Monday, May 28, 2018

Sinking in Credit Card Debt

Borrowed this from Good News Pilipinas




















Last week, people started trickling back into the office to prepare for work. Term and summer breaks are a gray area for PTFs. On one hand, you get some sort of breathing space for a few days or a few weeks. Then that turns to panic because you earn nothing and only get paid a month or so after work starts. Since we hadn’t seen each other for nearly a month, there was some catching up to do. One of those colleagues with a story to share was Sir W. 

I’ve known Sir W for a while since he also teaches at CoRK. He said that from a high of 50 Part Timers a year or so ago, they were now down to 5, and he’s got a lower course load this current term. So Hunger Games ang peg, really. 

Sir W is usually up and about checking out the latest restaurants, theater plays and movies, picking up the newest books. He also takes an Uber (when it was still around) and Grab going to and from work. He says since he’s working two jobs, the least he could do for himself was not to hassle himself with the tortuous commute. Sometimes other colleagues and staff members who share the same route home would share the car with him, other times it would be some food to share with the office peeps. So really, a nice and generous guy.

I’ve always wondered how he could afford to do all that. We share basically the same rank and earning rates. Even during the time that we were both getting full loads of work at CoRK and our current office, and therefore ostensibly double the earning capacity, I never dared to take Uber every day. I reserved it for when I felt like I was going to be late—and CoRK was notorious for deducting “late rates” even if you were already in the building and just waiting for the elevators. If I ate out all the time like he did, I wouldn’t have anything left at the end of a pay period. 

Last week, Sir W opened up that he was having liquidity problems. He’s mentioned this before, like when he’s asking if I’m watching Lion King and he says he’s watching but maybe just him and not take the partner along because that would be twice the cost. Said partner has resigned from his job a few months back and is struggling with a small business that tends to have seasonal demand.

But this time it’s different. He has two credit cards and he’s carrying huge balances on both. It must be a serious amount—I’m thinking in the 6 digits—and it’s been building up over two years of making only minimum payments. He’s asked his brother if there’s a loan he could take so that he could cut one of the cards, throw the money at the balance and pay it at a different rate—sorry, I’m not as familiar with credit card terms. His mother had bailed him out of a similar problem before, so he can’t turn to her now, as that would mean he hadn’t learned his lesson. There’s an aunt he could possibly approach, but again, this would be difficult do since the family already knew about the previous bailout. They would say he’s never learned how to handle his finances. 

So there we were, thinking of ways to get out of the huge debt. He mentioned maybe putting up some of his books up for sale next week. Or if only there were other collectors of the knick knacks he’s accumulated over the years. When he checked the credit card bills, he’s realized that all those Ubers and Grabs and eating out were taking up a huge chunk of his expenses. He’s asked his partner to cough up some money—after all, the debt was used to finance their expenses and lifestyle. The partner was half-hearted in his commitment to co-pay—there’s a family he also needed to support, the fledgling business, etc. 

He’s over 40, working two jobs part-time, lives at home, and now has huge credit card debt. Again. Who would bail him out now?

We’re in the same pay grade, and he’s doing twice the work load I have, then there is money to pay the bills. In my mind, the solution is to live more simply. When he asked me if I wanted to have lunch, I suggested the low cost employee canteen. I sensed the hesitation. There’s no way I’m spending over Php200 in a lunch out, especially since we’re not being paid yet. And neither do I want to go to the more expensive canteen, where the viand and rice would cost you Php110 easy. I tapped another colleague to join us so that it would be 2 vs 1. I don’t think he was too happy about it.

He recognizes that he needs to take charge of his finances. He’s not quite open to ditching the cabs and lunches and dinners out. It’s a lifestyle that he’s used to, and I don’t see him giving it up so easily. But in times like these, desperate measures are needed. He didn’t learn the first time around, and now knows the problem is real, shouldn’t he be willing to make adjustments? 

Makes you think that Filipinos do really need to learn about financial literacy. An article in today’s Inquirer quotes a study by the World Bank that only 2% of Filipino adults can be considered financially literate. 

I’m glad I don’t have this kind of problem though. Over the years, banks have sent me pre-approved credit cards and I never used them. You just get kind of shocked that you receive it in the mail. Recently, another bank surprised me by having an entry for a credit card in my online banking  account. I called and said I didn’t apply for a credit card. It’s still there though. Although there’s some convenience to not carrying cash and building a credit history, I’m not sure I’m willing to carry the possibility of soul-crushing debt. Then again, who knows if holding a piece of plastic will make you a swipe-addict. If I change my mind, you’ll be the first to know.  



Monday, April 23, 2018

Work hours

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In which industries do employees work the longest hours per week? by BusinessWorld

Business World has this infographic feature based on the  2017 Gender Statistics on Labor and Employment (GSLE) report released by Philippine Statistics Authority which showed the industries in which employees work the longest hours per week

The top 3 spots were Administrative and Support Services, Information and Communication and Transportation and Storage. I'm wondering if the first two implies BPO work, because people I know who work in these industries definitely work more than just 53 hours per week, and does not include the possibility that night/graveyard shifts. I can believe the long hours T&S which may include those driving public transport and those trailer trucks. My father used to drive buses going to the provinces, and we barely saw him, like once a month if we're lucky. 

Meanwhile, the last spots are occupied by Arts, Entertainment and Recreation, Fishing and Real Estate. Again, I'm wondering if AE&R include media production, which is classified as entertainment according to the BIR. People working in media (whether news or TV/movie productions) work far longer hours than 39 included in the survey, and most work on a per project basis. One is not assured of tenure. If lucky, one might get a contract renewable yearly, which features a "retainer's fee" that's more or less the equivalent of the minimum wage or an "allowance" for "brainstorming." Fishing and farming may be seasonal but definitely takes longer hours. 

Included in the bottom half is Education, which supposedly take "only" the traditional 40 hours per week. But it does not take into consideration that teachers and professors do course planning, class output checking, research, consultation with students, meetings and committee work, which together require you to put in more than the 40 hours stated here. If a teacher is tenured, then those hours are paid for by the institution one belongs to. 

Part timers are a different matter. PTs are only paid for classroom hours, or time spent inside the classroom actually teaching. But the real work is what needs to be done before you enter the classroom, and then the output that needs to be checked and graded. One is not paid for consultation hours, or the committee work or the meetings, etc. If one looks at most privately run Higher Education Institutions (HEI), the bulk of their faculty members (or Full Timers) are a mere 25% of the population, and yet whose rates are double those of PTs. The rest (a good 75%) are part timers who sometimes hop from one HEI to another just to make ends meet or make at least as much as the FTs. There is also the possibility that one school term one gets some teaching load or units and the next there's none. It's a precarious job. 

Sometimes it's difficult to look at these surveys, especially when you've worked in the industries mentioned and know the real hours involved aren't just those done at the desk or inside classrooms. 



Thursday, March 29, 2018

Baon Blues



Hipster baon: Noodles in a jar! 

















One of my bigger expense categories is food, especially food eaten while at work. Usually, wherever there are students, there would be cheap food. Sure, this would be loaded with carbs and fats, but would assure you of energy throughout the day. (Bacsilog with melted cheese topping, anyone?) However, just a few tries of these cheap meals convinced me that (1) my body is not young enough to process all that bad juju and (2) the calories will keep you young, as in deds agad. So, no. 

Now where I work, it’s always cheap eats. There are restaurants all around, but if you eat in one everyday, and most of the time, it’s not just lunch, sometimes dinner, usually merienda, and coffee,definitely. The go-to eating place has a stall that sells “healthy” food, and it would cost you Php165. So, no. 

There is an employee canteen, but usually the food there runs out or spoken for by 11AM. If your schedule doesn’t allow you to drop by and “save” your Ulam for lunch, good luck to you. You run to the other canteen where vegetables + rice will run you maybe Php55-70, and a meat viand + rice is Php90-115. Also not viable. 

The tipid alternative would be to bring your own lunch. The trouble is if your workday starts at 7:30AM, which means you have to be up and going by 5:30AM, and if it ends also at 7:30PM, which means you get home past 9AM. By then, you have almost no energy to cook, and you’ll be so tempted to just eat out before you crash on your bed at home. 

During this weird 12 hour working period, I almost always ended up eating out at least twice a day. When I tallied it, I was spending nearly 8k/month on food. If you’re single, that’s a big amount and all it takes is having regularly having sub-200 lunches and brewed coffee. 

It takes control to prepare your meals, but something necessary if you want to not spend all your paycheck on carbs and coffee. I don’t always succeed on this, but I do try most of the time—heck, even once a week—to bring food with me. I’ve also learned to check out the nearby grocery and sometimes stock on instant coffee (just coffee, not 3-in-1 because the sugar in those are deadly) and crackers and sometimes fruit and oatmeal for quick in between meals. 


Japanese lunches cost money. 




















Sometimes, like when people at the office are excited to see actual people (we don’t always have the same work/lunch schedule), we do eat out. Usually this would be around the start of the term, or somewhere near the end just before finals. One time, we just went for coffee and pastries, and it cost me Php280. Or dinner from the Japanese takeout—Php350. Sometimes I don’t mind it especially if it’s just an occasional thing. It’s celebratory and builds camaraderie, so I’m down for that. But if you do it regularly, I don’t know if I’ll have anything else left over. So basically, everything in moderation. 

There's only a month or so left in the work cycle, and when the homestretch comes, sometimes you don't have the energy to meal prep anymore. But I resolve to do more meal preps in future workdays. So do wish me luck. 

Tuesday, February 6, 2018

Diving in the gig economy

Cliff diver David Colturi for Hugo Boss

Philippine Star business writer Iris Gonzales writes about the country's freelance economy, or those who live and work on their own terms. 

It's nice not having to do a 9-to-5, dread Mondays, work in your pajamas, or get stuck in rush hour traffic. Or if you really lucked out and a day's work can net you a million. 

Not everything is rosy in the freelance world though. You do all the things that a normal HR office would do for you: take care of your own taxes, get your own healthcare, save for your own retirement. You have to hustle for your next project to make sure you have a more or less steady income flow. 

But that isn't so easy when there's tons of competition out there, made more cutthroat by  the phenomenon apparently known as  diving, or "bringing down rates below industry standards to get more gigs."

I once had an acquiantance link me with a potential client, who wanted a relatively easy write up.  I gave a quote for the work. But then a quarter of an hour later, my acquiantance calls me up. Turns out the client was also talking to other people. Someone else, a single mother, offered to do the job for half the rate I quoted, and with unli-revisions. 

My acquiantance was embarrassed and apologized. But really, there wasn't anything we could do. How can you compete with someone who gave a basement bargain rate with the matching pleading words, "Please, I'll do anything because of my child." 


I understand her situation, but it really harms everyone else working in the industry if you lowball your own fees. Gonzales puts it best: "If nobody accepts low rates, employers hiring freelancers will realize that they need to pay more. Trust me, they can afford your rate because they’ve already saved so much as they don’t need to pay for health and other benefits." 

An article from The Atlantic looked at gig economies around the world, including the Philippines. There's a bit where a contingent worker from the PH is proud of having gigs that allow her to spend on necessities for her family on her own. On the other hand, there is that consistent problem of competition that necessitates lowering your rates--from $8 to $3.50!--just to get gigs. 

Gone is the world of permanence and tenure and unions and job security. What we have now are part time gigs that turn us into "service providers" and "contractors." But hey, we're our own boss, right? 





Friday, January 26, 2018

Part Time Life is the New Normal




















A recent article from the Wall Street Journal reveals that the world’s biggest employers no longer sell things but rent workers. What this means really is that in the last two decades—basically my entire working life—the traditional employers and business hand over their tasks to “non-employees,” considered mere “talents” or “service providers” who are given lower pay and receive fewer or no benefits. 

According to the article by Lauren Weber: “For employers, dispatching work to outside companies saves money and lets them access skills they need without adding to their headcount. Workers in jobs that have gone to outsourcers, though, can feel moved around like chess pieces, either displaced entirely or re-badged as employees of a service provider, sometimes with fewer benefits and lower pay. A growing body of economic research suggests that outsourcing is a significant factor fueling the rise of income inequality in the past decade.”

This has happened in both industries I’ve worked in, even in government.

You’re considered lucky if you gain a contract that’s renewable every year, still subject for approval, and instead of a salary you are given what is considered “retainer’s fees.” If the project you’re working on does not make it to the finish line and or is shelved for some reason or another, then you would only get paid for that pilot and a “development fee” for everything else you worked for in the last year and a half. If the project gets aired, then you hope it runs for as long as it can. Otherwise, you get only the minimum of and get paid for 13-16 weeks. 

Then back to development hell. It’s possible that you or your group of creatives don’t get another project, in which case you are floating and hoping to get a slot in another team, which is harder because there are a lot of people who do not have active projects and hoping to get that “extra” revolving, free for all slot. It's feast or famine, boom or bust. This is mainly the reason why I decided to leave and go back to that other industry. 


















Where I work now, the practice is that the bulk of the force is comprised of part-timers. Like in my current office, there are less than ten full timers (FTF) and over a dozen or so part-timers (PTF). A PTF carries the same maximum work load as an FTF, but the rates are half of what a full timer gets, no benefits and no healthcare— although you have the option to get it as part of the collective and pay for it yourself as a salary deductible over 3 months or so. 

If circumstances dictate that less part-timers are needed, then we get less load. Current circumstances in this industry dictate that there will be less load in the next 3-4 years or until 2021-22, with this year and 2019 being the hardest hit. In my other previous non-employer (the College of Rich Kids, aka Cork), you don’t even get to know if you’ll get a workload until the very first day of work. So if you’ve been counting on that and get nothing, well good luck. It’s for this reason that a lof of part-timers work at more than one job—sometimes as many as three or four. 

My current non-employer manages things a bit differently. CNE makes sure that all the PTFs will have work, even at a reduced load. Most of the PTFs are farmed off to another area of the industry, which is not what we're trained for, but gives us work that will sustain us through these lean years

You are not an employee, and who you work for is not your employer. Yet you do regular time, you follow their rules. Everywhere in the world, this is the game now. The part time outsourced life is the new normal. 

Wednesday, January 3, 2018

Preparing for retirement with PERA


In a previous post, I looked at how the TRAIN would affect my take home pay. 

TRAIN promises to cut the withholding tax. From my previous effective rate of 32%, it will go down to ~9.2%. That savings will go a long way to fund my retirement. So while it might be tempting to use that "free" money to live the best life now, I'm opting to invest it for my best life in the future. 

Although I contribute to the SSS--it is mandatory, after all--I'm giving it the side eye. For one, there's the talk that the SSS assets would be depleted in 28 years if crucial reforms are not implemented. Which means the SSS is possibly not  around by the time I'm retiring. So I thought I should prepare for that bleak future scenario. At any rate, no one should be counting on just the government pension. I mean, the minimum pension right now is pegged at Php1,200. Who could live with just that money? 

Anyway, I was still working in government when the PERA law was approved in 2008, but implementation is another matter. There was buzz in 2016 that it would go live, and it did in December 2016. But the only two approved entities--BDO and BPI--only had mentions of it but no actual product yet. 

Even before the approval of the TRAIN, I was already thinking of seriously saving for retirement. In the international (mostly American) finance blog circles, it's all about ETFs or index funds. So I was looking at index funds. And then I thought of PERA to at least get a 5% tax credit for saving.  

I made inquiries with BPI already. I knew from other posts that one has to go to the head office to open a PERA account. However, when I checked with the BPI website, this FAQ states that starting January 2017, there should be several branches aside the main office that could facilitate opening a PERA account. I went to my local branch to ask if that policy had changed. The girl at the accounts desk called the head office to confirm and to ask for the requirements as well. 

This is how you open a PERA account with BPI: 
  1. Yes, you need to go to BPI's main office in Makati. Go to the 17th floor, Assets Management. 
  2. You need to bring your TIN ID. In the event that you don't have an ID, bring your ITR as it would have details they need to open a PERA account. 
  3. You must have a BPI savings or checking account. 
  4. a valid government ID. 
  5. Fill up their form, which gauges your investment risk profile 
BPI offers 4 kinds of PERA accounts, which are very similar to mutual fund or UITF offerings. They have a money market, government bonds, corporate bonds and an equity fund. 

Of course, there are fees: BPI asks for a 1% administrator fee based on the amount contributed. There are also "transactional and annual fees from the Cash Custodian as well as trust fees from the respective PERA UITFs." The Equity Fund lists a 1.5% per annum trust fee. I wonder if this is the same as or probably on top of the 1% admin fee. 

Meanwhile, BDO's PERA Equity Index Fund lists a 1% p.a. "management fee." Again, will need to clarify if this is on top of or the same as the admin fee. But I still need to inquire with BDO.  

If we go by fees alone, I'm partial to whoever is offering a lower fee. Then there's the matter of who offers an index fund. There's also the ease of transacting. BDO is attached to my payroll account, that would make it easier for me to transact. That matter of only having one administrator for your PERA accounts certainly has to be considered. 

All in all, I still need to check with BDO and then weigh which one between the two banks will get my retirement money. But even then, BSP Deputy Governor Espenilla acknowledges that the slow rollout is because there are only ~100 professionals dealing with PERA.  It would certainly give the investing public more breadth of choices if other entities would come in and offer their own PERA funds. Until that day comes, it's a coin toss between these two candidates. 

Tuesday, January 2, 2018

How to Ride the TRAIN with reservations

The gift that keeps on giving. You do you, Alma. 


The first part of the Tax Reform for Acceleration and Inclusion (TRAIN) was signed into law in December of last year. Its main selling point was that those earning Php250k annually will no longer have to pay the income tax. While a lot of people find this a cause for celebration. 

Like Alma Moreno, I still have my own reservations about this whole exercise. I do recognize that we will have a bigger take home pay, but I also know that we will be taxed in other ways. Like the price of anything that uses oil or sugar will surely go up. Hello, fare hikes and no more unli-softdrinks. (Not that I'm a big fan of soda, anyway.) 

But I want to look at this positively, so I want to focus on how the TRAIN will make our take home pay bigger. Every year around tax time, I just grind my teeth at how much tax the government takes away. I mean, it's fine if you see that social services are efficient or that government officials are competent. Just knowing that your tax money goes to someone else's already deep pockets and yours are butas, that's just a major bummer. 

In the pre-TRAIN tax regime, I get taxed ~25-32% because I am single, have no dependents, and earn from multiple compensation. A part timer is only allowed a maximum of 12 hours a week. So if I work for 4.5 hours a day, I only get 3 hours because the 1.5 is already eaten up by taxes. Your payslip may show that you get a sizeable amount, but the reality of what shows up in your ATM is another matter. A third of your salary is no laughing matter. Because in a year, that amount balloons to more than 6 digits. Monthly, it's enough to pay an amortization for a condo or a house. But in reality, I can't even qualify yet for a housing loan--I'm a part timer, and my salary is under 50k. So yes, a bummer. 

Photo courtesy of ABS-CBN reporter Alvin Elchico. 

















In the new TRAIN Revised Withholding Tax Table, my income category falls under the 30k + 25% of the excess over 400k. Which means roughly my annual income tax will now fall under 50k, which is a whopping reduction coming from around 3x that amount. From a condo amortization, pambayad na lang ng parking---kung may kotse ako. Eh wala so nganga. Hahaha. 

But seriously, if the tax computation table is indeed true, that is an additional 7k or so to the monthly take home pay. 

What to do with this "free" TRAIN money? 

Not going to spend it on #travelgoals, that's for sure. Will most likely funnel it into a retirement account, aka the long delayed PERA. 

As for which entity and fund, that will come in another post.