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.


I also have those days where I just don't want to know my monthly spending, kasi napalaki! Brave of you for just biting the bullet computing your deficit and even better for making a "break" from subsidizing your parents' bills, at least for now. It must be doubly hard to budget while allocating for the cost of kids, helpers and parents but you do it.
Sera Que said…
I've been avoiding the expense listing for the last couple of months. When I finally tallied them all, I found out I had bigger expenses in March, slightly less in April. But even without the excel sheet, you could feel it. All the harried lunches/dinners out, the cabs, staycations, plus some medical expenses--those really do add up.
Jen said…
Di ba may mga apps na ngayon about sa mga spending para ma automatic na ma-compute natin yung mga ins and outs of our money. Try downloading one para shoot sa banga ang spending computation.
Jillsabs said…
Hi Jen,

I used to use an envelope method app, then tried manually writing down my daily expenses, pero nakakatamad yung monthly tallying!

Subukan ko nga maghanap ng daily expenses app na may preset categories and monthly tallies. Yun ang kelangan ko.
Jillsabs said…
I've been spending a lot too on work lunches because I don't bring a baon anymore. I only go to the canteen, but the 60p-80p per meal can still add up.
Jillsabs said…
Budgeting was one of my first legit adult experiences. I'm not OC with my budgeting, instead I keep a big picture view and try to put as much into savings as I can. You gotta do what you gotta do.
choose simple said…
Going over the expenses is really helpful to know where we're spending more than we should. I just did mine earlier and discovered that majority of our discretionary fund was spent on eating out. Just like Jen said, I downloaded apps before, but I never find "the one" for me so I made spreadsheets for daily tracking of expenses and net worth tracking. So far, the spreadsheets are serving their purpose.

Anyway, cheers to reaching our financial goals!
Jillsabs said…
Cheers to us!
edelweiza said…
Ako naman gumawa rin ng sarili kong finances monitoring sheet sa Excel. Wala pang app na nagswak sa needs ko. Satisfied naman ako sa mga tables and balance sheets ko kaya keri na. I'm starting to overspend again (just like last year) kaya medyo nagstruggle din ako, haaay. I see that you're about to finish paying most of your loans so things will only get better for you. :)
Joy said…
Hi Ms. Jill,

Try using Money Manager (Android) dunno if it's working in iOs though. It's very convenient to use and it offers daily, weekly, and monthly totals per category (with pie charts as well). You can also edit categories and subcategories.

I've just found your blog and backreading your posts. I can totally relate!
Mark Nolasco Lim said…
Credit card bills amount to upwards of 36% per annum. If you can pay the credit cards by getting a lower priced loan (sss, etc) that would significantly lower your financing cost
Jillsabs said…
Hi Joy,

Thanks for the tip! I'm using Fudget now and I'm really liking it, but I'll also check out Money Manager.
Jillsabs said…
Hi Mark,

My credit card loans are more of personal loans so they have an annual interest rate of 12% - 14%. I wouldn't even consider those credit card cash advances because they have the same 3.5% monthly rate as credit card charges. The horror!
Ariel Manoban said…
Great read. How I wish I can have a stable financial goal this year. Nonetheless, thanks for sharing this. Very helpful and inspiring!

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