Bits on Money

Nowadays, if we switch on the radio and listen to the business news, or read the business news section of the paper, the economic outlook is always gloomy - either the Dow kept on plummeting, companies closing down factories and reducing workforce, or bank seeking rescue packages from the government. The effects so far has been worldwide and some have hit our shores. What I couldn't stand is our media focus on politics and acting as if we are protected from the obvious oncoming of world economic recession. Even Che Det has commented on this before. Maybe what's being parroted in the newspaper and TV3 is not actually what's there in the nation's balance sheet.

Due to this overplay on politics and underplay of economic situation, the government has started its wise move to "revive" the economy. Let's look at the government's instruction for EPF to get the depositors reduce their monthly deduction from mandatory 11% to just 9% beginning Jan. 2009. If you wish to maintain at 11%, you have to submit a form to the EPF. The results shown that only 30% wish to maintain at 11%, with majority located in Johor and Selangor. The remaining 70% happily wish to have more disposable income every month. Don't they realize the truth?

The pretext: More money circulating in the market -> more spending -> help retailers gain more profit.
Ultimate result - more tax to the government paid by retailers.
The actual: More money to be spent by workers -> increase income eligible to be taxed at personal level.
Ultimate result - more tax to the government paid by workers.
Isn't this government smart or what? But then again, to borrow wisdom words from Aziz CFP - "suckers are born everyday".

For those who opt for 2% increase in monthly disposable income, very doubtful that the amount will go to savings. Where it'll go? To places such as this ad I got this morning:



Very tempting indeed. Once you bring a credit card, that's it. If I go to this kinds of sales, easily I'll spend hundreds, on the ground that such happenings rarely occur in your town. Sometimes I think thank God I don't live in KL. Levi's warehouse sales, Louis Vuitton clearance sales, and the likes can really drive me crazy. Wisest move - don't ever think of the dates.

Bottomline - Manage your money, or risk being end up as suckers.