Save 20% or More on Your Electricity Bill

Electricity bills are getting more and more expensive as we are staying at home more often due to the lockdown for Covid-19 pandemic. However, it is possible for us to save up to 20% or more on our electricity bill. Our electricity bill are usually not more than RM 80 every month even though we have 4 air-conditioners, 2 water heaters, a fridge and an inductor cooker. From my understanding, the bill for our neighbours are usually at the range of RM 100 to RM 150.

Below is some steps that we took to save on our electricity bills:

Use LED light

With the advancement of technology, the current LED light is as good as, if not better than the conventional light bulb. In fact, the LED bulbs and lights are able to save up to 85% of the energy compare to the incandescent lights. It is also more eco-friendly, durable, energy efficient and affordable.

So, my best suggestion is for you to change your lightings to LED lightings when your current lights "give up".

Also, using natural light would help to keep the bill low.

Manage the cooling system.

We are living in a tropical country and most of the time, the temperature in our home would be hot or warm. We would need the air-conditioner to avoid being roasted by the heat. As mentioned earlier, our home have 4 units but it does not contribute a lot to our bills.

We do that by making sure that we set the temperature toward room temperature (aka 25 Deg C) instead of the lowest temperature possible on the air-conditioner unit (16 Deg C). If you turn it to 16 Deg C, your air-con unit will need additional energy to bring down the temperature. But if you keep it at 25 or 26 Deg C, it is still cooling but would not burn your pocket.

An inverter air conditioning unit will be helpful too because it will "stop" when the right temperature is achieved and start again when it is out of a range. This is better than the conventional air conditioner that continue to blow out cool wind no matter what is the temperature.

Also, never forget to service your air conditioner unit from time to time. It helps by making sure that your unit is running at the best conditions.

Electrical appliances

1. Change the old fridge to a new one. Look for the one with 5 Stars rating as these fridges would be more energy saving. Yes, you may pay a bit extra initially, but you will be using it for 10 or even 20 days. The amount of electricity that you would save would be worth more.
2. Just like the air-conditioner, don't turn the water heater to the extreme when you can adjust it with the intensity of the water flow. Running it at optimum temperature with suitable water flow would give you the same shower experience and save money.
3. Use your washing machine when you have a full load. Believe it or not, the amount of energy use would be the same whether you have a full load or half a load. Also, use cold water for washing as heating up the water will cost more.
4. Turn off the electrical appliance when it is not in use. Items such as TV, computer, rice cooker, etc.

This post is originally posted at Radical Ringgit.

16 Ideas to Kickstart Your Finance in 2020

With the start of the new year, there are some actions that you can take to kickstart your finance on the right path. I have prepared 24 ideas that you can take for the year 2020.

1. Declutter your house (or room)

We may have not noticed but over the years, we may have bought many things that we might have forgotten now. So, take a weekend and start cleaning and decluttering your house.

Items that you no longer need can be categorized into the following:

1. Trash to throw.

2. Stuff to donate.

3. Stuff to sell.

The idea is really simple because, once you clean and declutter your house, you will have more living space and for that stuff that you can sell, you will get some cash back. 

More importantly, you will get to see the stuff that you have purchased and not using (making it a waste of your money) and would give you a reminder to think properly before your next purchase.

2. Automate your savings.

As I have written previously, many of us have a mindset where we will save whatever money that we have left at the end of the month. However, the reality sucks and even before the end of the month, most of our money would have been used up, making it not possible for us to save. The reason why this is happening is because of our habit. We can still see the money in our bank accounts, so we subconsciously think that it is still okay to spend.

So, to make savings works, we should set aside our savings at the beginning of the month and that is where automate your savings comes in. Set a certain amount of money to be transfer to another saving accounts (or investment like Wahed Invest) at the beginning of the month and live your life with whatever you have left. Truth be told, you will not miss that amount of money that you have saved, seriously.

3. Try budgeting for a month

If you have not tried budgeting yet, you should try it. The simple way is to track where your money went for the previous month and budget accordingly for the coming months. Again, it makes you more conscious about your spending and lowers the possibility of overspending.

4. Review your Budget

The only thing that is constant in this world is God and changes. So, our lives today may not be the same as last year. You might have changed to a new job or have a new baby in the family. So, your budget should change according to your current life.

5. Eat at home

If you have been tracking/checking your spending/budget, you would soon realize that a big portion of our spending is on eating out. A meal for a family of 3 would cost about RM100 and that is a lot of money. But if we are eating at home (not delivery from restaurants), the cost would be much lower. My family's meals at home usually cost not more than RM 25 per meal. That is a lot of savings and imagine doing that for 20 days, you will be saving about RM 1,500.

6. Cancel memberships/subscriptions

There are many things that we love in our lives and looking at that small cost, we would not think twice to sign up for membership or subscription. Gym membership and Netflix subscription are things that are good to have but do not necessarily need. Instead of the gym, go and run at the local park and instead of Netflix, watch videos on Youtube. It is just as good. 

7. Limit guilty pleasures

Every one of us has a soft spot for certain things that we have much pleasure with, even if we know that it may not be good for us. Items such as cigarettes, beers, chocolates, sweets, etc are such items. We know that it is not good for us but we still fell for the temptations. But instead of stopping it altogether, we can put a limit on it so that the temptation would not be too much to bear. Imagine the money you can save just by limiting your guilty pleasures. My chocolate addiction cost me RM 50 per week but by limiting my chocolate intakes, my cost for chocolates is down to RM 20 per month.

8. Save Your Spare Change

Whenever we use cash, there is a high chance of us getting some spare changes back. Many would take it that these spare changes are not much but over a certain period of time, we can actually save a significant amount of money. It has been my habit to save my spare changes and over a period of a year, I would have accumulated about RM150 just from spare changes. It is an easy thing to do. Every day when you get home, whatever spare changes that you have in your pocket, put it into a piggy bank (or whatever container you like) and leave it. At the end of the year, you will see a significant amount of money that you can use.

9. Use Cash Back Apps

Whenever you purchase something online, it is best to use a cashback app to get some cash back. We have Shopback in Malaysia and over the years, I have managed to get RM300 cashback with another RM 327 still pending. Use my link to sign up and get RM5 cashback bonus.

10. Make Your Home Energy Efficient

New technology means a new way to make our home more efficient. When we moved into our new home last year, we choose to use LED lightings, air conditioners, water heater and even oven that has a 5-stars rating which is more cost-efficient. And when we are more mindful of the usage, we managed to bring down our electricity bills from almost RM 90 per month to slightly more than RM 50 per month.

11. Wait 24 Hours Before Buying

A lot of times, we would have an impulse to buy certain items. That is a reason we would have many items in our home that we hardly use and have to be throw away, donate or sell when we clean and declutter our home. But by waiting for 24 hours before buying, we may have a second thought about buying and high chances, we would choose not to proceed with the purchase. But if we still think we need to buy that item, chances are, we really need it.

12. Consolidate Your Debt

If you have debts all over the places, such as a few credit cards and personal loans, it is hard to keep track of all of it. A good thing to do is to consolidate the debts into one. There are two advantages to doing this. First, you only need to track one instead of many. Second, it is possible for you to get a lower interest rate and save money on your interests.

13. Use Savings To Pay Off A Loan

If you have a loan that is about to clean and you have enough savings to clear it, do it. You will be able to save on interest and for the coming months, you will have additional cash for other things. I would suggest you save or invest the additional cash.

14. Invest

The best time to start investing is yesterday. The next best time to start investing is today. The earlier you start investing, the better it is for your future. That is the magic of compounding interest.

If you were to ask me where to invest, I would gladly inform you that I would much prefer to invest in the US market. There are many ways to do that and the easiest way that I could find right now is to use Wahed Invest (look for the app in Google Play Store and use my referral code (limwei1) and you will get RM40 after you keep your investment (RM 100 minimum) for at least a month). Wahed Invest is a robo-advisor that provides halal investment and you can read more in my review here and here.)

15. Turn Your Hobby Into Cash

Everyone has a hobby and if it is possible for you to turn your hobby into cash, then you would be earning money while enjoying your hobby.

16. Refinance

Refinancing your mortgage is a great way to save thousands in interest and also potentially lower the monthly payment at the same time. For example, if you have a RM 200,000 fixed-rate mortgage at 4.5%, you will be paying RM 1,013 a month. Over a period of 30 years, you will be paying RM 164,813 in interest, and that is assuming you don’t make any extra payments along the way. But if you refinance the same loan into a new 20-year mortgage at 3.5%, you will only need to pay RM 719 a month and save almost $300 a month. Do note that this doesn’t take into account the interest savings you will get as well.

This article was first featured in Radical Ringgit.

Personal Income Tax

It is the end of the year. Have you maximize your tax reliefs?
Below is a simple guide regarding the tax rates and tax reliefs for those who are eligible.

Tax residence status of individuals

An individual is regarded as a tax resident if he meets any of the following conditions, i.e. if he is:

• in Malaysia for at least 182 days in a calendar year;
• in Malaysia for a period of fewer than 182 days during the year (“shorter period”) but that period is linked to a period of the physical presence of 182 or more “consecutive” days in the following or preceding year (“longer period”). Temporary absences from Malaysia due to the following reasons are counted as part of the consecutive days, provided that the individual is in Malaysia before and after each temporary absence:

                               - business trips
                               - treatment for ill-health
                               - social visits not exceeding 14 days

• in Malaysia for 90 days or more during the year and, in any 3 of the 4 immediately preceding years, he was in Malaysia for at least 90 days or was resident in Malaysia; or
• resident for the year immediately following that year and for each of the 3 immediately preceding years.

Rates of tax

1. Resident individuals

• A qualified person (defined) who is a knowledge worker residing in Iskandar Malaysia is taxed at the rate of 15% on income from employment with a designated company engaged in a qualified activity in that specified region.
• An approved individual under the Returning Expert Programme who is a resident is taxed at the rate of 15% on income in respect of having or exercising employment with a person in Malaysia for 5 consecutive YAs.

Personal reliefs for resident individuals

Types of relief	YA 2020 (RM)
Self	9,000
Disabled individual - additional relief for self	6,000
Spouse	4,000
Disabled spouse - additional spouse relief	3,500
Child:
· per child (below 18 years old)	2,000
· per child (over 18 years old): receiving full-time instruction of higher education in respect of: - diploma level and above in Malaysia; or - degree level and above outside Malaysia OR serving under articles or indentures in a trade or profession in Malaysia	8,000
· per physically / mentally disabled child	6,000
· physically / mentally disabled child (over 18 years of age) receiving full-time instruction at institution of higher education in respect of: - diploma level and above in Malaysia; or - degree level and above outside Malaysia OR serving under articles or indentures in a trade or profession in Malaysia	14,000
Life insurance premiums (Note 1)	3,000*
EPF contributions (Note 1)	4,000*
Private Retirement Scheme contributions and Deferred annuity scheme premium (until YA 2021)	3,000*
Insurance premiums for education or medical benefits	3,000*
Expenses on medical treatment, special needs or carer expenses for parents (evidenced by medical certification)	5,000*
Parental care relief (until YA 2020): father mother	1,500 1,500
Employee’s contribution to Social Security Organisation (SOCSO)	250*
Medical expenses for self, spouse or child suffering from a serious disease (including fees of up to RM500 incurred by self, spouse or child for complete medical examination) or expenses incurred on fertility treatment (w.e.f YA 2020)	6,000*
Fee expended for any course of study up to tertiary level other than a degree at Masters or Doctorate level, undertaken for the purpose of acquiring law, accounting, Islamic financing, technical, vocational, industrial, scientific or technological skills or qualifications or any course of study for a degree at Masters or Doctorate level undertaken for the purpose of acquiring any skill or qualification	7,000*
Purchase of supporting equipment for self (if a disabled person) or for disabled spouse, child or parent	6,000*
Lifestyle relief consolidated with the following:       purchase of books, journals, magazines, printed newspaper and other similar publications for the purpose of enhancing knowledge       purchase of personal computer, smartphone or tablet       purchase of sports equipment and gym memberships, and internet subscription	2,500*
Purchase of breastfeeding equipment	1,000*
Fees paid to child care centre and kindergarten (Note 2)	2,000*
Deposit for child into the Skim Simpanan Pendidikan 1Malaysia account established under Perbadanan Tabung Pendidikan Tinggi Nasional Act 1997 (until YA 2020)	8,000*

Maximum relief
Note:
1. For public servants under the pension scheme, combined relief up to RM7,000 is given on Takaful contributions or payment for life insurance premium
2. Previously the relief was limited to RM1,000 in YA 2019

Tax rebates for resident individuals

Types of rebate	RM
Individual’s chargeable income does not exceed RM35,000	400
If husband and wife are separately assessed and each chargeable income does not exceed RM35,000	400 (each)
If husband and wife are jointly assessed and the joint chargeable income does not exceed RM35,000	800
Rebate for Zakat, Fitrah or other Islamic religious dues paid	Actual amount expended
Rebate for departure levy paid for performing umrah and pilgrimage to holy places (w.e.f YA 2019)	The actual amount expended (twice in a lifetime)

The above rebate granted is deducted from tax charged and any excess is not refundable.

Emergency Fund

What is an Emergency Fund?

An emergency fund is a stash of Ringgit that you set aside for when an emergency happened and it turns your world upside down and you need the Ringgit to do what needs to be done. Having an emergency fund gives you the peace of mind to know that should something truly awful happen, such as losing your job, you can worry about how to deal with the emergency itself and not worry about how you’re going to survive financially.

While a person’s emergency fund will vary from situation to situation, most financial experts agree that a fully stocked emergency fund should hold between three to six months of monthly expenses.

Getting started with your emergency fund

The first amount does not matter. What is important is for you to start. On average, an emergency fund of around RM500 to RM1,500 is a good first step to build a solid emergency fund. A smaller goal is much easier to achieve and it allows you to feel accomplished once you reach this first awesome milestone. 

Once you establish the small emergency fund, you can handle life’s small emergencies without going back into debt. This allows you to focus on gaining momentum when it comes to saving your Ringgit stash rather than switching back to focusing on paying off the debt incurred by small emergencies.

How do I determine what number to use for my monthly expenses?

As mentioned, an emergency fund should hold between three to six months of expenses. This to figure out the total emergency fund, one will have to look into how much is your monthly expenses. This figure varies from person to person but the important thing is that the fund can ensure that you could continue to live your life without any income. There are people who would even include luxuries in their emergency fund while others would just keep the basic amount that provides just enough money to pay the bills.

It is your choice how much you would want to keep as an emergency fund but it is important that the amount is not to exceed that you don't feel uncomfortable about it.

Why do you need an emergency fund? 

A lot of people would think that it is unnecessary to prepare for an emergency fund. You might think that your job is really secure and you would have no problem to find a new job in case of lay off. Or you may have thought that using a credit card as an emergency fund is okay as long as you pay it off before the end of the month.  Still, you will still need to pay off the credit card debts. Otherwise, you will have to pay for the interest and that's never good for anyone.

What is an emergency?

Financial emergencies are unexpected major expenses that require you to use an amount of money immediately. These expenses must be related to preserving your financial future, your health or your assets.

A few examples of true financial emergencies where it would make sense to use your emergency fund are as follow:

• Job loss. 
• Unexpected medical expenses to maintain your health. 
• Sudden unexpected car breakdown or accident
• A sudden unexpected problem with a major system in an owned house such as an air conditioner, roof or electrical system. 
• A family member passes away and you need to purchase last minute travel to the funeral. 
• A family member gets hurt and you need to take time off work to provide the necessary care. 

What isn’t an emergency?

Some people would stretch the idea of what an emergency is to access the cash they have put away.

Examples of expenses that would not justify breaking into your emergency fund are as follows:

• Elective healthcare such as plastic surgery. 
• A great deal on a cruise vacation. 
• A last-minute request for you to fly to a destination wedding. 
• You really want to buy a new TV for the Super Bowl but didn’t save enough

Where to put your emergency fund? 

An emergency fund should be kept in a high yield savings account or a money market account. This will let you have almost instant access to the money when you really need it.

It often makes sense to keep your emergency fund at a bank separate from your main bank accounts. By doing this, you won’t be tempted to dip into your emergency fund for everyday expenses.

This article was first published in Radical Ringgit.

KWTBB - Kumpulan Wang Tenaga Boleh Baharu

I was looking into my house's electricity bill and I noticed that I was paying for 1.6% surcharge for KWTBB. The amount was small but it just captured my attention. Thus, I began to look into what this KWTBB is.

Not my bill. Just one that I found on the internet.

It turns out that this KWTBB is "Kumpulan Wang Tenaga Boleh Baharu". The name in English is "Renewable Energy Fund". The 1.6% levy for ‘Kumpulan Wang Tenaga Boleh Baharu’ is used to develop Malaysia’s renewable energy program. It is meant for maintaining a mechanism called the Feed-in-Tariff (FiT). The FiT allows homeowners and businesses to earn money by producing energy through renewable resources that will be fed into the utility grid for distribution throughout the country. In other words, those who participate in the FiT program will be generating energy that Tenaga Nasional Berhad (TNB) will use to produce the electricity that we consume on a daily basis. The idea is to reduce our reliance on fossil fuels as a source of energy (a non-sustainable option in the long run).

From what I have learned, only households that consume electricity above 300 kW (electricity bills that exceed RM77) are required to pay this surcharge. So, if you do not want to pay for this 1.6% surcharge for KWTBB, save more on your electricity usage.

Electricity Bill - How are we charged by TNB

I was curious about how our electricity bill is being calculated. Thus, I decided to do a bit of research on this topic. My first stop is Tenaga Nasional Berhad website, www.tnb.com.my. I have learned that there are many different types of tariffs, depending on which category you are in. But for the sake of our common people, we would be interested in only two tariffs: Tariff A for domestic tariff and Tariff B - Low voltage commercial tariff.

How does both this tariff is related to us?

Tariff A is meant for residential areas, such as your house, no matter it is a bungalow, linked house, apartment or condominium. The way the electricity bill is being calculated is the same.

Tariff B is for low voltage commercial buildings, which include service apartment that some of us may be staying in.

Below is the Tariff A and B:

So, for most of us that stay in houses, apartments or condominiums, we only look into Tariff A. From the way it is structured, the more that you use, the more that you would have to pay. Let us look into a simple home that used about 374 kWh.

For the first 200 kWh, we would have to pay RM 43.60 (200 kWh x 21.8 sen/kWh)
For the next 100 kWh, we would have to pay RM 33.40 (100 kWh x 33.4 sen/kWh)
For the balance 74 kWh, we would have to pay RM 38.18 (74 kWh x 51.6 sen/kWh)

Thus, the total payable is RM43.60 + RM 33.40 + RM 38.18 = RM 115.18

But if your house used about 748 kWh, you would have to pay a lot more

For the first 200 kWh, we would have to pay RM 43.60 (200 kWh x 21.8 sen/kWh)
For the next 100 kWh, we would have to pay RM 33.40 (100 kWh x 33.4 sen/kWh)
For the next 300 kWh, we would have to pay RM 154.80 (300 kWh x 51.6 sen/kWh)
For the balance 148 kWh, we would have to pay RM 80.81 (148 kWh x 54.6 sen/kWh)

Thus, the total payable is RM43.60 + RM 33.40 + RM 154.80 + RM 80.81 = RM 312.61

If you look carefully, I deliberately double up the quantity from 374 kWh to 748 kWh to make a point here. While the total electricity is double, we are paying more than double for it. Thus, the best thing that we could do to minimize our electricity bill is to minimize our usage.

There are many tips that can help but the few that I find most helpful are the following:

1. Air-conditioning temperature to be kept at 25 or 26 Deg C.
2. Use mild temperature on water heater when taking a bath.
3. Iron your clothes in batch.

Do you have any other tips to help bring down the electricity bills?

Get your money back via Shopback

It has been a long while since I last post something here. I have been working hard in the background on a project about personal finance for Malaysian and up until now, it is about 20% done.

Nevertheless, I still look around for opportunities to better optimized my finance and finally, I found myself on the website of Shopback.

If you don't know what it is all about, Shopback is a free service that helps you to get back some money from what you have purchased. Do note that Shopback only covers some companies.

You can get back up to 11% of your purchase which I think is incredible.

The next best thing about Shopback is how you can actually refer others to Shopback and you will get some referral fees. Terms and conditions apply, though.

Nevertheless, if you have not use Shopback just yet, sign up today and get back your money when you spend online.

8 methods to save money on daily basis

There are a lot of ways to save your money. Some are more efficient than the others.

Below are the 10 methods that help me save a lot of money.

1. Clear all credit cards' outstanding asap.

Do you know that you would be charge a certain amount of interest for all your outstanding payment in your credit cards? Yes, the interest is range between 15 to 18% per annum. And that is really a lot. For people like me who don't receive the monthly statement by post, it is hard to keep track of these interests. It may looks like a small amount but when add up, it is actually a lot in the long run.

The best thing to do is to clean whatever outstanding you have in all your credit cards, you would save up to hundred of Ringgit by doing this.

2. Read news online

There is no doubt that we need to know what is happening all around us but to buy newspaper on daily basis nowadays is a waste of money when you can read the same news online. Furthermore, it is up-to-date. Do you know that a newspaper will cost you around RM1 to RM2 and if you are buying everyday, it would cost you around RM60 per month (RM720 per year).

3. Stop buying lottery

The probability of winning a lottery is extremely low and not worth the money you spend on it. Let us do a simple calculation. If you buy RM10 for every drawing, it would cost you:

Every Drawing - RM30 (There are 3 operators in Malaysia)

Every Week - RM90 (There are 3 drawings every week)

Every Month - RM360 (4 weeks per month)

Every Year - RM4680 (52 weeks per year)

And this does not include the special drawings for special occasion.

You can do a lot of things with RM4680.

4. Quit smoking

This is also another no brainer. How much is a pack of ciggarates? RM20 per pack on my last check.

So, if you take one pack per day, that will be RM7300 per year. 

Or, if you take one pack per week, that will still be RM1040 per year.

And that is a lot of money. Period.

5. Cancel your gym membership

Frankly speaking, unless you are living and breath gym life, how many of you would go to your gym on daily basis? Won't it be better for you to go to a stadium or park to get your daily workout? You will get fresh air to breath in as a bonus. Plus, gym membership cost around RM150 per month or more. If you average it out, it is about RM5 per day. But as mentioned, you don't go to the gym everyday. If you go to gym three times a day, you would be going to the gym around 12 days a month. That means you are paying RM12.50 per day. Won't it be better for you to go for those gym with RM 5 per entry? You will definitely be saving a lot here.

6. Travel locally.

Malaysia is a very beautiful country and ask yourself if you have travel to every corner of the Malaysia. So, why go to overseas when you can travel locally? It is cheaper as you won't need to change your money to foreign currencies and loose on exchange rate.

7. Keep track on your monthly expenses

We always thought that a little bit won't hurt but when we really look into those little purchases that we made, we would see that they are actually really a big deal. So, to minimise it, we need to keep track on how much we paid on daily basis. With the advancement of technology, it is really easy for us to do this. An app on our phone can really do it.

8. Pay cash

We won't feel the pinch if we don't really see how much money we spent. So, instead of using credit cards, we should pay things with cash. That way, it would really registered in our mind how much we are paying. And we would be more mindful the next time.

Do you have any other ideas on how to save money? Share with us.