Category Archives: Business

Debt Trap – How loans trap us

The financial crisis is one inseparable part of a person’s life, and it may come in anyone’s life, without any notice. There are situations when the most financially stable person would seek support. Any they come at any time of our lives without notice.

That need for financial support is complemented by a loan, which could be a formal arrangement with the banks, financial institutions or informal money markets with individuals. The loans are either business loans, housing loans and the widely use loans are the personal loans.

When the credit is availed by the banks, other financial agencies and informal money markets for the personal use, it is called Personal Loans. This Personal Loan has come to the rescue of the many people, with the instant availability of funds. These Personal Loans have always been the helping hands during the urgent needs of the people and have solved various unavoidable circumstances in a person’s life.

But at the same time, the Personal Loan has been a cause of worry for many. Even, if the Personal Loans have been the lifesavers many times, they are the ones, which come with some hidden traps too


Informal Debt-Trap

In Papua New Guinea, the desire for fast personal loans to patch the gap before the next payday has forced many people to turn to INFORMAL MONEY MARKETS. The main reason for this is the CONVENIENCE, quick turnaround and the ZERO paperwork that comes with the requests for a loan.

As always, convenience comes with a price, and the price for this informal money market is very high. The interest charge for these loans are usually between 30-60 percent and only for a short period usually within 1-2 weeks.

The formula used for this interest calculation is the SIMPLE FORMULA.
You borrow K1, 000.00 at rate of 40% for 2 weeks; you pay K1, 400.00 at the end of the 2 weeks. If you do not pay at the end of the 2nd week, they charge another 40% on that K1, 400.00 and you end up paying K1, 960.00 after a month.

These informal money markets has sadly been a DEBT-TRAPPED for many Papua New Guineans who were not able to pay their loan when the loan sharks come calling.


Formal Debt-Trap

Then there is the Banks and the Financial Institutions who also offer personal loans aside from housing loans and business loans.

The requirements for personal loans, housing loans and business loans varies from each Bank and financial institutions. However, the calculation of the interest charge is the same across all those different requirements.

I will discuss the Housing Loan and how interest are charge, it is no different to a personal loan and business loan.

Personal loans have higher interest rates, Kina Bank charges about 20% p.a and BSP charges at about 27% per annum.  Home Loans have lower interest rates. Kina Bank Charges 6.5% interest on home loans whilst BSP Bank charges 6%, however BSP has a special of 4% per annum for the First Home Ownership Scheme over a period of 40 years.

Let’s use the FHOS of BSP to do a calculation of K400,000 for period of 40 years at 4% per annum interest

These Banks and financial institutions use COMPOUNDING FORMULA to calculate interest payable and additional charge interest on any outstanding loans which the called CAPITALISATION.  There 2 calculations, the first is for the repayment amount for the duration of the loan and the other is the interest charge on any outstanding loans. The interest is calculated daily and charge monthly.

Formula:

Mortgage Calculation Formula

Calculation:

  • 4% annual interest rate needs to be change into an effective monthly rate. Therefore we divide 4%/12 months = 0.3% effective interest rate
  • Number of repayments would be 40 years multiple by 12 months, therefore 40 x 12 = 480
  • Calculating the Monthly repayment using the formula above gives you K1, 573.64 which is monthly repayment
  • Aside of the fixed repayment, there is also an interest charged for loan outstanding. This interest is calculated daily and charged monthly, this charge is called CAPITALISATION.

A simple spreadsheet of repayment looks like this after calculations are done, it is done using a compounding formula

The BIGGEST TRAP in this Formal Loan is that the loan interest is charged daily and added to the loan amount monthly. This interest on loan increases the loan amount each month, and whilst we pay fixed amount monthly, the repayment would not seem to make any difference as CAPITALISATION costs keeps adding up.

The only way to get out of this formal debt-trap is that you find ways to pay more than then monthly repayment, any lump sum amount or extra repayments would assist in getting out of this, otherwise, it would take more than 40 years to completely pay of your debt.

Advantages of ONLINE Learning

There are several problems with the traditional system of education. First of all, you need to pay thousands per term to attend a prestigious school. With all those budget cuts, busy classrooms, and course shortages, you won’t always get the chance to study exactly what you want.

It’s no wonder why millions of students from all around the world opt for online degree programs or take at least one college course through an online platform. Online learning has to be the greatest revolution in contemporary education. It made a huge change in the system and opened great opportunities for everyone who wants to learn something.

Nevertheless, online education is still related to stereotypes. People often think that online students are not smart enough for a traditional college or university, they are lazy, and they don’t get “real” degrees. These claims discourage many people from taking online courses, so they get stuck in the traditional educational system that consumes a huge deal of money, nerves, and years of their lives.

Allow us to explain why online learning is more awesome than you think. We have 5 advantages of online learning that will make you reconsider your attitude towards this type of education.

1. You can learn whatever you want!

Benefits of working online

You can pick the program of your dreams in traditional education, too, but that would involve traveling away from home, living in a completely unknown city, and struggling in an extremely competitive learning environment. With online education, you can take any program or course present in traditional four-year universities.

For example, let’s say you’re mostly interested in neuroscience. All it takes is a Google search for such online course, and you’ll easily find the online programs offered by some of the most prestigious universities from all around the world. You can take such a course even if you have no aspirations to apply that knowledge in your future profession, but you’re simply curious to discover new interests and understand how the human brain works. The great variety of online programs and courses is a huge advantage of this type of education. It doesn’t matter where you live and what you want to study – you can always find a suitable course or even a degree program that you can follow from home.

2. Comfort.

Forget about attending classes for hours, sitting in an uncomfortable chair, and suffering from back pain by the end of the day. You will not be bound to physical class session when you opt for online education. All lectures and needed materials are provided via online platforms, so you’ll easily access them from the comfort of your home. You will not take public transport to get to campus, you won’t have to spend money on gas for your car, you won’t have to get up early to get dressed for class… the list of conveniences goes on and on.

Studying Anywhere

Comfort is a strong advantage, but it can go both ways. You mustn’t allow yourself to get too comfortable when studying from home, so it would be best to abandon the couch for few hours a day and set up an inspirational studying environment in your home. All you need is a large desk and a nice, comfortable chair.

3. Online courses look great on a resume.

Online Certificate from IBM

It doesn’t matter where your career stands at this moment; an online program will always look good on your resume. It will show potential employers that you’re committed to learning and you’re eager to obtain more knowledge and new skills. Hiring managers don’t see online degrees as inferior to traditional ones. A degree is a degree. If you obtain an online degree from a prestigious university, you’ll boost your career with the speed of light. You will certainly become a better candidate for a job promotion, and your resume will look much better when you apply for new positions.

4. Self-paced learning.

When you start browsing through interesting online courses and programs, you’ll notice the Self-Paced label on most of them. What does this mean? Self-paced learning means that the students can start completing the targets at any time, and he can arrange a learning schedule that meets his individual needs.

When you enroll in a traditional college program, you’ll have to forget about work, hobbies, and even family. In such setting, studying has to be a priority. That’s why many single parents and people who work decide to forget all about their dreams to get a higher degree.

A self-paced system enables them to make progress with rhythm that suits them. This type of system does not require attending live sessions; you can access the materials at any time that works for you. If you have to work or take care of your home and children during the day, you can study at night. That’s an advantage the traditional educational system cannot beat.

5. Lower costs.

The fact that online programs are cheaper when compared to the ones held in a traditional campus setting is enough to convince you to consider them. The average tuition for online courses depends on multiple factors, so it varies from one program to another. If, for example, you want to enroll in the Big Data Specialization program provided by University California, San Diego through Coursera, you’ll pay $399 (K1,000). You also have an option to pay $49 (K110) per course. Financial Aid is available for learners who cannot afford this fee, so that’s something you should always keep in mind.

We saved the best part for last: many online courses are completely free of charge. MIT, for example, offers all course materials online without any charges. Free courses don’t usually come with certificate of completion, but they are still more than useful for anyone who wants to learn from prestigious educators.

Online Education Is Totally Worth The Effort

Online courses and degree programs are more convenient and cheaper than their counterparts in traditional education. Those are the two main advantages of online learning that lead many students to opt for online platforms when they want to earn a degree or certificate.

The best thing about online learning is that you can learn in a relaxed manner even if you don’t want to get certified. You only need passion for learning and a quick online search that will take you to the right course. From that point on, you will be the master of your own education.

By: Stephanie Norman
eLearning

Free Email Address is bad for Business

I have seen so many professional business cards with a gmail address on it and my first instinct is never to take that person seriously!

Maybe it is just my way of filtering the noise but how many companies and business executives do the same thing as me when they look at a business card with a Gmail, Hotmail  or yahoo address?


Most people will say, this is a way of keeping costs down and to use as much free stuff when you starting out in business.

Personally, using the FREE EMAIL risks the following;

  • You missing out on Marketing Opportunities

A perfect way for your Brand to stick at the minds of people is when you use your own business name in an email address. The business sells itself without making an effort.

Using the FREE EMAIL, makes you lose that marketing opportunity!

  • It looks unprofessional

Flashy looking business cards with a gmail, yahoo or even a Hotmail email address just looks unprofessional. As much as someone appears to look and play the play the part, the FREE Email address makes you look like a fake. It is like a Michael Jackson impersonator – everything looks real until they open their voice to SING.

  • Hackers love FREE email account

Free EMAIL account are so easy to hack! A lot of hacks on email happens on gmail, yahoo and Hotmail. Using your own business email makes it harder to be hacked.

  • Can be mistaken for a SPAM

Have you wondered why most of your proposals sent to companies and business never get a reply? Maybe because it was mistaken has a spam and its’ either blocked or sitting in the spam box. Free EMAILS are associated with SPAM and 9/10 your proposal would be considered the same.

It is not hard to get your own domain name. A lot of ISP’s provide that already.

I used to use a google business before when I registered shellnetpng.com but they started charging monthly for every other email account created. I now use ONE.COM, as I can have as many email address under just one domain account name.

If you need your own domain name – hit me up and I can assist you.

DataCo uses O3B satellites

Just over 12 months ago, I was privileged to escort DataCo engineers to Manasseh in US to do a factory acceptance test for an O3B Satellite that DataCo has purchased from O3B Networks.

The satellite was purchased by the Australian Government for DataCo to provide capacity for the APEC Leaders Summit last November 2018.

During the Leaders Summit, O3B were able to deliver up to 8Gbps of capacity and would have delivered more if DataCo had requested.

Can read more about O3B here
https://www.ses.com/press-release/o3b-satellites-roar-space-scaling-sess-meo-constellation

Footprints

Dear Family & Friends,

Been trying to figure out what to do on my Birthday as I approach the halfway mark of the life expectancy in Papua New Guinea. I was wondering if I had at least influenced anyone I came across in the last 10-15 years and if there was any significant positive change in those who I had met.

I guess what I am trying to say is, am at the stage where I am thinking, will anyone remember me after I am gone? Maybe my children will …but would my grandchildren and great-grandchildren remember me?

Am thinking – what I need to leave behind is a legacy……….

So I have decided to create a website (blog) which I would document some of my passions (not the nasty ones). I have named it ‘Paura – the Digital Nomad’, that summarizes my two main passion of Technology and Travel. The last few years, I did much travel and involved in technology but did not get to pen them down for someone else to enjoy.

So I’ve created the nomadicpaura website will be collection of my interests in life going forward. Aside from Technology and Travel, there would be a page on Entrepreneurship, a page on Food (who dosnt like to eat or even cook? ) and of course, there would be another page on Photography.

I plan that this website would be use as a guide for anyone who hasn’t really grown any wings to fly away from their nests and also some pointers on travel locations, budget meals, tips on photography and some advice on technology and business.

Hope some of you follow me on this journey…