Topic of The Month

Jan’08 Putting Motivation into Commitment

This month we talk about motivation.

Our family is motivated to change the way we work with our money, only after we had our first born.

So today we’re in excellent shape. We have our enormous debt of course, for the house and the car. I don’t see that we can pay it off anytime soon. But thanks to Don’s job, in the past 8 years we have enjoyed the privilege of ‘cheap’ subsidized loan from the banks. Therefore, our loan installment is very small and we can invest a substantial amount from our income. Let me remind you that before we had our first born, we already had the ‘cheap loans’ but our regular and lifestyle expenses were very high.

It wasn’t until Azra was 2 months old that we started driving around the Cibubur neighbourhood looking for a good school for him. I came home crying, frightened by the fees we had quoted from the schools.

How do we put that into commitment?

Well, I bought a useless insurance policy :) In three years time, it cost us Rp 24 million, not to mention the interest we had to pay because we couldn’t afford it and we charged it to our credit card. We got virtually nothing in return except for the Rp 100 million life coverage for Don. This of course, is a big laugh because his light metallic blue Korean car at the time was worth about the same as the life coverage.

We proudly closed that insurance policy and replaced it with a Term 10 year policy with coverage of Rp 1 bio with new premium amounted a quarter of what we had to pay. By the way, it was ‘Asuransi Pendidikan’, I don’t see why anyone should have it! As any independent financial planner would say to you bluntly : Buy Term Life Insurance, and Invest the rest of your money!.

Hey at least we were committed to put our money somewhere. We just put it in the wrong direction. With that same commitment, we sat down together and broke down our expenses together. I wasn’t working at that time. Don was making so so. I thought he was so brilliant, a 25 year old bank manager making almost double digit salary. Hehe yeah right… And then, the numbers spoke to us. Numbers don’t lie to you…

This is what our monthly expenses looked like in 2002.

Regular Investments 0% (regular purchase of Reksadana)
Loan installments 40% (for the House & the Car)
Regular expenses 30% (Meals, Utilities, Transport, School, etc)
Lifestyle expenses 30% (Fancy dinners, Recreation, Handphones, Fitness)

We freaked out. It was obvious that we didn’t have the ability to save any money! With our children education in mind, we were committed to start savings = minimum 10%. It had to come from somewhere! We had a ‘black period’ for 6 months. No fancy dinners, no recreation, no going to the mall, no phonecalls from the handphones. Don actually called me from the office phone on his desk. And we did it. We managed 20% Savings Rate.

Our commitment to the plan is very strong. We looked at the figure for Azra’s university fund, soaring at Rp 1.5 billion by 2020. We would never be able to afford that through normal routine savings. This money has to grow on its own and it has to grow now. We had been buying Reksadana but not on a regular basis.

By 2005, we sat down with my partner Teja. She reviewed the plan that I did. She put us into perspective and provided challenge. We don’t just want to put Azra through school, we also have Dena. We want new house, new cars, holidays abroad, pension fund, pension health fund, and most importantly enjoy a great life. So this plan cannot just aim for Azra’s education fund. This is how we put our commitment into work.

Now, this is what our monthly expenses look like compared to our total income.

Regular Investments 30% (regular purchase of Reksadana)
Loan installments 10% (for the House & the Car)
Regular expenses 40% (Meals, Utilities, Transport, School, etc)
Lifestyle expenses 20% (Fancy dinners, Recreation, Handphones, Fitness)

So what have you done?
Don’t just sit there and think things are going to be alright. It doesn’t get better by itself, you have to make the changes.

There is absolutely nothing wrong with starting the PLAN yourself. Ofcourse I can guarantee you that our team 5 years of experience will definitely make a difference. But give yourself a brake. Find what motivates you in life. Make that commitment.

You’re the one who will make the equation works!

Our job is to improve people’s quality of life. This can only be done when the clients are committed to the plan. I have seen so much knowledge gained, so much skill acquired, and so many families benefited from a proper comprehensive financial plan. Most importantly, how much net worth value we have assisted to significantly increase over the past five years.

You ARE Responsible For Your Own Finances!

Ligwina Hananto


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