Household Items You Should Never Buy for Cheap

Looking for good bargains to save money doesn’t mean we should skimp on every purchase. Some buys are just not worth the lower price; find out which items you should never cheap out on!

In an effort to save as much money as possible, it’s tempting to want to buy your household goods as cheaply as possible. But unfortunately, the benefits of lower prices might not be worth the harm it could bring to your health and finances in the long run.

Here’s a list of stuff you should never buy for cheap whether from your favourite variety stores (RM5 stores), second-hand or online:

1. Knives

It’s best to be extra cautious when buying any item that will be used for food prep. Cheaper, low-quality knives may rust or corrode easily and could be made with unhealthy materials such as low-grade stainless steel or nickel coating.

Moreover, a cheaper knife may be poorly crafted i.e. blades may break off (leaving shards) and handles made from low-density or soft wood could loosen or crumble and cause serious injury.

When choosing knives, you don’t have to look exclusively for an expensive brand. Even your neighbourhood supermarkets should offer a wide range of safe, quality and affordable pieces. Remember to buy individual knives as they suit your kitchen habits instead of buying a full set since those are often way more expensive and include knives you probably won’t even use.

2. Mattresses

If you buy a cheaper mattress made from less-sturdy materials like low-density foam or plain cotton, you may end up having to replace it sooner and spend more money in the long run. But that’s not the only issue with skimping on your mattress purchase; in fact, choosing a mattress that is unsuitable for you could lead to posture problems, body aches and poor overall sleep quality.

If you suffer from a breathing-related ailment such as asthma, you could be worsening your condition if your mattress isn’t dust-resistant. If you can afford it, do spring for a mattress that is hypoallergenic, anti-mites and made of long-lasting materials (e.g. natural latex, high-density memory foam, pocket coils, etc.)

If you do indeed find a good mattress that meets your needs and still happens to be on the cheaper side, do ask about warranties and return policies just to be safe.

3. Extension Cords and Power Strips

Any electrical item that hasn’t received safety certification, no matter how cheap should be purchased with caution. Extension cords and power strips are no exception, especially because it is commonly overloaded which could make it a fire hazard.

The Electrical and Electronics Association of Malaysia cautionedthat cables made from substandard materials can cause fires. The Association also asked consumers to look for product quality certification such as a SIRIMstamp of approval before buying. In addition, make sure your cords and power strips come with internal circuit breakers. Choosing the cheaper option with none of these safety features is not advisable.

4. Phone Chargers and Batteries

If you have to replace your smartphone charger or battery, you might be tempted to buy a knock-off version for a fraction of the price. However, even though the original accessories are more expensive, it’s actually worth the money. This is because it is likely to come with a warranty and be saferto use.

On the other hand, third party chargers or batteries may not be apt for your phone as it could void the warranty of your handset if damage occurs as a result. More worryingly, aftermarket accessories have been linked to scary, explosive incidents.

Note that even if original chargers and batteries are faulty, you will at the very least have some legal redress if you suffer injuries or damages to your property. This will not be the case if you buy an imitation product.

5. House Paint

Since this is an expensive buy of which you might need a large supply, you might be tempted to buy the cheap stuff and save more.

However, low-grade house paints sometimes contain volatile organic compounds (VOC) that are released into the air. These compounds may cause breathing difficulty among young children, pets and those with respiratory illnesses.

Look for low-emission, low-VOC paints or organic ones. These will typically cost you more than regular paint, but is certainly worth the extra money. Alternative, if you can’t afford better quality paints, go with basic matte or low-lustre coats as these are usually low in VOCs as well.

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What Does It Mean To Be Middle Class In Malaysia In 2017

When Budget 2017 was unveiled last year, Malaysians were already coming to grips with the rising cost of living, soaring house prices and deep levels of debt.

While the federal budget consolidated current personal tax reliefs into a lifestyle relief and introduced two new reliefs to assist young families, some critics say that the key people driving the country’s economy – the middle-income and top earners – have been forgotten.

For example, one tax consultant said he expected lower level tax bands to be widened to provide the M40 – or the middle 40% – with extra disposable income.

It is believed that this group of Malaysians are the one struggling with rising costs of transportation, education, healthcare and interest charges on cars and housing loans. In the same breath, they are the ones who drive the private sector.

So, what does it mean to be among the middle 40%?

Defining the middle class

A straightforward answer can be derived from the definition of the M40 group which refers to households with a monthly income of between RM3,860 and RM8,319.

But definitions of the middle class include a wide degree of subjectivity. What constitutes the “middle class” differ across and within the social sciences. From the perspective of economists, the middle class has been defined using absolute or relative levels of income or a combination of the two.

Also, subjective measures look at those who self-identify as being part of this group based on their own perceptions and aspirations. This manner of identifying the middle class can be seen through polls conducted by the World Values Survey, Pew Global and Gallup.

The World Bank, in its Malaysia Economic Monitor 2014: Towards A Middle-Class Society, proposed a definition that includes those households earning more than the mean income.

The Statistics Department, in its latest findings dated 2014, put the average household income of the middle 40% at RM5,662.

M40 through the years
Year	2002	2004	2007	2009	2012	2014
Average income	RM2,660	RM2,875	RM3,282	RM3,631	RM4,573	RM5,662
Ethnicity
Bumiputra	RM2,167	RM2,408	RM2,863	RM3,272	RM4,123	RM5,190
Chinese	RM3,780	RM3,951	RM4,389	RM4,560	RM5,836	RM7,049
Indians	RM2,860	RM3,116	RM3,393	RM3,569	RM4,589	RM5,646
Others	RM1,931	RM1,973	RM2,459	RM2,875	RM3,341	RM5,510
Source: Statistics Department

The World Bank, however, said 33% of all Malaysian households with a monthly income of more than RM5,919 in 2014 fell into the middle class or beyond.

Putting the numbers in context

Since 2014, economists and academics have believed the term “middle class” did not have the same meaning it had more than 10 years ago, citing the challenges faced by this group in coping with the demands of life today.

What makes this harder to gauge is while disposable income or savings is a good indicator of how many people “live comfortably”, Bank Negara Malaysia and the Statistics Department stated in a media report they do not track such data.

Ong Wooi Leng, a senior analyst at think tank Penang Institute, believes that the monthly household income unveiled during the 2016 budget is a well-received indicator to determine the M40 or middle-class household.

“However, it needs to be carefully defined,” she tells iMoney in an email interview. “The ideal income range for M40 needs to take into account other factors contributing to household expenses.”

She cited household size, education qualifications, occupation and residential location among the factors that could contribute to whether the income range set by the Malaysian government was feasible.

“For instance, a household of four living in the Klang Valley with an income of RM4,000 per month would be classified as urban poor due to the higher cost of living,” she said.

Here’s our estimates of how much a family of four living around the Klang Valley would need to get by on a monthly basis:

Average monthly expenditure
Home loan	RM1,342.75
Car loan	RM1,195.76
Credit card	RM968.94
Insurance	RM850
Food	RM676
Transportation	RM523
Utilities	RM430.19
Clothing and footwear (adults)	RM124
Health	RM59
Communications (phone and Internet)	RM600
General expenses for 2 children	RM1,000
Overall total	RM7,769

Source: Statistics Department, Life Insurance Association of Malaysia, iMoney Millennial Survey.

This is just a rough estimate for a family of four to live comfortably in an urban environment. This would place them at the upper ranges of the M40 group and is certainly more than the average.

However, this does not factor in savings and other miscellaneous costs such as daycare fees, among others, which could easily cost upwards of RM1,500 a month.

Stuck in the middle?

According to Ong, the middle class faces two challenges: First, these households may face a tougher time landing their first homes. This despite government aid for affordable housing such as PR1MA for households with income not more than RM15,000.

The Household Income and Basic Amenities Survey Report published by the Statistics Department found that M40 households recorded a double-digit growth in median monthly household income from an annual 6.3% in 2013 to 11.8% in 2014.

“But, property prices have skyrocketed since 2010. House prices around Kuala Lumpur, Johor and Penang have drastically risen by 15.6%, 22.7% and 15.6% respectively year-on-year in 2013.

“Despite the fact that the hike has been moderate in the last two years, it has reached a level where younger households cannot afford to own their first home,” she tells iMoney, adding that the risk-to-debt service ability could be higher if the monthly income did not keep pace with the spike in house prices.

Second, middle-income households would be more cautious and softer on their expenditure due to the weekly floating fuel prices.

“Consumer sentiment would be high and M40 households who are largely tertiary educated could be more watchful to the changes in global oil prices. Those living in the urban area may opt for alternative transport such as GrabCar and Uber services for the ease of mobility and saving in petrol expenses,” she said.

Upskill, adapt or lose out

Needless to say, in the name of making ends meet, the middle class may need to work multiple jobs. We have written extensively on avenues where one can generate a side income, from ride-sharing to blogging to freelancing on platforms such as Upwork and Freelancer.com.

“Given the advancement of e-commerce, it may not be impossible. Many start-ups have created platforms for full-timers looking for a second income,” said Ong.

But even before one talks about multiple income streams, perhaps it is best to begin with paying down debt. Our survey showed millennials being neck-deep in debt, with credit cards being one of the main culprits. Household debt is also at an all-time high.

There is no easy way out. Sometimes, drastic measures may need to be implemented and we are not just talking about foregoing your morning Starbucks fix – you might need to alter your diet and go vegetarian and even rely on public transport to get around the city.

If property is on your mind, then expectations also have to change. One opportunity that might provide for some relief is PR1MA. If you are not selected, as the affordable housing scheme runs on a ballot system, then purchasing a property within your means might just be a feasible option.

But for households dreaming of upward mobility, the only route is upskilling.

“Upskilling is vital to ensure that the Malaysian workforces stays competitive and grows at the cutting edge of innovation and technology.

“Human capital development is believed to be the only solution to move this group of households upward,” Ong tells iMoney.

While there may not be an aggressive push to upskill from government or private sectors, you can certainly take the steps to further your education. One option is to use your EPF Account 2 and go back to school to do post-graduate studies such as an MBA.

If you are tight with money and prefer to leave your EPF account alone, consider enrolling for online courses. There are many platforms such as edX and Coursera where you can either learn something for free or pay a slight fee.

While these may not be as intensive as pursuing an MBA in a reputed college or university, you still get to take away new skills and use what you’ve learned to either seek a better paying job or even negotiate for a higher salary or even work your way to a promotion.

In economics, it is believed that it is easier for a low-income country to be middle-income, than it is for a middle-income country to be a higher-income one. In fact, only 13 of 101 middle-income economies in 1960 reached high-income status by 2008.

While Malaysia may be on the cusp of moving into high-income territory, its citizens will have to continue cutting costs as the country navigates through choppy economic waters.

Ong believes the answer for the country to step out of the middle-income trap is to retain local talent and recruit top foreign expertise to train the existing workforce.

For the average Malaysian, the first step is simply taking charge of his or her finances and being prudent with their spending.

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Does Living In A Service Apartment Make Sense For Your Wallet?

Do You Know How Much It Really Costs To Live In A Serviced Apartment?

Just a few years ago, the local property market saw a boom in serviced residences and many billed these projects as a popular property type after double-storey terrace houses and apartments or condominiums.

What ensued were stories of disgruntled homebuyers who discovered that after moving in, they had to pay higher utility charges and maintenance fees. Why? Because the units were built on commercial-titled land, therefore owners were expected to pay commercial rates.

Of course, the question is how did these owners get caught unawares? But the bigger picture here involves enthusiastic homebuyers who might chance upon the opportunity to land their first home by purchasing a serviced residence in the name of affordability and convenience.

However, is that purchase justified?

All in a name?

In its truest sense, serviced apartments are fully furnished abodes rented for short- or long-term stay and come with hotel-like facilities such as housekeeping and room service, as well as a fitness centre, a laundry room and a rec room.

Examples that come to mind are The Ascott across the Petronas Twin Towers and Lanson Place in Bukit Ceylon. These serviced apartments are upscale commercial units and are usually geared towards tourists, business travellers or even expats.

But there’s another type of residential units marketed as “serviced apartments” and these are offered sans the hotel-like amenities.

The Ascott, a four-star serviced residences complete with hotel amenities.

These residences usually mirror what you’ll find in a condominium – such as 24-hour security, a swimming pool and a gym – but will also consist of adjoining retail outlets.

They are offered in various configurations, from SoHos to studio units to three-bedroom apartments, and they also go by the name of mixed-development units. Price-wise, they can start anywhere from RM250,000 to upwards of RM500,000.

In this context, the term “serviced apartment” is a misnomer and regardless of the configuration of the units – whether a three-room apartment or a studio – what it really means is simply: stratified freehold/leasehold residential units built on commercial land.

And, by this, we also include purely residential projects with no commercial aspect whatsoever but built on commercial land such as CitiZen in Jalan Kelang Lama.

Minding the utility gap

Since these properties are on commercial land, owners will have to pay higher quit rent and assessment charges as well as electricity and water. They also might have to fork out higher monthly maintenance fees.

A serviced apartment or SoHo is categorised as low voltage commercial premises and according to Tenaga Nasional Berhad (TNB), the minimum monthly charge is RM7.20. A private dwelling on the other hand is capped at a minimum of RM3.

According to Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), the minimum water tariff for commercial usage is RM35 per month, while the minimum for domestic usage is RM6. That’s a RM29 difference!

As for assessment rates, local authorities in different areas have different rates on property assessment. For example, the Majlis Bandaraya Shah Alam or Shah Alam City Council imposes a 4% and 3.5% assessment rate on landed and stratified residential properties respectively but charges 5% on serviced apartments.

Majlis Bandaran Petaling Jaya (MBPJ) imposes a 6% assessment fee on stratified residential properties but charges a 6.6% fee for serviced apartments and 8.8% for SoHos.

A year’s consumption
	Two-room residential condo	Two-room serviced apartment
^Electricity:	RM60.63 x 12 months = RM727.56	RM112.96 x 12 months = RM1,355.52
^^Water:	RM36.85 x 12 months = RM442.20	RM83.85 x 12 months = RM1,006.20
*Assessment tax:	RM1,368	RM1,504.80
Overall total:	RM2,537.76	RM3,866.52

^This is based on the national household consumption average of 251 kWh per month, which roughly amounts to RM60.63 for residential and RM112.96 for low voltage commercial.
^^ Estimates provided by Syabas for a 31-day billing cycle. 
*Figures provided by MBPJ for properties in Damansara Perdana at 6% for residential condominium and 6.6% for serviced apartment. Assessment tax rates differ from one location to another.

Based on the table, if you are an owner of a serviced apartment, you can expect to pay an estimated RM1,328.76 more every year than someone who owns a private dwelling on non-commercial land. That’s more than 50% more every year!

Note: This does not factor in maintenance and sinking fees which are said to be higher than units on residential land. Also, some serviced apartment projects charge a monthly parking fee.

Can you appeal for lower tariffs?

According to Syabas, high-rises such as condominiums and apartments that are non-low-cost fall under Tariff Code 17 while low-cost flats are under Tariff Code 18.

Generally, a residential property on commercial land incurs higher utility charges.

Service apartments are classified under the commercial category and they fall under Tariff Code 11. Water is supplied through a bulk meter and residents would need to pay a minimum monthly water bill of RM36.

Syabas has a migration programme where those living in Tariff Codes 17 and 18 are eligible to participate with residents enjoying domestic water tariff rates – those paid by owners of landed residential properties.

Unfortunately, service apartments are not eligible to participate in the migration programme.

As for electricity tariffs, there is no general consensus. However, there are cases, including that of the writer, where an appeal to the nearest TNB branch was successful and the tariffs were changed from commercial to residential.

One reason for this is that serviced apartments and SoHos now fall under the Housing Development Act, meaning these premises have been recognised for residential usage.

Serviced apartments and GST

The Royal Malaysian Customs (RMC) guidelines on land and property development state that a SoHo is treated as a commercial property as it is developed on commercial land and as such subjected to the goods and services tax (GST).

A SoHo can only be treated as residential property and exempted from GST If these conditions are met:

• Development Order is issued for mixed development purposes, i.e. for “commercial” and “residential”, by the relevant local authority.
• Approved layout plan and approved layout building is for dwelling purposes.
• The Housing Development Licence and the Sale and Advertisement Permit are issued under the Housing Development Act (Control and Licensing) 1966 by the Ministry of Urban, Wellbeing, Housing and Local Government; or under the Housing Development (Control and Licensing) Ordinance 2013 by the Ministry of Housing Sarawak; or under the Housing Development (Control and Licensing) Enactment 1978 by the Ministry of Local Government and Housing Sabah.
• The property developer and the buyer enter into a Sale and Purchase Agreement for a property governed under the Housing Development Act.

Meanwhile, serviced apartments sold both in the primary and secondary markets for residential purpose are exempted from GST, according to the RMC.

The maintenance fee on serviced apartments and SoHos are also subject to GST and there are no discounts of exemptions unless a unit fulfils the conditions by the customs department and is treated as residential property. Only then is the maintenance fee on the unit no longer subject to GST.

Source: The Edge Property

So, is a serviced apartment worth it?

It all boils down to your lifestyle and your goals in purchasing a property. While there may be loopholes in the way a service apartment or SoHo is marketed, not all of these properties are subpar.

For instance, Saujana Residency in Subang Jaya boasts a well-designed layout for its units and offers a wide range of amenities. It is also strategically located – it is behind Subang Parade, and adjacent to the Subang Jaya KTM station and the SS15 LRT station.

A stone’s throw away is Subang SoHo, which consists of duplex and studio units. These are great bachelor pads and also for young entrepreneurs wanting the luxury of working from home and yet commute easily to major parts of the city.

So, if you are looking to rent out your unit, such properties are desired simply because of their close proximity to the city and food and lifestyle spots as well as major public transportation hubs.

The duplex design of the Subang Soho unit makes it the ideal bachelor pad.

But it is undeniable that a residential property provides peace of mind. Owners definitely save on utility charges and they also need not worry about paying higher quit rent and assessment charges.

If they rent out their units, tenants would also pay a lower amount on their electricity, water and sewerage bills.

Also, for first-time homebuyers, their chances of getting a 90% loan are much higher, which makes it easier for a newbie to get a foothold on the property ladder.

One disadvantage, however, is that residential property in and around the city is expensive and we can expect that to remain for some time.

Even if you consider residential units near the MRT rail lines, it’s worth asking whether travel time and cost and other out-of-pocket expenses would be worth the trip every day to and from the office or to anywhere you want to go.

The allure of serviced apartments and SoHos is that these units are usually strategically located in business areas and that makes a world of difference when you think about commuting and accessibility.

Whatever your pick is, the rule of thumb is to always thoroughly research your property before embarking on a purchase. It also makes sense to consider the long-term financial commitment you will be making, on top of the home loan monthly repayment.

Even the grouses of serviced-apartment owners could have been avoided if they knew what they were getting into in the first place and all those are laid bare beyond the sales speak and in the fine print.

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#OpsRaya: 3 Most Common Financial Mistakes Malaysians Are Guilty Of Every Raya

In a matter of weeks, Malaysians will mark the end of the fasting month and greet the Hari Raya festivities with the usual balik kampung sojourn.

It’s a time to catch up with family and friends, flash that baju raya and indulge in a hearty meal of lemangand rendang.

But it is also a time of heightened financial spending. Online sales are expected to surge upward by at least 50% throughout this year’s Raya month, according to digital marketplace 11street.my

Electronics, home gadgets and clothing are sought-after items while demand for car services and road safety-related items are expected to rise, it added.

Now, while we don’t mind a little splurging in the name of festivities, money is no respecter of times and seasons – you’ll just have to use it wisely.

Here are three things you should avoid doing this Raya at all costs:

1. Buying a new set of wheels

By this we don’t mean new tyres, which you should change if they are worn out or have past the expiry date.

For Malaysians a car is more than moving from Point A to Point B – it’s a status symbol. But there’s a more sobering reality: one of four bankruptcy cases in the country are due to the purchase of vehicles.

The Insolvency Department revealed that 27.94% or about 28,374 bankruptcy cases between 2011 and 2015 fell into this category.

Now we know that purchasing a car in Malaysia is easy: all you need is some basic documentation, a low down payment and approved hire purchase loan.

Heck, these days there are many financing programmes empowering consumers to own an upmarket auto through a seemingly reasonable monthly repayment.

But there are many financial pitfalls – from fuel to servicing to road tax and insurance – when it comes to car ownership and we are not just talking about depreciate rates and loan interest rates.

How this ruins your Raya

First, restricted cash flow. Since you would probably take out a loan for your car, monthly repayments kick in once you are handed the keys.

So you’ll probably have to cut back on a lot of things in the name of servicing that car loan.

Second, run the risk of having your car repossessed. This is a reality that comes with car ownership.

Festivities or not, the moment you draw out a loan, you are subject to paying the loan according to the agreed deadline between you and the bank. Not being able to do that because you blew your budget will not cut it.

The last thing you want is to recall a Raya where your car was repossessed and put up for auction.

2. Drawing out a personal loan

The World Bank last year discovered that only 36% of Malaysians are financially literate.

Such illiteracy is filled with dire consequences: bankruptcy. Actually besides car loans, many Malaysians are bankrupt due to personal loans.

Personal loans, just like credit cards, exist for a reason. With good intentions, you could finance a pet project or even consolidate and pay down debt.

But you can definitely use a personal loan for a wider range of intentions such as vacations, home renovations, weddings and even big ticket items such as a new surround sound system for your home.

If showboating is what you have in mind, think again. Under the revised bankruptcy laws, the threshold for debt has been increased to from RM30,000 to RM50,000.

Banks are offering personal loans these days up to RM150,000 and you could be swayed into drawing out a loan in the name of a Raya upgrade. But committing to those monthly repayments though…

How this ruins your Raya

First, tighter cash flow. Like a car loan, monthly repayment kicks in once you sign the agreement, meaning you’ll have less cash to use for Raya, worse if you have to hand out green packets of duit raya to friends and family members

Second, outstanding debt affects your credit score. This makes you a less desirable candidate when it comes to applying for a mortgage or car loan. You could be denied a loan or even get stuck with a less favourable interest rate – all these affect your finances in the long run.

Worse is if you have a family and children, which means you could potentially even financially neglect them just to pay off your debts.

Third, bankruptcy. All you need to do is have an outstanding of RM50,000 and above with a default period of at least 6 months to be declared bankrupt. Your assets will be administered by the Director General of Insolvency (DGI) to settle outstanding debts.

Yes, this means all your assets and properties and sell or dispose them to repay creditors. Also your passport will be held by the DGI, meaning you can’t leave Malaysia.

3. Maxing out your credit card

It being the festivities and all, splurging a little on that baju raya is okay. But swiping that plastic for a Prada tote bag or Jimmy Choo pumps or an iPhone? And don’t get us started with shelling out hundreds for jars of kuih raya.

The Asian Institute of Finance found that 47% of young Malaysians are engaged in expensive credit card borrowing.

It found their debt woes were the result of impulse-buying behaviour coupled with easy access to, well, personal loans and credit card financing.

A credit line is helpful if moments where you truly need cash and by this we mean more serious reasons than compulsive shopping.

When used properly, a credit card helps you save, whether it is in the form of cashbacks or discounts and privileges. Some credit cards even offer seasonal treats including festivities such as Hari Raya.

Not being prompt on your monthly payments or skipping payments altogether can lead to dire straits and you are looking at anywhere from incurring late payment charges to a black mark on your credit report to bankruptcy.

How this ruins your Raya

Straddled with long-term debt. If minimum monthly repayment is your MO, you are going to be straddled with debt for a few more Hari Rayas. Looking forward to future festivities is not going to be fun as you will greet each Hari Raya with tighter cash flow and debt.

Second, you’ll deplete your savings. Either by paying off debt or to manage your lifestyle. With the odds against us, from insufficient EPF funds to retrenchments, a decent amount of savings can help us survive such devastating outcomes.

Not having any savings would just leave us vulnerable. Then there’s the usual stuff that happens if you can’t service your debt – all that we’ve mentioned previously.

Keep things simple

Spend if you can afford to. The joy of Hari Raya or any festivity is to actually indulge in the company of others.

The customary duit raya handed to friends and family, particularly children, and the open houses all embrace the spirit of living in community.

In fact, you don’t need to sell your kidneys to look good during Raya – discounts aplenty and you can surely snag an affordable baju raya.

Financial prudence is timeless but so is debt. Remember that an abuse of credit has long-term consequences and if you are not prepared to promptly pay it down, not even your brand new baju rayacan help you in that department.

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