The good news is that it's very easy to withdraw funds from COL Financial, the bad news is I had to sell some stocks to pay off my credit card debt. That's how I found out how effortless it is to withdraw from COL Financial.
Ever since we bought the next door condo unit, our money situation has been slightly precarious with our emergency funds decimated and finding ourselves in debt to some family members. Things are looking up though and I'll be through paying my brother within a few days. Also, with an upcoming bonus, we can even start renovating the kitchen and tuck a tidy sum away in our emergency funds account.
But because of this juggling, I haven't been able to pay off a credit card bill in full for the last three months and the finance charges for carrying a balance have already reached Php4,000! I thought about it long and hard and decided to sell my AC (Ayala Corporation) stocks since it had already surpassed my 25% threshold to sell. More importantly though, the finance charges from my credit card balance would surpass whatever I was earning monthly from my AC stocks through capital appreciation.
The recent turn of events also made me take a closer look at our finances since I always thought we were doing well, give or take a few needed tweaks here and there, so why were we suddenly crippled by that big purchase?
Apparently, what I thought were mere cracks in our finances turned out to huge holes that needed to be patched up ASAP. And as with most things related to personal finance, we were the problem, not our income. Here's how we were unintentionally wreaking havoc on our finances:
1. Not planning for the condo purchase- I've already talked about how we vacillated between buying and not buying the next door unit, and how we eventually decided not to push through with the purchase which made me a little cavalier with our finances and a little too spendy for our own good (remember the ring of regret? Hanoi vacation?).
And then suddenly things happened which put the condo within reach at a very, very attractive rate and friendly terms. Before you know it, we had taken out a loan from my parents and brother AND added a mortgage to our monthly budget.
If we had prepared for the condo purchase, our emergency funds would still be intact and we would not be in debt to my family, or if ever, the amount would not be as big.
Moving forward: As it turns out, having a goal is the best thing to keep me in line when in comes to finances, since I don't feel deprived by delaying what I want in lieu of something better. Without a goal, I become reckless and transform into a spendy monster.
2. Having a guess-timate budget - In my defense, we've always lived within our means because there would always be a surplus at the end of every month, bills were paid on time and I even manage to top up our investments and emergency funds. So we must be doing well right? Wrong. Kinda.
When I started to create a budget, as suggested by the personal finance experts I listed down every single expense and then plotted them on a graph. After one week, I was hopelessly behind and feeling stressed from the backlog. So I tweaked my budgeting system by only tracking our non-fixed expenses like grocery, gasoline, eating out and laundry. I used the Goodbudget app (an envelope type of budgeting system) for this, setting a monthly budget and then tracking the expenses for those items.
Moving forward: I have already accounted for everything that we spend for, including investments and debt payments, and was dismayed to see that we are a few thousand pesos short every month if we only rely on my salary. Doing that has opened my eyes to the fact that those vacations and little luxuries we indulge in are things that we cannot afford after all on my salary.
3. Relying on bonuses and windfalls to bridge the gap between income and expenses - Our household income is composed of my salary as an employee and my husband's earnings as a freelance website developer. My salary is constant while as a freelancer, his earnings are of the feast or famine variety. Even if my salary falls short of our monthly expenses, I have always been good at squirreling away our windfalls and would incorporate those in our budget when we had them, that's why it took me this long to realize that we had a monthly shortfall.
Moving forward: The best thing for us is to make our expenses fit my monthly salary and use the windfalls and bonuses to complete our emergency funds and set aside a fund for the monthly top-ups of our investments. Doing this will free up a good chunk of our monthly budget so we will have an excess even if we rely only on my salary. Luxuries and vacations should also be sourced from windfalls, but only after savings and investments.
4. Impulse purchases -Because I wasn't aware of the monthly shortfall, I didn't think twice about indulging in tiny purchases here and there. A thousand pesos for buy-one-take-one shoes, a few hundreds for a magazine and a book, picking up the check for dinner with family members...the list goes on and on. Heck, even my RFP course was an impulse purchase to be perfectly frank! But those seemingly harmless purchases do add up to a pretty impressive sum and I have found myself on several occasions reading my credit card statement in disbelief ("I spent this much last month?! What the hell was I on?!?!")
Moving forward: With our monthly household expense sheet as a visual proof that we can't afford those little luxuries, it's easier for me now to say no to impulse purchases. It also helps that I already have something planned for the upcoming bonuses (i.e. kitchen reno, couch and new bed) so I know where my money should go.
5. Paying for convenience all the time -Sure the produce and foodstuff are fresher and cheaper at the wet market but it's such a hassle to wake up early, go there, haggle and all that ek-ek. Whereas in a supermarket, everything is laid out beautifully in a well-lit and airconditioned building and there's always a takoyaki stand right outside, so I can grab a snack right after grocery shopping as well.
And that's why our grocery bill is equal to a minimum wager's take-home pay, because I'm a disgusting sloth who can't be bothered to go to the wet market. Take note as well that our eating out expenses is still separate from our grocery bill.
Moving forward: We now ask our stay-out yaya to shop for vegetables and fruits, since she passes by a wet market on her morning commute. This is our second week using that system and I still have to see if our grocery bill has indeed gone down. Also we have come up with a weekly menu, and save for the tough as leather beef with broccoli last Wednesday, it seems to be working since we haven't ordered in or gone out to eat this whole week (our usual fallback when there's nothing left to eat at home).
As I go over this (very long) post, I'm struck by how being sloppy and complacent can end up costing us money. However, the bright side is that the actions needed to fix our finances aren't even that drastic to begin with. They're just little attitude and lifestyle tweaks that we'll quickly get the hang of in no time. And with more money as the reward, you can bet that I will try my darndest to develop the necessary habits to improve our financial life.