Today is a public holiday; so you’re probably at home chilling. So, look around your home. Can you spot any item that has not been used for months, or even years? Do same when you get back to your office on Tuesday. Almost every home or workplace has a considerable amount of clutter accumulated overtime.
Recall that we previously discussed how to plug your spending leaks. Now, eliminating clutter is an entirely different ball game. Note that not only does clutter take up space, make your environment look untidy, and get you depressed (even if you don’t realise it), they also tie up your cash.
Wealth in a rot
Just a few days ago, an acquaintance of mine ran out of space due to all the stuff he’s been keeping in his home. He tried moving some of them to the garage, but it was also filled to the brim – the horror of it!
Note that most of these items had not been used for over ten years. So, he decided to see if he could get some sold. Luckily, once he made his intentions known, it wasn’t difficult to find buyers.
At the end of the day, although he didn’t sell up to one-fourth of the contents in his garage, he made a mind blowing 100, 000 naira. This is good money that someone would have thanked him dearly for, and used to settle debts or even start a thriving business. But for ten years, it was trapped in a garage.
Get rid of clutter
It is important to note that accumulating clutter is a financial sin. Therefore, in this article, we are going to discover the different types of clutter that exist in your living space. This will help you decide what to keep, sell, donate, or toss.
We are also going to look at what you can do to avoid building them up in the first place.
Here are the different types of clutter that you may have in your home or office. It’s possible that you don’t even recognise they are there. However, by identifying them, you would have taken the first step towards getting rid of them, and also avoid accumulating more in the future.
- Useless items:
These should be the first to go. They are items that cannot be sold or donated and should simply be thrown away. Old books you used in college or the university, newspapers, magazines, worn-out shoes, clothes, and irreparable electronics and furniture are just a few examples.
- Aspiration clutter:
It’s only natural to want to learn new skills or take up new hobbies. But sometimes, after we’ve spent the cash to purchase the necessary tools or equipment we require, we end up not finding the time to see these dreams through, or we quit after a while.
For some, it could be a musical instrument, skating shoes, or new office equipment that never left the packaging.
It could also be spare auto parts that can easily be sold but you hang onto them with the thought that they may come in handy at a point. But most times, you forget you have them and buy a new one. It could also happen that the need for them never comes, so you leave them in storage, even after you no longer drive the said car.
Therefore, the best way to go with this kind of clutter is to get them sold.
You may be thinking, “Why would I do that? After all, it’s still in perfect shape and I may decide to pick it up again one of these days”.
That’s a good argument. But, just like the case of my friend, it may still never get used for many years to come, and before you know it, will go out of style or even expire.
If it’s something you can easily buy again, then it’s best to get it sold.
- Bargain clutter:
These include items that you don’t really need but because they were on sale, or came attached with a free gift, you found yourself not able to resist. Before you could tell what’s what, your hand was already in your pocket, pulling out your wallet.
Watch out for bargain clutter. Some, you may not be able to sell, or even if you could, may not fetch a very reasonable price. The best way to get rid of such clutter is to donate them.
- Sentimental clutter:
This is the hardest type of clutter to get rid of. Letting go of them may seem like betraying a loved one or your fondest memories. So, what do you do?
- Decide whether it’s worth keeping: for some of such items, it’s not really that you need them or that they serve any particular purpose. It’s usually that it reminds you of a time, place, or person.
If it means much to you, then there’s no need getting rid of it. But in most cases, you would be better off to dispose of it.
- Pass it on or donate it: some sentimental items that you don’t use can be of great value to a friend or family member. Rather than keep it, give it to someone who would appreciate it.
- Remake or re-purpose it: if you have a sentimental item that’s not particularly usable, find a way to re-purpose it, if possible.
- Abundance clutter:
This is often the most common kind of clutter. You may buy things that you don’t put to use immediately. Before you know it, you forget you got them and enter the market to purchase the same item again.
If you stock products that go unused, you’ve got a case of abundance clutter on our hands. It could happen when you are used to buying things in bulk.
It could also be that you just got a raise, so you decide to buy yourself a brand new TV. You set it up and put away the old, but still functional one. Fast forward 5 years later, the old TV is still in its lonely corner collecting dust.
How does clutter cost you money?
- Maintenance costs:
Let’s take as an instance; you have a car you no longer drive but still keep. To keep it from degrading, you have to maintain it once in a while. Other times, it may sit there and rot over the years, or even get vandalised.
Why not consider renting the car (in which case, you earn some revenue from it) or simply sell it off, rather than allow it to depreciate gradually as years go by, or cost you money to maintain.
As you accumulate clutter, you will notice that your home or office begins to look untidy. An untidy environment can lead to depression, reduced morale, a drop in productivity, or loss of customers.
- Purchasing duplicate items:
When you forget you have a particular item or can’t find where you have kept it, the only option left is to purchase it again. Re-purchasing items is a waste of time and money.
It may seem like the cost is negligible. But when you add up the cost of all such items, you will discover it really adds up to something. Bringing in more stuff also means perpetuating the clutter problem.
- Piling up valuable items:
You tie up useful cash when you accumulate clutter. Imagine the things you can achieve with the money. You could save or invest it and earn yourself more money.
You might even be in need of money to pay bills or settle a debt at the time but you’ve got valuable cash imprisoned as clutter.
- Clean up costs:
There may come a time when you would have to relocate. It will take ages before you figure out what to do with all the clutter you have gathered over the years. You may decide to still hold on to all of it, in which case, you have to shoulder the costs and the time to get them sorted out and moved.
Things would have been a whole lot easier if you only have to move items you use regularly.
- Keeps you disorganised:
Because you have so much clutter lying around, you will be prone to looking for things all the time. Maybe you would blame the kids or your wife or husband or workers during such moments.
Having clutter keeps you disorganised. Has there ever been a time when you had to pay a late fee because you couldn’t locate a borrowed library book or perhaps a sensitive document amidst all your clutter?
How to avoid clutter
Now that you’ve gotten rid of items you don’t use, how does it feel? Freeing, right? Let’s now see what you can do to keep them from piling up again in the future:
- Adopt the 1 item in 1 item out rule:
Each time you bring in a new item into your home, you have to decide which existing item you will get rid of. This might not be the easiest rule to stay true to, but it is a sure way to keep clutter from building up.
It will also help you think twice before you decide to purchase any new stuff.
- Before you make a purchase, wait a day or two:
Before you buy anything that won’t be considered an essential, give it a day or two. Don’t rush to make the purchase simply because you have the cash. Allow yourself time to think over it. You may find that you have changed your mind after a few days has gone by.
- Ask or give gifts of experiences:
We give and accept gifts so as to show affection to our loved ones.
As a man, during the holidays, you may be gifted yet another wrist watch or a pair of trousers. You may also decide to buy some new clothes for your wife (and perhaps she already has many she probably doesn’t wear). It could also be that you buy a few toys for your kids.
While all these are thoughtful gifts, they are the perfect way to pile up clutter. Why not consider instead, taking your wife on a lovely night-out? Or register your children for a skill acquisition program that will help them in the future? The world we live in today is no longer about the certificates you possess but the skills you can deliver.
- De-clutter monthly:
Even after you have taken proactive steps to see that you don’t accumulate clutter, one or two things can still pile up over time. So, rather than allow this to continue over months or years, make out time to sort out and organize your stuff every month (commonly known as clean-up or spring cleaning). This way, you can eliminate items that are no longer of use to you before it gets difficult to manage.
No matter your financial status, clutter is a real thing. Even the most humble of homes or business startups can still find some clutter lying around.
If you want to take conscious steps towards financial freedom, you have to begin today to avoid and get rid of clutter.
For businesses or individuals that are thriving financially, remember there are people in need. Always make it a point to give back to society. Donate your clutter today or sell them and use the money to help someone in need.
We hope this content has been of use to you. Cheers!
DEVALUATION: CBN updates website to official rate of N360/$1
The central bank of Nigeria has devalued its official exchange rate from N307/$1 to N360/$1.
Just as Nairametrics reported, the Central Bank of Nigeria has devalued its official exchange rate from N307/$1 to N360/$1. The apex bank has now reflected this change on its website signaling a confirmation. The bank is yet to issue a press release to this effect.
The CBN has now officially devalued by 15% moving from N307/$1 to N360/$1. Depreciation at the “market-determined” I&E window is 5% having moved from N360/$1 to N380/$1
Devaluation: Nairametrics reported yesterday that the Central Bank of Nigeria (CBN) sold dollars to banks at N380/$1 in a move signifying a devaluation of the currency. Banks trading at the Investor and Exporter (I&E) window bought dollars at N360/$1 from the CBN on Friday, March 20, 2020. The I&E window is the official market where forex is traded between banks, the CBN, foreign investors, and businesses. The central bank typically buys or sells in the market as part of its intervention program.
Nairametrics also got hold of a letter from the CBN to banks informing them of the new exchange rate for dollars flowing from the International Money Transfer Operators (IMTOs). According to the CBN, IMTOs will sell to banks at N376/$1 while banks will sell to the CBN at N377/$1. The CBN will sell to BDC’s at N378/$1 while the BDC’s will sell to end-users at “no more than” N380/$1.
Single Exchange Rate: A report yesterday also suggested that the CBN also planned to move to a single exchange rate policy for determining the price of the dollar. A senior central bank official who does not want to be identified, said, ‘Today we allowed the rate at the importer and exporters (I&E) window to adjust in response to market developments.’
The central bank has now made an apparent u-turn after it had initially that the “market fundamentals do not support naira devaluation at this time” detailing reasons why it did not need to devalue.
Falling oil price: Oil prices fell to under $20 on Friday before climbing back up to settle at $23 per barrel. Nigeria’s Bonny light trades at $26 while the benchmark Brent crude trades at $29 per barrel. In response to the crash in oil price, Nigeria’s announced a cut to its 2020 budget by N1.5 trillion as it faced the reality of a potential drop in its revenues. Nairametrics also has information that state governments are getting jittery about their ability to sustain salary payments as a reduction in their federal allocation “FAAC” is anticipated.
Investment options for salary earners
Investment options for the salary earners
#Investing #Entrepreneurs #Investment #Salary #Wages
Recently, one of the readers of my articles asked to know what investment options are open to salary earners. A salaried individual is like everyone else except that he or she has a fixed monthly income. This implies that their investments and expenses have to be managed strictly according to their fixed monthly income.
Since salary is assumed to be the only source of income for the salaried, it is advisable that such an individual fortify himself financially before investing so that adverse investment performance will not have untold effect on him and his family. Therefore, if you are a salaried prospective investor, you need to:
Get life insurance
Most families in Nigeria are single income families so much such that if anything bad happens to the income earner, the family gets shattered, at least financially. Again, given the risks inherent in capital market investments, it is only prudent to have a life insurance as a first step in one’s investment journey. It is very baffling to see many investors very deep into the market, yet they do not have life insurance.
[Read Also: Understanding the risks in bond investing]
Life insurance is and should be a basic part of any financial plan. Life insurance is a protection for loved ones against financial hardship arising from the death of a breadwinner. This is even more important today than ever before with high cost of funeral expenses, college education and medical bills. So, the first investment option for a salaried individual is to get a life insurance.
Prepare for financial emergencies
Life is full of surprises, emergencies do happen, jobs are lost without notices, and even good investment opportunities emerge sometimes suddenly. There is, therefore, the need for a cash reserve to help weather the financial storms and emergencies when they come calling.
Cash reserves do not only provide for emergencies, they also help to ensure that investments are not liquidated prematurely or at inopportune times to cover unexpected expenses. There are no hard and fast rules on what the exact amount of the required cash reserve should be, but most financial experts and planners will advise that an amount that equals about six months of living expenses be set aside.
So, as a salaried person, your next investment should be to have a cash reserve. A cash reserve should not necessarily be in a savings account or under the mattress; it could be in an interest-bearing money market account, money market mutual funds with low to zero luck-up period or another form of very liquid investment that is readily convertible to cash without loss of value.
[Read Also: Understanding the risks in bond investing]
Know your risk appetite
As a salaried and fixed income individual, your risk appetite is most likely going to be low as well as your risk tolerance, although your extended family profile could change all that. You need to know or understand your risk tolerance before you engage in any capital market investment.
Your risk tolerance will and should drive the type of investments you go into. Your risk tolerance depends on your psychological makeup, your current insurance coverage, presence or absence of cash reserve, family situation, and your age among others.
Talking about family situation, it is reasonable to think that a married individual whose children are still in school will be more risk averse than an unmarried person. On the other hand, older people have shorter investment time horizon within which to make up for any losses. the reason for this is because the older you get the less time you have to work to recoup on losses.
In that case the risk tolerance of an older man will be less than those for younger folks. Again, the more cash reserve and insurance coverage you have, the more your propensity to take risk. Now having known your risk tolerance based on the underlying factors, you can then define your investment objectives
[Read Also: Important tips on how to profit in a bearish market]
Set your Investment objectives/goals
Having met those essentials above, you are now ready for a serious investment plan or program. A good investment plan starts with investment objectives. Investment objectives are the force that determines what you invest in. Investment objectives range from capital preservation, to capital appreciation and constant income generation.
Capital preservation as an investment objective implies that you, the investor, aim at minimising the risk of loss by maintaining the purchasing power of your investment. So, if you are risk averse or you will need money from your investment soon for children’s education or for building a house or you are nearing retirement, this should be your objective.
Investors whose aims are to see their investment portfolios increase in real terms over a period of time are better suited for capital appreciation as an objective. This is better for investors that are more risk tolerant and those with more potential to recoup on losses along the way.
If you are already retired or nearing retirement, and therefore depend on your retirement plan supplemented by investment income, you need an investment that generates income rather than capital gains. In that case, your investment objective should be current income generation. It is always good to have investment goals stated in terms of risk and returns.
Decide on asset allocation
Armed with the knowledge of your risk appetite and investment objective, you are now ready to decide on what to invest in, and how much to invest in any asset class. This takes you to asset allocation decisions. Asset allocation involves dividing an investment portfolio among different asset classes based on an investor’s financial requirements, investment objectives and risk tolerance.
A right mix of asset classes in a portfolio provides an investor with the highest probability of meeting his/her investment objectives. Asset allocation is the most important investment decision an investor can make in a portfolio because it demonstrates an investor’s understanding of his or her risk preferences and return expectations.
It is good to strive for a diversified portfolio. Unfortunately, the Nigerian market does not provide a lot of asset classes for optimal diversification, but diversification can be achieved across sectors or industries within the few asset classes in the Nigerian stock market.
Decide on how to invest
There are different ways to invest in the capital market. You can invest directly by making the stock selections by yourself, thanks to the online stock trading platforms that abound the world over. This implies that you have what it takes to conduct the required research and analysis of the companies whose shares or stocks you wish to buy.
[Read Also: How I Would Invest My Mother’s Retirement Funds]
It also implies that you have what it takes to know when to sell or add to existing positions. Another method is to have someone “do the heavy lifting” for you. In this case, that someone, often times called fund manager or portfolio manager, does the research and analysis and selects shares that suit your investment preferences, investment objectives, risk tolerance and appetite as well as your investment time horizon.
This route is most suitable for investors that lack the knowledge and time for the required research and analysis. If you decide to go this route, mutual funds are the best bet for you.
Atiku kicks as Buhari spends $3.7 billion in foreign debt service since 2015
The Buhari led government has spent about $3.7 billion in foreign debt service since 2015, one of the highest from any democratically elected government. The highest single-year foreign debt service was in 2006 at $1.79 billion.
About 68% of Nigeria’s foreign-denominated debt servicing is in commercial Eurobonds issues over the last two years. The loans range between 5.1% and 9.2% per annum. Nigeria’s external debt stock stood at $27 billion in June 2019.
Rising debt service: The Buhari administration has so far spent about $1.1 billion in foreign debt service this year. In 2018, the government spent about $1.4 billion in debt service, more than 3 times the $444 million it spent servicing foreign debts in 2017. The rising cost of debt service is a direct attribute of the government’s reliance on foreign loans as a means of funding government expenditure.
Foreign Loans: Nigeria’s fallen revenue following the crash in oil price has allowed President Buhari to rely mainly on foreign loans to fund government expenditure. As of June 2015, Nigeria’s foreign loans were about $10.5 billion mostly made up of multilateral and bilateral loans.
However, by June 2019, total foreign-denominated loans were $27 billion with $10.8 billion made up of Eurobonds. Commercial loans which include Eurobonds and Diaspora bonds make now make up about 42% of total foreign borrowings.
Critics of the government have complained about the government penchant for debts believing that it could put the future of younger Nigerians in jeopardy. Supporters of the government, however, believe the borrowing was necessary to invest in critical sectors of the economy particularly infrastructure.
Recently, Director-General of MAN, Segun Ajayi-Kadir expressed worry about Nigeria’s rising debt.
“….the rising debt profile of Nigeria continues to be a cause for concern, especially the capacity of government to effectively service it and, at the same time, meet the bursting needs and aspiration of the citizenry going forward.”
“Already, our budget projections for 2020 anticipates a debt service sum of 2.45trillion, an amount higher than the 2.14 trillion earmarked for capital expenditure.
“And even though our debt-to-Gross Domestic Product (GDP) ratio, which currently stands at 28 percent, is still below the average in Africa, our revenue-to-GDP ratio remains low.”
The Finance Minister Zainab Ahmed however, believes the current debt profile is sustainable, comparing it to our GDP.
“Currently, Nigeria’s debt is at N25 trillion; that is about $83 billion. And at $83 billion, we are just at 18.99%…so 19% debt to GDP. I hear people say Nigeria has a debt problem. We don’t have a debt problem. What we have is a revenue challenge and the whole of this government is currently working on how to enhance our revenues, to ensure that we meet our obligation to service government as well as to service debt.”
Former Vice President and defeated PDP Presidential aspirant, Atiku Abubakar during the week piled criticism on the government’s borrowing.
“I have said it time and again. The business of government is too serious to be left in the hands of politicians. We must all ask questions because if they throw away the future, it is not going to be their future they are throwing away, it will be all our futures.
“The fact that Nigeria currently budgets more money for debt servicing (N2.7 trillion), than we do on capital expenditure (N2.4 trillion) is already an indicator that we have borrowed more money than we can afford to borrow. And the thing is that debt servicing is not debt repayment. Debt servicing just means that we are paying the barest minimum allowable by our creditors.
What this means: Nigeria’s rising foreign debt profile should be a worry to investors and businesses and must be watched closely. The country’s ability to repay these loans will continue to be harder as it increases especially now that it is costing about 9%. The immediate risk for investors is the exchange rate which could be the first to suffer should the government struggle to repay its loans.