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Philippine Christmas is Nearly Here — Don't Get Caught Short

December 7, 2009 By Philly 4 Comments

Merry Christmas and Happy new Year to all my readers.  This post is just a short note to remind everyone that the Christmas Season here in the Philippines is a “big deal”  A very big deal.

I’m writing this on the 7th of December.  The holidays will be here in a rush … like that Jeepney you thought you had plenty of room to cross the street in front off … and now you are looking at the scratches on his bumper in detail while you are wondering if the 1950’s technology in the braking system and the bald tires will bring him to a stop before you study the underside of his chassis in detail as well.


Creative Commons License photo credit: petrr

Banks and most businesses tend to take a a lot of time off.  In addition to banks having extended holiday closures, remember that everyone spends money and the teller machine you are used to using may be empty when you go to get some Christmas cash … the fellows who go around in armored cars and fill them up are stuck in traffic or on their own day off .. so take the time to plan now how you’ll get enough cash to carry you through from, say, 18 December until 4 January.

Many businesses and some government offices will be open some of the days in the week of 28 December through 1 January 2010, but for sure no one is working New Year’s Eve and New years Day.  Check now, or wish you did.

(especially important if your Visa is expiring end of this month .. you sure won’t be getting a new stamp over New Year, and overstaying is still overstaying)

Also, traffic in the next few weeks is going to be worse every day and stocks in stores will go down suddenly.  That Christmas turkey you had your eye on, or that toy your little nephew wanted do badly will likely not be there Christmas Eve.

For those not used to it, this is the season of giving gifts to those you normally wouldn’t be expecting to.  The postman, the trash pickup crew, the security guards for your building or subdivision, the receptionist at your doctor’s office, the people at the bank who always help you, so on and so forth.  When they wish you a big, hearty Merry Christmas, that’s a sure sign they are expecting.

A hundred peso note is good for most people … I got about 30 of them last trip to the bank … they can get hard to find also.  Might as well think this through before the season is fully here, because it’s fine if you get angry at people expecting a sort of “mandatory tip”, but just recognize it’s the custom and it won’t do any good to lose your temper and raise your blood pressure over it … you’re not in Kansas anymore.

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How Much Is That In Philippine Pesos?

October 30, 2009 By Philly 17 Comments

One thing I think a lot of my fellow Americans have trouble with is currency … money … moola.  No, not the problem of having month left over at the end of your money … that’s an age old problem that can happen to us all, from time to time.

What I’m talking about today is foreign money, that “coin of the realm” stuff, the money that’s different in almost every country on earth.

Whether they are thinking about moving to the Philippines or to any other country, a surprising number of folks I have talked to somehow have the idea that they will just continue thinking about expenses and dealing with bills and expenses in good old US “greenbacks”.  “I’m not interest in that Foreign Exchange stuff:, they will say.  “I’ll just use local currency on those rare occasions when I have to.  Foreign exchange (often labeled ForEx or Fx) is for the investors and big money types, not little guys like me.”

Well it’s fine to think that way … and I certainly don’t advise anyone to start splashing around in the currency markets, trading blocks of Dollars or Pesos or Euros or whatever.  But if you come here to live in the Philippines you will find out you “play” the Forex markets each and every day you wake up … and you are going to have to deal with at least two currencies in your day-to-day modest efforts at staying alive.

Actually the Philippines is much easier than a number of foreign countries to deal with this issue in, because it is legal to own foreign currency here, and you can open bank accounts in both Philippine pesos and US Dollars.  There are so countries that won’t let you even have another country’s currency, try to confiscate it at the border, so in that respect, we’re very lucky.

But even though I have a bank account specifically for my US dollar holdings here, and if I want to, I could go to the bank when they open this morning and draw out ‘real’ US dollars in my hand, this is still a country that runs on Philippine Pesos and there isn’t a lot I can do with those dollars except put them back into a bank, or hand them over to some third-party money changer.  I can’t go to the electric company and pay my bill there with them, I can’t hand them to a tricy driver or get food for lunch today at the market with them … regardless of my preferences, I have to deal with and think in Pesos each and every day. 

But the way, a question I get often is, “Can I get Pesos from an ATM with my US debit or credit card?  The answer is yes, in fact Pesos are all you can get from a teller machine in the Philippines (except for a few specific “inside the bank” machines in Manila, which I have been told about. nut have never seen).  “Now wait just a minute” I can hear a few people saying.  “My bank account in the US is in dollars, how can I get Philippine Pesos with that?”

Well that part is quite simple … but depending upon your bank’s policies and the agency they use for money changing, it could be expensive.  For example, here’s a snippet from my US bank transactions when I used my US debit card to get 10,000 Philippine Pesos out of a local teller machine earlier this month:

withdraw philippines pesos with a US debit card

 

On the day I made this Philippine ATM withdrawal the commercial bank exchange rate here in the Philippines was averaging so I should have paid about $ 212.59 over the counter at my Philippine bank for the 10,00 Philippine Pesos I received.  Instead, I paid $211.86 from my US bank account for the currency itself, $1.69 to Master Card for the privilege of transacting business across international boundaries, $1.00 to my US bank “just because” and $ 0.43 to someone in the change for a “Currency Conversion” fee.  The “effective exchange rate” to me then in reality was PhP 10,000/$ 214.98 or PhP 46.51 per US dollar.  That means I paid, in total $2.29 or am extra 0.014% on this transaction for the convenience of using my US debit card. 

If this seems a bit too detailed or even a shade on the ‘anal-retentive’ side for an every day transaction, fear not.  I usually don’t go into this sort of detail every time I need some Philippine Pesos in my hand.  But if you want to live here you are going to have to grasp these basics and at least work them out from time to time, especially on major purchases.  Or, you will spend a lot of your time here living in the Philippines wondering where the money went.  Over the course of a year, someone living in the Philippines on my optimistic $770 USD a month budget (see Live In The Philippines On $770 Dollars A Month? | PhilFAQS) would have lost nearly $130 or about 17% of a month’s budget if s/he did a whole year’s Peso changing in one “go”.  Not so insignificant if you are trying to watch the pennies closely.

So, did you catch the mistake in language I just made.  “Peso changing”?  “Money changer” is a common enough term, and no one will look at you cross-eyed if you use it, but it’s a term of convenience.  It’s used all the time but it really means something different than the definition of the words.

There is no such thing as ‘changing” money.  It does not happen.  To get Pesos if you have US Dollars in your hand you have to “sell” the dollars to someone who wants then and let them pay you in Pesos.  If you want dollars … let’s say you are making a trip home and want money for your trip from the airport to where ever you are staying, you need to “buy” dollars .. meaning you hand over the equivalent price in pesos for dollars that the vendor is asking, and s/he will had you back ‘real’ dollars.

I know it sounds a bit overly detailed to say there is no such think as ‘changing” the money when the transaction of buying and selling I just described is very accurately termed an “exchange”, but it helps, in my view, to be accurate in the terms at the beginning in order to understand more complex terms properly.

Here’s a current chart that illustrates some of the points I am making.  US dollars versus Philippine Pesos over the past three months.  In other words the US dollar’s value expressed in Philippine Pesos on any given day … actually the value changes many times a day, as often as each an every transaction.  The idea that there is an “official rate” for each day is another one of those “shortcuts” we use, and has a legal meaning in some cases after the fact … like at the end of the trading day in a particular country, but every time Dollars are sold for Pesos can be different than the last time Dollars were sold for Pesos .. it’s a free and open market and the laws of supply and demand are in full force.

Take a look at the figures below the chart from some extra illumination:

Chart for USD/PHP (USDPHP=X)

Last Trade: 47.35 Trade Time: 12:41PM ET Change: Up 0.22 (0.46%)

Prev Close: 47.135 Open: 47.165 Day’s Range: 46.99 – 47.44 52wk Range: 46.195 – 50.700

Bid: 47.35 Ask: 47.38

The most important figures on this page are on the last line above.  These figures change each and every time someone enters a sell order for Dollars.
60; At the end of the day you are going to have to think frequently in your home country currency, in Philippine pesos and in US dollars as (well if the dollar isn’t your ‘native’ currency or if you earn money online, which is almost always a USD transaction.)

Some interesting thoughts on the foreign exchange state of mind here.

You can also learn a lot of fascinating facts about the ForEx business here. 

(note, this leads to a sponsor’s page, if you buy something I make a commission.  However, feel free not to buy, there are some fascinating live action videos here that will teach you a lot.  You snooze, you lose, you learn, you earn ;-) )

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Philippine Questions — Thursday, 7 May 2009

May 7, 2009 By Philly Leave a Comment

Time to revisit another old favorite subject here at PhilFAQS, where we answer your questions about living in the Philippines.  This has certainly been covered before, but people search for the subject continuously and I am here to try to give them what they need.

Writing yourself a check and other Philippine Money and Philippine Banking Tips

I last wrote at this on length in When You Need Money Just Write Yourself A Check | PhilFAQS a while back.  I see a lot of searches coming here to my bog about living and making a living in the Philippines that may not be relayed to the Philippines … they may just be about how to write yourself a check.  It’s simple, but something that apparently isn’t covered much in schools … people have to figure it out for themselves on the fly.  Here goes:

If you have a checking account, you can write yourself a check from that account, just as if you were writing a check to anyone else that you wanted to give some of your own money too.  Obviously all normal rules and regulations for your bank, your home country and the country you are writing the check in apply, but the banking rules of the Philippines and the US are quite similar, so it is likely that if you write a check in your US home town to pay your electric bill, you can write it to yourself here in the Philippines.  This is how my bank wants to see my checks written out … as always, YMMV.

I typically “live” off my US dollar account here in the Philippines.  Each month I go to the bank, usually on the first banking day of the month with a check written out to myself and a deposit slip filled up to deposit the check into my account.  On the front of the check 9the payee line” I write my full name as shown on my bank account.  Years ago I used to just write a check for “cash” rather than to myself specifically.  This is still legal in many banking jurisdictions, but it’s a bad security practice and you certainly wouldn’t be able to cash (here we say “encash”) the check over the counter anyway, so go with the flow,

On the left side of the reverse of the check, in the place for the endorsement I write the words “For Deposit Only” and when I am standing in front of the teller, ready to hand over the check, I then sign my name and then print my name under the signature.  This is called a “restrictive endorsement”, meaning that the bank is not supposed to encash the check over the counter or use it for any other purpose than to put the money in my account.  I do not sign the check before I am at the teller as a precaution against theft by loss of the check, even though, theoretically, the restrictive endorsement adds a level of protection.  Belt and suspenders for me, that’s my motto.

There are two schools of thought on whether the restrictive endorsement should include the receiving account number or not.  You do have to write the account number on the back of a check that you are depositing. It is sufficient to write "For Deposit Only." Some security experts advise that writing your bank account number on the back of a check is a security risk in that it exposes your account number to third parties who may handle the check.

I personally side with this point of view, but on the other hand, if you do not write the account number on the endorsement you may risk the bank confusing your check with someone else’s and depositing something to the wrong account.  Totally your decision on this matter.

If you are accustomed to British-based banking systems, don’t get yourself all crossed up ;-) .  In Great Britain and other countries who pattern their banking laws after the “mother country”, it is common practice to cross a cheque which tells a bank not to cash it across the counter. The cheque must be paid to a bank (e.g. into a customer’s account). If a bank does cash the cheque it may be liable for any loss suffered by the true owner.  Crossing a cheque means drawing across the face of the cheque from top to bottom two parallel lines, with or without the words ‘not negotiable’ between them. A crossing may be added by you when you make out a cheque or by any person who obtains possession of your cheque.

I have received two reasonably authoritative answers to the question, “is it acceptable or necessary to cross a check/cheque here in the Philippines”?  Problem is, the answers are directly contradictory.  One source says “yes”, the other says “no”.  Welcome to the Philippines.  My personal advice?  Don’t bother.  It is not necessary for your protection since the check doesn’t become “live” until you sign it when you hand it to the teller.  Also, I lived for some time in the UK, with both a Pound Sterling and US Dollar bank account and didn’t even know what ‘crossing a cheque” meant until years later when I looked it up in response to a reader’s question here.

Once the check is correctly deposited, you’ll be in the clearing process.  Although some banks advertise they take less time, mine still takes about a month to clear the check … that is to make the money actually available in my account.  To live off your dollar account, then, you must plan ahead and keep track of what you have on deposit and what will be “maturing” in the current month.  This is a real thorn in the side for some folks.  The advantage is, I never have to do anything more complex than write that one check per month and my bank charges no fees for a deposit like this.  Again, check before you set up a banking relationship here, because the clearing times and per check charges vary substantially.

Now how do I get my hands on and actual cash, US or Philippine?

  • I make a cash withdrawal, over the counter in US dollars (this is manly if I want to exchange dollars for pesos somewhere other than the bank, or I am traveling outside the Philippines … just so I have easily convertible cash in my wallet)
  • I do an over the counter conversion and transfer from my US Dollar account to my Philippine Peso account, so I can use my Philippine ATM card in any teller machine to get pesos in hand.
  • If I just want Pesos, here and now, I fill up a withdrawal form for my US dollar account in the amount of dollars that equals the amount of Pesos I want at the current days rate, and when I present it to the teller, so/he will do the conversion as part of the transaction and hand me the correct amount in Philippine Pesos.

That’s about it for writing yourself a check here in the Philippines.  Better look in m,my wallet and see when I have to go to the bank again.

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Philippine Financials — 2009 Outlook

December 27, 2008 By Philly Leave a Comment

If there is anyone less qualified to give accurate financial and investment advice than I am. I’d like to meet him or her.  I am not qualified to offer financial, investment or tax advice.  That said I do have a few qualifications that many of your better know commentators and advisers don’t have … I live here in the Philippines and I earn money here (although not from Philippine sources … an important distinction).

You might be shocked just how much of every news broadcast, every talk show and every newspaper here is devoted to US news.  The Philippines may have had its independence since 1946 but the times to the US, both emotionally and financially are very strong.  From a financial standpoint this closeness is unlikely to change any time soon, good times or bad the US economy is always the 800 pound gorilla in the room that sits where he pleases. [Read more...]

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