The Budget and FATCA

This week will be an interesting week, as our country has two game-changing events taking place simultaneously on the same day. The first is the fiscal budget of the year 2017. This budget is an interesting one as some have indicated that the government is using less money than the previous. It will outline taxes, their financial strategy and the allocation of finances to the various sectors of the economy. Media sources already indicated that gas prices will increase and once increased the prices of everything increases. We shall have new information regarding new taxes such as the online tax to curb the outflow of foreign exchange the country has. The implementation of old taxes such as the property tax would begin January 2017. Products that has vice attached to it such as gambling, cigarettes and alcohol will have a price increase or will be taxed as the case with gambling.

 

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FATCA and the upcoming Fiscal Budget 2017 will soon be affecting the purchasing power of your dollars!

 

The other event is the Foreign Account Tax Compliance Act (FATCA) legislation that must be passed on that day. If delayed or ignored, at best, performing online or USD transactions will cost 30% more. At worst, the US banks that facilitate these transactions can cut off Trinidad and Tobago starting a financial crisis. It will be utter madness to pay banking fees for foreign exchange transactions + new online tax fees + (at best scenario) 30% withholding fee because the politics of the day did not see the far-reaching effects of FATCA.

I am humbly suggesting dear readers, to perform the following in the event of a financial crisis that could happen if one is implemented (budget) and one is not (FATCA):

  • Withdraw at least $1,000.00TTD from the bank as a safety precaution. In times of financial crisis, banks have the tendency to seize money of account holders to protect itself.
  • Purchase all your essentials before the 30th, as the budget will certainly increase all prices of goods and services.

Protect yourself from the harshness of budgetary measures or the mishandling of the Foreign Account Tax Compliance Act.

Having Perspective

Over the past several months, I have been speaking to my co-workers, friends, allies and a few strangers about the financial situation internationally and how it is affecting us in our country. Seventy percent of them displayed verbal and physical signs that they would prefer complacency and willful ignorance of the problem. Twenty-six percent of them agreed that something was wrong but are taking no proper actions against it. The rest agree and are taking the steps to defend themselves. If you live in the twin island state of Trinidad and Tobago, let us take the time to understand what may lie ahead.

A fuel hike to reduce the gas subsidy bill the government pays – The price of all goods and services will be increased (food, transportation, clothing, bills you pay, etc.) Bad driving habits, driving long distances and having a bad view of a car will cost you in the long run.

 

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Online Tax will be nice to some of the local businesspeople who love to “make a killing” with their prices

 

Implementation of an Online Shopping Tax – Seeing this will affect all of us it means that prices of most goods and services will increase again (as we do not manufacture most of the goods we crave for). If you want something different, fancy or just not located in Trinidad and Tobago, you will have to pay more to import it.

Implementation of Property tax – Depending on where you live, it will cost you more and rent may rise as a result.

Luxury taxes, especially on alcohol and cigarettes, will increase – The cost of hanging out, parties, fetes and carnival will increase. The people you associate with and your core views on “what makes a hangout/celebration excellent” will determine how much this affects you.

 

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Surely someone in our country is going to die because of this

 

Taxation on casinos and gambling machines – cost more to gamble. This tax may increase illegal gambling facilities and murder rate (when the gambling goes sour)

Increases in NIS taxes – less take home pay to survive.

With these things looming in the air, do you still think that we should sit and do nothing about it? Do you think these things will be “going away” anytime soon? Is investing in bitcoin and other assets still a bad idea? Lastly, what are you doing to protect yourself from the problems that exist and will be created when these things are implemented? Take wise action, for it is you in your older years and your children that will suffer or benefit as a result!

Sources

http://www.cnc3.co.tt/press-release/more-taxes-2017-budget

http://www.finance.gov.tt/wp-content/uploads/2016/04/2016-Mid-year-Budget-Review.pdf

http://www.nibtt.net/Downloads/downloas_2016/Rates.pdf

Supermarket Purchasing Tips

With deflation of food prices being just a hopeful vision at best, we should maximise the part of our salaries not taxed by the government and banking sector. One thing sure in life is that a man (human) must eat/drink for basic survival. I am confident that if one found a way to survive this human life without eating and drinking, then such a technology or system would have been developed centuries ago. With these in mind, I am here to share with you some tips that would give long-term value.

1) Set limits to how much you are going to spend (in this case on food). Budgeting is one of the best ways one that was not “born with a golden spoon in their mouth” can acquire enough money to invest in ventures that will help them and their loved ones in the long-term. Set a limit to how much you are going to purchase in groceries for the month. It is also wise to have a purchasing limit on takeout food if you did not carry food to work or hanging out.

 

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Calculator app will be your best friend. It does all the hard work for you!

 

2) Calculators. When shopping for food in the grocery use your calculator app on your android or apple phone. This app will help you keep in line with the budget you have set.

3) Round off prices. If something has a price tag of $1.15 round it off to $1.25. The price of an item is $3.30 or $1.80 round it off to $3.50 and $2.00 respectively. This method protects you from upward price changes on items the grocery did not update when shopping.

4) Purchase basics first. Basics here are things you will always need when cooking throughout the month. A is a short list of basics – Rice/pasta, vegetables (fresh/tinned/packaged), flour, milk, seasonings (food has to taste good) & oil. This one may vary between families and persons due to personal preference and health-related issues. Whatever left over you can purchase as “want” items.

 

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Snacks! These should not be a priority in purchasing.

 

5) One/Two item rule. If you carry children shopping, set a limit of one or two items they can have after you have purchased your basics. By doing this, you are teaching them:

  • Patience – learning to wait in general as we lack it world over. People can get into serious problems because we do not know how to wait (or wait for the wrong things).
  • Self-control – you can’t have everything, but you can have something
  • Better decisions making – they will learn to make better choices in general due to the experience

I have used the tips mentioned above over the months with a significant effect. Together with self-discipline, I have more food to cook with and cut down the food bill by 20 – 30% at times. With more cash, I can invest it into bitcoin and other opportunities that pop-up from time to time.

Cost Effective Solution to Digital Entertainment

My fellow readers and seekers, we must accept the reality that we are not financially fairing well now and in the next couple of months or years. Our government is ladened with debt. The biggest contributor to our total revenue (Oil) is erratic at best, a devaluing currency nobody in the world wants (Trinidad and Tobago Dollar), and revised rates of old taxes means less to make do has certainly impacted on you unless you’re an investor or a different kind of business person.

 

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If you want weak cable transmission, Spanish advertisements and expensive cable installations/rentals look no further than flow!

 

Flow the primary provider of Cable has steadily increased prices every two years beginning from 2012 while the overall quality and service has decreased. Direct TV has its issues, as you need to pay for a satellite with accessories and pay a monthly reload fee. Netflix may seem like a better solution however if the exchange rate changes lean toward the US dollar then you would have to pay more each month for the service.

 

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One Pre-paid kit $400.00. Monthly Direct TV Top up $159.39. Total cost of 1 yr with Direct TV = $2312.68  TTD

 

You may say some of these services are convenient to you. “Convenience” however, is slowly robbing you when you apply how much inflation, increasing taxes and total cost of services to your (very) slow growing income.  Think about it, when was the last time you got a pay increase that could fight off these things comfortably? This monthly fee you pay can be invested into appreciating asset classes (bitcoin/ precious metals), a practical skill than can generate returns or placed into clearing off your debt faster. The following are pre-requisites that will allow you to access this content:

  • Willing Mind to Learn
  • Basic Knowledge of Computers/Android Devices
  • A computer, Mac or Andriod device
  • Internet Connection

If you have these then I am here to enlighten you on some of the many free options available to you that are ad blocker friendly (PC/Mac):

Filmon – You can install this app on your PC, Mac or Android device to access free TV channels from Africa, Asia, USA, UK and Europe.

Showbox – Another popular app for Android one can use to watch various TV series and movies.

123movies.to – This website allows you to watch the latest movies and has most TV series available.

watchcartoononline.com – Another great site for watching entire series of cartoons and is up-to-date with series.

Putlocker.is – A good place to find movies and tv shows in HD

For those who wish to watch our depressing and disturbing news media in Trinidad & Tobago here are the two links you can watch news on:

Tv6tnt.com

cnc3.co.tt

Warning – It is good to know that you have many free options in digital entertainment, please do not spend most/all of your time consuming them. It will not do you nor your family, friends and allies (through consistent actions) any good. Documentaries are okay in this regard if they are backed up with doing your unbiased research.

Financial Terms Explained Pt 3

As we progress to understanding the weird world of money, here are some financial terms worth noting.

Fractional reserve banking –  a banking system in which only a fraction of bank deposits are backed by actual cash on hand and are available for withdrawal. A Bank loans most of the money to those they deem “worthy” from depositors’ accounts while having a fraction of their money (physical bills) on hand.

 

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You are seeing correct. This is a five billion dollar note issued in Yugoslavia in 1993.

Inflation – the rate at which the general level of prices for goods and services is rising and, consequently, the purchasing power of currency is falling. Paying more for the same services or goods [over time].

 

 

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Deflation – a contraction in the supply of circulated money within an economy, and therefore the opposite of inflation. In times of deflation, the purchasing power of currency and wages are higher than they otherwise would have been. Paying less for same services or goods [over time].

 

All references can be found on www.investopedia.com 

 

A Solution – Bitcoin

(UPDATE: – If you are going to purchase more than 125 USD of Bitcoins you will need a passport and may have to wait for 1 – 7 hours to process payment)

As inflation presses on in our country and tax increases to be expected, more of your wealth will be taken away from you. The purchasing of Bitcoin is one out of the many solutions that can be used to protect oneself from the theft of financial manipulation (taxes, inflation). Here is one way you can obtain them:

1) Get a debit card (much preferred unless you have financial discipline) /credit card that has at least 60 – 70 USD available (always good to have extra cash “in the event of”).

2)  Download the Jaxx wallet for the platform(s) that work best for you

3) Backup your Jaxx wallet by selecting menu > Tools > Display Backup Phrase

4) Wait 10 seconds for it to generate your 12-word password backup.

Jaxx Wallet Backup 2

5) Write down and save this 12-word password as this will allow you to link Jaxx wallets on different platforms (PC/mac/android/etc) and retrieve your bitcoins/digital currencies that you have lost if you deleted your wallet by accident (or on purpose if your computer of the phone was stolen).

6) Enter the 12-word password as proof that you remember it

7) Go to the home screen and copy your bitcoin address

Buy.Bitcoin 1

8) Got to buy.bitcoin.com, paste your bitcoin address and enter 50 USD (or how much you can afford) of bitcoins you wish to purchase.

 

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After entering your information you will need to confirm your  number and email address to continue

 

 

9) Fill in your details and go through the two-step verification process (email and text message)

10) Input your debit master card/ credit card information and verify the information given

11) Wait 45 mins – 1 hour and you will receive your bitcoins.

It is also wise if you set a four-digit pin security code on your wallet (Menu > Settings > Setup security pin). Please remember your 4-digit pin and 12-word password!

There are websites that sell bitcoin cheaper, in my experience however, it can be a bit more time consuming or your credit card provider may block the transaction.  I will keep you posted on sites that sell bitcoins cheaper or have a faster delivery time for them. If you did perform the following actions successfully, you would have taken a small proactive step in protecting yourself from inflation.

Love them Spreads

A breakfast favourite for friends, allies and co-workers of mine is the infamous bread and butter. How can one like cold (or warm) fermented processed milk on yeast and flour is beyond me. There are many delightful spreads on can choose such as peanut butter, fruit spreads and even Nutella. They are wonderful in taste and aid toward building a happy mood. Sadly, this spread you have read about before cannot be consumed nor is it pleasant to the average citizen. The central bank is the governor of this spread and distributes its produce to the populace by consumer banks.

 

Central Bank Spread

The Bid\Buying price and Ask\Selling price and the difference between them called the spread.

 

While a normal citizen cannot purchase foreign exchange by the central bank, you can see clearly the policy it has set for the commercial banks that do sell to citizens. The spread can change, literally, overnight without warning as explicitly stated by all commercial banks. The spread is especially ridiculous for the Pound and Euro, even though they have lost value over the years due to their money printing programs.

FCB Spread

With FCB you lose $1.1123 TTD for every physical Great Britain pound you want to convert. It may not seem like much, however, try converting £10.00 or £100.00 to TTD….

Royal Bank Spread

With Royal Bank, for every Euro you wish to convert to TTD you lose $0.7305. Almost seventy-five cents is lost for every Euro converted! Isn’t that wonderful?

Those who choose to purchase cash or perform physical-to-digital conversion will be at a greater loss than a digital-to-digital one (transferring TTD from your bank account to your debit\credit master cards). Why is the ask\selling price obscenely higher than the bid\buying price for cash especially Euros and Pounds? If we have a shortage of US dollars in our country, why is this obscene spread not seen in the US dollar instead? Sadly, this is one spread that most humans deal with worldwide but least understood by the masses. With knowledge and discipline, we shall know how to use this type of spread to our advantage.

Financial Terms Explained (Pt2)

The main way we can protect ourselves in the world of finance has always been knowledge. Banks and financial agencies are masters of this and will employ “technical” terms, even use the law to rid you of your hard-earned dollars. Whatever country you belong to the financial language, however, remains the same. I will use bold italics to simplify the terminologies.   Here are three financial terms you need to know:

Ask – Ask is the price a seller is willing to accept for a security, which is often referred to as the offer price. The lowest price the seller is willing to sell the item you want.

Bid – A bid is an offer made by an investor, a trader or a dealer to buy a security, commodity or currency. It is the highest price you are willing to pay for the item that you desire to have.

Spread – A spread is the difference between the bid and the ask price of a security or asset. The gap between the asking (selling) price and the bidding (buying) price.

All references can be found on www.investopedia.com 

 

The BMI Report – Bad News Ahead

In the light of how economies really function, I do share the sentiment of the BMI risk report of our country. The review had little hope for us in the short to mid-term. At the time of this post, the oil price continues to fluctuate below the $50.00 USD a barrel mark the finance minister has set for Trinidad and Tobago.

BMI

When the credit rating agency Fitch speaks wise people listen, do their own research and take action.

Their views are:

  • Low oil prices = less revenue for us
  • Non-oil industries will make little sense investing in thus further reducing our capacity to produce overall
  • The government will make minor cutbacks on how they spend revenue. This does not significantly decrease our debt (we, the people, still have to pay it off so expect either new taxes, tax increases or less in our social programs…”GATE” anyone?)
  • As less foreign exchange enters our country the central bank will use capital controls to prevent a significant depreciation of our dollar, however, they will gradually allow it to happen (as they have done earlier this year)

This is what may happen to us if our oil price remains low for a long period:

Grid-Lock

If there were ever a time for the people of Trinidad & Tobago to change course, it would be now. We cannot depend always on the government to “take care of us.” Do you really want the revenues from oil and carnival to determine whether you and your family eat fine food or not? When and where you should go? How many things/services you can buy online? Financial education (sadly not taught in schools) will give us wisdom to protect us from inflation and financial manipulation that has been going even before your grandfather was a thought.

If you want a copy of the summary report you can download it here.

A Question to Ask Thyself

If you had not viewed the previous post I do suggest that do so you can better understand what this post has in store for you. In a world of 40 hours (or more) of work a week, ensuring that our children get an “A” in school and things that help with “normal life” we fail to take the time to ask the “why” of anything. Here is  a question to ask yourself. Is my car really an asset as the banks and “conventional wisdom” says it is? Take a look at the picture below:

 

 

Conservative Car Example

Light Blue – Expense over time (comes out of your salary every month until it’s paid for)

Purple – Prices are varied (could be more or less depending on your links and genetics)

NOTE: These are conservative figures.

But…but…how can you say that? When you have to work from 8 – 4 (whatever shift the system gives you) and your car is in the parking lot, does it make any money for you? Driving fast is known to burn a lot of fuel, add bad roads to the mix and you have more part replacements to consider. Car care products abound and they are not cheap when you watch the total amount of money you spend on these products. While we all should have fun and entertainment going “here, there and everywhere” every week or another week with your car is costly.  After 50,000 miles or 3 years, it seems expense performs intense workouts in the gym while taking steroids as the engine and other internal parts start calling for maintenance.

Depending on the way you make money/job and where you live,  a car is a valuable asset as it can save time and some transportation cost. If you do fall into one of the many conventional wisdom categories such as the 8 am – 4 pm  worker, can only drive fast, I “do not want my car dirty” or  must hang out every other week human then I’m quite sure your car is an expense.

So, is it still an “asset” now?