Yesterday, I went to two banks to inquire about mortgage. I wanted to find out how much loan I am eligible for so I could budget for a property early next year.

Both the banks, in their computations, used 70% of my gross salary as the maximum repayment I could afford with the condition that I put up 20% of the property value as down payment. Could the banks be serious? If my gross salary is $1,000 then the bank would be willing to loan an amount whereby my monthly repayment will equal $700. This is insane.

The statutory retirement contribution is 11%. Tax is about 13%. This leaves me with about 76% take home pay. If my mortgage repayment is 70%, I will only be left with 6% to survive and pay my bills. Could people really live on only 6% of their gross pay? I suppose you could if your paycheck is enormous. However, I doubt the poor and middle class could.

The banks are encouraging people to spend beyond their means. No wonder the credit crunch has such a huge impact on the economy. Because people were spending and living on credit. Once the money supply (or credit) is cutoff, people have nothing to spend with.

We should not overstretch ourselves when buying properties. Else, we would be slaves to the bankers.

Have you ever dreamed of winning millions in the lottery and how you life would change? Chances are your life would probably be the same. Studies have shown that majority of the lottery winners squandered their winnings and in a few years they have gone back to where they were financially before their windfall.

I came across an article at MarketWatch explaining why people squander their windfall, whether it is lottery winnings or inheritance. In my opinion, this article did not answer the question, which is “Why do these people squander their windfall?”

The answer is simple. It is because these people were not ready to become millionaires. Rich people have different mindsets compared to the middle and lower income group. A person who does not have the millionaire mindset will not be able to manage the windfall and hence, he will squander away his money and end up where he was before. To keep his millions, he would have to change his mindset. He would have to think like millionaires.

Here is a simple analogy. Imagine a 1 liter bottle. This bottle can only keep up to 1 liter of water. Suddenly you receive a windfall of 5 liters of water. But your bottle can only keep 1 liter. The other 4 liters are spilled as you pour the water into the bottle. To keep more water, you need to change the bottle to a bigger bottle.

In this analogy, the bottle is your mindset and the water is your wealth. If you keep thinking you are worth $1 million then you would only be able to keep $100,000 even if you receive a windfall of $500,000. To keep the $500,000 you need to change your mindset. If you keep your mindset at $100,000, you will manage your money in such a way that you will only be left with $100,000 in the end.

Let me share my personal experience. For many years, I have been chasing wealth. I was greedy. I wanted to be wealthy as quickly as possible. I invested my money in get rich quick schemes and also gambled with all my wealth to the point I was borrowing money to gamble with. I gambled all my wealth away and was only a step away from being a bankrupt.

The problem was my mindset was a poor man’s mindset. Rich people do not gamble with all their wealth. Rich people do not leave their fate to others. I was not managing money like rich people. My mindset was “either zero wealth or double my wealth”.

After this period, I changed my mindset to, “$10,000 wealth”. I began clearing my debt and saved some money. Eventually I saved $10,000. Then, as if history repeats itself, I found that I was squandering money again. For months my wealth would not rise above $10,000. Because my mindset was at $10,000, I managed my money in such a way to achieve the $10,000 figure in my mind. I saw this problem and increased my mindset to “$20,000 wealth”. Immediately I saw a change in the way I manage my money.

Over time, I have gradually increased my mindset and my wealth has followed suit. I recommend you to read “Secrets of the Millionaire Mind“.

This is a follow up to my earlier post about Paypal stealing money during withdrawals, I criticized Paypal for automatically converting currencies at a high exchange rate. I sent at least three emails highlighting my dissatisfaction with this new “upgrade”.

There must have been more than just a handful of customers voicing out their dissastisfaction. Recently, I made two withdrawals and Paypal no longer converts these withdrawals to my local currency. This is good for me because my bank will convert these withdrawals at a cheaper exchange rate.

Finally some good news for the consumers. Prices of thousands of items are starting to come down following the reduction in energy prices. Hypermarkets are leading the way. Hopefully the restaurants and hawkers will follow suit.

When costs increased, businesses quickly raised their prices. For about 4 months, consumers had to adjust their lifestyles to cope with rising energy and food costs. It had looked like more people will fall into poverty.

Now when costs have come down, these businesses were slow in adjusting their prices downwards. Many gave the excuse to wait until the energy and commodities costs have stabilized first before readjusting their prices. Some said their suppliers have not reduced prices, hence they could not reduce their selling prices too. It seems like each one is waiting for the other to lower the prices before they will lower their own prices. Consumers have become angry and frustrated at these inconsiderate businesses.

The Government should study and implement a more efficient distribution of products such as agriculture produce. This would eliminate unnecessary middlemen, lowers distribution costs and minimize wastages.

Paypal has recently implemented a new rule for withdrawing money. And this new rule is forced upon its customers. I could not find any new policy update announcement of this new ruling. They know this rule will be met with fierce objections, hence the reason the rule was implemented below the radar.

My primary currency in Paypal is USD. I’m from Malaysia, and I used to withdraw my Paypal funds to my credit card attached to my Paypal account. Last time, I would be able to withdraw in USD. My bank will then convert the USD to MYR at the prevailing market rate.

However, about one month ago when I made a withdrawal, I was forced to accept the withdrawal in MYR. Paypal will convert the money from USD to MYR at a very expensive rate. I lose more money when Paypal does the conversion compared to when my bank does the conversion.

Paypal converts my money from USD to MYR at a very expensive rate and forces me to accept this. There is no option to receive my money in USD.

I know Paypal wants to earn more profits. But certainly this is not the way. It is akin to stealing money from my pocket. Just because Paypal is a monopoly does not mean they can do whatever they want with their customers and take their money.

Paypal should instead let the customer choose during the withdrawal process whether he or she wants to receive the money in their primary currency or let Paypal convert to another currency.