06 March 2008

Money Lending Rules

Updated on 4 Jan 2008:

Several sharings and comments on this blog entry since its posting. The ideas reinforced my belief that we should have established out money lending rules as early as possible.

Eng Peng suggested his blog entry on "How Do You Allocate Your Money - Part 2" for related read to this entry of mine. I'd looked thru and find his views useful. For sharing @ http://teaengpeng.blogspot.com/2008/08/how-do-you-allocate-your-money-part-2.html.



Initial Post on 6 Mar 2007:

I understand the need for assistance, sometimes, when unforeseen events just popped up from nowhere and impact on our personal finance in a negative manner. I fell into this category sometime back in my life. I was lucky to have my mentors and friends to tide me over financially. Situation begin to improve as my financial plan falls in place.

While trying to emulate the compassion that was bestold upon me by those whom had helped me previously, i recokned that this form of compassion is getting unsustainable. As I build up my funds for potential investments, requests for financial assistance keeps streaming in too.

It seems like a norm that when a person needs to loan money, he will, somehow linger around your surroundings, also in constant contact with you. The situation changes when the money was finally loaned and entered his pocket, the communication channels suddenly disappeared.

I don't and won't feel embarassed to approach the person whom I'd lent the money to, in order to collect my money back. I do wonder how will they feel as I keep contacting them when the timeline which they'd promised to return my money back to me was breached. Relationships start to get strained in the process.

To me, the principle is simple. You'd approached me with a story to get a financial loan (interest free duh!) from me and promised to return that loaned amount by certain date. I buy your story and decided to issue the loan based on the trust I have for you, that your story is true, and, you will return me the money by the agreed due date. When this understanding is breached or somehow you just disappeared into thin air, our friendship suddenly is just worth only the amount you'd borrowed from me and your integrity and reputation becomes worthless.

After much considerations, I'd decided to establish some money lending rules to guide my decision making process in a logical manner, rather than being influenced by emotions.


1. I will consider to offer financial loan to my immediate family members and close relatives. Friends will be on a case-by-case basis. (Blood will always be thicker than water, so my friends, dont envy)

2. I will NOT lend money to clear any form of personal debts. (It reflects on poor financial planning, the risk of defaulting is extremely high and the strain on the relationships will be extremely unhealthy)

3. For friends whom wish to loan money for business purpose, I want to see the business plan. If the plan is feasible, I will offer to take equity stake or issue convertable bonds as options.

4. All loans must be accompanied by a written plan on how and when the money will be returned to me. Once this plan is breached, so will be our relationship. (I want it in black and white)

Sounds cold-hearted as I write. Pretty logical to my brain though. All for the purpose of building a long-term and sustainable relationship.


'When I Stop Learning, I Stop Living.'

02 March 2008

PME2 - Concept for Financial Freedom

It has been a good short break for me since I last blogged in Nov 2007. Work and learning had been intensive but I am still spending at least 1 hour per day to continuously improve my financial intelligence.

Time flies and it has already been 2 years 3 months since I made that choice to achieve financial freedom with the financial enlightenment I'd gained in Dec 2005. Over this period, I am glad that my learnings have improved by leaps and bounds. I have also started to struture my own thoughts and develop my own concept of how one can achieve financial freedom, which i will like to share in this article.

On the journey towards my financial freedom, I have attempted to share my learning experience to numerous learning partners. I have also attempted to spar my ideas with my learning partners to sharpen my thoughts. Most of the sharing or sparring have been in parts, as I am unable to express my ideas as a whole. It is also pretty lengthy to express the parts in details before a holistic whole can be derived. Thus I have decided to share my learning using a simple concept, introduced to me by one of my mentor. The main structure is known as Purpose, Methods and End-State, or in short PME. I have since evolves the PME structure into a concept known as PME2, to suit the context of this discussion.

The PME2 builds upon my limited 2 years of journey in trying to find my ways to achieve financial freedom. I believe many newbies, like me, in the search of their own path to achieve financial freedom, will also encounter what I had been through. What I am going to share here, is nothing more than logic. Yes, plain logic. The difference lies in action. I put the logic into action and evolves it into applied knowledge.

PME2 attempts to conceptualise, shape and synergise my efforts to achieve my desired outcome - Financial Freedom. When expressed pictorially, it is can be seen in the form of constructing a building. The larger framework is enclaved by the Purpose, Methods and End-State. The inner structure are supported by key pillars of Plans, Meta-Attributes and Education. I will attempt to discuss the PME2 concept broadly here.


The ground forms the foundation on which the building is been constructed on. If this foundation is weak, the building will face a lot of difficulties during the construction phase or the completed building will collapse in no time. The ground is the purpose.

The purpose will also answer the question of "WHY", the key reason for all the subsequent efforts to achieve the desired end-state. When faced with difficulties along the journey, this Purpose will constantly reinforce the practitioner's belief that the journey is worth all the while.

Purpose seems simliar to one of the pillar, Meta-Attributes, as though they are a sub-set of each other, yet are different in nature which I will attempt to elaborate further later.


If I have 6 hours to chop a tree, I will spend 4 hours sharpening the axe. This is where I will invest my 4 hours in.

Plan, Meta-Attributes and Education are the three supporting pillars building upon the purpose, supports the way to achieve the desired outcome. The three pillars are also mutually supporting each other.

A Plan keeps the practitioner focused on what requires to be done and synergise his efforts to achieve it. The Meta-attributes forms the backbone without which the outcome will be hollow and empty. Education is established by acquiring Skills, Knowledge and Experience along this journey.


The end-state, in this context, are financial goals / targets in definitive form of 5Ws. It has to be specific, measurable, quantifiable and in the form of Who, What, Where, When and Why.

In the next sharing, I will attempt to discuss more into the methods of Plan, Meta-Attributes and Education. Meanwhile, I invite and appreciate any reader of this entry to share and leave your comments after reading this entry.

Good night,

Leroy :-)

"When I Stop Learning, I Stop Living."