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Month: April 2013

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The Kurot Principle [Financial Wisdom]

What is the “Kurot Principle” all about? The “Kurot Principle” is truly remarkable.

Kurot. (As a verb, it means “to pinch”. As a noun, it’s “a small pinch”)

To better understand this, I will tell you a story of a person who had the intention of getting for himself a mobile phone worth Php1,000.00. Just so happens that he has Php100,000.00 in savings. Realistically, can he buy himself a mobile phone?

The Kurot Principle, Yes he can, because Php1,000.00 is a small pinch (a kurot) taken from his savings.

Now a second person wants to buy a mobile phone as well, also worth Php1,000.00. He has savings in the bank worth Php1,000.00. He goes right ahead and buys a mobile phone. So what would you call that?

A handful (dakot)– he didn’t just pinch off a little bit of money, he grabbed a handful of money!

OK now here’s a third person, who also wants to get a mobile phone for himself, but he has no savings whatsoever.  He goes ahead and buys the same Php1,000 mobile phone anyway.  So what do you call that now?

Debt (utang). He is now in debt.

So the question is: which of these three principles are you currently using as far as your financial lifestyle is concerned: the pinch, handful, or debt?

Is it any wonder why we usually find ourselves penniless or even buried in debt? Most of the time, we don’t pinch; we grab money by the handfuls. Or we borrow money, leaving us in debt. If you want to be rich, you have to learn to pinch instead. If you must buy something, just pinch a little bit off, not grab handfuls or borrow. Understand that if this is what you do, you can be assured that you will eventually live rich.

To understand this, let’s observe the lifestyles of the richest social group in the Philippines: the Chinoys, or Chinese-Pinoys. Why do you think they live such prosperous lives? Because they practice the Pinch Principle. And us regular Pinoys? We practice the Handful Principle.

The Mindset of the Pinoy and Chinoy Businessman

There was once these two businessmen who started their own enterprises: one was a Pinoy, and the other, a Chinoy. They both started off with a working capital of Php100,000.00.

After the first month, our Pinoy business owner made a profit of Php10,000.00 What do you suppose he bought for himself? A mobile phone. Our Chinoy business owner also made a profit of Php10,000.00. What do you suppose he did with this money? He added it to his working capital.

So how much does the Chinoy businessman now have in capital? Php110,000.00. Meanwhile, the Pinoy businessman still has Php100,000.00, but he does have a shiny new mobile phone! That ain’t so bad now, is it?

Philippine MoneyLet’s continue with our story. After a few months, their businesses are doing rather well. Our Pinoy businessman made Php50,000.00. When any Pinoy has this sort of money, what do you think he does? He goes out and splurges on a home theater system with a DVD player and an LCD TV! Our Chinoy friend also made Php50,000.00, but does he do? He adds it to his business once more. So how much is his working capital now? Php160,000.00!

Fast forward a few more months: the Pinoy businessman makes Php150,000.00! When a Filipino has this sort of money, what does he buy? Either he treats himself to a second-hand car, or he puts a down payment on a brand-new one. When the Chinoy businessman has Php150,000, what does he do? He puts it back again into the business! So much does he have in total now? Php310,000!

Do you see what we’re getting at here?

Every month, both businessmen make the same amount of profit. Our Pinoy friend makes some money, then goes ahead and buys new stuff. In the end, his business still works on a Php150,000.00 capital. On the other hand, our Chinoy businessman makes some money, then puts that back in to his business.

Eventually, the Chinoy entrepreneur was able to save up Php1,000,000.00! What do you suppose he does next? He approaches one of his suppliers and said, “Hey, if I buy a million pesos worth of inventory from you, will you give me a discount?” And what do you suppose the supplier says? “With that sort of volume, sure I’ll give you 5% off our regular rates!”

Our Chinoy friend takes it a step further: “Hmm. What if I give my customers a 3% discount, and I keep the 2% savings for myself?” This only means that he can lower his prices a little bit more.

It just so happened the respective shops of our Chinoy and Pinoy business owners are right next to each other’s.  They sell the same products, offer the same services.  Given the situation, where do you suppose would you make a purchase?

The Chinoy’s, of course. Because it’s cheaper. And what do you suppose would happen to our Pinoy businessman? He’ll start losing business. And then what do you think would happen? He’ll start selling off some of his stuff to cover his expenses. That car he bought for Php150,000? He’ll start peddling it around. Our Chinoy entrepreneur is pretty liquid, but he makes an offer, and haggles the price down to Php80,000. And because our Pinoy friend needs the cash right away, he sells the car at a loss. Now the Chinoy businessman got himself a car at a bargain!

After a few months, the Pinoy’s Php80,000.00 is about to run out. So what does he do next? Sell off his home entertainment system, this time for only Php20,000.00. Our Chinoy friend also snatches it up. And then eventually, the Pinoy business owner sells off his mobile phone. For how much? For only Php2,000! Soon, the Pinoy decides to close up shop. Most likely, he’ll end up working for the Chinoy.

And this, pretty much, is the story of our country.

There used to be a time when the Pinoys were more prosperous than the Chinese. How do you suppose that changed? What seems to have been the problem here? We Pinoys are great at grabbing money by the handfuls! The Chinese are great at pinching just a little bit off their cash!

You know, we used to have a participant before who remarked, “Sir, that isn’t all true! I know a Chinoy, he drives a BMW. That’s a P5 million car! Is that a “pinch”?” In all likelihood, yes. Yes he did practice the Kurot Principle. When he bought that new car, he probably had Php100 million in savings! So that’s just a pinch! Are you still with me?

A Hand-To-Mouth Existence

Where do you suppose you’d find people living a hand-to-mouth (isang kahig, isang tuka in Filipino) existence? The squatters area? The depressed neighborhoods of Manila? While that seems to be the usual connotation, if you really want to see these kinds of people, look no further: Makati, Ortigas Center– you’ll find them there.

What do I mean? If you don’t get a paycheck this month, do you think your family will survive? If you don’t have a credit card now, or if you lose your job this very moment, how many days do you think would your family last, living a decent lifestyle? The truth is: if you lose your monthly paycheck, you’re not going to make it.

For Chinoy businessmen, even if they don’t make a profit at first, they will eventually lead a prosperous lifestyle. Why is that? Because they’ve already put in the hard work for so many years, and they’ve learned to just pinch a little off their rewards. Which is why so many Chinese-Filipino families now reap all the benefits. As for the regular Pinoys, for a lot of us, if we don’t work, we don’t eat.

In a way, this is a painful realization. Even as we grow old, we are still in that perpetual state of working and working. How many Filipinos 60-years-and-up do you think are there still making a meager living? Don’t you think it’s about time, starting today, to put in all the hard work, and avoid grabbing your rewards by the handful? Delay your gratification a little.

You know what’s a more painful realization? One day, you’ll find yourself wanting to work, but cannot. You are already old? Why? Because you’ve led such a decadent lifestyle when you were a child. You wasted your youth and good health back then on endless partying and other vices.

Here’s a question: is it wrong to buy yourself good things? The short answer is “no”. As long as you’re just pinching a little off the top. If you see your colleague sporting a new pair of Nike shoes, don’t be too judgemental. Who knows? Maybe he did just pinch a little off his savings. At the end of the day, what is happening to other people is not important. What’s more important is what is happening to you.

The Bible says in 1 Thessalonians 4:11, “Make it your ambition to lead a quiet life. You should mind your own business and work with your hands, just as we told you.”

(Excerpted from Vic and Avelynn Garcia’s book entitled Kontento Ka Na Ba Sa KaPERAhan Mo?)

Photo by Liu Yangfeng. Shared on Facebook by Maribel Loyola-Generoso. Original post “Kurot Principle” by the good people over at CBN Asia, and translated into English by Renzie Baluyut.

A Lesson In Socialism [Things That Make You Go Hmm..]

This one came from a post being shared around on Facebook. It’s originally from Kathryn Kimbrough of Topeka, Kansas, entitled “Is This Man a Genius?”

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.

lessons in socialismThe professor then said, “OK, we will have an experiment in this class on Obama’s plan”. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A…. (substituting grades for dollars – something closer to home and more readily understood by all).

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.

The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F.

As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.

To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed.

These are possibly the 5 best sentences you’ll ever read and all applicable to this experiment:

1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.

2. What one person receives without working for, another person must work for without receiving.

3. The government cannot give to anybody anything that the government does not first take from somebody else.

4. You cannot multiply wealth by dividing it!

5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

Can you think of a reason for not sharing this?

Neither could I.

Your Screen Will Explode With Cuteness!

Here’s another of those videos being shared on Facebook.

Nothing thought-provoking here, just a little over 6 minutes’ worth of adorable furry goodness. No idea who’s originally put it together now, but hey, whoever it is, we’d all like to thank you for splicing together this Frankenstein video of cuteness!

I gotta admit, I’m a sucker for cute little animals– kittens all the more so. So yes, this short clip definitely got my attention.

Again! Watch it again!

Everytime you watch it, all the stress you accumulated these past few days just washed away, like rain under a Black Hole Sun. OK maybe not, but it still makes for great internet viewing, yeah?

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