly! i agree na bukod sa location, mahalaga din yung secured yung lugar para sa mga futured tenants ko. hay! sana matupad tong plano ko na to. :-)

joban99

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Re: Becoming Financially Free
« Reply #18 on: September 13, 2013, 03:55:40 am »
Thanks so much for the advice aquacharly. Yes, Ill really have to triple check the numbers. But I think were safe as Ill be staying abroad to pay off the loan and we have a house in the Phil and we have another house which we are renting out and the rental money there will be what my family will use for their monthly expenses.  So the money made in the business will hopefully not be touched and go back into the business or other businesses. The only thing we dont have is a contingency fund. So if our house doesnt get  rented for a little while or I lose my job, then wed be in trouble but I doubt both of those things would happen. However of course I should still try to save for a contingency fund. Im a bit surprised that a 5M franchise can only make 20%, is that 20% ROI per year? So it would probly take 5 years to get the ROI of 5M back? Because most franchises I saw state that it usually only takes 2 to 3 years to get the ROI, or are these the more costly franchises? Also, why should I have equity? Also, what is a sensitivity test and how do I do that?  Thanks again Aquacharly. :)

JOBAN99,  IMO, the best return any P5Mio or less franchise yields nowadays here in the  Phils is 20%.

My advise is, you crunch the numbers & breakdown into components:

How much will your family require to live the lifestyle you think is best for it?
What will the relocation require?  Buy a residence? Buy a vehicle?
Find out what the requirements are to raise kids here, and triple  check the costs.

Your single income must afford your  answer to the above, plus a portion of the loan  amortization. 

Now for the franchise:
1st:    do not go into business with no equity -- even if your interest rate is low.
2nd:  A franchise cuts down on the pre-operating requirements & helps with crucial decisions like location,, Fine .
BUT you still require business acumen, management expertise, & financial discipline to make it profitable.  Is your wife up to all that? She will be the 1 in place, and running the show -- do not think it will be doable to Skype your hands-on management in. 

Then, since you have dependent kids & have a loan --  you must have a contingency fund set aside.

Hwag ka ma sisilaw sa low-interest loan. 
It's a loan  & must still be repaid, even  if your business does not succeed.

Am I discouraging you?
No
What I am trying to say is:  crunch your numbers well; do your cash flows & sensitivity tests. 
What is the minimum your business must earn NET to be able to meet your loan amortization? 
     Keep  in mind, ang business has low months ha. 
Will your salary be enough to meet all your family's needs?
     Kasi  sa mga studies ko:  once you piggy back personal needs on the business -- dyan na beginning of the end.
     Dapat, give the business space muna to grow --  so you can repay your loan ASAP &/or plow back  earnings to expand the business or invest in whatever to make your business more profitable.
« Last Edit: September 13, 2013, 03:58:51 am by joban99 »

aquacharly

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Re: Becoming Financially Free
« Reply #19 on: September 13, 2013, 06:10:21 pm »
Im a bit surprised that a 5M franchise can only make 20%, is that 20% ROI per year? So it would probly take 5 years to get the ROI of 5M back? Because most franchises I saw state that it usually only takes 2 to 3 years to get the ROI, or are these the more costly franchises? Also, why should I have equity? Also, what is a sensitivity test and how do I do that?  Thanks again Aquacharly. :)


The 20percent is just my assessment.
 I assess on the assumption that everything is by the books:  declaration of all income & payment of all taxes; full compensation to all employees as per laws, etc etc. AND a more realistic (to me, after crunching numbers & understanding others' experience) sales assumption. 

If others say 60percent, fine.  Good for them.  But look into the assumptions used to project that --  like the sales volume.  Pag hindi mo na meet yang 60percent mo, eh kasi your location not as good, your turn-over low, etc etc etc. yan say nila.  A franchise IS a business, success depends on many factors.  It isn't like a time deposit with a guaranteed return rate.

Big franchises take more than 2-3 years to recover.

It's DEALS that are quickly recouped, or lose your investment in a heartbeat. 
Some businesses are easy to recoup too. Bars, for one.

Also, what is a sensitivity test and how do I do that?

Pls google financial sensitivity test.  This is not a convenient forum  to explain the concept.  :).
                     



. The only thing we dont have is a contingency fund. So if our house doesnt get  rented for a little while or I lose my job, then wed be in trouble but I doubt both of those things would happen. However of course I should still try to save for a contingency fund.
 Also, why should I have equity? Also, what is a sensitivity test and how do I do that?  Thanks again Aquacharly. :)


CONTINGENCY FUND.  You should always factor that in, anything goes, specially with kids.
IMO, kids are the iffy factor.  Just coz you can't turn your back on their needs.
But of course, you may not need 1. It's just a personal view of mine, coz you have kids.
You may not lose your job, but what if you get sick?
What if someone in your family requires hospitalization & expensive medical intervention?
What if your tenant burns down your house? Insurance pays after quite some time.
Mga ganong Bulaga we pray don't happen, ever.

As for the loan, the way I view it -- it's got a fixed repayment sched.  Fixed, which you can perhaps extend if needed. But still -- it needs to be paid back.
Putting in equity is like a buffer, IMO. 

But see, JOBAN99  choosing a business is a very personal thing, same as one's risk profile.
Hubby and I are big risk takers, coz our opinion is:  bigger risk = bigger gains
That's why we don't like loans/OPM --  coz walang kelangan consider na constraint when making diskarte/taking risks  &. coz if we lose it all -- it's easier to re-start, that's our opinion. 
Timing din is critical, so 1 example is -- we gave ourselves 5 years before having kids.  Nagawa namin.

And, having no loans & no kids, and living below our means (we lived in our own townhouse, and rented out his house, for example) -- we took big risks.  He concentrated on our main business, I maxed time on full-time consultancies (in govt agencies --  consultants are paid at least 10x the plantilla position; and you get multiple consultancies from subsidiaries). 
We declared no dividends (hahahahaha - 2 lang kami own it) & imported heavy equipment & bought properties to lease out or use as depots. 

We have kids, and we still take big risks. 

BUT, JOBAN99 --  our way just fits our risk profile and skills.   Others have other  ways, better even.  So just crunch your numbers well.  No one approach guarantees success.  So, study the  business and industry "Winning Line" & interpret that in the context of your resources & constraints.

Good luck!!!


                         

     
       
                   

 

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