Maybe we can change this to Malaysia Economy...but what about the IMF? Change to?

Even the wife, who is a hair stylist, told us that the number of customers have been reduced by 50% at least.

My dad’s friend (another person), who owns a factory, told us that he has to retrench 20% of his foreign workers because of bad economy. The number of orders have also been greatly reduced.

Well, at least, that factory fares better than some others who are forced to close down, thus increasing the number of jobless people.

I do expect our country to be badly hit somewhere in May or June 2009. Whether we like it or not, and whether our government and central bank like it or not……there are just too many things which we cannot really control – such as the closing down of those factories by the multinational companies. Unless our government can come out with $$ to support those jobless people…otherwise, we might just end up like what happened to US now – people don’t have money to pay back the debts/loans.

That’s why I am really afraid of investing anything in banking stocks. It’s just too risky for me. My speculation might be wrong but well…better be safe than sorry.

That’s why it’s very important for us to start planning our finances, and one of the most important things we need to do to kick-off this is to look at our spending habit. And remove the bad ones which are badly affecting our finances.

Here are some of the examples of bad spending habits.

1) Impulsive spending

Feeling down? Want to get something to cheer yourselves up? Oh look! That shop is having a sales and the thing you love to have is selling for such an affordable price! And without hesitating much, you go to the shop and purchase it – forgetting the fact that you just had your pay cut.

2) Credit card swiping-go-lucky

Credit cards are there for your convenience but that does not mean you should use them happily without thinking much. Because currently, there is no proper (and easily accessible) way to check how much you have signed for a particular credit card. And I have a feeling you will not have this feature anytime soon. After all, the more you swipe, the better it is for the bank. Thus, it is your role to be aware of all your pending credit card payments and control yourselves from overusing the credit cards.

3) Debts? No problem, I can pay them slowly

Some people think that they can repay the loans and debts slowly while enjoying the luxuries of life NOW. Thus, they do not hesitate long when they apply for housing loan, car loan, personal loan, etc. The problem is, you DO have to pay them and if you missed one payment, the interest charges might actually kill you. Always know your limit and don’t take on more debts or loans than you can possibly handle. Always reserve some “space” or “buffer” because you might need a lot of cash when it comes to emergencies. Taking too much debts or loans will limit the amount of cash you have.

4) Spend now and think later

This is quite similar to all the above points. People tend to say money can be earned back easily, but the things on promotion now might not be there forever. So you should get it as soon as possible, and think about the payment later. Well, I don’t deny that people need to cheer themselves up every now and then by buying the things they love. But it’s also important to know your limit NOW, and not LATER. I doubt you can really enjoy the thing you bought if you realized later that you can’t really afford it.

5) Bill payments can be postponed

If you are thinking about this, STOP IT NOW. Bill payments SHOULD NEVER be postponed because the banks will not be so nice to allow you to do that. They will incur interest charges and penalties if you do pay your bills late. If you’re talking about utility bills, then most of them do not have interest charges (some have penalties) but do prepared to get a very shocking number. If you can’t pay RM 100 this month, what makes you think RM 200 next month will be better?

6) Buy cheap stuff! Surely they are of some use later

Okay, this is the most serious problem of them all. People tend to love buying discounted stuff, even the unnecessary ones. There were few occasions when my colleages bought all sorts of things from ISETAN sales and I actually asked them whether they need those things or not. They told me the things were very cheap and so they bought it. They also said that they were very sure they would use those things after buying them. Until now, I can still see few of those items in our office…unused…untouched. To me, that’s a total waste of money. Only buy the stuff you need, even if you have to pay slightly more than the discounted price. Something more expensive but useful is better than something cheaper but useless.

7) It’s warehouse sales!

Items sold in warehouse sales are normally pretty cheap but I personally don’t feel they are worth it. Why? Because people tend to look at the price rather than the usefulness. Also, warehouse sales are normally meant for the businesses to clear old stocks. These items might not be that lasting. What’s the point of buying something cheap but something which will break down in a few months? I have some friends who bought a lot of stuff in warehouse sales for the last few months, but they don’t use those things. They are preparing for their new homes which are scheduled to be completed at the end of the year or in 2010. If I were in their shoes, I will use that amount of money to put inside a FD or somewhere where I can earn interest $$. Why? 2 reasons. Firstly, the value and condition of the items bought will depreciate with time. Secondly, there will always be warehouse sales throughout the year especially during recession period. So think before you buy. Do you really need it now? Will the thing last long? Or should you pay a little extra for something more lasting?

These are some of the bad spending habits which I’ve observed. I used to be (1), (2), (3) and (4) but have since changed a lot. Because I feel that I need to control my finances in a better, more systematic and efficient way. Having such bad spending habits does not help at all. I seriously do not want to spend my entire life worrying about money and about paying credit card bills or loans. That’s why I’ve decided to take action and change. If you have any of the above spending habits, maybe you should start changing too.