Take Care of Your Finances Before Going Traveling

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If you have a plan to travel overseas for more than a week, please remember to take care of your finances.

If you know that you have bills due to be paid while you are overseas, you need to arrange the payments, either paying them online or delegating the task to someone that you can trust. If you have automated payments by debiting your account, then you do not need to worry about it. Just make sure that you check the amount when you get back from the trip.

Please remember to pay your credit card bill because the late charge and interest are punishing. I know one bank charges Rp 150,000 just for late charge. Imagine if you are only using your credit card to buy one mocha latte at Starbucks for Rp 31,000 and you get to pay Rp 150,000 late charge – Aaaarrhhh! Pay your credit card bill early!

This month, I paid all my credit card bills on the same day as when the e-statement arrived because I plan to go on a trip. I do not want to cut it too close because I will only come back one day before it is due. Better early than sorry!

What about savings? I have an automated system to save and invest my money, so I am covered. Every month, my account will be debited and that money will go straight to saving and investment account. Automated savings makes life easier and you can have more time and freedom to do what you want.

How about you? What do you usually do before going traveling? If you have some tips or comments, please share.

Learn and Grow!

Inge Santoso, B Com, CFP®

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Kredit Kendaraan Bermotor – Bunga Flat dan Bunga Efektif

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Kita sering melihat iklan penjualan sepeda motor yang menggunakan bunga flat.

Kredit motor 2 tahun hanya dengan bunga 2% per bulan.

Jika kendaraan bermotor yang dibeli seharga Rp 15,000,000 dengan DP Rp 5,000,000. Berapakah angsuran per bulan? Berapa bunga efektifnya?

Pinjaman               Rp 10,000,000

Bunga 24 bln          Rp  4,800,000 (Rp 10,000,000 x 2% x 24 bln)

Total + Bunga        Rp 14,800,000

Angsuran per bln  Rp   616,667 (Rp 14,800,000/24 bln)

 

Bunga Efektif       

Periode (n)            = 24

Pinjaman (PV)       = 10,000,000

Angsuran (PMT)     = –616,667

Future Value (FV)  = 0

Due                        = 1

Bunga periode       = 3.76%

Bunga efektif       = 12 x 3.76% = 45.12% p.a

 

Seringkali kita berpikir bahwa dengan bunga 2% per bulan, bunga setahun hanya 12%. Dengan contoh di atas, kita bisa lihat bahwa sebenarnya bunga efektif adalah 45.12% p.a.

Semoga contoh ini bisa memberikan gambaran kepada Anda tentang angsuran dan bunga efektif ketika Anda berencana membeli kendaraan bermotor.

How Much Interest Are You Getting from Your Bank? 0%?

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Do you know how much interest you are getting from your bank?

In Indonesia, for most of the banks (BCA, Mandiri, and BNI) that I know of, if your balance in the saving account is less than Rp 1,000,000, you will earn 0% interest.

If you have money less than Rp 1,000,000 sitting in the bank at the moment, you’d be better off by having the same amount under your bed. Why? Because not only you are not getting anything, but you are losing money through bank charges ranging from Rp 10,000 to Rp 12,000 per month.

What should you do if your saving account’s balance is often under Rp 1,000,000?

Get a saving account with no administration fee!

There are several banks that offer free admin saving account – for example TabunganKu that has limited features such as a maximum of one or two withdrawals per month. Each bank has different terms and conditions for TabunganKu, so please go to the bank official site to get more information.

Personally, I prefer Danamon Lebih when it comes to free admin bank account because not only there is no admin fee, but I can get cash back (max Rp 50,000 per month) from using the debit card when shopping. I also get an ATM card and internet banking facility.

We need to be smart when it comes to our money. Try to get the best deal that suits our needs!

Learn and Grow

Inge Santoso, B Com, CFP®

Note: This is NOT a sponsored post

Interest–Part 3 Rule of 72

A quick and easy way to calculate compound interest is using the rule of 72.

In finance, the rule of 72 is used to estimate how many periods the investment will be doubled, given the interest percentage per period.

The formula is very simple

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If you can get a 12% interest or return on your investment per year, how many years will you double your money? If you invest Rp 10,000,000, when will it be Rp 20,000,000?

n = 72 / 12

n = 6

So it will take approximately 6 years to double your money or make your investment become Rp 20,000,000.

 

Let’s take another example. If you want to double your money in 3 years, what is the rate of return that you need?

3 = 72 / r

r = 24

So you will need an interest of 24%

 

What is the number if you want to know when your money is tripled? Use Rule of 114

What is the number if you want to know when your money is quadrupled? Use Rule of 144

Remember to use this rule as an ESTIMATE because it is not meant to be exact. It is good for rough calculation that you can use without a financial calculator or spreadsheet.

Learn and Grow!

Inge Santoso, B Com, CFP®

Interest – Part 2 Compound Interest

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Compound interest is interest upon interest. That is, when an interest payment is added to the principal and then the whole thing (principal + interest) earns interest.

How does it work?

If you invest Rp 1,000,000 and the compound interest is 10% a year, then

Year 1 : Rp 1,000,000 + (Rp 1,000,000 x 10%) = Rp 1,100,000

Year 2 : Rp 1,100,000 + (Rp 1,100,000 x 10%) = Rp 1,210,000

Year 3 : Rp 1,210,000 + (Rp 1,210,000 x 10%) = Rp 1,331,000 and so on

 

Compound interest is what can make you rich when you invest. One of the most important elements in compound interest is time. The longer the time, the greater the impact.

That’s why the best time to invest is yesterday! Smile  Since you cannot go back to yesterday, then the next best time is NOW!

 

Perhaps you have heard this story…

One day a father and his son went to play golf. Before they started the game, the father asked his son.

“Son, would you prefer getting a lump sum Rp 50,000,000 or getting Rp 1,000 on the first hole and doubling it for next hole until you reach the 18th hole?”

After thinking for a few seconds, his son said, “Rp 50,000,000, Dad.”

“That’s why you still need to learn, Son. I’ll show you why.”

golf course 

“If you choose doubling that Rp 1,000, at the 18th hole, you will have Rp 131,072,000 and if you total all the money from hole 1 to 18, you will get a sum of Rp 262,143,000. You will get about 5 times more.”

 

What can we learn from this story?

1. It’s OK to start small. The most important thing is to start NOW.

2. When you have more money, save and invest more!

3. You may not be able to get an interest of 100% like in the story, but there are financial instruments that can get you better return than bank saving rate.

 

Learn and Grow!

Inge Santoso, B Com, CFP®