Month: November 2017

It goes by different names in every country, but surely, you are entitled to a Christmas bonus from your employer. The rate varies per country too, but the sure thing is you have something extra for the holidays.

What do you plan to do with it?

Shopping or upgrading your jurassic-old phone may be a good idea, but if you are serious about your family’s financial future, then check out these tips on how you can spend your Christmas bonus wisely:

1. Pay off existing debts. 

This should be on top of your financial priorities list more than anything else. Keep in mind that it is not a good idea to start the next year with debts, so use the extra money you have and pay off your loans.

The rule is to pay off the loan with the highest interest first, so you can save on interest charges. If you borrowed money from friends, then make sure to pay them before the year ends. Once you’re debt-free, it will be easier for you to save money.

2. Grow your existing business. 

Do you have an existing business? Why not use your extra funds to fill up your store by replenishing your stocks or add new items to your existing line? You can also use your Christmas bonus to buy additional equipment for your store, say a new mixer or other baking tools if you’re into baking goodies or heat sealer in case you are into food repacking business.

Better yet, you can try opening a new business. Check out these micro-small business ideas you can try.

3. Invest in appreciating assets. 

Don’t settle for savings account only. Sadly, it will never be enough, especially if you plan to stay in the Philippines for good while maintaining a comfortable lifestyle.

In that case, use your Christmas bonus to purchase appreciating assets like stocks, mutual funds, Peso balanced fund, or even in a small property. The good thing about using your extra funds for investment is that there is a possibility that your money will grow in years. You can use the income from your investments to pay off bills, send your kids to a good school, and even put up your own business.

4. Start building your Emergency Fund. 

They say that OFW life is uncertain. That’s true. Even if the contract says two years, there are still instances when you have to go back home because the country is having a political crisis or your employer is not treating you well.

This Christmas, make sure you start setting up your emergency fund, which should be at least six months-worth of your monthly salary. In case something happens, this Emergency Fund could help you get through for at least three to six months and help you get back on track.

READ: Tips on how to set up an emergency fund

5. Treat your family (only). 

It’s been months (or even years) since you last saw your family. Since you’re home for the holidays, why not treat them for a change? After all, Christmas is all about family and togetherness.

A Christmas lunch or dinner at a restaurant could be nice, but make sure you stay on budget. It is understandable that one gets carried away easily in granting family’s requests, so the best way to go about it is to impose a specific budget only.

One last thing: keep the treat to immediate family members only. There is no need to invite the entire barangay. 

6. Treat yourself. 

Yes, you deserve it. After all the hard work and sacrifices you did to be able to provide a better life for your family, don’t feel guilty if you indulge yourself into something, like new shoes or a new phone. Think of it as a payment for yourself because at the end of the day, you need to be rewarded too.

Don’t get carried away. Christmas could mean bonus, but this doesn’t mean you’ll forget about your financial goals. The key here is to plan your expenses so you could use your Christmas bonus wisely.

Why do you want to work abroad? For many people, it’s the idea of earning in dollars and being able to provide a better life for the family.

Despite that, there are still instances when it seems like your monthly income is not enough to cover your family’s daily needs. Plus, you want to open a new business so you don’t have to work overseas again. In that case, you can turn to OFW Loan for help.

Here’s everything you need to know about OFW Loan:

What is an OFW Loan? 

This type of loan is a financial assistance specifically catered to Overseas Filipino Workers. OFW Loan can be a personal loan, auto loan, or even a housing loan, but with special terms and conditions that will suit the needs and only applicable to OFWs and their families.

Who are qualified to borrow? 

• Workers who are currently working abroad and with active employment contract.
• Balik Manggagawa, or workers who previously worked abroad and planning to go back but have no specific funds.
• First time OFWs

Unfortunately, ex-OFWs or those with no existing Overseas Employment Contract (OEC) ware not qualified to apply for any type of OFW Loan since OEC is among the requirements. Still, you can avail of the ordinary type of loan from lenders depending on your specific needs.

What are the allowable reasons to avail of OFW Loan? 

There are many reasons why you need to apply for a loan. Nonetheless, banks and private lenders are careful when it comes to the purpose. They won’t allow “to buy a new phone” or “for shopping” as your reason to borrow money.

Below are the allowed reasons to apply for a loan:

• Acquire a new home
• Home construction or renovation
• Purchase of a car
• Process and pay work-related documents and plane ticket
• Start a new business or expand an existing one
• Start a new livelihood through the OWWA Reintegration Program
• Pay off personal or emergency expenses such as medical bills or your kids’ tuition fee

What are the requirements when applying for an OFW Loan? 

Each lender has their own set of requirements. Still, here are the most basic requirements you need to prepare to fast-track the processing of your loan application:

• Borrower must be between 21 to 65 years of age at the time of loan application. This gives lenders a peace of mind that the loan will be repaid because you are still capable of working.
• Working overseas for at least two years, thereby proving a stable source of income.
• Monthly loan repayment must be at least 50 percent of the income.
• Having a co-borrower, which gives lenders a peace of mind that when something happens, the loan will still be repaid.

Aside from these requirements, you are also required to submit the following documents:

• Application form with picture and signature
• At least one government-issued ID
• Proof of employment such as payslip or employment contract as validated by the Philippine Embassy or Consul.
• Special Power of Attorney (SPA) if the application will be processed by a representative in your behalf.

Are you ready to apply for a loan? In that case, Balikbayad is here to help. Submit your loan application now and we’ll get back to you as soon as can. 

Congratulations! After months of job seeking, you finally landed a job that allows you to earn in dollars. You attended and completed the trainings, submitted all the required documents including medical examination, and even sat down for one day to attend PDOS, which is compulsory, by the way.

What’s next?

You need to secure your OEC or Overseas Employment Certificate. 

What is this? 

The OEC is a requirement imposed by POEA to make sure that all migrant workers are documented and protected. Also referred to as “exit pass,” OEC will be presented to international ports of exit in the Philippines to prove the legitimacy of your status as OFW. You will also need the OEC if you intend to take a vacation in the Philippines and go back to your country destination after your vacation leave.

The OEC will likewise exempt you from paying travel tax and airport terminal fee.

Then came DOLE’s Department Order (DO) No. 185-17

In the latest Department Order issued by Labor Secretary Silvestre Bello III, he declared that the issuance of OEC is suspended for 15 working days, both acceptance and processing of application.

The reason behind such suspension?

To cleanse POEA of corruption and to protect the people against illegal recruitment activities. DOLE recognized the presence of individuals and companies who are taking advantage of the increasing demand for workers abroad and the agency aims to put a stop on that. The Labor Department likewise found out that there are corrupt POEA employees who who issue OECs to illegal recruiters.

During the duration of the suspension, there will be an investigating committee who will look into the root of the problem and submit appropriate recommendations.

What is the effect of suspension?

The suspension of issuance of OEC means approximately 75,000 Overseas Filipino Workers cannot be deployed – yet – since this “piece of paper” is an important document required to prove your status as an OFW. It will also take time, perhaps months, before they can get their OEC.

Nonetheless, not all migrant workers are affected. Returnee OFWs, workers on leave (balik manggagawa), and those hired by international organizations, sea-based recruitment agencies, and diplomatic corps are exempted from this suspension.

Don’t worry. The government is doing its best to normalize the situation and at the same time, put an end to illegal recruitment.

Remittance is and will always be part of every OFW’s life. In fact, it is one of the penultimate reasons why you are working overseas since you want to provide a better life for your family. Many companies are offering remittance services since there are millions of migrant workers and the increasing demand for remittance services that will make transfer of money easier and more convenient.

Before you decide on what remittance company to employ, here are important factors you need to look into:

• Cost – Every remittance company charges a specific fee when transferring money. Ask about the service fee first since some companies charge higher than the others.
• Convenience – Can you send money easily? Will your loved ones receive the money in a place accessible to them?
• Reliability – Is the transfer of money safe?
• Speed – Can your family get the money immediately or will it still take a few days before they can withdraw it?

Given these factors, here are your options when sending money to your family:

Traditional Money Transfer Operators

You know them as MoneyGram or Western Union among many others. In fact, this has been the go-to remittance centers of many OFWs because of speed and convenient service. It is impossible to miss them since traditional cash agents are conveniently situated to make money transfer easier for you. Your family can also get the money within minutes up to one day, depending on the type of money transfer.

The issue with traditional money transfer operators is that they can be more expensive compared to other remittance channels. The quicker you want the transfer to be, the higher you have to pay for the service fee.

For instance, Western Union charges $18 for cash pick-up, which will be available within minutes. If you opt for bank transfer, you will be charged $8, but the recipient will get the money after a day. On the other hand, MoneyGram will charge almost $20 for cash pick-up, which the recipient will receive in minutes.

Nonetheless, traditional money transfer operators is ideal if any of the family member has no bank account, Paypal, or no access to the Internet.

Banks with Remittance Facilities

If you are looking for a secure and cost-effective way to send money back home, then banks are your best options. Major Philippine banks like BPI and BDO also have branches overseas to help facilitate bank transfers.

The procedure is simple. Simply deposit the money at the bank and your recipient can easily withdraw it. Plus, you don’t have to worry about the cost since rates are fixed regardless of how much you send or the manner of receiving the money.

Apparently, this will only work if you or any member in the family has a bank account. Otherwise, you won’t be able to enjoy the savings + remittance account rolled into one. Transfer cost is higher too, with BDO charging as much as $30 if you prefer door-to-door delivery.

Check out the banks with remittance services here.

Online Money Transfer Providers

You can’t physically go to cash transfer operators or banks to send money in the Philippines all the time due to time constraints. In that case, you might want to avail of online money transfer services for ease and convenience. All you need is you create an account, transfer money online, and your family can receive the money on the same day. Transfer cost is cheaper as well, with Xoom charging as low as $4.99 with your recipient receiving the money on the same day. Cash pick-up is available, but if you prefer more security, bank transfer service is also offered.

The issue with this type of remittance option is the security risk. Online fraud and malware attacks are rampant these days, which is why security measures are employed to minimize the risk.

There is no perfect remittance center since all three channels have their respective pros and cons. The best way to find out is to try each channel available while taking into consideration the fees charged. Consequently, don’t be afraid to ask about the fees. You want to send as much money as you can to your family back home and surely, spending a big chunk of money on costs is not part of the plan.

Pasko na naman! Surely, your family back home has a long list of bilin – and they are expecting to see every single item inside the balikbayan box. After all, you only go home once a year, so you want to make sure that every member of the family is happy.

Apparently, Christmas season means more spending than saving. Since you are earning in dollars, your family and friends are expecting you to be extra generous during the holiday.

Don’t worry. Remember these tips to make sure you won’t compromise your savings even if it’s the season of giving:

1) Set a Christmas budget. 

and make sure you stick to it!

This is the first thing you need to do even before the festivities start. Christmas season means eating out, shopping, preparing for Noche Buena, going out with the family, gift-giving, and the list goes on. It is tempting to use your bonus, especially since you got yours in dollars. If you don’t set a budget, you might end up going back to the country where you’re working with no money at all.

Don’t live the millionaire life and budget everything. Having a budget encourages you to spend within your means and avoid going overboard. Try the envelope system and place a particular amount for every expense. This way, you still have something left as you head back to your normal routine.

2) Make a Christmas list. 

Aside from setting a budget, making a list is also important during this season.

List down the people you plan to give gifts to and the gift you plan to give. This way, you can easily keep track of your spending and at the same time, make sure that you won’t miss someone who really matters to you.

Remember: you don’t have to give gifts to everyone you know. Choose those who are closest to you. Be practical.

3) It’s okay to say no. 

Your kids want this and that, and to make up for the time lost, you gave in to their demands and buy everything they want. Apparently, that’s not a wise thing to do, especially if you want to be financially secure.

The best way to handle this is to impose a one-gift policy. Let your family choose what they want for Christmas and check if it is within the budget. Explain the need to budget your spending as well since you will never know what could happen in the future.

Hey, this includes relatives and friends as well.

READ: How to Say No to Extended Family’s Requests

4) Stay away from freebies. 

Christmas sales and freebies are rampant this holiday season. Surely, you are excited to buy something for every member of the family, which you can’t buy in the Philippines.

Relax, take a deep breath, and never buy anything based on the discount or freebie available. Nothing is for free and you will always have to pay for something one way or another. Go back to your list and stick to what you can afford.

5) Spend your Christmas bonus wisely. 

Does your employer give Christmas bonus? Don’t get too excited yet. If you really want to prioritize saving even during Christmas season, then you need to be wise on how to use your bonus.

You can get a few dollars from it, but the rest must be kept for emergency purposes. Use the additional money to pay off existing debts (a must!), start an Emergency or Retirement fund in case you still don’t have one, or even invest it in products like Mutual Fund or stocks. You can even deposit a part of your bonus in your savings account to increase your money.

We still want you to enjoy the holidays, but this doesn’t mean spending everything you have up to the last centavo. Remember that Christmas is about family and togetherness, and that’s what matters more than anything in the world.

They say the government’s taxing power starts from the moment you were born up until you die (and beyond). That’s true. After all, the citizens of a particular country are required to contribute proportionate amounts so that the government can provide necessary services to its citizens to improve the quality of life.

What if you are working overseas? Are you still required to pay income tax in the Philippines?

Here’s what we know.

First, who is an Overseas Filipino Worker? 

OFW is a Filipino citizen employed outside the Philippines where physical presence is required to be able to perform work in the country of deployment. Take note that your foreign employer pays your wages, salaries, and other benefits, and not the agency who facilitated your deployment.

You must be registered with the POEA to be an officially recognized OFW. Nonetheless, your basic rights as a Filipino citizen remains even if you are working abroad.

What’s the rule on OFW’s salaries? 

Under the Philippine Tax Code, all Filipinos will be taxed based on the income derived within and outside the Philippines. This means wherever you go, everything you earned is taxable because you are a Filipino citizen.

Don’t panic yet. There is a principle called Tax Reciprocity which exempts you from paying income tax in the Philippines.

Under the Tax Reciprocity rule, Filipinos working abroad are exempt from paying taxes in the Philippines since your income is already being taxed in the country where you are working. Similarly, foreign individuals working in the Philippines will no longer have to pay for taxes in their home country since they are already paying taxes here.

Aside from income abroad, the following also entitles tax exemption for OFWs:

• Airport fee
• Travel tax
• Documentary stamp tax imposed on remittances. To avail of DST tax exemption, the OFW must submit Overseas Employment Certificate (OEC), valid membership certificate from OWWA, and electronic receipt issued by the POEA prior to remittance transaction.

Does this mean Overseas Filipino Workers will no longer pay taxes in the Philippines? 

That depends. For income alone, you don’t need to file an income tax return. BUT if you are receiving income from sources within the Philippines, then those income sources are subject to income tax and must be paid to avoid tax evasion case filed against you.

This includes but not limited to:

• Income derived from business
• Rental of property
• Earnings from investment

Still, it is hard to escape the government’s taxing power. Wherever you go, whatever you do, the government will always find a way to impose tax on you.