Additional Charges Waived for Hire Purchase Loans Moratorium

Gain insight on how Malaysia’s Ministry of Finance announced latest changes to hire purchase loan and Islamic Financing moratorium affects you.

Banks have now agreed to waive the additional interest or profit charges imposed on installments for hire-purchase loans for the six-month moratorium, as announced by the government.

According to Malaysia’s Finance Minister, Tengku Datuk Seri Zafrul Tengku Abdul Aziz in a statement:

• The total amount for hire-purchase loans, both conventional and shariah will not change.

• No compounding will be imposed.

• Nor will the loan accrue interest during the six-month moratorium.

He added that the decision was made after discussions with the banking industry player.

“Borrowers must resume their loan repayments as usual based on the terms of agreement with their respective banks. This includes an additional six months to the total repayment schedule if they want to opt for the moratorium,” Tengku Zafrul added in his statement.

Banks will released further information regarding this matter and he hoped that this will help reduce Malaysians burden during these tough times.

The announcement is expected to put a stop to the heated debates that started over the weekend, on whether banks should impose additional charges for the six-month period from April to Sept 30.

Previously, Zafrul suggested that the financial institutions waive any accrued interest or profit imposed with respect to the moratorium period.

On Sunday (May 3), Agrobank, a development bank under the purview of the Minister of Finance Inc, announced it would do exactly that for all eligible individuals.

Make Good Financial Decisions Based on Your Needs

For individuals who don’t have any emergency savings, unstable source of income/salary, income affected by the Covid-19 pandemic, or have high interest debt e.g credit card debt, do opt for moratorium and use this opportunity to clear your debts and build up your emergency savings.

Overall

If you are still wondering what action needs to be taken for your financial planning, do consult a licensed professional for insights on actions you can take to improve your cashflow and finances.

5 Financial Tips for College Students to Manage Money Better

By Nurul Khairiah Mohamed Yusof

Personal finances should start from a young age. The independent life of a college student provides a good opportunity to experience, develop, and grow good money habits.

Congratulations, you’re a college student!

As a young adult, you are likely to have moved out of home (Merdeka!) to pursue your education. For those who are still living at home while doing so, you will likely be living a more independent life compared to your secondary schooling life. Among some of the new skills you will need to master will be, of course, financial savvy-ness.

Whether you are paying your own way, receiving parent’s help, using financial aid, or a little of all three, college is an expensive experience that becomes pricier with poor spending practices. College students often collect debts quickly. As with any adult, if debt is not managed well, you will face a lot of hardship trying to settle your debts instead of having a fulfilling young adulthood.

What causes some college student debts to rack up more quickly than others? Generally, it falls to lack of financial awareness and poor money management. However, these are easily overcome if you take the effort to learn about your current financial situation and instill practical yet reasonable money management habits. With this in mind, we provide you with a few financial tips to survive in college years.

#1. Create a detailed budget

Carefree high school students frequently spend whatever is in their bank account, living off their parents’ generosity or the spoils of a part-time job. Once that student moves away to college, a budget becomes crucial.

Whether or not you have been exposed to a budget, it’s important that you sit down to look at finances. Map out your various streams of income, including money from parents, income from a part-time job, and money coming from student loans, grants, and other types of financial aid. Then, categorize your expenses you know where it’s all going. Maybe, in the beginning, you can’t force yourself to stick to a budget but you can feel confident because now, you have a clear picture of what is and isn’t affordable.

You can use a smartphone app that makes money management easy and convenient. Some apps, like Spendee (Google Play, App Store) and Mint (Google Play, App Store), can help you track your online spending by connecting to your bank account as well as providing a platform for you to fill your spending daily. By the end of the month, these apps provide you with a summary of your monthly spending.

Or, you can opt for a more traditional way of keeping track of your budget by using Microsoft Excel spreadsheets. This will require more discipline from you to put your financial activities but can give you a better look at your current spending and saving.

As stated, the trick with any budget is sticking to it. Have some talk with your parents about how to make smart money choices that fall within the budget. Try to reduce unnecessary spending and always track your recurring expenses.

#2. Build a Small Emergency Fund

An emergency fund is a pot of money you keep to the side for a rainy day. When you have a little extra money, put it towards an emergency fund. This fund protects you if you ever have to deal with an immediate or urgent financial emergency.

While you’re in college, these emergencies will be minor. As you get older, get more responsibilities, the number of potential emergencies increases.

For example, if you own a car, you will rely on it to get you to and from work. What if you go to drive it one morning and discover it won’t start? Or your tire hits a nail on your drive home the night before? While minor, these are emergencies that you won’t have accounted for in your budget.

This is when the emergency fund can prove useful. With a fund, you can avoid putting those charges on a credit card. You can now make decisions from a position of financial safety rather than one of panic.

#3. Minimize Student Debt

There are several ways to minimize student debt. One of them is to spend financial aid on the right things. Even if loans look like “free money” now, they do come back to bite you. Tuition, books, housing, food should be your upmost priorities instead of weekly social outings or loads of new outfits.

Consult with your parents if you want a credit card and they can help you choose the best one together. Freshmen should never sign up for a student credit card on a whim. Instead, you can discuss the pros and cons of different cards, set a reasonably low spending limit, and look for cards with points or cashback rewards.

You may also want to use a debit card while in college. While it sounds foolproof, make sure your bank doesn’t allow a large overdraft. Turn off overdraft protection so you can only spend what is in the bank and won’t get slammed with overdraft fees. 

#4. Earn extra money with a part-time job

If you want to fund other needs and/or your social life, it should be done with income from a part-time job, rather than with money taken out of your student loans. Work-study positions on campus like research assistants usually offer the flexibility a student needs with the convenience of location, while off-campus positions usually pay more. Either way, it is better to pay now for non-essential purchases so that you don’t really need to pay for them later.

But, keep in mind that your part-time job shouldn’t interfere with your main purpose as a student – to study. Good time management is crucial when you are balancing between studying and working part-time.

#5. Set Financial Limit

One way to help your spending is to implement financial limits for unnecessary items. Setting a spending limit doesn’t necessarily prevent you from making impulse purchases, but it should give you a pause to assess whether or not the new iPhone is really necessary. By setting a fairly low limit – say, RM400 – RM800 per month – you will have some restriction when it comes to spending power. Add the non-essential money into your proposed budget or emergency fund, separate from essential expenses such as gas and food.

Conclusion

Managing personal finances is a good way to instill discipline and preservation in our life. When you went to college, you’re not just going to a new era but you are also will be getting hands-on practice on how to manage your finances better. But, don’t forget to have fun and enjoy your university life as well because it is once in a lifetime experience.

What financial advice or tips would you give to a student during college years? Share with us in the comments section below.

5 Ways to Manage Your Finances after Losing A Job

By Nurul Khairiah Mohamed Yusof

Losing a job during these tough times seems like an inevitable situation for many people. So, what can you do for your finances if you are let go?

Earlier this month, Bank Negara Malaysia (BNM) Asisstant Governer, Marzunisham Omar in a virtual press conference said, Malaysia’s unemployment rate is expected to shoot up to 4% this year, from 3.3% in 2019.

“We expect the labour market to be considerably weaker and the unemployment rate to increase to about 4% in 2020″

At the same time, on the global level, the International Labor Organization estimates that nearly 25 million workers will lose their jobs, with loss of incomes of approximately US$3.4 trillion (RM14.8 trillion).

If you suspect a layoff is imminent or you already experiencing it, it’s important to prepare. Losing a job is scary and stressful, but you can mitigate the damage by taking as much control of the situation as possible now.

1. Slash your budget.

Your first step should be to examine your expenses and look for any non-essential spending you can cut right now.

Work with a bare-bones budget and establish the expenses you need to live and focus on cutting spending. Obviously, you have to keep the lights on and feed your family but you should aim to pause any discretionary spending.

“You need to figure out how long you can go if your job is cut back or terminated. Then you can make decisions accordingly,” said Ande Frazier, a certified financial planner and CEO of MyWorth.

She suggested pausing gym memberships, canceling streaming services not in everyday use, pausing transportation costs (such as train passes), stopping auto refills or subscriptions, and cutting down on shopping for things you don’t absolutely need.

And don’t feel bad if you need to slow down on your savings goals for the time being. Making sure you can cover your basic living expenses should be a priorities over saving up for your holidays.

2. Prioritize your bills

So once your budget is pared down, take a look at the expenses you have left and decide which ones are most important to continue paying if money gets tight.

“Food and housing expenses are essential to cover if you have limited funds, so prioritize allocating your funds to those expenses first and foremost,” said Brittney Castro, the in-house certified financial planner for Mint and Turbo, and founder and CEO of Financially Wise Inc.

Next, Castro said you should call your service providers (cell phone, internet, cable, etc.) and find out what sort of options you have to reduce or pause your payments temporarily.

“Beyond that, you want to protect your credit for the future, so try to keep credit expenses low, and pay your minimum debt payments so you don’t default,” Castro said.

3. Deal with your debt.

Speaking of debt, this is an area of your budget where you may be able to find temporary relief.

“If you are currently facing or anticipating a reduced income during this time, as a first step you should reach out to your lenders, providers and landlord to preemptively discuss temporary payment relief options,” said Adrian Nazari, founder and CEO of Credit Sesame.

This means that you have the option to delay paying these bills without a negative impact on your credit score or losing service, and allowing you to prioritize paying for necessities like groceries and pharmaceuticals. Be sure to explain that you’re facing financial hardship due to income loss.

Even if you aren’t able to pause payments or get penalties waived, there are a few options for at least reducing the monthly bill.

If you’re carrying credit card debt but have a decent credit score, look for a balance transfer deal. In order to attract new customers, credit card companies will offer 0% interest for around 12 to 18 months if you transfer your balance over from a competitor. Though there is usually a fee involved ― around 3% to 5% of the balance ― it’s usually worth it to avoid accruing interest for a year or more. During this time, your payments will go 100% toward the principal, allowing you to pay it off faster.

4. Start networking like crazy.

Job hunting landscape are rapidly changing. Not only are there fewer jobs available as businesses continue to shutter, you’re now competing against all the other workers who’ve recently been let go or furloughed. Not to mention, in-person networking and interviews aren’t a possibility.

That’s why now is a good time to get ahead on your job search and reach out to some of your trusted contacts to let them know you may be making a career change soon, according to Christy Noel, a career expert and author of “Your Personal Career Coach: Real-World Experiences for Early Career Success.” This allows you to line up references you’ll need as you begin interviewing for new positions.

Plus, it alerts your network that you might be job hunting soon, so they’ll keep you top of mind as they come across open positions.

However, Noel warned against hitting up your connections for jobs right away.

“Reach out to say ‘hi,’ send articles that may be of interest, comment on their LinkedIn posts . Get back in touch so you can reach out to them and they’ll be receptive when the time is right,” she said.

If you are someone who believes strongly in financial planning, perhaps a career in Financial Advisory is your calling.

5. Find a side hustle or ramp up the one you have.

The working world is changing in the face of technological update and becoming more competitive, it may be some time before you’re able to secure full-time income again.

“One of the best ways to prepare for losing your job is to start a side-gig that allows you to replace the income that you may soon lose due to an impending job loss,” said Roy Morrison, digital marketing and growth strategist for Meaningful Profits.

Though it’s unlikely that your side gig will replace your full income in the beginning, it’s a great way to beef up your emergency fund. And over time, it might be able to replace your current income or even surpass it. It is very risky to depend on a single source of income, as it can vanish any day.

Morrison said. “For that reason, I believe working on a side gig to develop a second source of income is the best way to prepare for potentially losing your job. It will give you some peace of mind knowing you have options.”

Conclusion

Losing job is not a child’s play and require us to reassess our personal finance goals and prioritizing our necessities. Look at this as an opportunity to focus on your family well-being and nurturing yourself.

But, you can always make a preparation ahead of the possible recession because believe it or not, you are not alone in this battle.

What other tips do you think can be beneficial when face with unemployment? Share with us in the comments section below.