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Tuesday, December 9, 2014

The Tale of the Two Super Typhoons (and us!)

More than a year ago, our country Philippines made international headlines when we were struck by super typhoon Haiyan. Being a flash flood survivor (Ormoc, 1991), it was horrifying to go through probably that same ordeal again. Let alone, I already have my own family with children! And what was more horrifying is that we didn't even have an emergency fund for it (Problem #1: We didn’t have an emergency fund.) The extra money we had was spent on a family vacation a few days before Haiyan made a landfall (Problem #2: Obviously, we didn't have a budget in place for anything! We were living paycheck to paycheck.)

Last year, if it would have made me less stressful, I would have done the following but cannot:

  • Have cash on hand (P6K) in case power fails for a few days or worse, weeks! (Problem #1)
  • Checked into a hotel in case there’s flooding because our house is a bungalow. But as what I've said, we just didn't have the funds to do it (Problem #1) and to think that it would just cost us at least P10K for two nights’ accommodation.
  • Traveled to Ormoc ASAP to check on my parents. What happened was I had to wait for my sister to send me money so I can afford to go to my hometown and fetch my parents (P7K) because I just spent a lot during our vacation. (Problem #1 and #2)
I know, I know. My examples are just too small as examples. In fact, it’s so easy to shrug off the amounts because others can just say they can afford it by using a credit card.  Hmm. Well, I have an issue with that. Let’s start by discussing the problems I've identified above.

Problem #1: We didn't have an emergency fund.

It’s sad, but yes. This happens to people who are living paycheck to paycheck. They can even justify not having emergency funds because they have their credit cards to use for emergencies. But the question is: how can they pay for the full amount when they don't even have any cash saved to pay for it? Maybe it’ll take a couple of months to pay it off (with interest). What I’m really trying to say is that it is okay to use credit cards as long as you have money saved somewhere that you can use to pay off everything before its due date. In short, you cannot use the money you don’t have. Again, you cannot use the money you do NOT have. :)

Also, I just realized typhoons have always been there growing up here in the Philippines. Don’t they come here every year from A to Z? So typhoons are really not an “emergency” thing anymore. Thus next year, we may have to adjust our budget to have a separate “Other Savings” for typhoon-related expenses or emergencies. Are you still with me? :O

Problem #2: Obviously, we didn't have a budget in place for anything! We were living paycheck to paycheck.

No budget for building up the emergency fund. No budget for vacations. I say, no budget for anything! Sadly, we were doing that come–what–may–thing–in–my–jig act. :hide: And worse, we’re not tracking our expenses at all. We were completely clueless where we were and where we were going with our finances. It just breaks my heart thinking about it now. But there’s no use, there’s no use. J We live, we learn. Apologies for digressing, but yes, in personal finance you must place a budget for almost everything necessary you spend money on. The operative word is “necessary”. To the most basic expenses such as food, utilities, etc to the personal needs such as clothing, health, allowances, etc, to the things that may relatively matter to you such as vacation, books, etc. After you're done with the necessary, you can then proceed with the "wants" given that your expenses won't surpass your income.

Fast forward to this year with super typhoon Hagupit, almost a year after taking on the challenge of a lifetime to acquire financial freedom (thank goodness), I am so happy to say our family is in a better state. Finally, for super typhoon Hagupit,  we would have been able to afford to do the following if we had to:

ü  Have cash on hand in case power fails (goodbye, ATMs) for a few days or worse, weeks!

ü  Check into a hotel if Hagupit was a very serious threat to Cebu.

ü  Travel to Ormoc ASAP to check on my parents or offer to pay for their fare just to get them here safer in Cebu..

Again. operative word is "if we had to". We didn't have to do the last two points above because we didn't need to. For bullet point #2,  the frugality mindset played a vital role and the "sense of entitlement" just had to fly out the window. Why, it would have been so easy to do it not because you think hotels are safer but because you feel you deserve it; that you deserve to spend the savings on a hotel during a typhoon. hehe.

To conclude I’m no millionaire just yet and guess what, it’s not something I am trying to get at with this post. Haha! I’m just saying how definitely grateful I am for starting on this journey to financial freedom because things have changed for the better. It does pay off to plan, to budget, and to be frugal. It may take some time, but as what they say: time can either be your best friend or enemy. In personal finance, I could attest that time is your best friend and discipline coupled with determination is your ally. Cliche, but really. :)

How about you? Have you got stories to tell? ;)

Monday, December 1, 2014

My Goals and Updates (November 2014)

Around February this year, I declared to the world that I am starting on the journey to be debt–free and be financially independent. I had the following goals set with the month of November as the target date:

1) Build a $1000 emergency fund asap!
2) Get a savings/investment/life insurance rolled into one (separate from my company’s)!
3) Be debt–free!
4) Start the full 3 months’ worth of expenses emergency fund!

Then came November, I did manage to strike through items on the list. In fact, I was able to add one goal to get the momentum going.

1) Build a $1000 emergency fund asap!
2) Get a savings/investment/life insurance rolled into one (separate from my company’s)!
3) Be debt–free!
4) Start investing!
5) Start the full 3 months’ worth of expenses emergency fund!

Hurray! (Remember though that in #s 4 and 5, the operative word is “start”.  Thus, we’re still a work in progress.) But I have to admit, it didn't come all easy.

As I've shared with you on a previous entry, budgeting is a very challenging task especially if the funds for expenses are on the negative. Trust me, no one will ever say it’s easy; and this is the reason why people give up and go back to losing control with their finances. So how I was I able to do it? Here’s how:

  • I wanted the change so badly for me and my family. If it’s not obvious, when I want something, I really work hard to get that something. I don’t wait for it to get to me. I am a believer in hard work and sacrifices. You know what they say about how budgeting is the same as losing weight? It really is and I can personally attest to that because I have tried to lose weight a couple of times and succeeded by only eating a half cup of rice every meal. It really is excruciating to try to lower the consumption of rice but I had to do it. Then sacrifices call for patience. You don’t lose the weight right away. It took me almost a year to lose 10 pounds. But I didn't stop. I just had to keep my eye on the goal. Thus, budgeting is all about self–control and discipline to follow through with the plan. Just like in losing weight, nothing will if you don't change anything at all. If you don’t have self-control, you just have to have it. If you think you don’t have the discipline to follow through with your plan, then may be you can partner with someone who has who can consistently check up on you like a parole officer.
  • We stuck to only having one helper. We used to have two.
  • My family and I had to scrimp on a P12K monthly “FOOD” budget for a household of 5 (3 adults and 2 kids). I believe that cooking all in a week’s meals has helped us a lot! Really.
  • I postponed paying the (self–imposed) rent/allowance to my parents so I can use the fund to pay off debts. This act broke my heart but you got to do what you got to do. Make negotiations when you need to.
  • I became an Avon dealer and sold a few thousands worth of items.
  • I partnered with my husband and together, we had weekly finance dates. Make personal finance a family thing.
  • I got organized with papers and finances through keeping a spreadsheet for the budget and tracking our expenses. I also had lists and files of almost everything: goals, accounts, FLOP, etc.
  • I read and read and read about personal finance, financial freedom, or financial independence. I've tried to read them all. Haha! Jk. There you read stories full of inspiration and strength. It’s just addicting and motivating. I am grateful.
  • I've attended free seminars and the likes. Remember that first free talk  I attended facilitated by the Colayco Foundation? I found the time because it matters.
  • I always try to be grateful that I paid it forward. I hold sessions with friends to discuss about budgeting and thank goodness, they've indulged me. LOL! And if you, my friend, are reading this, thank you.
I know my list is quite generic. You may have probably read the same points from other personal finance articles. But the only difference is it came from me and that by doing these points, everything is so much better than before. I am happier. My kids are happier and so is my other half. If that doesn't tug at the heart strings then I don't know what else to give you. :hide: At first, you may become a grumpy saver, but give it a few more months and you’ll be happier. Nothing else; just simply happier. :)

In my next entry, I will talk about the new budget goals of ours which are “Other Savings” and “Tithes/Charity” that will surely make me happier. Hihi. :)

Have a good day, y’all.

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