Tuesday, April 30, 2013

Wants vs Needs

It's just so easy to fall into the "bigger, better and faster" mindset, moreso when everything and everyone around you seem to encourage unabated spending.


Your phone is half a year old? Why it's time to upgrade! Check out our new models which can be yours for 12 easy payments at 0% off!
You received a promotion at work? Then it's time to celebrate by going on a Hongkong shopping spree with your 10 closest buddies! Charge all your expenses to your brand, spanking new credit card!
This season's must-haves are animal prints festooned with glittery rainbows, and no self-respecting fashionista should be caught donning last season's castoffs. Ugh.

This radio commercial from PAG-IBIG likewise bolsters that train of thought:

Lumalaki na ba ang pamilya mo? Kailangan mo ng mas malaking bahay!
Umaasenso ang buhay? Kailangan mo ng mas magandang bahay!

Kailangan ba talaga o gusto lang?


I can understand taking out a loan if your family can hardly fit inside your house anymore, but why do you need to upgrade your house and go into debt for it just because you're doing well financially? 


I hear that all the time from my friends, how there's a certain standard that they need to live up to just because they are now at this stage in their careers.


I say bullshit.


If you've been happy and content all this time with what you had, why should a salary increase or promotion change all that? Why do you suddenly need to live "commensurately" to your perceived status? It just makes my head spin and my heart ache to see my friends trapped in this never-ending cycle of spending because of the insidious marketing campaigns by the sneaky powers that be.


Which now brings me to our planned house expansion. The hubby is thinking twice about taking over the unit next door because he insists that we are doing well in our tiny 30sqm box and adding an extra 30sqm will not really make a difference in our lives. I acknowledge all the points he raised, but I want the extra space. I want to have a nice kitchen where I can putter around while watching TV. I want to have my own work area with this cute desk from Heima.


I want Bean to have his own room.

I want to have dinner parties with friends.

I know the difference between a need and a want, and that extra space is definitely a want at this point in time. A want that will probably cost us between Php100,000-Php150,000 to construct (not counting the extra for furniture and appliances), plus taking on an extra Php5,000++ per month for the mortgage and another Php5,000-Php10,000 a month for 3 years or so to pay off my brother's equity on the unit.


Yes, I am willing to spend all that much for the extra space, but since this is a want and not a need, I refuse to go into debt for it. And so the penny pinching begins to raise the funds needed to pay for this want.


This is my version of buying a designer bag, I don't need it and it's not an investment (although it might be if we manage to flip it for a profit in the future). But I want it, I worked hard for it, it makes me happy, and so I will enjoy it.


I don't believe in a miserly existence, nor in foregoing pleasure and accounting for every peso earned. But I do believe in spending money on my own terms, knowing fully well what I'm getting myself into, and not simply because I was bamboozled by some clever marketing campaign or because of some misguided need to keep up with the Joneses.

Wants vs Needs

It's just so easy to fall into the "bigger, better and faster" mindset, moreso when everything and everyone around you seem to encourage unabated spending.
Your phone is half a year old? Why it's time to upgrade! Check out our new models which can be yours for 12 easy payments at 0% off!
You received a promotion at work? Then it's time to celebrate by going on a Hongkong shopping spree with your 10 closest buddies! Charge all your expenses to your brand, spanking new credit card!
This season's must-haves are animal prints festooned with glittery rainbows, and no self-respecting fashionista should be caught donning last season's castoffs. Ugh.

Friday, April 26, 2013

The Cost of P500

While reviewing my online transactions for March, I was shocked to see a Php500 deduction from my checking account. A quick call to my bank revealed that my account had gone below the Php25,000 average daily balance (ADB), hence, the Php500 penalty.


The last time I got slapped with a Php500 penalty was when we were on survival mode, making every peso count to pay off wedding related debts, credit card debts and everyday expenses, while waiting for my government salary to arrive. Of course the ADB went below Php25,000 back then and I swore that I would never, ever pay another penalty ever again.


The Cost of P500

While reviewing my online transactions for March, I was shocked to see a Php500 deduction from my checking account. A quick call to my bank revealed that my account had gone below the Php25,000 average daily balance (ADB), hence, the Php500 penalty.

Sunday, April 21, 2013

Between Penny Pinching and Splurging


I constantly struggle between the extremes of accounting for every. single. peso I spend and saying "F*ck it. I can well-afford this and so I will buy it. Walang basagan ng trip!".

I notice though that the latter usually manifests itself when I've been on a penny pinching drive, maybe it's a reaction from all of the deprivation I've been imposing on myself?  And so my constant challenge is to find a happy middle ground between these two extremes.

My usual source of frustration is our restaurant expenses, since I know that we could save so much more if we eat out less and follow a weekly menu. But eating out means that my hubby, who works at home, will get a respite from cabin fever and won't have to put together a meal after he's been working all day. So even if our monthly restaurant expenses sometimes give me palpitations, I recognize that it's a necessary expense to keep everyone happy.

I sometimes fantasize about staying at home and doing the whole super mommy / Martha Stewart bit, but I know that I will go nuts with all that domesticity and have you tasted my cooking? Good for you that you haven't:p

It's different when it comes to spending for myself since I have long settled into a routine when it comes to personal care products and clothes. I now know what to splurge or save on. Base makeup is always a splurge, while point makeup is tipid to the max. With clothes, I'm fine with spending a bit more on highstreet fashion like Zara and Mango since I usually just buy one or two during sale season, and then reuse them until they fall apart years later. Considering this, there's no need to stock up on the cheap and trendy stuff at Forever 21 or department stores. However, shoes are a different matter altogether and probably deserve a separate post of their own.

One habit that needs to be looked at more carefully though, is our predisposition to go on mini-breaks. Oh how we love our vacations! We usually have one every 3-4 months, which is not bad really, it's just that the penny pincher in me starts fretting about the money allotted to our mini-break which could have been funnelled towards our investments, therefore earning us income in the long run. But then the spendthrift bares her teeth and shouts: "Anuber! OA ka na!"

Yes, I have imaginary conversations in my head.

So far, I think the only way I can reconcile those yin and yang forces is to set a budget for our quarterly vacations, and then to stay within that budget. It's like having fixed limits but then being totally free within the confines of those limits. Does that make sense?

Anyway, as with everything else in life, this is still a work in progress and will probably be tweaked ad infinitum in the future.

Between Penny Pinching and Splurging


I constantly struggle between the extremes of accounting for every. single. peso I spend and saying "F*ck it. I can well-afford this and so I will buy it. Walang basagan ng trip!".

I notice though that the latter usually manifests itself when I've been on a penny pinching drive, maybe it's a reaction from all of the deprivation I've been imposing on myself?  And so my constant challenge is to find a happy middle ground between these two extremes.

Monday, April 15, 2013

Four Steps to Financial Strength


When it's laid out like this, obtaining financial freedom seems so easy to achieve. And when you think about it, it really is.

From experience, Step 1 (1) is the most difficult hurdle to overcome in your journey towards financial freedom. Because once you  begin living well below your means, that usually means that you've conquered your inner demons that lead to overspending (i.e. spending to keep up with the Joneses, emotional spending etc.), and that you are now ready to take control of your finances.

Based on that chart I am 3.5/4 compliant with Step 1, finished with Step 2 (although I'm thinking that I may be underinsured and probably need to step up my coverage), working on Step 3 and still don't need to worry about Step 4 at this point in time.

Four simple steps. Now stop mumbling excuses and finally do something with your finances.


*Image from Journey to your Financial Independence.

Four Steps to Financial Strength


When it's laid out like this, obtaining financial freedom seems so easy to achieve. And when you think about it, it really is.

Monday, April 8, 2013

April 2013 Budget & Money Goals



I already talked about our plan of annexing the unit next door to add more space to our teeny studio, and for that to happen, we need to come up with about Php300,000- Php400,000 to cover the downpayment to my brother (who owns the unit) and the renovation/ furnishing costs.

Our goal is to move in by Christmas next year, or to at least start construction by then, and I have decided to allot my equity funds as well as start a new savings account for this. The house renovation budget above only refers to what we should be stashing in our house account, adding to my equity funds on a monthly basis is another thing altogether.

I have also neglected our emergency funds, so this month, I will once again start building it up until it reaches 6 months worth of expenses.

For the expenses part of the budget, the figures pretty much represent our monthly expenses, except for our restaurant expenses which are kind of difficult to predict. However, I did allot an extra Php1,000 to electricity since we've been using our AC more this month and I also added the baby stuff and room renovation categories because we still need some more stuff for Bean's arrival (i.e. breastfeeding paraphernalia, cloth diapers etc.). Hopefully, the baby stuff expenses will be significantly lesser by next month.

Thank goodness that I'll be receiving my mid-year bonus and the educational assistance bonus in the next few weeks to cover all the extra expenses. Hooray for institutionalized bonuses!

April 2013 Budget & Money Goals


Friday, April 5, 2013

March Cash Expense Report

I hitch with my dad to and from work everyday. But for two weeks last month, he and my mom went to New Zealand to visit my sister, so my husband had the privilege of being my driver. At first, my husband would bring me to work and do his own work in a coffeeshop while waiting for me, but that proved to be counterproductive so he eventually made two treks from Paranaque and Manila everyday, bringing me to work then going home in the morning to work, and then going back again to pick me up.

True love I tell you.

I  dreaded our gas expenses. But I shouldn't have worried about gas because what really skyrocketed last March was our dining out expenses. After the hubby picked me up from work, we would opt to eat out instead of preparing something at home. Besides, he's usually in charge of meals, and with working and the two trips to and from Manila, he would be too tired to cook anything.

Needless to say, I was not excited at all to see how much we spent for March. But the show must go on, so here we go:
  • Grocery - Php6,340
  • Eating out - Php10,930 
  • Gas/ Toll and parking - Php3,800/ Php236
  • Entertainment - Php840
  • Household / Miscellaneous - Php6,427 / Php6,650
Total: Php35,223.00

Surprisingly, considering the circumstances, our March expenses were not that bad after all. I expected a significant jump in our eating out expenses from February, but the difference was only Php2,655. I attribute this to the fact that we made a conscious effort to limit our dinner tab to Php500 per meal and if I didn't bring baon for lunch, then I would eat at the canteen. Also, we really couldn't go anywhere during the holy week because everything was closed and I'm too pregnant to do anything fun, leading to savings.

Another surprise was our gas expenses, which even went down to Php3,800 from February's Php5,300. We actually parked our Grocery Getter (what we call our Hyundai Getz) at my parents' house and used my mom's car (a Honda Jazz) while she was away. But still, we gassed up her car every week so it's not like we freeloaded on it. I swear, keep your showy gas guzzlers, I'll take a fade in the background, gas-tipid car any day.

Our household expense can be broken down into: shopping for house stuff (Php5,000) + laundry (Php827) + cleaning lady (Php600). Breaking down our miscellaneous expenses, we get: baby stuff (crib and mattress protector) (Php4,000) + entertainment (Php840) + party needs (Php1,500) + kikay stuff (i.e. new dress and nail care) (Php1,150).

I hoped to uncover a pattern of spending by now so that I could at least create a monthly budget for us to follow, but as it is, every month seems to bring its own peculiar situation so I can't pinpoint a pattern just yet. And it's the same with April because I'm throwing a birthday party for myself and we're also having some work done in our condo to make way for the baby. Moreover, it's also less than a month before baby makes his presence known, translating to even more expenses.

Maybe I will make a budget for this month after all, if only to see if we can follow it.

March Cash Expense Report

I hitch with my dad to and from work everyday. But for two weeks last month, he and my mom went to New Zealand to visit my sister, so my husband had the privilege of being my driver. At first, my husband would bring me to work and do his own work in a coffeeshop while waiting for me, but that proved to be counterproductive so he eventually made two treks from Paranaque and Manila everyday, bringing me to work then going home in the morning to work, and then going back again to pick me up.

True love I tell you.