Here’s an article I wrote for my column at the Business Mirror a year ago, just thought of sharing this once more.

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Confession of a Financial Planner

MY wife Mia and I went on a date last night. Since my wife loves to watch movies and since the secret to a happy life is a happy wife, I instinctively knew she would prefer watching a movie.

I thought she would prefer watching the John Lloyd Cruz-Sarah Geronimo movie so I was trying to psyche myself to watching it, but I was so delighted to find out she wanted to watch something else. My wife knew I’m not a big fan of those movies so she wanted to watch something else for my sake. That’s one of the many reasons I love my wife so much—so unselfish! Not wanting to be a total jerk by asking her to watch an action movie, I suggested to meet half-way. As a result, we ended up watching the movie Confessions of a Shopaholic. I was actually intrigued by it because my daughter Gabbie said it was a great movie while another daughter Billie liked the book.

How was the movie? It was awesome! In fact, I urge everyone reading this to watch the movie. Watching it is like attending a financial-literacy seminar, only more amusing, more relevant and actually more effective.

The plot revolves around a character named Rebecca Bloomwood (brilliantly portrayed by Isla Fisher) who has an exaggerated spending problem and ends up being a columnist for a personal-finance magazine. The main character represented many of us, albeit in a humorously exaggerated way. We live in a society that is afflicted with a debilitating disease called “consumerism.” This burden has manifested itself in a “spending problem,” resulting in many of us  living a debt-ridden life—a life that robs us of true freedom and of victory.

As a financial planner myself, I was endeared with the character in the movie. Her column gives out a lot of practical and great personal advice and has a lot of followers, despite her financial life being in complete havoc. Well, I wouldn’t say I’m exactly like Ms. Bloomwood in the sense that I don’t really have a shopping addiction, and I’m not too sure if I do have many followers. While my financial life is not in havoc, it is far from being ideal.

Many times, I find myself “preaching” to myself whenever I write or speak. It’s not very wise for someone like me to say that I don’t have an “ideal” financial life, but I want people to know that I, too, experience the difficulties of putting my financial life in order. I went through a lot of mistakes that I have been trying to rectify. I was also afflicted with a spending problem that nearly left me in ruins. I made so much mistakes I later on regretted, which I wrote about in this column many months ago. But I learned from those mistakes and I am in a very long process of rectification. What is crucial is the realization of one’s problems and the resolution to learn from them, and have a lasting solution for them.

I do not only write or speak from a theoretical point of view. I am writing from painful personal experiences. We can’t “undo” many things we have done, but it doesn’t matter anymore as what’s done is done. Like anything in our lives, we must learn to stand when we fall. In doing so, we become more resilient, stronger and, most important, wiser.

Here’s a wise advice: To really fix a problem, go to the source of the problem. When I found myself with a financial burden, I tried many ways to “fix” it but I noticed that while some of those remedies worked, most of them did not permanently solve the problem. Like the many “solutions” we try, I found myself applying mostly short-term or “Band-Aid” solutions.

If we have a financial problem or a spending problem, we should determine the root cause of the problem. Is it the lack of income or the way we spend? Why do we spend the way we spend? In my case, I got into a financial mess because I had a “want” issue: I wanted this, I wanted that. It wasn’t just with me, it was with my family, too. But it was a “want” problem nonetheless.

Over the years, my “wants” became bigger and bigger and I found myself doing everything just so I can satisfy my “wants.” It didn’t really feel wrong at that time. In fact, some people might even say that it helped motivate me to work harder and harder. In retrospect, I now know it was very foolish of me not to have stopped my insatiable desire to want more and more. I am glad  I came into my senses and was able to curb my “want” issues. I guess those desires are still there as I am only human, but I have developed a strong willpower to overcome them.

How was I able to overcome my weaknesses? Simple. I merely reexamined what is really important in my life. Do I want to impress others because of what I have, or do I want others pleased with me because of my character? Do I want to please my family with a life that I can hardly afford and, as a result, become a preoccupied husband or father? Or do I want my family to be pleased with me because I am a real and approachable head of the family for them, always there when they need me? Do I want people to listen to me because of what I have accomplished, or do I want people to have hope that they can have a good future by learning from the mistakes that I chose not to hide?

In the end, I chose what really was more important. I chose to have a meaningful relationship with what really is important in my life—my family and my savior, Jesus Christ. In doing so, I found a permanent solution to my deeply rooted “want” problems—the cause of my financial fall.

I fell down, I stood up, but I know I’ll fall down again—all these happen because God is molding something that is very important in me: my character. “…But we also rejoice in our sufferings, because we know that suffering produces perseverance; perseverance, character; and character, hope.”—Romans 5:3-4 (NIV). Our character will determine our future, even our financial future.

This is my confession.

… con’t.

The Philippine government tried to copy the same cheap money scenario but the local game was played very differently. The government pegged the interest rate very low, yet the bank’s borrowing rates were still stiff and did not really trickle to benefit the economy the way the government wanted it to. As a result, while there was some modest economic growth , it was a laggard by other country’s standards. When global financial institutions came crashing, the local financial companies stood their ground with nary a scratch. I got to give it to our Central Bank and sound local management to some point… but to a large degree, our local financial companies breezed through the storm unscathed because of the huge margins they enjoy. Imagine borrowing money at very cheap rates (thanks to the government) and lending them at high rates – how can you go wrong?

The first world economies and the Philippines applied what John Maynard Keynes advocates with different results. First world experienced unprecedented growth but their economy later succumbed into what appears to be a vacuum. The Philippines were spared from the financial mess but continues to await some economic epiphany that seems to be a dream. In my view, both results are failures.

Now, was John Maynard Keynes right? Should the government continue to craft policies to influence the economy? It seems that now more than ever, the Keynesian theory is alive – dole outs, stimulus packages & low interest rates; and we still claim that we subscribe to a free market? Hmmm, perplexing. Why don’t we just let the economy take its proper course; allow recession so we can learn from it; fix our houses, weed out inefficiencies and review our priorities? Allowing to do so will definitely be a painful and a hugely unpopular move. Or, we can continue applying band aid solutions to a necrotic wound.

There’s only one economy that can experience consistent growth with no recessions: God’s economy. Maybe it’s time we start focusing our time and effort in participating in His economy.

“So if you have not been trustworthy in handling worldly wealth, who will trust you with true riches?” – Luke 16:11, NIV.

A blessed New Year to everyone!

John Maynard Keynes: 20^th century economist and father of the ‘Keynesian’ Theory.

What the heck is Keynesian Economics? Simply put, “it is a macroeconomic theory that argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle” (wikipedia.com). In other words, this is a theory that gives the government a huge say in the economy.

Governments, whether they admit it or not cling to Keyne’s theory like it’s the gospel truth especially now. Governments feel the need to dictate the direction of the economy as they feel that only government intervention can solve the crisis.

Really? Here’s a thought. Isn’t government, to a large degree, responsible for the mess we are in? When you really look at the root cause of many of today’s economic problems, one major thought comes into my mind – cheap money. Cheap money or a very low interest scenario allowed for an unrealistic prosperity that was not only unsustainable, it was bound to crash – and indeed, it crashed big time. Particularly in the US and Europe, the stock market took the cheap money and recklessly gambled with it; while people took it and wantonly spent it like there’s no tomorrow. Yes, cheap money allowed for growth but when you really look at it retrospectively, the growth made many reckless and deleted the word prudence in their vocabulary. In other words, it was a bubble.

… catch part 2