Recent Posts

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? ;)


Post a Comment

Powered by Blogger.