Frugal Honey

Psychology of Money

Frugal Honey on ANC On the Money

When Salve Duplito tweeted a question about lending money to friends or family, I responded by saying that it was usually a big mistake and look, I even wrote about it here and sent her a link to this post (epal much?). A few hours later, ANC On the Money asked if they could quote portions of my post in their show. I asked for the terms of the exposure and my talent fee, oh what the heck, I said yes in a heartbeat!

We don’t get ANC on our cable and so I had no clue if the episode actually aired until a reader sent me a link to the episode.

That day’s guest said that the odds of only 1 out of 3 paying a debt is fairly normal and my mistake was in failing to conduct due diligence before lending money to my friends. I actually  didn’t know what to make of that because how exactly do you conduct a due diligence study on your friends?
With the one who lost her job, I really had no inkling that she would renege on her debt. She would always pay her share of the tab during our night outs and never tried to mooch money off me, so I honestly had no clue that that would happen. But looking back now, maybe I should have made them sign an undertaking, even a one pager, just to make the deal more official.
As for the other one, he really was just forgetful and in fairness, he did pay me when I demanded the whole amount.
Anyway, lessons have been learned and I am still not convinced that being a guarantor is a good idea.

Investing in Luxury

An investment is simply defined as putting in money or capital in order to gain profitable returns, as interest, income, or appreciation in value. That’s why I always wondered about women who buy expensive bags and shoes and declare them as “investments”. Do these really appreciate in value? 


Lending Money to Friends and Relatives: More Harm than Good

This article from Learnvest brought back a barrage memories of the first and last time I acted as guarantor for my friends.

In my old law firm, one of our clients had an ex-deal with Gold’s Gym and was paid with 1 year membership GCs redeemable at any Gold’s Gym branch. Our client then sold these GCs for Php12,000 each, payable in 12 monthly installments. Of course I pounced on the deal and informed my friends about this fantastic offer from Gold’s Gym. Several friends bought GCs and we agreed that they would pay me Php1,000 monthly for each GC, I would then remit the cash to the client every month.
Sad to say, of the 3 friends who got GCs through me, only 1 religiously paid every month. One always forgot it was that time of the month and the other lost her job and gave back her GC to me, promising to pay me back later.
The forgetful friend eventually did pay me, but only after I demanded the whole amount after he forgot for 2 straight months to remit his payment. The other friend still owes me money and from the looks of it, she has already wiped off that debt from her consciousness, even if she got a new job about 3 years ago.
I’m still friends with these two, but I will never, ever lend them money again or act as a guarantor for them, or for any other person, for that matter. The stress and disappointment are just not worth it. 
For me lending and borrowing money involves so much more than the actual value of the transaction, as it really boils down to respect. Do you as the borrower, respect the lender enough to make good on your word? Or will you just disregard the loan, reasoning that the lender has more than enough to not notice that she’s out a few thousands of pesos?
I know money problems can’t be avoided, but what you can control is how you will honor your word to someone you are indebted to.

Frugality 101

I have long wanted to be frugal, to live well within my means and have something saved for a rainy day, but it has only been in the last year that I’ve made considerable headway towards my financial goals. Admittedly, I’m earning a bit more than what I used to two years ago, but my expenses have also increased, so I can’t attribute my better financial state to a fatter paycheck. What really changed though was my mindset.

Frugality is a complete lifestyle in itself and not just a mere goal. Looking back, my past attempts at frugality were always defeated by repeated bursts of spending buoyed by feelings of self-entitlement (i.e. “I’ve been ever so good, so I deserve this”). I now realize that before I could be really comfortable with frugality, I had to first get my “poor student” frame of mind out of my system.

Because I was a student for so long and my first job paid peanuts, I always turned to retail therapy or a good meal to comfort myself. There’s nothing like a new pair of shoes to erase those years of subsisting on a small allowance, or so I told myself. The pairs of shoes and swag from blogging eventually piled up, but I wasn’t any happier, and after a while, accumulating stuff just got old and tiresome.

In due time, stuff became exactly that, and I was no longer enticed by the shiny and the new. And with that slight shift in mindset, I finally succeeded in setting up an emergency fund (after my first attempt was an epic failure) and investing in stocks and mutual funds. Here’s what I’ve come to realize so far:

  1. When you get rid of your feelings of helplessness or your woe is me mentality, you’ll have better emotional intelligence to resist the retail sirens. Clearly, you have to wrestle with your demons to find out why you act the way you do.
  2. Stuff, no matter how they package and trumpet it, is just stuff.
  3. Yes, it is possible to have enough shoes/ clothes/ makeup / bags or whatever it is that makes you lose your mind. Don’t believe the marketing machines that proclaim otherwise.
  4. When you’re feeling weak, simply avoid the source of temptation, in this case the mall, until the moment of weakness disappears.
Frugality is not meant to make you feel small or impoverished, so if it does, then you obviously still have issues to deal with. Thus, before anything else, face the monsters within and do whatever you have to conquer them.

The Goal

Sale season is upon us, but I haven’t burned my credit card in Zara and Mango as I normally would for the simple reason that we have a goal.

The goal is to move to a bigger house in 2-3 years time. For G that house should have a garage where he can tinker with his automotive project du jour. And for me, that house should have lots of natural light (for product shots) and cross ventilation.


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