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Tuesday, April 24, 2018

Time Deposits ~ Review and Our Take



Today is the maturity of our first bank peso time deposit as a couple. It has been locked for 5 years with 3.5% interest and exempted of  withholding tax. We didn't actually have second thoughts of withdrawing the full amount of P59,389.45. Our P50,000 has earned a whooping P9,389.45 in 5 long years. :)

To give you a background, it was the money we have earned on our wedding day. You probably have an idea why we are so clingy to it. Yes, the earning was a miniature compared to having it invested in the higher risk investment. However, at that time, we are still too afraid to test the waters with both our feet. Thinking that we would eventually lost it. More so, our knowledge on handling money and personal finance was limited. 5 years seems too long to keep the money, at that time, but we dove into it nonetheless. As we go along, we have learn that of the same amount, there are better ways to earn  greater than just putting it in the bank. But like, anyone else, we made mistakes and continue to try to be better.

These bank time deposits are basically for conservative investors, where you wanted to keep the capital and earn small amount ranging from 1 to 3.5% annually. It is one of the safest form of 'keeping' your money. However, with the current inflation rate, our money is losing its value over time. Of course, we do not want that to happen.

If you still wanted to have this type of 'investment', you can check each banks to determine which give the highest interest rate for a certain period of time. Also, look for those with tax exemption. Remember to read the papers.

I am pretty sure, we won't do this anymore in the future, unless for the Emergency Funds. In a shorter period of time.

Take note that IN the emergency fund, there should be an amount which is readily accessible. We all know, that savings account alone is barely earning. Mostly, it has 0.25% less 20% of withholding tax. Yet, we really need it to be liquid.

Next to savings account, you can always tier it with time deposits which has only a month lock in or two. Yes, there are banks which offer this. Eastwest Bank is an example. They have terms ranging from 30, 60, 90, 180, 360 days, up to 5 years.

The problem with having to tier it, is monitoring. Tedious. But, of course, the bank can just roll it over on the next month, if you do not want to be bothered going to the bank. This will still serve its purpose as Emergency Fund.

Why? For sure, the amount you have put in the savings account as an emergency fund covers at least 3 months of your living expenses. The standard, well, there is really no standard when it comes to Emergency Fund, but more often, the book will tell you it should be equal to 6 months worth of expenditures. There are some, who goes up to the extent of one year. By the time, your liquid money was exhausted, your time deposits which was lock in for 1 or 2 month/s can now readily be withdrawn without any pre termination fee. Sounds good, right?

This may work to some. To others, it won't. Different strokes for different folks. Find strategies which works for you. Don't give up if it is difficult at first. Continue working on it until it is already part of your system. And don't forget to continue educating yourself.

For now, we have put the amount in our joint savings account and waiting for the next opportunity to invest it. Maybe, on a corporate bonds, an RTB, or on a Cooperative which we have been studying since 3rd quarter of 2017. I'll keep you posted. :)

Thursday, April 5, 2018

Don't Forget To Have Cheat Days

Out first quarter of the year, saw us with lots of spending. Literally.

January. My birthday month.

February. Bonding with my brother and her family and bringing my family to Tagaytay for the first time. We don't usually go out of town so this was a treat in over a long period of time. No regret anyway.

March. Step up ceremony of my little girl from Nursery to Kinder. Well, the spending in this month was unexpected. I'll probably blog about it separately because right now I am still in cloud 9.

The good thing all through out these, was that I received a good amount of windfall at the end of February, which has covered the expenses and left the savings untouched. Thank God for all these abundance.

Anyway, we have been debt free since November, but having that mindset has somehow clouded my judgment these early months of the year. This actually is, bringing me back to the old self of having-money-enough-to-spend. I have to set up reminders to myself for this, 'hey, if I continue doing this, I might end up in debt again by the end of the year'.

Holding myself was difficult even though I have managed for a long time to somehow live frugally as I can. I think, the idea of being penny pinching for such a long time has taken a toll on me and my spender-natural-self is kicking in.

I just hope that I would be better again in our finances this second quarter.

Just like any subject or journey we embarked, there will be this time, when you have to let loose. I think, that I missed that when I was starting up. I was so fire up in achieving something big, that while I am travelling I forgot to give in to my cravings or in diet program - the cheat days.

But then, these are the lessons I am about to learn while working on those dreams. Yes, I have read about all these but experiencing it personally is way different. They would say that all questions pops up when you are already on it. I guessed, I belong to that group of people. And I need to develop that trait, that when I am presented with an idea, I have already put myself on that shoe before it even started.

It's a long way to go.

There are still a lot to learn. I should start with refreshing myself on why I have chosen to work on my finances back in 2014. For now, let me reflect again. :)


Saturday, February 24, 2018

WARNING: Overdue Post, Publishing It Anyway

WARNING: Overdue post from the draft. Posting it just now. :)

The intention to write is overwhelming especially when I am idle on something. But, the thing is, I am having difficulty gathering the idea I wanted to share. My 2017 personal finance goals achievement were not impressive and what I had hope it to be. I am prolonging the idea to write about this, but, because I am accountable to this own blog and to myself, I have to. Other than that, I am not comfortable sitting with no output at all.

I am not into crocheting this week, because I wanted my hands and eyes to rest. I mentioned this on the other blog.

Yes, I was able to pay the consumer debts last year and I was expecting that freeing those amount of money could give way to saving more. Yet, it actually confuse me now, how on earth am I not fast growing my savings?

The reality is that when I get a hand with my payday money, it seems like it is evaporating in seconds I could not even get a grip of it. This January saw how I went back to over spending with dining out more often with friends and family. The imminent price increase on necessities and commodities hit my money to a lesser value.

This change is inevitable though. With the new tax law implemented the first of day of this year, it follows this price increases on every item we use. A chain of reaction.

However, our bimonthly pays haven't coped up yet with the new tax law. And it left me now, trying to discern, how else can we make ends meet.

I wanted our family of three to eat healthy, enjoy weekends, paid the bills on time , and still have something added in our meager passbook accounts. With the rate of things going, I really need to device more ways to earn, live simply without sacrificing the quality of food intakes, and enjoyment on a much rather free entertainment.

Okay, I hope that this February, there is no much eating out. This is doable since this is no longer my birth month.

I will have to practice saying 'NO' again. It is not because I do not want to be with the friends but because, my friends are mostly single and I have a family to take care of.
The loyalty cards we have from a local grocery has already 400 points equivalent to Php400 pesos which we have redeemed on Sunday for our grocery this week. Our viand for the week is now free.
I don't cut back on food. So maybe, we will go back with more home cooking this month and limits our dining out as a family.

There is a free shuttle to office and I will have to take advantage of it this time. I just need to go out early from home so I can make it to the shuttle on time.
Coffee is still free at the office. I have to remind myself of that.
I think I will have to accept orders for handmade crochet starting next week. But I will have to make sure to take it easy this time.

I have to cross my fingers that hopefully by next payday, the new tax decrease is already reflected in our income.

This will pass. As long as we are not actually dipping in a portion of our paper investments and no additional debt incurred, I think we are still good. Hoping, the coming months saw a gradual development if not drastic progress on our savings.