Living with a Deficit
It was fairly obvious that we had a deficit in our monthly budget (Hello! I kept on selling stocks and taking out credit card loans on a regular basis just to keep up with the bills), but I wasn't really sure exactly how much that deficit was. To be perfectly honest though, I think I was mostly just scared to know how much in the red we were every month.
But I sucked it up and crunched the numbers, and, like what usually happens when you face your fears, it wasn't as bad as I thought. Our deficit was Php14,500.
I came to Php14,500 by comparing my average take-home pay with our monthly expenses, both fixed and estimated. Our monthly expenses turned out to be more than my take-home pay, hence, the deficit (boohoo!). But that Php14,500 is not bang-on accurate because some of our line items are merely estimates, based on how much we've usually spent on those categories. I also didn't include the quarterly insurance premium payments in computing the monthly deficit.
Faced with a deficit, I had to really go over our expense categories and dig deep within to decide which could stay and which should go, or at the very least how we could minimize spending on some of the categories.
The first thing that had to go was my parents' credit card payments. Someone else was supposed to take care of the restructured payments, but that didn't happen so I stepped in and took over. But with a deficit to deal with, I could no longer handle the monthly payments. I also decided to stop paying for my parents' cellphone bills.
Strangely enough, I felt really anxious when it came to breaking the news to my parents because I did want to continue doing it and lessen their monthly expenses, but not at the expense of incurring debt and jeopardizing my own family's financial security. To make a long story short, the "break-up" was worse in my head than it was in reality. My mom, the CFO, was totally cool with my announcement and promised that she would reimburse what I paid when I handled their bills. I'm honestly not expecting any reimbursement though because I didn't do all that with repayment in mind. Furthermore, my mom never even asked how much I actually spent for the past 2 years, so I'm chalking the offer of reimbursement up to small talk.
While I was willing to cut ties when it came to my parents' bills, I wasn't as willing to let go of my monthly sponsorship to Tapulanga Foundation. With Php1,500 a month, I sponsor a child's tuition fee for a year in a private school. The Foundation is managed by the people who run the school, so it's not a mammoth institution where a huge percent of your donation goes to administrative costs. Majority of the Tapulanga scholars are children of the sugarcane plantation workers and these kids have big dreams, foremost of which is to help their own families financially. With all the f*cked up things happening around us, I choose to align myself with those who continue to persevere and help those who need it the most. That's my tribe right there.
I also refused to cut down on my helps' salaries because I didn't want to shortchange the women who not only take care of my family, but also indirectly help me reach my dreams.
So yeah, I was perfectly fine with dropping my parents' bills, because that only meant that they'll have to be more mindful with their spending (i.e. don't buy a speedboat), while if I cut back on my helps' salaries, I knew that their own families would feel the pinch and they might consider finding another employer (Noooo!).
Credit card loan payments also account for about Php20,000.00 of our monthly expenses. I currently have 5 existing loans with the monthly scheduled payments as follows:
- RCBC Loan 1 = Php3,649.30 until August 2018
- RCBC Loan 2 = Php2,736.98 until December 2018
- BPI Loan 1 = Php1,980 until November 2018
- BPI Loan 2 = Php6,742.76 until February 2019
- BPI Loan 3 = Php4,816.26 until March 2019
By removing my parents' bills, I had whittled the deficit by half and with full payment of RCBC Loan 1 and BPI Loan 1 by August and November, respectively, there would be no more deficit to speak of!
Being in the Judiciary, our bonuses are already scheduled so it's easy to plan our household budgets months in advance. The plan is therefore to use the remaining bonuses of 1 month basic pay (May) and anniversary bonus (June) to create a buffer to account for the deficit. The current buffer should last until October, because by the end of October all the way to December, another round of bonuses come out.
Aside from the deficit, the buffer will also answer the insurance premium payments, so there's a lot relying on that buffer.
Thankfully, our finances will start picking up when the credit card loans are fully paid one after the other. If I play it smartly and barring any sickness or accidents, I should have a gap* by December this year.
By January next year, when the final tranche of salary increases will be implemented, my monthly take-home pay will also rise. February is likewise an important month because that's the last payment for my GSIS loan, which means I can finally experience how it feels to receive my full salary without any deductions for loan payment! Can I just say how thrilled I am with this thought?!
Sometimes I think that I'll be juggling our budget and putting out fires all my life, like what my mom used to do and is still doing. But I refuse to do that because I don't want to be responsible for anyone other than myself any longer than I have to be (read: until my kids finish college, although I might also consider helping them with postgraduate studies). So to make sure that my dream of future indolence becomes a reality, I will assess, plan and execute accordingly to reach my goals.
Laban lang guyz.
* The "gap" is the difference between income and spending. The ideal is to have a big gap between income and spending, with the gap (i.e. surplus) put towards savings or investments.