The outlaw

 The outlaw

TO preserve peace and order, laws were put in place for people to follow for their protection. Breaking the law would mean disrupting the system that will benefit its constituents.

More often than not, the penalty for breaking the law goes from a minimum penalty of fines to a maximum of death penalty. These penalties are aimed at preventing people from committing actions which are against the law. Even during Biblical times, the Ten Commandments were given to the Israelis. Breaking one results to harming himself and be subject to punishment.

In modern times, people who break the law created by men are called outlaws. Examples of outlaws are hold-uppers, kidnappers, drug dealers, car-nappers, hired killers and the like. Outlaws are the cause of miseries to the citizens where they extort money through threats and bodily injuries. They also cause trouble to law enforcers when they are subject to the penalty and yet remain free. In general, outlaws are a nuisance to society. They are a hindrance to the progress of a country.

In personal finance, the same principle applies. There are also outlaws that affect a person’s financial life but not to the extent of being a criminal like the examples above. Usually, these outlaws are very well known and very close to a person – they are his in-laws.

Majority, but not all, in-laws cause a heavy burden upon the personal financial life of a person. Filipino culture dictates that the in-laws are already a close family member of a person once he gets married. Most often than not, the problem of the in-laws becomes his problem.

I remember very well some years back, I was able to exchange e-mails with a husband whom I met through an on-line forum. He was having a very hard time making both ends meet, being the sole breadwinner of the family. His problem was that whenever his in-laws had money problems, he was always the solution to the problem. His wife always approached him and narrated the situation of her parents and siblings. Being a good husband, he would agree to the demand of his wife to loan his in-laws a certain amount of money. Time would pass and the loan would be forgotten by the in-laws. The cycle continued again and again. Getting sick and tired of the situation, he joined a finance forum and yours truly was one of the respondents to his predicament. By exchanging views, he said that working for several years, he was not able to save even a single centavo because his in-laws totally depended on him. If he did not give in to his wife’s request, a word (world) war would ensue. 

I had a colleague who experienced the same situation. However, the wife did not need to ask from him any amount of money. The wife controlled the husband’s paycheck. It is a well-known fact that whoever controls the paycheck controls everything. In this case, the husband is under control and is treated as the unlimited ATM. The wife would pawn his ATM for loan that charges seven percent a month and the husband paid the loan.

I gave them a very simple advice that my late father narrated to me through a story some years ago. He had a friend in Chinatown who owned a business. My father was only an employee but he was very frugal and had a substantial lifetime savings. His friend was sure he could borrow from my father back then. The amount he needed was quite sizable.

My father, who could always sense danger and risk, turned him down politely. Naturally, his friend felt bad for being rejected. Their relationship was affected. My father told me this principle: “It is better not to loan to a friend and temporarily have a bitter relationship than to loan to a friend and create a lifetime enemy.” True enough, after a short period of time, they were on speaking terms again as if nothing happened. But the sad thing was that the business closed down in less than a year and his friend succumbed to a heart attack. Had my father not been wise in handling his money, it was quite certain that our future would have become bleak since his savings would have been wiped out. He did not preach to us greed but just showed good judgment in managing risk. It must be noted that whenever we shell out our money, there is always a credit risk involved.

So I gave them the lesson learned, implying that they should put a stop on the dependency on each of them. I also said that that before they help others, they should be able to help themselves first. For how can one be a blessing to others when he is not a blessing to himself? Knocking some sense into their minds, they seemed to have awakened from a deep sleep. My colleague heeded my advice and freed himself from the bondage to his out-laws, rather his in-laws. By freeing himself from his in-laws, he could then start to put order into his personal financial life.

Another classic example is that of the two house helps of a friend. They are cousins-in-law and are 10 years apart. Both of them earned the same wage.  For reasons unknown, the older one was deep in debt to the younger one in the amount of P8,000. She kept on borrowing money whenever payday came. Since they were related, the younger one just could not say no. When the younger one needed money to send home, she still has to borrow money from her employer. In this case, the lender becomes the borrower. She could not get her money when she needed it. The other one did not make any attempt to pay back her debt. Sometimes, one can’t help but feel like being held-up by a crook to extort his money. Indeed, in-laws like these are really the outlaws of one’s financial life. There is only one antidote to a problem like this: Be an outlaw to your in-laws and for sure, they will disappear from your sight.

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Edmund Lao is a candidate for registered financial planner (RFP) designation. Edward was recently awarded the 1st Investment Savvy Award by Sunlife’s It’s Time!. To know more about becoming a Registered Financial Planner (RFP®) , please visit www.rfp.ph or inquire at info@rfp.ph.