If You can Help It Avoid Using Credit Card for Deferred Payment or Cash Advance

                             
               

If you can help it, avoid use of credit card for deferred payment or cash advance.  The interest being charged is 3% basic plus penalty of 4% of  total of 7% monthly or 84% on a nominal basis.  That nearly l00%.  I did not realize this when I did not pay the annual fee for a well known credit card company for the credit card I was no longer using.  The Pl,500 fee became P3,000.00 in a matter of months.  It was good that the credit card company relented when I threatened to go viral on them.


So some tips:

l.  If you can buy the things you need only in cash;

2.  Plan your purchases;

3.  Remember the movie "Shopcoholic"

4.  Limit your credit card to just one;  if you will use it, use it as debit card.

5.  Pay on due date;  never put your restaurant bill on deferred payment;  that is foolish

6.  Wait for the zero interest deals.  Caveat:  those that are put on O deals are going out of style or old stocks.

7.  Watch where your credit card goes when you hand it over to a waiter of hotel  reception. I was hacked for P97,000 in UK when in fact I was in Cebu.  And the credit card company told me that hotel has been traced to be the source of many hacking.  So avoid that HotEl

                    


8.  Avoid  buying online using your credit card.  Even if they say the lines are secure, you can be hacked. still.  You can even learn how it is done.

How to hack credit cards.

How a Public Utility was Acquired for Nothing

This is a true story.  It is very ingenious, smart, strategic and entrepreneurial.  A public multimillion public utility company was acquired from a foreign company by a local tycoon for nothing.

This was a kuwento by Prof Dudes Echauz, my professor on FinMan thirty years ago.

At the end of Laurel Langley agreement, the foreigners beginning l974 could no longer own public utility companies:    broadcast, advertising, energy companies in the Phil.  Thus the foreigners had no choice but to divest and sell to Filipino investors.

The deal

The deal:   20% d/p, balance payable in l0 years, the shares would have to be transferred now (to comply with the law)

Here is what the Filipino did:

l.  The tycoon borrowed money from a commercial bank the amount needed for downpayment.  He could have put up a collateral or could have been unsecured because of his credibility.

2.  The shares of stock from the American company on the basis on DP, and a contract.

3.  The tycoon established a holding company to hold on to the share and execute the contract

4.  The holding company pledged the share of the tycoon to take out the personal loan of the tycoon for the downpayment

5.  The holding company went public to produce money for:  cap ex and to pay for the loan incurred in 4.

6.  The amortization for the l0 year contract came from the earnings of the public utility company.  Smart.  Neat.
                    



We benchmarked this to buy a memorial park in the south.  The owner was a widow was old and did not want any more head ache.

 

Using Tax Laws to your Advantage to Create More Wealth

                  


I know of one businessman who was very smart.  Knowing that if he sells his company on private, would mean that he would pay l0% of the first Pl00,000, and 20% on the succeeding, he went public before disposing.

The reason for going to Stock Exchange.

l.  Going public is an exit strategy.  You want to liquify your holding and make you wealthier.

2.  But the main compelling reason is the tax angle.  Going public means you pay only l/4 of l% for capital gains.  Even if you pay the broker fees, say 2 to 3%, you are still far ahead of the capital gains tax

Savings on the estate and/or donor's tax.

Ever wondered why there are so many big corporations have foundations.  It is not just about being a do gooder or corporate citizen.  It is about wealth preservation.  A foundation as allowed by BIR (before it was NEDA l-8l) to do CSR and other social entrep projects and be tax exempt from donor's and donees tax.  Now if you have an estate, when you transfer the same to your heirs, you can do any of these things:

       l.  Simulated sale  (pay only capital gains of 7.5% to l0%)

      2.  Donate to heirs and pay both the donees and donor's tax (this is hefty too)

      3.  Or pay estate tax of up to 35% when there is a will, or the principal dies intestate.

What happens if you donate this to the foundation?  How much do you pay?

Nada.  Nothing.  Zero.

 

Would you be surprised if some major companies are now owned by the foundation.?

How about control?   You simply appoint yourself and your children to the foundation (they will earn salaries too).  You and your foundation being a major stockholder, can still elect your own board of directors.

Pretty neat. eh....