Monday, August 31, 2009

The Lean and Mean Machine Pte Ltd Monthly Income Statement August 2009

Below is the first monthly income statement for my company, The Lean and Mean Machine Pte Ltd. I would like to highlight several conventions of my income statement. This is not your typical income statement because the company makes equity investments and I chose not to record this in the income statement because it makes little sense as it will make my company appear to make losses via relatively large investment expenses.

The income statement will recognize capital gains as revenue and not the revenue from the sale of shares.

Needless to say, in August, the company made several investments in equities and that is not reflected in its income statement. It will be reflected in a special quarterly balance sheet that shows both the cost of my investments as well as their market value.

Revenue for this month is slightly higher than expected due to unexpected revenue from a chess tournament victory during the Merdeka Rapid Tournament. This, however, is offset by the much higher than expected expenditure on food. While it is still below budget, the company believes that there is a possible further cut in food expenditure in the near future to maximize profits.

Fuel expenditure is also higher than expected due to extra transportation services provided to friends in need. Fuel prices are expected to increase in September and the company will reassess the situation at the end of September.

Net profit margin is at 25%, which is satisfactory at this point. The company hopes to increase the NPM further by minimizing costs.

Net asset value (NAV) per share reflects the total shareholder's equity per share at market value as at 31 August 2009. This means at equity investments are valued at market price as at 31 August 2009

The Lean and Mean Machine Pte Ltd Copyright © 2009

Income Statement

August 2009


Interest Income


Dividend Income


Net gain on quoted disposal of investments




Less: Operating Expenses



House rent






Electricity Bill


Internet Bill




Investment Fees




Profit before tax


Income tax expense


Profit after tax


Net Income


Basic Earnings Per Share


Net Profit Margin


Return on Equity


NAV per share


Sunday, August 30, 2009

Economics @ Home © Volume 1 Issue 6

Merdeka Day

This weekend is Merdeka Weekend. I thought about writing a special issue for Merdeka Day but then I realized that I don't really do anything special on Merdeka Day. For those of you who don't know what it means, Merdeka Day is the independence day for Malaysia. Most of the time, I end up playing in a chess tournament in conjunction with the festivities and I get to meet my friends from all over Malaysia. I really looked forward to this even when I was much younger. I am still going to be playing chess this weekend. Perhaps I do not look forward towards this event with the same earnest, partly because so many things have changed since the days that my friends and I used to dominate this tournament. Ever since they opened it for the whole of world and introduced a bunch of funky rules, coupled with the fact that players that I played with are mostly more focused on work right now (including myself), it is indeed difficult to find the same enthusiasm that once made me wait the whole year for this event.

Nostalgia aside, there are many different meanings of independence to this country. One of the most common reasons that Malaysians celebrate this day is that this country obtained its independence from its British oppressors in 1957. While that was the reason 31 August is commemorated each year, the reason that most Malaysians celebrate Merdeka is probably because it is simply a holiday. People don't have to go to work, there is no need to "struggle", no need to plod, no stress, and people can just have some "leisure" time to themselves. Regardless of the reasons people celebrate this 31st August, I would like to indulge in some of the reasons why we should not be celebrating.

This is not an attempt to be a party-pooper but I simply find it difficult to shut out the glaring deficiencies in this country while pretending to be thankful for 52 years of "peace and harmony". While we have been absolved from the grips of the British, for the most of the past 52 years, we were bound by an even stronger but more subtle oppressor. Like always, I will steer clear from politics because I do not pretend to know how to run a country. My job as an economist is only to analyze the costs and benefits of any issue that I deem interesting. Anyone can point out the flaws of any government and the simple rebuttal of "nobody is perfect" speech by the government can hardly be refuted. Mostly because no one is ever given a chance to refute this. This is what I mean by the subtle oppression that we face. It is redundant to scream for the freedom of speech and what not. Thanks to the internet, I am able to share my views with you today. But my readership is ever so limited. What can one expect after six volumes, right?

The goal of this issue is to discuss this attitude of "nobody is perfect". I assert (just like all great economists do when they begin an argument) that this is a result of plain complacency. I keep reading about the anger of the people who demand such and such from the government and I cannot help but share their anger. It is too easy to notice the sad deficiencies that our country faces, but the important issue is why we cannot escape our miserable fate? The government and some people keep preaching about how lucky our country is. I remember back when I was in Form 1 that my history and geography teachers taught me that Malaysia is a lucky country because of our natural advantages. We are shielded from earthquakes, tsunamis (except for that unfortunate day in Penang), volcanoes and what not while enjoying the advantage of having THE trade route that links the West and the East in the form of the Straits of Malacca.

After the British left, we were left with the same advantages. Our economy grew rapidly despite the falling out with Singapore, courtesy of the vision of our first Prime Minister, Tunku Abdul Rahman. Why did we advance so rapidly and what happened after that? After being "freed" from the British, Malaysia was hungry. We have been hungry for a long time but we were leashed down by an oppressive nation. Malaysia rose as one of the five tiger economies. However, if we look back over the past forty years and compare ourselves with the likes of Singapore and Thailand, the flame that was claimed to be Malaysia's just seems to be fizzling out like a dying ember. What happened?

As I said before, the problem is complacency. For the past few decades, our country has basked in the doldrums resulted from self-content. There is no need to say that while Malaysia and Singapore are about the same age, the difference in the maturity of our economic strengths are astronomical. The national income per capita of Singapore has grown to at least three times that of Malaysia since our independence. That is without accounting for the handicap in terms of the lack of natural resources that Singapore had. We often hear that Singapore is a smaller country and this made it easier for them to advance. They have fewer mouths to feed, thus having more resources to focus on growth. We simply forgot that they have no natural resources at all. Well, at least not those that can be harvested from the Earth. They simply harvested the most valuable natural resource of all: human capital. On the other hand, Malaysia rested on its laurels of being "the best" in the region. We were ONCE the largest rubber exporter. We were ONCE the largest palm oil exporter. We were ONCE the largest exporter of semiconductors. We were number one in the world. They still tell us that in our history books. Then after that, as years go by, we decided we should fish in a smaller pond and became number one in South East Asia and then number one in whatever smaller region you can think of.

After the 1997/1998 Asian Financial Crisis, we almost chuckled at Thailand because of its financial meltdown. We again looked upon lesser foes and crowned ourselves champions of the weak. A little known fact is that the national income per capita of Thailand has overtaken that of Malaysia assuming we had started off from the same base since 1970. Who is having the last laugh now? Not us, for sure. Forget about Thailand. Let's laugh at Indonesia because they can't even keep the bombers from blowing up their own people. Guess what? If you study the growth in the national income per capita of Indonesia, you will notice that Indonesia is gradually catching up to Malaysia ever since Bambang Susilo Yudhoyono, was elected president in 2004. Before long, maybe Malaysians will be sent to Indonesia as maids. Scary thought isn't it?

What are we champions of next? Oh wait, what about Laos, or Vietnam, or Cambodia? We are still better than them. Are we? 52 years ago, we celebrated our independence with the hunger of an unfed tiger. Today, our government has indeed satisfied that hunger. We have kept them well-fed. March 2008 served as a wake-up call for these satiated monsters and we can only hope that the same hunger of the sixties is rediscovered. Or do we leave it to hope?

I can only hope that I will never be stuck in this rut of a complacency that I was once guilty of. Indeed I basked in the doldrums of self-content. Today, I repeat to myself everyday, the grand message that Master Steve Jobs passed to me, "Stay Hungry, Stay Foolish". Maybe one day, I will truly stay hungry and foolish and be proud of it.

Sunday, August 23, 2009

Economics @ Home © Volume 1 Issue 5

Economics of Brutal Honesty

Remember the time when we were young and we were told never to tell lies? “Honesty is the best policy”. Once we got older, not only did we learn to lie but we also became masters of deception. The power of reasoning was bestowed upon humans. Because of this, not only are humans able to weigh the costs and benefits of lying, but are also able to justify their deception. This issue explores the incentives for dishonesty and whether honesty really is the best policy.

First of all, many people will argue that concealing the truth does not tantamount to lying. That is to say that silence over some relevant issue is not equivalent to lying, which is often defined as disclosing information that is contrary to actual facts. I assert that nondisclosure is within the class of falsification or lying. Saying that it isn’t a lie is merely the justification of the lie that is a consequence of human reason. Before you become defensive, let me first clarify that I do not pretend to be a moral judge. I don’t care if it’s OK for you to lie. Whether or not it is “right” or “wrong” to lie about something is dependent on what “right” or “wrong” really is. That debate will be left for theologists and philosophers because those issues are not really relevant and their accurate definitions are unnecessary for our topic of interest.

One of the most common reasons that people lie is for protection. They lie to protect others, which apparently makes them nobler, or to protect themselves, which may or may not make them selfish. Usually, people who lie to protect are involved in issues that revolve around extreme danger. The common mentality is “the less you know, the better”. Usually, one has committed wrongdoings or is a witness to a crime. People can choose to hide the truth to protect themselves and their family to avoid retaliation. But if you were to think about it a little bit more, you will recognize that the need for protection is a result from the feeling of fear. Fear is a survival mechanism inherent to all living things. Applied to controversial issues of Malaysia today, many parties have cowered in silence for fear of retaliation from corrupt authorities and people in positions of power. Even the mysterious letter implicating the former Selangor MB and the TP of MACC was signed “anonymously”. If these witnesses were to list down every single one of their names, would the letter not appear to be more credible? However, in the animalistic world today, their very own survival is a priority. If every human being were to always consider the benefit of the greater good, then the benefits of always being honest will probably outweigh the costs. However, to a rational individual, the loss one’s ability to survive is of infinite cost, especially when compared with the marginal benefit one can gain from being honest.

The second incentive is closely related to the first. People lie for their own gains. Survival and protection is merely a subclass of one’s personal gains. Other common gains come in various shapes and sizes: money, power, pleasure and happiness, just to name a few. With so many incentives that can grant almost infinite utility (satisfaction) with relatively little personal cost, shouldn’t the real question be, “Why not lie?”. Once again, we have to look at the bigger picture. Cost-benefit on a personal basis would logically lead one to lie. However, many real life situations that involve lying are zero-sum in nature. That is to say, one man’s gain is another man’s loss. On a larger scale, not all situations are zero-sum. In fact, most scenarios have positive externalities when honesty is applied. Nonetheless, this would require one to actually consider the costs and benefit of a larger group as a whole, which is very often not the case. Our primal instincts tell us to look out for ourselves and our “own kind” (family, closed ones etc.). Fortunately we are not all animals.

Recently, I read a quote from Khir Toyo that made me laugh. The comment was referring to the mysterious letter that was handed to Gobind Singh that implicated several top officials and politicians, including Khir Toyo. This letter was published on many blogs and other online sources. I will not post the letter here because this is not my fight and I tend to get very emotional when I discuss cases like these. This was extracted from the Star:

Meanwhile, when contacted, the politician (referring to Khir Toyo), who was overseas, said the allegations were baseless. “I have nothing to gain by toppling the Selangor government,” he added.

“I don’t think it’s the work of MACC officers. What are they going to get by making such wild allegations?” he asked.

At first, you may not find it as funny as I did. But let me point you in the right direction. It was not because I think he was lying, but because of the reason he gave: “What are they going to get by making such wild allegations?”

This is so typical of a pig who only knows how to think of himself. He thinks that everything that everyone does is for self-gain. Maybe on an individual basis, the authors of the letter would gain nothing. However, to expose a corrupt fraud and pig of an ex-government official in a country that is trying to stem corruption from the core is a huge gain for the people of the country.

Let’s backtrack a little. Before this he said: “I have nothing to gain by toppling the Selangor government”. Once again, talks about self-gain. Clearly, a man who only looks out for himself. If only investigative journalism was more mature in Malaysia and reporters were given the free reign to report facts. A pig would never be able to hide under a man’s clothing. Of course I have no evidence to claim that Khir Toyo was lying when he said that. However, any being of at least miniscule intelligence can tell that there is everything to gain for an ex-Mentri Besar of Selangor to topple the current Selangor government. After all, he is the one who is living in a house that is allegedly worth RM 24 million.

Furthermore, theoretically, a politician should have an inherent desire to serve the public. If he still believes in such things, there should not be any talk about self-gain in trying to win his old position back. Do it for the people. Or maybe he thinks that the current Selangor government is doing a great job for the people. Maybe that’s why there is no reason to topple them. I guess I did venture a little too far into politics. Told you I’d get emotional.

Back to economics. There are many countless examples of people lying for self-gain. One can easily point to Bernie Madoff and his USD 65 billion scam. With the incentives of lying so tempting, can we really blame people for lying? Is honesty really the best policy? After all, these liars are behaving merely like the Homo economicus that we assume people to be in our study of economics.

If only we were Homo economicus, then we would have all the right reasons to lie. We are Homo sapiens. Some of you do not need to be reminded of that. However, it is not too uncommon that sometimes Sus barbatus forget what they are.

I would like to remind everyone that cost-benefit analysis must never be abused. While it is easy to see the infinite gains for oneself when practicing deception, it would be nice to think of the costs and benefits of everyone that is affected by our decisions. More often than not, the benefits enjoyed by the group far surpasses the cost to ourselves. That is why we call it the greater good. That is the world that I hope my children will get to live in. A world that prioritizes the greater good.

Sunday, August 16, 2009

Economics @ Home © Volume 1 Issue 4

Where is my money?

How many times have you asked yourself that question, or some other similar version of it? Waking up at 7.30 a.m. to go to work and returning past dinnertime every weekday just to keep your family fed. As Monday begins, you look forward to Friday, AGAIN. Some of you even dread Sundays because tomorrow is Monday. Weekends are a whole lot of fun because you get to watch TV, hang out with friends, or do whatever it is that you do. To make things worse, after all that, when you receive your paycheck at the end of the month, you feel only two seconds of joy as it dawns upon you that you have to pay your rent, your bills (electricity, telephone, internet, handphone and god knows what else), your wife (for her to buy groceries and necessities for your family because she quit her job to take care of your children; you refused to hire a maid because you want the best environment for your children) and the list goes on. By the time you subtract all these expenses, you are afraid to even look at the balance that remains. Maybe that’s why you don’t keep account of your expenditure. Does the above sound like you? Granted, most of my readers have not had a family yet but I hope the story is something you can relate to.

Don’t misunderstand me. I am not saying that you are struggling to make ends meet, but I believe that you wish you had more money at the end of every month. There is a reason why I keep referring to “you” throughout the introduction above. If you feel belittled or angry or even better, you said to yourself, “That’s definitely not me”, then you have even more reason to read this issue.

The purpose of this issue is to raise awareness regarding personal finance. Though I do not claim to be an expert on multiplying my money or earning millions, I feel it is important to know how to be prudent. I am talking about that date you had with your girlfriend last Saturday that cost almost RM200, the clubbing nights you had with your girlfriends on Friday and Saturday, that extra haircut you had last week because you suddenly decided that a straight fringe does not look good on you. I am almost certain that at that point in time, you had a dilemma whether to spend that extra money or not. It wasn’t that you couldn’t afford it, but it definitely is a decent proportion of your monthly income. That is to say, I don’t think you are not prudent. In fact, you showed great persuasiveness and reasoning skills to the extent you convinced yourself that you are either doing it for love, or because it is a once in a blue moon kind of thing and not purchasing spontaneously. I am not going to judge your spending habits but one thing is for sure, these expenditures add up and very quickly at that.

I have not even gone into the fact that women (more mature form of “girls”, which was actually my first word choice referring to the female human species) shop for clothes, shoes, makeup and all the other ego-enhancing doodads that sometimes make them appear more glamorous and aesthetically pleasing than they actually would be (or in some cases, less). What about the manicures, pedicures, spa sessions and gym memberships, yoga classes and pilates? At the end of the month, you often ask, “Where is my money?”.

Where is your money, indeed. The only way we can ascertain exactly where all the money went to is to prepare a simplified income statement or cashflow projection that I showed two issues ago (refer to Volume 1 Issue 2: The Lean and Mean Machine Pte Ltd). Once you figure out where your money goes, the next step is to list those spending down in order of priority. Some people rate shopping above food, so… I don’t know what your list would look like. Now start from the bottom up and ask yourself two questions? First, “Is this expenditure necessary?”. Second, “By how much can I reduce this expenditure?”

Of course, cashflow projections are meant to be taken seriously. I recommend a 10% decrease on unnecessary items such as shopping, eating at restaurants and things like that. Try that for a month. It takes a lot of discipline and self-control. So to help you, you should visualize a goal that, something that you really wish you could do or have, be it a trip to Paris, or an iPhone, or your favourite LV bag, if you had enough money (by which I assume you currently do not have enough). With this goal in mind, every month you manage to save a proportion of your projected expenditure would seem like a huge step closer to attaining this big dream of yours. This is how you are going to get what you want. That is of course assuming that is the point of asking “Where is my money?” to begin with. There must be something that you want.

Just to switch gears a little, I would like to address a slightly larger perspective. On a macro scale of things, many of you who have existed in the past ten years or so would have heard about our fourth and fifth Prime Ministers who don the fancy Egyptian crowns and declare themselves Pharaohs, building their pyramids and monoliths. What am I talking about? I am talking about the Mega Project era of Malaysia, the dark times when projects of galactic proportions mushroomed throughout our country.

Let’s visit a few, in case you’re struggling to think of any. The most notable one would be our local favourite Petronas Twin Towers, which cost about RM1.8 billion. In a news article, Mahathir was quoted as saying that a country needs “something to look up to”. With a building of that height, there is no surprise that we have to look up to get a full view of it. Not only did the towers cost a fortune, it was built right smack in the middle of KL, the jammestest city in Malaysia, even worse than Sydney, a city with a much larger population than KL. More offices in the city means more people have to travel to the city to work. The debate about all the man-hours (and woman-hours) lost each year due to traffic jam is almost disgusting and will be left for discussion on another day.

Second, how many of you have heard of Putrajaya? Now, how many of you actually know where it is? If I did an actual poll among Malaysians, my guess is many of us don’t even know where Putrajaya really is. But guess what? The administrative capital that is actually in the middle of nowhere cost RM5.26 billion to construct. Among the buildings there is the “Prime Minister’s Palace”.

Third on the list is Malaysia’s favourite racing circuit, the Sepang F1 track (other than the streets of KL). At least one can say that street racing has been curbed to a large extent, no thanks to the 300 bumps that were laid across each straight road. One only has to visit the housing area of SS2 to see that 300 is probably not an exaggeration. The F1 track that was built, again, in the middle of nowhere cost taxpayers about RM75 million, a midget figure compared to the previous two projects.

Lo and behold, the fourth superstar, the KL International Airport. The airport is another one of the super projects that was located “a stone’s throw” from the city as publicized by the media. It only requires one to drive about 45 minutes to the airport for a 40-minute flight to Singapore. The airport cost about RM2.36 billion. To makes things worse, the airport was so seldom utilized that the government had to force all international flights to go through KLIA to maintain its A grade rating. In the past, Japanese tourists frequented Penang because of the direct flight that was available from Narita, Tokyo to Penang. This option is no longer available as one has to go through KLIA now. The Japanese no longer visit Penang and the tourism in Penang has suffered tremendously because of this.

Even more recently, any newspaper reader would be aware of the PKFZ scandal in which Kuala Dimensi Sdn Bhd was alleged to have overbilled the government close to about RM1 billion for the development of Port Klang Free Zone. Of course, the exorbitant expenditure works both ways as the overbilling was not questioned at that time and the government overpaid KDSB, or did they? Nonetheless, with its political twists and turns, the scandal is far from being settled and one can only hope that the case will not be buried six feet under once again just like the many high-profile scandals that have occurred in the past. I must be cautious not to misquote anyone or throw any names to avoid being pulled from my comfortable armchair by the ISA. Who is going to stage a demonstration for an unknown person like me to get me out?

I do not have to total up the billions that were spent on these mega projects to tell you that you are not alone when you ask, “Where is my money?”.

It would be too harsh to equate oneself with the excessive spending of the government but the idea is similar. We spend and we spend on things that we may or may not need and pay a price that sometimes far surpasses the intrinsic value of our purchases. To put it simply, we are paying RM10 for the new RM9 note, just because its unique or some other funky reason. Would you pay RM10 for an RM9 note? If we try our best to live life practicing strict valuation on our purchases as well as good cashflow planning, hopefully we would never have to pay more for something than what it is actually worth. So for those of you who have asked yourselves, “Where is my money?” it is about time to wake up and smell the coffee or roses or whatever it is that you want to smell. Start taking control of your money and don’t let your money control you.

Where is my money, indeed...

Sunday, August 09, 2009

Economics @ Home © Volume 1 Issue 3

Economics of Love

How can love and economics ever be related? The relationship between these two is a lot closer than you think. Economics is a study of scarcity and as we all know, at some point or another in our life, we have definitely experienced the scarcity of love. In life, everything that is in shortage will definitely have a price, monetary or otherwise.

For the sake of simplicity, I choose to discuss this topic in the case of heterosexuals. Goodness knows I am not that familiar with the concept of Homosexuality and how it works. As usual, let us begin with a basic assumption. We first assume that when one is in love, he (now and henceforth unless otherwise relevant referring to both genders for the sake of time and convenience) has a commitment towards an on-going relationship with a partner, or several but that is usually not that common. I try not to make too many assumptions so that I do not limit the scope of my argument. I believe that any sane person would agree and allow my assumption.

Now, I am not going to pretend to know everything that one should do when they are in love. However the most common activity among couples is probably dating. Dating does not have to be dressing up and going to an expensive French restaurant, eating over a candlelit table for two. Let us consider a typical date among couples.

Tommy and Sharon have been dating for six months (I am going to assume they are in love or at the least, they think they are). They are both gainfully employed. They try to see each other over the weekends as often as possible, whenever their schedule permits. Just last Saturday, Tommy asked Sharon out for a dinner and a movie. Sharon, of course, having not seen Tommy for more than three weeks not only agreed, she even requested that he pick her up at two so that they could just hang out a bit more.

On that eventful day, Tommy arrives at exactly 2.01 p.m. at Sharon's apartment and Sharon, being the loving girlfriend that she is, ensured that she was punctual because she knew that Tommy is very picky about tardiness. Being the gentleman that Tommy is, he brought a pink rose (stereotypically Sharon's favorite) for her. Now we have arrived at the juncture where I explain to you what the point of this story is. We are going to estimate what a date costs for a couple (or in most cases, men) to go out on a date and hopefully make some conclusions about the price of love. The rose just cost Tommy RM10.

On with the story. Sharon gives Tommy a tight hug and a long frenchy, long enough to give him a whiff of the Chanel perfume he bought her for her 23rd birthday (RM350). After some additional tender-lovingness that is not going to be elaborated in this issue (or any other issue), they are on their way to Mid Valley. What is there to do at Mid Valley besides shopping (window or otherwise). Now, before you begin having preconceptions of me exaggerating the cost of date, I assure you that for the sake of all my avid readers, Sharon is not a spoilt brat or a demanding girlfriend. The shopping mainly constituted browsing through clothing from shops like Zara, Top Shop etc. Occassionally, Sharon would hint at Tommy about how nice that skirt was at Zara. Tommy would reply nonchalantly while making a mental note to get it for her as a surprise during the next special occassion. That skirt will cost him RM 59.

After walking around for about two hours (Tommy is a real man and he is not going to bitch about shopping), Tommy suggests that they get a drink and relaxed for a bit. Sharon excitedly requests for a Mocha Frap from Starbucks. Knowing that they probably might not finish two drinks, Tommy orders a Large (or Venti or whatever they call it) Mocha Frap. RM16.50. They agreed that they should probably get their movie tickets while it is still early. Two tickets for couple seats for Harry Potter: RM 30. Nothing eventful occurs until dinnertime.

After haggling over Sushi Zanmai or Italiannese, they finally settled for Italiannese because there was no line at the entrance. Salmon Fettucini and Calamari Caesar Salad, with two drinks: RM80 (conservative estimate).

I am not going to include the price of popcorn or drinks during the movie because any sane person who has eaten at Italiannese will know that after dinner, you'd have to be Jabba to down more food. After the movie they left Mid Valley and headed back to her place. Depending on your imagination, what entails will be left out and let's assume that it cost them about RM12.

Totalling the cost for the goods that were mentioned in the relationship:

Rose: RM10
Chanel Perfume: RM350
Skirt: RM59
Mocha Frap: RM 16.50
Movie Tickets: RM30
Dinner: RM80
Parking: RM5
"Extra goods": RM12

Total: RM562.50
Total (excluding perfume): RM212.50

Okay, maybe the perfume was a bit too much and let's just assume it's a once a year thing. Even so, the total expenditure for the day was a whopping RM212.50!!

If you have read my last issue, my company's total expected expenditure is RM1765. That would mean that a date would cost about 12% of my monthly expenditure and 9% of my company's revenue. Wow!! I am sure any beginning investor would be happy to make 9% per year.

Let's just say they only manage to go out once a month. Now we include spending during special occassions like Birthdays (two a year), Valentine's Day, Anniversary (2 gifts), Christmas (2 gifts) and random gifts (2 a year), Assuming that RM150 is spent per gift, that would entail another RM750 per year. Total expenditure per year of dating would be RM3300.

Is love worth RM3300 per year? I don't know. To some people, maybe. I mean, if you paid for an escort, it would probably cost more than RM212.50 per day. So maybe it is worth it after all.

The Lean and Mean Machine (update)

For cost and efficiency purposes, I have decided to only to publish my income statement monthly, all the relevant financial statements quarterly, and a special annual report.

Monday, August 03, 2009

The Lean and Mean Machine Pte Ltd

So as promised, I am bringing you the projected cashflow and paid-up capital of my new company.

I have chosen to startup with a nice and easy round number, RM8000 for my paid-up capital with RM1 per share (RM6000 cash and RM2000 in Unit Trust).

As of today, I still have outstanding payables:

House rent: RM330
Electricity Bill: RM 55
Internet Bill: RM 55

Total: RM440

I also have receivables of RM2300 which is my monthly revenue. RM2300 is just the portion of my monthly salary that I choose to pay to my company for its services. The company functions as my financial advisor and wealth manager.

I am also currently invested in a unit trust. I purchased 7586.53 units at the cost of RM2000.

I will provide a proper balance sheet at the end of this month. I am just giving a brief preview of what I have for the time being. Here is the highlight of the day, my cashflow projection:

Revenue: RM2300

House rent: RM330
Electric Bill: RMRM65
Internet Bill: RM55
Handphone Bill: RM55 (RM50 postpaid plan + tax)
Food: RM640 (RM160 per week)
Fuel: RM120
Parking: RM120
Car Instalment: RM300
Miscellaneous: RM200

Total Expenditure: RM1985

Expected Profits: RM415

That seems like very little profits for now. My net profit margin (profit divided by revenue) is about 18%, which isn't too bad. However, I will provide a much more detailed financial statements either at the end of each month or quarter. Furthermore, I will try my best to produce a weekly estimated cashflow statement.

Hopefully this project will be able to encourage further cost saving measures as well as other revenue seeking prospects. I will explain my income and expenditure as they change if necessary. It is vital that I maintain integrity and transparency for this project. Hopefully it will bear fruit at some point.

Once again, the goal of The Lean and Mean Machine is to maximize profits through cost minimization.

Sunday, August 02, 2009

Economics @ Home © Volume 1 Issue 2

The Lean and Mean Machine

For those of you who have been visiting my blog regularly in search of updates, let me assure you that my Economics @ Home project will be a weekly deal. I will try my best to post an interesting topic (with practical applications, hopefully) every Sunday unless circumstances do not permit (i.e. death, illness, orgy invitation and similar activities).

More and more people I know have talked about trying to invest, or at the least, trying to learn how to pick stocks. Investing is a great idea. As for speculating... I am not so sure. I will skip explaining the difference to you because not only is it trivial, but it is also easily found in any other website. Plus, c'mon... if you're visiting my website, shouldn't you already know this?

The discussion today is about money. I am going to assume that everyone wants money. That goes a bit further than saying everyone needs money. I don't care if you're the Dalai Lama, but did you know that the Dalai Lama flies First Class? Yeah... changes your perception a little bit doesn't it?

So why do we want money? Hell, money buys us all our wants, desires! Why would we NOT want money? Are you insane? Hear me out. We want more money so that we can acquire more goodies. When we get the money to acquire goodies, we would have very little money left. Then we want more money? So how do we end this vicious cycle? For most people, it never ends. That's what makes most of us dependent on money. That's why we work so hard. Or is it?

I have always worked to defy this norm. Saying it is one thing. Albeit I am a huge saver when it comes to money, I am going formalize my practice. I did try to take account of all my expenditure to keep my spending in check. While many people spend money on shopping and liability acquisition, I feel like I spend a lot of money on food. I know that some of you will relate to this. In the past, I told myself that it's OK to treat myself once in a while. It's not that I have changed my mind and going to live like the Dalai Lama (he does fly first class!). I do spend unnecessarily at restaurants. I am going to put an end to that.

I am going to try to start a lean company (not a real company). I am currently the 100% shareowner. Every cent I earn or spend will be published in this blog. I honestly have no idea what my current net worth is. I will find that out and report it tomorrow. I will start preparing my accounting statements and publish it here as often as I can. For humor purposes, you may even invest in me. I might even draft up some terms for that.

My goal will be to maximize profits for this company. In this coming weeks, I will do a forecast of my earning and growth potential and see how I fair against some yet to be determined benchmark.

My company will be called "The Lean and Mean Machine Pte Ltd". The goals of this company is to minimize cost in order to maximize profits. Hence, spending will be monitored tightly. The target for each month would be to limit the monthly expenditure to necessities being at least 80% of total expenditure. Necessities include, rent, bills and food. Now food will become debatable because I may "overstate" the necessary food spending. So to maintain integrity and objectivity, I define necessary food spending to be RM150 per week. That is to allow for RM20 and some change per day. This limit may be adjusted in the future. I will try this for the month of August and see where that takes me.

Miscellaneous spending will be properly defined and stated as and when I do have them. My only source of revenue is my paycheck.

My complete monthly cashflow projection will be provided tomorrow.

The ultimate goal of The Lean and Mean Machine is to maximize net worth over the long run. Stay tuned for more updates on the Lean and Mean Machine.