HERE’S A FINAL TIP

Learning From the Global Financial and Economic Crisis

By Gov. Amando M. Tetangco, Jr.

When I’m asked what keeps me up at night, I say “on the contrary, I sleep soundly.”* Though I have to admit that during the critical weekend just before the European central banks came out with their concerted program, Bloomberg, CNBC, and CNN kept me awake. At that time, it was quite unreal that when you would retire, the equities were up, but when you wake up, they would be down.

Seriously, I sleep well knowing that the Philippine economy is in a better position to withstand any financial storms that come its way and that our policy framework at the Bangko Sentral ng Pilipinas (BSP), though not recession proof, contains the appropriate balance between the requisite discipline toward the price stability mandate and flexibility to respond to challenges.

On that note, I share with you three key lessons we all should take away from the current crisis:

Macroeconomic prudence. This entails building buffers during good times to provide resilience in bad times. The pursuit in the past of credible monetary and exchange rate policies, responsible fiscal management, and strengthened financial supervision and regulation has afforded the Philippines some cushion from the turmoil going on in the global economy.

Quick and decisive response. The difference between the current crisis and past financial crises was the urgency and swiftness with which governments and central banks responded with an extensive array of support measures to stabilize the financial system – liquidity provision, capital infusion, and enhancing deposit insurance. These have had some effect in terms of shoring up confidence.

Effective and timely communication and transparency. These are important to help shore up market confidence. This is manifested most profoundly in terms of better disclosure of bank exposures to troubled financial institutions, banks’ institutional arrangements for risk management, and information on the range of underlying assets of structured financial products. Timely communication to the public on recent developments, policy changes, and emerging risks to the outlook and their implications for the economy would also help reinforce credibility.

And my advice to financial players to cope with these challenging times:

Remember the basics. Understand your market and keep to standards. It is worth noting that the root cause of the crisis is the weakening of safeguards in carrying out a very basic lending institution responsibility – underwriting. Even with an expansionary monetary environment, the crisis could have been mitigated had lending institutions observed prudent underwriting standards and regulators undertaken appropriate or corrective oversight.

Make sense of every financial innovation in the market. What one does not understand, one should not dabble in. This may seem pretty rational but under benign market conditions, exuberance strips the market of any rationality.

Protect themselves from market downturns. Have sufficient capital in line with risk exposure, business strategy, and possible changes in the economic and market environment.

*This was excerpted from The Last Word from GlobalSource Philippines monthly report of GlobalSource, New York and Lazaro Bernardo Tiu & Associates, Inc., Philippines.

A central banker for 35 years, Amando M. Tetangco, Jr. has worked through the 1980s debt crisis, the 1990s central bank restructuring, and the Asian crisis. Now in his fourth year as BSP governor, he’s at the helm working through the global financial and economic crisis.

•     June 26, 2010: Personal Finance for Overseas Pinoys
Money Tips & Traps for OFWs | The Automatic Overseas Investor: How to
Save and Invest Regularly and Remotely | The Great Remittance
Challenge: Comparing the Best Ways to Send Your Money Back Home | Make
Your Hard-Earned Savings Last: Business and Investment Opportunities
for Pinoys Abroad
•     September 18, 2010: Money Issues for Boomers
Healthy, Wealthy & Wise: Personal Finance When You’re Over 50 | The
Boomer Catchup Plan: What to Do When You’re Saving Too Little, Too
Late | Not Just a Number: A Holistic & Fun Approach to Retirement
Planning | If There’s a Will, There’s a Way: Estate Planning
Strategies to Save Money and Keep the Peace
•     November 13, 2010: Family Finance 102
Chief Family Officer: Managing Your Family Finances | The Sandwich
Generation: Supporting Your Parents and Your Children at the Same Time
| Financial Advice for Solo Parents | Work From Home: Home-Based
Businesses You Can Start

MY MONEY STORY

The Coach’s Playbook

The popular basketball coach shares life and money skills

By Vicente “Chot” Reyes as told to Tina Arceo-Dumlao

It’s not easy being a professional basketball coach. Aside from motivating big and tall players to give their all, night after night, to chalk up a win for the team, you end up setting some of them aside to give them a pep talk on life, love and, sometimes, money.

Perhaps it is because we are together so much and go through the agony of defeat and the thrill of victory that we become a band of brothers, not unlike soldiers. And I, as their coach, am often asked for advice even outside the hard court.

When they ask me about what to do with their money, the first thing I tell my players, at least those who are interested, is that they should learn to work within a budget. It sounds fundamental and very basic, but you will be surprised at how many of the players do not know the value of working within a certain amount so that there would be enough for all the essentials, like food, shelter, education and, more importantly, savings. Some have not even heard of the concept.

I try to impress upon them the importance of having a budget because I do not want them to end up like so many others before them who once had a lot of money on their hands, only to lose it all after they hang up their jerseys.

I do understand why it is very difficult for many of these players to work within the confines of a strict budget and to live within their means because many of them came from very modest backgrounds. Since they had very little growing up, they do not know exactly what to do when they suddenly earn about P150,000 a month as a top-quality professional basketball player in the Philippine Basketball Association.

Many of them end up buying non-essentials like the latest model car. They do not even think of buying a house yet at the start maybe because they are not yet earning enough. The car is almost always the first thing they buy, which I think is also understandable because they no longer want to take public transport.

The danger though is in buying one expensive thing after another, those they do not really need like jewelry or designer watches, thinking that the money will never end, and that they will always earn what they are earning.

I try to tell them that they will not be in basketball for many years, especially with competition, the prospect of injuries and the very real possibility of being cut from the team when a better and younger player comes along. No one stays at the top of their game forever.

I also tell them to be wary of those who are just hanging around them because they feel that they can get a piece of their resources. Over the years, I have seen players who are faced with relatives, friends, and groupies who suddenly surfaced just because they have money. But to their credit, the players almost always take care of their families. If nothing else, they will make sure that they are provided for – education, shelter, and altogether better living conditions.
They can do more with their money though. This is why many teams invite speakers from insurance companies or real estate brokers to talk to the players – especially the veterans – about what else they can do with their money so they will not spend all of them.

The talks are very informal and with no strings attached. Our idea is to at least give the players an idea of the many possibilities open to them, that they must take advantage of opportunities while they are still earning well. I am happy that many of the players I have coached over the years have been good with their money, so good that they may no longer be professional basketball players but are still earning more than a decent income.

These are players like Jojo Lastimosa, Glenn Capacio, Alvin Patrimonio, and Jerry Codiñera who have long left the PBA but are still cashing in on what they have saved up and invested in during their playing years.
Some of them bought pieces of property. Others went into business while others just saved up because they never lived beyond their means. They did not commit the same mistakes as the others, like buying big houses or expensive cars that they really cannot afford.

Practicing what I preach

I do practice what I preach although I must admit that I have learned through trial and error with the help of my wife, Cherry. But just like I tell my players, we do work within a budget and we do live within our means. That is why we decided, for instance, against splurging on a big house. We still live in our townhouse but it works for us.

We also have a little set aside and have investments in some instruments. But one thing for sure is that we are well insured and we do have a good pension plan so that we won’t be a burden to our four children. We make sure that our retirement money is out of the way.
We are very hands-on in our approach to investments, which is why we do not put our money in trust funds or hedge funds, although we really do not have too much to put in those instruments.

What we have, we invest in our business, which is Essensuals Tony and Guy. We already have three branches and that is where our money is going. I also do not have too much money saved up for the children because I believe that is the surest way to making them lazy, especially since we have three boys. Aside from education and maybe a little something for them, we do not want to leave them with too much. They will have to work for their fortune themselves.
But what we do spend a lot on are vacations and travel together. Those are investments that will not give us any financial return but they are still investments that are truly worth making.

MY MONEY LESSONS

How to Play the Money Game

Chot Reyes teaches his players not only basketball skills but important life skills, including how to handle their money.

1. Start with the basics. The first thing Chot teaches about money is to work within a budget and live within one’s means. It may be very basic but a lot of people don’t even know this fundamental concept.

2. Save for a rainy day. Basketball players may be earning a lot of money in their prime but Chot warns no one stays at the top of their game forever. It applies to any other career. So don’t waste your income on expensive stuff. It’s okay to enjoy your money and especially to help your family but just make sure you save and invest wisely.

3. Make good investments. One good way to augment your income and transition to a new career is to start a business. Chot owns three branches of Essensuals Tony and Guy and takes his hat off to some veteran basketball players who have become entrepreneurs. Invest in real estate and education, and most importantly, invest your time with your family because that’s what truly matters.

SMART SPENDER>THE GOOD LIFE

Bite the Big Apple

New York City on a Budget

Text and Photos By Heinz Bulos

New York City is one of the priciest cities in the world, but you don’t have to spend a lot of dough in the Big Apple. There are plenty of cheap – and free – options for you.

Where to Stay

If you think you won’t find affordable rooms in New York under $100, think again. Hotel rates in the Big Apple are the most expensive in the US. Still you can find cheap hotel rooms. Prices of course vary per season; you’ll get the lowest rates during winter (January to March), and stay on weekends, which are often cheaper. It’s also best to check out downtown hotels, which are outside the touristy spots (but also happen to be located in more interesting and authentic neighborhoods.

Start with boutique hotels, small establishments with a few rooms but with great character. The Chelsea Savoy Hotel (www.chelseasavoynyc.com), close to the subway and the night life, offers rooms with a private bath and complimentary breakfast starting at $99. A popular boutique hotel is The Gershwin (www.gershwinhotel.com) in Murray Hill, which has a funky vibe to it. Most rooms have private baths that start at $109 but the cheaper dorm-like rooms start as low as $45. If you’re not too picky with sharing a bathroom with other guests, the Larchmont Hotel (www.larchmonthotel.com) in Greenwich Village offers great value at $90 up.

Another good option is to stay at motels. They’re not the kind you’ll find here in the Philippines. Motel chains offer decent rooms at good prices. Apple Core Hotels (www.applecorehotels.com) operate five hotels in Manhattan that offer excellent value, including Red Roof Inn, Comfort Inn, La Quinta, Ramada Inn, and The Hotel. Prices start at $89. A sister chain, Super 8, has a fantastic location in Midtown Manhattan, and offers similar features and prices as Red Roof Inn.

There are other alternatives like hostels, rental apartments, and inns, both in Manhattan and the other boroughs of New York City (particularly Brooklyn, Queens, and The Bronx), which are just a subway train or bus ride away.  The cheapest place to stay, of course, is at your friend’s or relative’s house or apartment. Being Filipino, it’s highly likely you have a cousin or college buddy living in the Big Apple.

I’ve stayed at a clean and cheap Super 8 motel in New Jersey, which was just a 15-minute bus ride to Midtown Manhattan, a swanky apartment at the Upper West Side owned by a friend of a friend, and at my uncle’s apartment in Queens, a short subway ride from Manhattan.

How to Get Around

Once you get settled in your accommodations, the next order of the day is to explore New York City. On your first morning, take a bus tour like the iconic Gray Line New York Sightseeing (www.coachusa.com/newyorksightseeing/), which is without a doubt the best there is. Yes, you’d look like a typical tourist on the double-decker bus, heckled by the occasional rude New York local, but the hop-on-hop-off tour will give you a comprehensive view of Manhattan – and, depending on the package, other boroughs – in a day or two. It saves you the time and effort of visiting popular landmarks by subway or foot. Get the $49 All Loops Tour, which is valid for 48 hours and includes 50 stops. There are four loops of 2-3 hours each, although you can just take the Downtown and Uptown Loops and skip the Night Tour and Brooklyn Loop if you’re pressed for time. Just hop off a neighborhood you want to explore further on foot and then catch the next bus when you’re done. There are other types of tours you can consider like bike tours, boat tours, and helicopter tours, but they’re either more expensive or inconvenient, but they do give a unique perspective of the city.

Once you’ve taken the bus tour, it’s time to try the two other popular modes of transportation – the subway and taxis. The MTA New York City Subway is certainly the fastest and cheapest way to go around New York City. One trip costs $2. Get the Fun Pass for unlimited rides for the day for only $7.50. Of course, a trip to the Big Apple wouldn’t be complete without taking one of the city’s 10,000 yellow cabs. It starts at $2.50 and then 40 cents for each fifth mile traveled (there are extra fees for idle time, peak, and night surcharges). You also pay 30 cents for every half-minute waiting in traffic, and 50 cents extra at night. Conventional tips are in the 15 percent range. But keep your taxi rides to a minimum, because the cost can add up.

If you like more intimate and unique guided tours, try taking a walking tour. Whether you want to explore a particular neighborhood or want a theme based on your interest – movies, food, shopping, architecture, literature, history, finance, etc. – there’s a walking tour available. Prices range from free to $180. Or contact Big Apple Greeters (www.bigapplegreeter.org), which offers a free personalized 2- to 4-hour tour of New York City for a family or small group.

The great thing about Manhattan is that it’s truly a “walkable” city. It’s best experienced on foot. It’s nice to get interesting facts and insider tips from walking guides, but if you research way ahead of your trip, you can get a lot of satisfaction – and surprises – if you explore on your own.

The best places to walk around are located in Downtown Manhattan (www.downtownny.com) such as South Street Seaport, the Financial District, Tribeca, Chinatown, Little Italy, Soho, East Village, and Greenwich Village. There are even street signs located at famous landmarks that give a brief background and even suggestions on where to go next. And since you’d likely be visiting the most crowded tourist spots of Times Square and the Theater District, you might as well explore other Midtown areas such as Chelsea, the Meat-Packing District, Flatiron District, Union Square, Gramercy Park, Murray Hill, and the Garment District. I’ve explored all these neighborhoods on foot with nothing more than a map and a list of landmarks I wanted to see and restaurants I wanted to try, and limped all the way from Midtown to Chinatown via the entire stretch of Fifth Avenue. The best thing is it didn’t cost me a cent.

Where to Eat

Manhattan is world-renowned for chic bars and expensive restaurants. You can skip those. One of the best ways to experience New York – as with any other big city – is to try the street food. Thankfully, NYC street food is nothing exotic or stomach-churning, although they’re not completely stale-and-dirty-free. Most street vendors serve up cheap, tasty, and filling hotdogs, barbecue, pretzels, shish kebab, and falafel. You’ll find a cart at practically every street corner.

You can get good eats at under $5. The city is well known for its coal- and brick-over pizza parlors. So you can get a good, quick, and affordable meal if you buy a pizza slice or two (they’re huge) from the likes of Patsy’s Pizzeria (www.patsyspizzeriany.com) in East Harlem where a slice costs just $1.50 or Famous Joe’s (www.famousjoespizza.com), where it’s $2.25 per slice. I tried the world-famous and historic Lombardi’s (www.firstpizza.com) in Little Italy, ordering a whole 14-inch pie for $20 (they don’t sell slices, and I didn’t mind). Or get a bagel, another famous New York staple, for around 75 cents, which is great for breakfast along with coffee. Sandwiches are pretty affordable too, and the most popular deli has to be Katz’s Delicatessen, made even more famous in the film When Harry Met Sally. Try the renowned and overstuffed corned beef sandwich for $10.50 or just a hotdog for $2.50. Speaking of hotdogs, you’ll find the ubiquitous Sabrett (www.sabrett.com) in street corners for a cheap lunch of a frankfurter and a soda. Sure it tastes the same as the ones in Manila, but there’s nothing like eating Sabrett hotdog in Manhattan.

The other must-eat in New York is steak. There are plenty of high-end steak houses in NYC but if you want really cheap but really greasy-good steak, try Tad’s Steaks, a fast-food steak chain with locations in Times Square. Food critics hate it but there’s always a long line. I got the lunch special for just $6.99, which comes with a thin but juicy steak, baked potato, garlic bread, and lots of onions and gravy.

Every big city has its own Chinatown, and New York’s Chinatown is teeming with cheap Chinese restaurants such as Dumpling House where you can order steaming noodles and fried dumplings for less than $3.

What to See

Manhattan is a picture-perfect city, with turn-of-the-century architectural wonders and modern movie scenery (yes, NYC is possibly the most filmed city ever). And you can visit most of these must-see tourist sites for free.

You can spend the whole day if you explore Central Park, an oasis amidst busy New York streets. But it’s worth the time. And make sure you go inside the majestic Grand Central Station (New Yorkers prefer to call it Grand Central Terminal) and just bring in the sights and sounds. Most likely, you’ll find yourself gawking in glitzy Times Square, which you have to experience during both day and night time.

Visit famous skyscrapers and churches such as Rockefeller Center, Chrysler Building, Flatiron Building, New York Public Library, Federal Reserve Bank of New York, the United Nations headquarters, Radio City Music Hall, City Hall, New York Stock Exchange, Yankee Stadium, St. Patrick’s Cathedral, and the Cathedral Church of St. John the Divine, among others. And while it costs about $20, you might as well as go up the observation deck of the Empire State Building to get a bird’s eye view of the city.

A nice place to hang out is the historic South Street Seaport (www.southstreetseaport.com). The waterfront is lined up with cafés, shops, restaurants, and sadly a shopping mall, but the renovated mercantile buildings and sailing ships add to its charm, along with wide open spaces, where you can enjoy watching street performers. You can also get a great view of Brooklyn Bridge here.

Another must-see is the Statue of Liberty. A ferry ride to Liberty Island and Ellis Island costs $12, and you can gawk at the Lady Liberty and explore the museum and the old facilities for free. If you have extra time, you can also visit Staten Island and get a nice view of the New York skyline on the free ferry ride.

What to Do

The thing about New York City is you can enjoy it without spending a dime. The Big Apple boasts of parks and museums that are open to everyone without an admission ticket. Visit museums, parks, and gardens that don’t charge visitors like the Forbes Magazine Galleries, National Museum of the American Indian, Goethe Institut, Museum at Fashion Institute of Technology, Sony Wonder Technology Lab, Brooklyn Botanical Garden, New York Botanical Garden, Staten Island Museum, American Folk Art Museum, Bronx Museum of the Arts, and Bryant Park. Keep in mind that some are free only on certain days, so make sure you check their Web sites and other online resources.

Or go to those that let you pay whatever you can afford! These include the Metropolitan Museum of Art, one of the greatest art museums in New York City, which has a “suggested” admission of $20. You can go to the Bronx Zoo and donate whatever you can on Wednesdays. Go to the Guggenheim Museum, Whitney Museum of American Art, or to the famous Museum of Modern Art (MoMA) on Fridays at night and give what you wish.

Of course, a trip to NYC is not complete without watching a show on Broadway. Forget paying the average ticket price of $100. You can get discounted tickets at 25-50% off full-price if you purchase same-day or next-day tickets at the TKTS booth. Skip the hour-long lines at their Times Square booth and head towards the South Street Seaport and Brooklyn locations, where the lines are shorter.

If you’re willing to take the risk, you can wait for rush discount tickets or standing room only (SRO) tickets, which sells for around $25, at the box office, when it opens or a few hours before the product starts.

You can snag the same deals if you plan ahead and buy through Broadway discount ticket newsletters and Web sites such as Playbill.com, TheaterMania.com, OnStageSavings.com,

HitShowClub.com, and NYTix.com.

On the other hand, if you want to watch concerts for free, summer would be a good time to go to NYC. You can go to free summer concerts at the Central Park Summerstage, Washington Square, McCarren Park, Union Square, etc. And if you’ve been watching morning shows on cable, you know you can watch famous artists and bands perform live for free on Good Morning America at Bryant Park and the Today Show at Rockefeller Center. To get a more authentic New York experience, just hang out at around the Times Square subway station during rush hour for local musicians.

New York is also the mecca for shoppers. For high-end and fashion-forward shops, simply walk the entire length of Fifth Avenue, Madison Avenue, Soho, and Nolita. Visit “destination” stores just because their famous or are attractions by themselves such as huge department stores including Barneys, Bergdorf Goodman, Bloomingdale’s, Macy’s, Henri Bendel, and Saks Fifth Avenue. Just window-shop. But if you’re itching to buy designer clothes shoes, head for the discount stores and outlets such as Century 21, Find Outlet, Gabay’s Outlet, Syms, and Loehmanns, where you can nab designer stuff at 30% to 75% off.

Go to specialty shops like Tiffany & Co. for bling; American Girl Place, Toys ‘R’ Us, and FAO Schwarz for toys; Apple Store and Sony Style for gadgets; Strand Book Store and Virgin Megastore for books and music; Adidas, NBA Store, and Niketown for sportswear. Toys and gadgets are typically cheaper in the US than in the Philippines, so this is a good reason to buy.

So as you can see, enjoying the Big Apple doesn’t cost an arm and a leg. You’ll find even greater satisfaction exploring and tasting the real New York City – along its streets.

EASY MONEY>VERSUS

Rent Vs. Buy

Oh the immortal conundrum – is it better to rent or buy your house, apartment, or condo unit? Most experts will probably advice you to buy and research has shown that home owners tend to have a higher net worth than renters. But as with many financial decisions, the answer is: it depends.