Moneywise24 Personal Finance

Tipping is often a sign for outstanding service, and I know that I usually tend to give a tip. But how much tipping is actually usual, or even expected?

Tipping for me is pretty much a dilemma: on the one side I am trying to live frugally, expecting a good service at a restaurant or bar to be included in the price, but on the other side I have this urge to give a tip for good service. I guess it is a cultural thing I have been brought up with.

In German, for example, tipping around 5% – 10% of the total price is fully accepted. In fact, this is about the rate in Europe in General. Although tipping in Europe is not mandatory, it is expected; not leaving a tip is a strong sign of not appreciating the service. In some countries, such as the Czech Republic, it is noted on the bill that a service charge is not included on the bill. However, this service charge is not included anywhere, and it is a sign that a tip is expected.

So, why do we tip anyway?

Personally, I find the entire concept of tipping very outdated. As the tip is a sign of outstanding service, the tip may be seen as an additional commission on top of the base salary. There are two criteria, which need to be fulfilled to make this possible: Read the rest of this entry →

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Last week I was enjoying my annual leave to the fullest; I stayed home for the first part of the week (which motivated to write the article How To Spend A One Week Holiday At Home), in the second part of the week I visited the wonderful city of Prague, capital city of the Czech Republic,  with friends.

I can’t stress enough the great time we had. Architecture is absolutely stunning, the food is great, and Prague is quite an inexpensive city.

Actually, Prague can be inexpensive, but it can also get quite expensive. Me and my friends intuitively did all the right things to stay on a low budget as much as possible; I spent around 250 USD during the 3-night stay, and that is including the costs for the hotel.

During our stay, I recognized that we kept our expenses relatively low by looking at three key things. I guess it can be applied to many touristic destinations.

Hotel

Hotels can be quite expensive, and sometimes you pay a fortune for hotels that are crappy and dirty. Often, hotels located in the city center are simply too expensive. They know they can afford this, as many business people and more wealthy tourists want all touristic attractions around the corner.

We stayed in a hotel in the area called Karlín, which is directly next to the city center. We could either walk to the city center within 15 minutes, or take the metro for 2 stops. There was enough parking space for our car, and it was free. In addition, there as a supermarket in the area, and some restaurants and bars for a last drink before going to the hotel. Read the rest of this entry →

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Sometimes I am wondering, what I do all this for. I mean, all the work, financial planning, breaking my head over my retirement planning. Often, a typical month would look like this:

• I work the hard, the entire month,
• I pay taxes on my salary, and receive about half of my salary on my bank account at month’s end,
• I pay for my loan from college times,
• I pay my rent, and all other bills,
• I cover for my expenses,
• And, with a bit of luck, I will have some money left and the end of the month.

Often, when I have something left at the end of the month, I am so proud of myself that I give myself a treat and spend the money anyway. Or I start traveling and go places… so in the end I have nothing left anyway.

I stumbled on this chapter in “The Cashflow Quadrant” by Robert T. Kiyosaki. Kiyosaki writes, that you should pay yourself first, before spending any of your hard earned money.

The basic principle is, that you should look at yourself as a running business. And the main purpose of a running business is to make profit, and to increase assets. What individuals do in stead is focussing on paying the bills first, i.e. other people’s profits and assets, before they focus on their own life.

So what does this mean? Read the rest of this entry →

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Many books providing financial advice write to pay your bills on time, reducing the risk of late payment, and keeping your administration up-to-date and in good order. Although this is technically not wrong, there is one reason why you may not want to pay your bills immediately: interest.

The bottom line is simple: by postponing payment, you keep the money on your account just a little bit longer, generating interest during that time span. It is what large companies do as well. Consider a multinational company who would have to pay a bill worth 10 million Dollars. By keeping that money in their accounts for an additional 20, at an interest rate of 3% they earn an additional 16,438 Dollars on interest (compound interest has not been considered in this example).

As an individual, the interest earned might be much smaller, but the principle is similar. When you receive a bill, it will become due after a specific number of days. In many countries, it is regulated by law how many days a supplier of goods or services has to allow the consumer to make payment. Often it is also stated on the bill, that payment should be made within a specific number of day.

By not paying immediately, but towards the end of the deadline you can let time work for you. The only thing that you have to monitor closely is to be sure to make payment before the deadline. If payment has not occurred until the due date, the supplier may be entitled to impose an additional interest on you, which can be very high.

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Traveling can be quite expensive. First, a large proportion is spent on getting to your destination, either via plane, car, train, or whichever method of transportation you use. Second, daily activities and food and beverages might eat up a large proportion of your budget. Last, you will need a place to stay. Most people choose for a hotel, a hostel, a campsite, or similar. Especially for the more open-minded people among us, there is a cheap alternative to the so expensive lodging: it is called couchsurfing (www.couchsurfing.com).

Couchsurfing is not as much focussed on cutting costs, but it is more a way of life. It is built on the principle idea that there is a basic trust among people, and that participants offer their couch, guest bed, mattress, or any possibility for guests to stay one or more nights. On the other side, participants may search the Couchsurfing database to find lodging opportunities at their destination. In addition to actually finding a place to sleep, the most important benefit of couchsurfing is to get to know the locals as you would otherwise not have. Hosts (those offering their couch) often also offer to show guests around town, they might introduce you to some of their friends, or invite you to come along at a party.

How to register

Couchsurfing is free for everyone, and all it needs is a registration at the website. Once registered, you can make a profile, upload some pictures of yourself, and tell something about yourself. Your main goal is to achieve a basic level of trust, so that if you are approaching people to host you, that from looking at your profile they will get a pretty good idea of who you are, what your passions are. As you are building your profile, you can also indicate whether or not you would be able to host people. Not everyone might have this possibility due to various reasons, so you may also indicate that you are unable to host people, but you’ll be happy to show visitors around town or meet up for a coffee.

Participate in local events

Couchsurfing has a large message board system, allowing you to exchange information and ideas around a variety of topics. Many couchsurfers meet up locally at a regular basis, and this would be your first step into meeting up with other couchsurfers live in order to get a good idea of what it’s all about. Also, if you are traveling you might want to see if there are some events at your travel destination and simply join; Couchsurfing does not know any boundaries.

Building trustworthiness

There is always the elementary question: who can I trust, and who can I not. Remember, Couchsurfing is accessible to everyone, and there might be some people who are abusing the website for their own interests. In order to build a trust system, Couchsurfing has build a strong reference system (here you can read what others are writing about another person), a ‘vouching for’ system, and the possibility to have your identity and your address verified. Using these three parameters, you can easily identify who is more trustworthy, and who is not. In order to start building your references, it is recommended to become active in the community as soon as you can; join local events, or participate in the forums.

Couchsurfing is a great platform to save additional money on lodging, but moreover it is a way of life. Members are typically students, individualists, or very open-minded people who want to have a different kind of travel experience.

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