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Paddy

Assessing your financial risk...

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Paddy
and no, this one doesn't belong in the investing forum (although I'm not sure if here is the right place either).

 

I was prompted by a recent occurrence in my partner’s family to take a pulse check on the level of financial risk I face in my dealings with her family. I then reminded myself about all the advice out there in multiple topics on this and other forums. As a result, I decided to put together a simple risk level calculator for anyone in, or contemplating, a relationship with a Filipina who resides in the Philippines. The plan was to bring it all into one simple spreadsheet.

 

There are probably many forum members who would say “I don’t need a spreadsheet to determine my level of risk” and I don’t disagree. What I found useful about this exercise was having a way to keep all of my thoughts together in a consistent manner.

 

Being in, or contemplating, a relationship with a Filipina residing in the Philippines has some associated financial factors that are probably not common in relationships in all parts of the world. They may be common when the relationship works across a boundary of significant economic differences. The calculator is probably of little value if both you and your lady live outside of the Philippines or if you are not in, or contemplating, a serious relationship. The method, however, would work equally well in any situation involving 3 parties. 

 

I hope this calculator has value to others. It is not judgemental and only indicates the level of risk you might be facing. If you firstly agree with the simple factors and you are comfortable with the level of risk calculated for you, no problem. If you agree with the factors and are not comfortable with the level of risk calculated for you, you might wish to consider some mitigating strategies.

 

You may not agree with the factors I have used. You may question the validity of the simplicity of this particular approach. These are good topics for discussion.

 

The calculator considers three “people” (you, her and her family) and requires an assessment on a scale of 0-10 for three factors for each of the three “people”. (I am ex-army, 3 is a good number). On the scale, 0 is no risk and 10 is high risk. The scale gives a person adequate scope (my opinion) to have a reasonable assessment for their situation. The three factors for each person are not necessarily the same. They are what I consider to be most relevant to a risk assessment for that particular person. When you have completed your assessment of the nine factors, you can see your overall level of risk and which of the three “people” presents the greatest risk and why.

 

Factors for you

  • Proximity – the more time you spend together, the more chance you have of exercising some level of influence in financial matters 
  • Trust – how much do you trust her? You might think trust is a factor for her. My contention is that this is all about you. I consider myself to be fortunate. My partner has demonstrated her trustworthiness time after time.
  • Generosity – how likely are you to open your wallet? I have put myself firmly in the middle of this scale - not a complete sucker but....
Factors for her     

  • Family links – (generalization alert) most Filipinas have strong links to their family and are highly motivated to help their parents, siblings, children etc. They may also be encouraged or manipulated into helping. My partner has openly stated a desire to help her siblings, hence my high score for this factor.
  • Financial position before meeting you – does she have experience with handling financial matters? It is another generalization to say that if she had nothing before she met you, her financial dealings will be fraught with risk – but I am saying it anyway.
  • Assessed business acumen – if you are going to help her run (finance) a small business (sari-sari, piggery, tricycle, jeepney, etc.)  what sort of a businesswoman is she? Does she trust relative employees too much? Does she understand the market, cash flow, stock management etc?
Factors for her family

  • Size – the bigger the family, the more likely it is that there will be a relative of questionable integrity, ability etc. (that’s not just Filipino families!) or the bigger the family, the more financial needs will be presented to you. This is a very subjective measure. In my partner’s case, I think her family is large – one parent, many siblings, many aunts and uncles, lots of nieces and nephews
  • Current financial position – does the family have experience with handling financial matters? If you observe the family, what sort of place(s) do they live in, what do they do for a living and how do they manage their finances? You may not know about the hectares of coco-lumber, but if it stays hidden from you, that’s a pretty good indication of some risk based on family attitudes towards finances.
  • Assessed level of need – statistically, many Filipino families are below, at or near the poverty line. There could be many needs. In my case, all but one of my partner’s siblings have some level of need.
The calculator will work at the boundaries:

  • You live together, she was rich before you met her and she comes from a rich, well to do family – your personal level of financial risk is low. You may be subject to other risks or you are living the life of Riley. There would appear to be a few of these people on this forum.
  • You’ve never met her in person, don’t really know anything about her or her family and are a sucker for a sob story – your personal level of financial risk is high. You might get lucky but you are more likely to be a scam victim. There are many of these people on all sorts of forums (fora?).
Here’s what it says for me (I am not asking anyone else to post their own result):

 

post-15276-0-47295000-1380220872_thumb.jpg

 

As you can see, my greatest risk comes from the family and my partner’s desire to help them. This risk manifested itself in the recent occurrence I mentioned at the top.

 

I love my partner and I am willing to assist her family (within the capabilities of my resources). I do not appreciate it when a family member takes advantage of her good nature and my willingness to assist. Fortunately, neither does she. We will be employing better mitigation strategies going forward.

 

You may be quite comfortable in your relationship or you might have concerns. Give the calculator a shot and see if where you think you stand is the same as where I think you stand.

 


 

Just because you assess a level of risk doesn’t mean that something will happen. The problems come when you haven’t assessed your risks, haven’t set up any mitigating strategies AND the risks manifest themselves. You may not be able to mitigate every identified risk.

Edited by Paul
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lamoe

Another variable would be proximity of family. The closer they are, the easier it is to apply pressure. I learned that from my family and my wife's.

 

Hard to hang up when they're standing on your doorstep.

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Paul

For some reason, even after adding the file extension to the site, it would not allow me to upload it. I changed the extension to .xls to get it to upload. Please check the file I uploaded and see if that works for you.

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hyaku

Please upload again. I think risk assessment when it comes to someone else spending and making business for you here falls into the money to burn bracket for most. I really wish it was otherwise. For most with a pension and savings charity has to begin at home. Yes it's difficult when they on the doorstep. But I can't feed someone else who knocks out 8 kids then wonders why it's not working out. A few thousand pesos divided among 50 who probably want it for fiesta to impress friends won't work either. The reason factor also has to be considered.

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Paddy

Please note:

 

The calculator was created in Excel 2010 (.XLSX extension). The file as uploaded by Paul (thank you) will work if you are using Excel 2010 or later. You will get a warning about the file format when you download and open it with the .XLS extension.

 

I did try to save it as an Excel 97-2003 Workbook but it uses conditional formatting not supported by those versions of Excel. 

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Salty Dog

Downloaded and opened OK. Excel noticed it was a workbook with an .xls extension, but it still opened and then saved it with the proper extension.

 

My score (50) was almost exactly the same as Paddy's.

Edited by Salty Dog
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Paddy

I agree with both lamoe and hyaku that Location and Reason will factor into your level of risk. However, my approach has been that it is the family's attitude towards finances in general that will influence the risk most. 

 

A family that has a lot of resources, and which has long experience managing those resources, can live right next door and still not make any demands on you, or, if it does, the demands are less likely to be frivolous.

 

A family that has next to nothing, but was surviving before you arrived on the scene, is much more likely to make many demands on your resources. Many of those demands will have an unreasonable motive. In this situation you probably have to rely on your partner to weed out the unreasonable demands. If this family lives close to you, I agree, you will probably spend time and money dealing with their day to day crises.

 

My partner picked the location for our little place. It is 30 minutes away from the bulk of the family. Smart girl!  Now, if only we could make sure one or two people don't have load for their CPs....

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Paddy

Salty Dog - that puts us both in the "it's not too bad, but keep your wits about you" category. If your reds and ambers line up with mine, then we have the same sorts of risks.

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Salty Dog

Salty Dog - that puts us both in the "it's not too bad, but keep your wits about you" category. If your reds and ambers line up with mine, then we have the same sorts of risks.

 

Looks like I need to run it again. I was thinking you could only choose 0, 5, or 10 for each area. Noticed you sometimes picked a number in between.

 

Came up about the same, 45.

Edited by Salty Dog

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Paddy

The 0 to 10 scale lets you create a more refined assessment. If it was only 0, 5 and 10, the scale would be too coarse and the answers (probably) too black and white. (Hmmm, a black and white reference to a green through amber to red scale - I think I need another coffee!)

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Paddy

I didn't originally provide a summary of the assessed risk level in words. But, if you're interested, here is how I would categorize it based on the overall score:

 

  0 - 27  Not a problem. Your personal risk is low. There might be one or two things to keep an eye on.

28 - 45  OK, but keep your wits about you. You have probably identified at least one area of significant risk.

46 - 63  A little high maybe?. You will be disappointed from time to time. You have probably identified at least 2 areas of significant risk.

64 - 90  Danger, Will Robinson. Your personal risk is high. You need to exercise extreme care.

 

That puts Salty Dog in "OK, but keep your wits about you" and me in "A little high, maybe?" and yes, I have been disappointed.

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mpt1947

I started out as a 30 - didn't know I could change the numbers to a 1-10 range - when I put in the actual risk it dropped to 15

 

My wife is very close to her family - but she doesn't take care of them - if any family member needs money, my wife comes up with a way for them to work it off - BEFORE she gives them money .  We are doing a re-modeling project on our home - One of my wife's brothers has been working full time for us for the last couple of months.  He is a certified electrician, an accomplished carpenter, and welder.  He gets the standard daily rate for an experienced Construction Worker 400 Pesos a day. In addition, we feed the crew and for those that are from Leyte, we provide room and board- so we do pay well, but my brother in law and the others earn what they get.

Edited by mpt1947
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broden

I started out as a 30 - didn't know I could change the numbers to a 1-10 range - when I put in the actual risk it dropped to 15

 

My wife is very close to her family - but she doesn't take care of them - if any family member needs money, my wife comes up with a way for them to work it off - BEFORE she gives them money .  We are doing a re-modeling project on our home - One of my wife's brothers has been working full time for us for the last couple of months.  He is a certified electrician, an accomplished carpenter, and welder.  He gets the standard daily rate for an experienced Construction Worker 400 Pesos a day. In addition, we feed the crew and for those that are from Leyte, we provide room and board- so we do pay well, but my brother in law and the others earn what they get.

now figure out how much a risk you are to your wife 

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mpt1947

now figure out how much a risk you are to you wife 

 

 

 

I am at least a 35 to her - Should I take her seriously that she wants to dump me for a rich Americano? 

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broden

I am at least a 35 to her - Should I take her seriously that she wants to dump me for a rich Americano? 

just don't forget to do your chores

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