Monday 29 May 2017

Save More, Spend Less or Earn More Money?

I have been keeping an expense log since November 2015 till March 2016. I stopped updating our monthly expenses report till today as I felt it was a tough job tracking every cent that we spent. Recently I have taken some time to think about some important questions like what does being financially free/independent mean to me? What is my attitude towards money?  Why do I continue to track our spending? Why be frugal and prudent? To what end?

At first, I got really excited when I started reading other people's journey in personal finance and decidedly made decisions that I wanted the same, only to realise that everyone has different needs and circumstances. Could I save 70% of my income like the Frugalwoods? Invest in stocks like Dividend Magic in creating his Freedom Fund? Saving money and living frugally like RinggitOhRinggit? Different! We all different and on different journeys! We each have our  own set of challenge and circumstances that we are responsible for.

According to Wikipedia, Hubby and I have a gold class membership in Club Sandwich which by the way is an interesting read. My parents definitely had membership there too and I am now only realising how challenging and tough it can be. However, I am eternally grateful that my parents have been living really wisely and are now quite self sufficient. Furthermore as government servants their healthcare and medical expenses are all fully paid for by the Malaysian government. (Phew!) Even then having two very young children and 1 set of parents to look after financially can cause you sleepless nights a lot of days.

So back to our discussion, Hubby is a "it is more important to earn money kind of guy rather than check on how we spend it" I on the other hand, recently and decidedly felt that we have to spend less, save more. However, I do realise that time and not money is the most important commodity. Time allows you to earn more money but more than that, it allows you to pursue your God given purpose in life, other passions and interests. Spend time with the people that you love, stay healthy by eating well and exercising more, resting and relaxing, sowing into other people's lives, writing! So, I have come to a realisation that to me being financially independent means having the freedom of time!

Freedom of time most of all to have the choice to care for my two children and pursue work that allows me to do so.  Freedom of time to give to family and friend, to give back and be involved in the community around you. Today everyone is just too busy. I want more than just lunches and dinner catch ups, or coffee afternoons. I want to be involved in each others lives and give of both time and money. So time is really so precious.

Mother's day lunch this year. My WHY, or "whys" to work towards financial independence

So it is going to take all three to achieve my definition of success and financial independence! It is the effort of saving more, spending less (far less) than you earn whilst continuing to earn more money.

 Here is a video that catches the essence of how we live nowadays and here is to changing that for our family anyway (clinking a champagne glass together with anyone who believes that we all need to change in our consumerist society!!) and inspiring others to find the simple pleasures in life and focusing on what is really important!

Words of wisdom from the world's poorest President of Uruguay
(What hit me the most was from minute 1:53 to 3:20 in case you didn't want to listen to the whole video)

What does success and financial independence mean to you?

Saturday 13 May 2017

What My 13 Months Clothes Buying Ban Has Done For Me...

My first posting of 2017! Gosh time flies but I am back! Christmas, New Year and Chinese New Year has come and gone! It is now May! Second month in the second quarter of the year!  My boys are a year older and I am now only catching up with my writings! They have really grown so much and the year has just gone by in a flash.

Chapati eating his cheese

Little Murtabak chewing on his favourite dragon soft toy!

I thought what better way to start my writing this year than to do a review of my posting back in September 2015 about financial independance and simple living. That was when I decided on 3 things to do immediately which was my clothes buying ban, track our family monthly expense and de-clutter our home.

I am pleased to report that I successfully...albeit after a small road bump in November last year when I bought 2 stretchy dresses from Cotton On on the account of my growing belly (Murtabak was on his way to us), have not bought any clothes for myself since December 2015! 2015! I broke my clothes buying ban in January 2017 so all in all I did not spend any money on buying clothes for 14 and the half months if you count half of September 2015 and October 2015. But I am happy with 13 months!

The 2 dresses which were my undoing...)

I am so excited that I actually managed to do this! I didn't think it was possible to not buy any new clothes. That is not even the best part of it! In reflection, I realised that when I stopped buying clothes, I also stopped buying a lot of other things that came with shopping in general. The impulse buys, the lipstick that you just got to have, the latest gadget that makes life easier, that pretty double walled mug, the lock & lock plastic containers that just happened to be on 50% sale, the latest shade of eye make up (which is really similar to the one I currently have....) that really cute notebook that costs a bomb (RM45!), the Innisfree green tea seed serum that is on promotion, the must-have nude pair of high heels to match my office outfits, the designer handbags that I have always wanted is on 70% sale!!!...Ok ok I am sure you get the picture. There is just so many opportunities to spend money needlessly. The reason I can name specific items is because this year, I broke my clothes buying ban on a massive scale and that is a post for another time!

Emergency Cash Fund

To start with, Hubby and I did not have an emergency cash fund. Shocking right? Everything we earned monthly was channeled into investments in property and Hubby's laundry business and then into bills, eating out and stuff for the kids, general groceries...etc. We didn't have a lot of liquid cash as we thought that if there was an emergency we could utilise our credit cards. So we made a conscious decision to build an emergency cash fund. Our plan was pretty  loose and we didn't really have a figure in mind but this is what I did.

1) Pay off all my credit cards debt in full first
2) Transfer RM 3,250 every month into a separate savings account
3) Pay off monthly bills, housing loan, car loan, insurance, our parents....etc
4) Spend carefully throughout the month
5) Transfer whatever remaining money we have into the savings account mentioned in 2)
6) Transfer any bonuses that I received from my job, ang pows received for the kids during Chinese New Year, Hubby's additional business income into the saving accounts mentioned.

Voila! We are so happy that we now have an emergency cash fund! This is pure funds set aside and not touched for anything. Our investment funds are different. Now that we have done this, we have now planned and set some goals to accumulate a more significant emergency cash fund by end of 2017! Another post coming up soon I guess? :)

Credit Cards Paid In Full

For years, both Hubby and I have always had credit card debts. The banks have certainly made a lot of money from us in the interest that we have paid so far. It is easy for my credit cards to get out of control and accummulate more than RM10K of debt in the past. A little purchase here, a little purchase there and suddenly I owe the bank quite a few thousand ringgit. With today's rising cost of living, the danger of credit card debt is ever present and imminent if you are not intentional about this.
I have always wanted to clear all my credit cards since 2014 and have working towards it, however in 2016, I have consistently paid off my credit cards in full! Now we have to work on Hubby's cards. :) How did I clear my credit card? Wow, now I have more stories to tell!

Opportunity to invest in Bitcoins/Cryptocurrency

I started researching and reading up about Bitcoins and Cryptocurrency since end 2015. Instinctively, I knew it was something that  we could diversify into but the concept was challenging to grasp. I then immersed myself into the tech community who was more than welcoming to a newbie and have since become a staunch supporter of cryptocurrency.

Honestly, it was only because of the emergency cash fund that we had and were building that gave me the confidence to take some risks and to make my first bitcoin purchase in August 2016. Borrowing a saying from someone I really respect in the crypto community, "down the rabbit hole" I went not knowing where I would end up! What followed was an exciting 6 months if you follow the news and I am glad to say that I had the means to continue purchasing more bitcoins! I must say that our forays into the world of cryptocurrency  has made us some lucrative returns which we have realised early this year.  Having said that, the price of bitcoins have continued to sky rocket so investing in alt coins is also something that we have looked into. I have an awesome story to tell! Soon soon...

Sense of Achievement and Peace of Mind

The sense of achievement and satisfaction is really a fantastic feeling. Really how many new clothes do I actually need? The better question is how many different clothes do I actually wear? Looking at my clothes cupboard, it is packed full of clothes that I have not touched in years...some of them 10 years or more! I kept wearing the same ones over and over again. I realised that I had too many clothes and would just pull the recent ones that I had been wearing before.

I also came to understand that clothes were not a priority to me. Of course I believe in being presentable and appropriately dressed for any occasion but I didn't have to buy a new dress every time! Watching our savings account grow was more satisfying knowing that we were focused on a goal.

Renewed Hope and New Possibilities

The experience of being credit card debt free is empowering and gave me great peace of mind. I realise that there are other more important things in life than just shopping for something. I could pursue other interests and even business possibilities. I am excited that I could be doing new things this year like travel more...a lot more! Home school the boys and spend more time with them, blog more, start a new internet business, make my own natural products with Ameo essential oils, serve in church, mentor, help and inspire others to be financially wiser, start my edible garden, give time and money towards the community around us and share the many possibilities,

I am grateful and thankful that I started this journey of learning to become more self aware and being more financially prudent. I have still have a long way to go but what a great start!

Their first visit to the beach! Tough trying to get both of them to smile and look at the camera!

Do you have a success story to share about unique knock-on effects of achieving a goal you set out to accomplish?