How To Live Below the Means

 

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In the past couple of weeks, I have been joining Saturday virtual meet up of Sun Life's advisor. And one of the topic is about how do we do our own budgeting. 

To be honest, I no longer do the tedious thing of writing it down or listing my expenses in a day. Read my post about it here . Since, I already know our fix expenses every month, my salary every 15th and 30th are already allocated into it. Everything is now auto debited from my account including all the investment and savings that we have.

Did you know that during this pandemic, it makes more sense to me not to list down my expenses? Why?

I no longer go out which means there is no transportation cost. And because of the quarantine, the family is no longer going out and no more eating out. My husband only goes out once or twice a month to replenish our stocks. Most of the days, we are just at home and not spending anything. Funny, because at some point when I was starting with this journey to personal finance, I have set my self to shopping fast and even no spending weekend. But nowadays, there is no need for that. We are automatically cut out of spending. We don't buy new clothes, since working from home only requires me of house clothes. Our purchases are limited for food.  

I really think, I love just being at home. 

Let me go back to the topic of budgeting. 

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Since, it was our assignment to identify how do we budget, I then retract my expenses. I look back and found my spreadsheet of budget for the past years. Truth is, I was surprised to know that our living expenses doesn't change since 2018.How does it happen?

1. Debt-free. Yes, we don't owe any debt at the moment. And that is good thing, because it only means that we have retain our living expenses the same as 2018 because we are living the same frugal way. I inculcate in the family the value of wants versus the needs. No need to buy things on sale but we will never use. No need to buy new clothes because it is trendy but because old ones still fits and usable. No need to flash new things, just because everyone has it, but because we do not need at this time.

2. Windfalls goes directly to savings or investment. Yes, I don't touch any extra bonus nor surprise windfall. It will either go directly to my savings or investment.

3. Salary increase. From 2018, I received salary increase twice. What I did is the same - 10% is automatically deducted for my Provident Fund. I also increase my contribution of Pag-Ibig MP1 and also MP2. I also increase the UITF contribution and open another EIP subscription. With all these, it only means, that what I can see in my account during payday is the same amount I was receiving back in 2018.

4. Shopee income goes directly to my MF.

5. Online and offline selling income are extra money for me that I use for "cheat days". Of course, there should be cheat days. But since, we are on quarantine, it becomes a saving at this time. 

This didn't happen overnight. It took years to finally come to this terms. 

Living below our means has thought us that we can.Over the years, we are able to work it out. Not an easy task especially we have a little girl. But, constant reminder and talks and living by example also helps. 

Sometimes, I am tempted. But I just have to think more than twice what is the purpose of it and if it will be of real use to me. We practice the 7 day rule as well specially for big purchases. If there is a second hand item of lesser amount yet with the same usage, we'd go for that. 

How I Have I been Doing Lately?

There are a lot a of things going on right now for me.

I am still working at the same company. In fact I have been doing overtimes since start of May. One reason is that I am adding more take home pays. Maybe a higher amount in the payslip is something to make me change my mind. It is exhausting. This is a test.

Another big push is that this is my way to try to change my mindset towards the job role I have right now. An experiment I embarked at the start of May, challenging myself if I can actually extend my tenure in the company. And if the "phase" I have been feeling is valid and a confirmation that the decision I've come up is the next best course of action. Back and hips pain are real though.

Leaving this job is a tough decision, if I continue doing that. I have so many things to consider. Not just for myself. I finally have a view that I shouldn't be selfish and that I have a daughter who look up to me.

These past months, I keep going back and keeps reviewing again and again our current savings and investment. It is a "big leap" if I give up now. The money we have set aside is not enough to take that dive. That's the sad reality. Our preparation for an early retirement is already late.

Yes, we are debt free. No mortgage to pay. No consumer debts. Just the daily expenses and being frugal in our lifestyle. But not yet enough.

Other than that, there is no sustainable business yet. I keep looking for opportunities and at this time, nothing comes up yet. My job hunting shows a lot of "thank you" letter.

So in the meantime, I try to keep afloat amidst everything by keeping myself busy, so there will be time to overly think.

I work on Kolotibablo and 2Captha captchas while writing this.

I answered queries in my Shopee and Facebook Page.

I send applications to companies.

I read in between other blogs and articles.

I check crochet projects I'd worked with while waiting in line on doctor's visit.

Am I spreading myself too thin for everything? That is maybe the case. It is better though than sulking myself to this situation.

There are a lot of things I wanted to do. Time and money sometimes play a big part. I have to remember, we are a single income household.

One time, I was thinking if I am just complicating things. That this adult life is difficult. And that there are a lot of dependencies. I know everyone has their own battles daily. This is my own battle. Keep trying.

From 0% to 37.77% Savings Monthly!

Like what I have mentioned in my previous post, I have been dealing with my anxiety at work for the past months. It's been terrible that I've been dragging myself to go to work each day. I know this is insane. If only options are on my favor.

But of course, there are always silver linings in each situation. I finally decided to quit!

Okay, I am not quitting the job immediately, without a replacement. But has started looking for a job which suits my preferences. Job hunting has now officially started. Our current savings and investment are not yet enough to cover our expenditures in the next 20 or 30 years. C'mmon, I am 38 years old and hadn't solidify our retirement nest egg yet. So glad though that we have started. Late but had started.

In the meantime, let me share with you how are we started saving from 0% before to now at least 37.77% of my monthly income. Saving is the toughest. I'd save before and then my phone rang, and then gone. Or something happen. Or someone needs it. Or I want this. Or something breaks. Or I felt like the income is not enough this payday, I'll save on the next. It never ballooned.

You see. I've just been going in circle. The biggest factor on which it didn't materialize is my self. I am not knowledgeable about personal finance. I was not train to say no. I wasn't able to identify my wants versus my needs. I rely on retail therapy for short term satisfaction.I wasn't able to identify what's an emergency or not. I kept up with friends even though I cannot afford it.

Sad but I went through all of these. I've learned how to be broke and in debt though I am employed. It took years to change. It took a lot of years of courage and humbling experience to finally come to peace with my self when it comes to finances and expenditures .

It didn't happened overnight.

There were so many frustrations.

But let met break it down to you where my salary is going to every month.

Company Retirement Fund Contribution: 10.76%
Pag-Ibig Fund: 1.43%
UITF: 5.72%
Mutual Fund: 1.43%
Insurance (3): 10.28%
Auto - save Accounts:
    Emergency: 3.86%
    Investment: 1.43%
    Appliance: 1.43%
    Car: 1.43%

Total: 37.77%

Total is 37.77% of my net income. But the percentage actually varies each month due to overtimes and night differentials.

Yes, I am receiving a salary above the average. But it took years too to accomplish this and of course, many projects to finish. Also, really working hard for a good performance review at the end of each year. I did overtime. I cover for someone who calls out sick or emergency leave. I initiate projects. I present process improvement. I try to solve the issues presented. I own the issue. And I am 10 years and counting to this company.

It wasn't easy.

I come to work day after day. Clocking myself to an 8 hour shift. I have missed holidays. I have missed family gatherings. I have missed being there.

The sacrifices I have come to terms to be able to get at least a good percentage for a good annual performance evaluation report. Which on some years are fruitless but just have to move on. Sometimes, good is not just enough.

Any employee can understand.

They say that it is good to know the balance between work and life. I am in the process of working it out. I'll let you if I know it.

Going back to the topic (sorry, I jump from one topic to another *wink*), let me share with you how we save the way we do. Disclaimer alert, and you have to remember that. What works for us may not always works for you. You will have to find the method that works for you. You try and give it a time, if it is effective, your desired result is presented. Otherwise, you have to check for more ways. You can actually devise one which suits you.

1. Company Retirement Program

Our company retirement program is one of the benefits our company offers to the employees since day 1. If I contribute to my retirement fund, my company will match it up to 3% of our contribution. And we are allowed to automatically save at the maximum of 10% of our salary. Which if added is already a 13%. Our contribution is already tax-free. But the matching amount from the company is with tax if my separation from the company is through resignation.

When I became employed, I didn't grab the opportunity. The reason behind was that the amount will only be given to you - 1st, if I resign. 2nd, if I was lay off, 3rd, if I retire. So, for many years, I didn't contribute to this retirement program. (Sayang...) My mindset that time was that if I needed the money I cannot withdraw the amount. Right, I don't have any idea yet what's an emergency fund. (Facepalm) Had I known about it earlier, I could have started earlier and should have been able to save more.

For those interested, what you need to do is ask your company if there is a retirement fund savings set up for the employees. I know some, they call it as bonds. These amount is automatically deducted from your salary so you will no longer see it in your payroll account. It appears like a force savings for you but you will thank yourself in the future.

Maybe you are asking, why don't I just invest it outside for higher gains? I tried that. It didn't work for me. At least for this, I no longer see the amount in my payroll account. And then, there is already a 3% guaranteed amount plus of course the gains for my contribution. Our retirement contribution is also invested.

2. Pag Ibig Fund (MP1).

This is the MP1. Our company payroll doesn't support yet the MP2 funding but there were talks. Because I don't have time to go to the branch to complete my MP2 registration, I settled with increasing my contribution to MP1. The mandated amount to contribute as of this writing is Php 100 per employee which the employer match with another Php 100. I started to increase it to Php 300, three years ago. And then Php 500, a year ago. This January, I requested it to increase it to Php 1000. Why?

Because of dividend. The dividend varies but at least it is always above the inflation rates. For 2018, it is 7.61% for MP1 and 8.11% for MP2. I can withdraw the amount if I already completely contributed for 15 years and every 5 years thereafter. But I planned to get the amount when I retire.

Oh, and I just ask our Payroll department to debit a higher amount from my salary. So far, the last time I have gotten my contributions from Pag-ibig, the payments are posted up to date.

3. UITF

Our UITF is from BPI and BDO. It is a monthly auto debit from our account. What we did is to study first the UITF and then went to inquire. Note that you have to be firm in inquiring about the UITF. Some banks personnel will actually encourage you to open a product with VUL. So, you have to stick with what you want. Be ready for so many forms to fill up and 2 valid IDs to be presented. Don't forget your TIN number.


4. Mutual Fund

We have our own mutual fund set up. It is just a small amount for the recurring monthly debit but at least, we get to save on it. We have our separate one time pay mutual fund account to other institutions too.

5. Insurance.

We have our insurances too. I don't think I need to elaborate much about this. But initially, we only have the basic insurance. And later on, when there is an extra amount, we try to purchase another insurance with riders that were not covered on what we initially bought. And as we grow older, we noticed how the premium amount increases.

Honestly, I do not have an insurance when I was single. I don't find it as a necessity. But when I have my little girl, I crammed. I don't want to leave her with nothing just in case.

If you are looking for an insurance, talk to every agent. Have them present their products. Study what they offer. Learn about the company. Go with the product that really suits you (not with who you know) and be honest with what you can afford.

6. Auto Save Accounts.

I set up this account to automatically deduct an amount from my payroll account. These are set up for those 'just in case' situations. Like a broken appliance. Just in case, we have our own car in the future. Like for an upcoming good investment such as bonds, RTBs, fixed income securities and such. We try to save an amount first then get to invest it when there is an opportunity.

Savings isn't innate to me. It took years to develop and to finally be able to set aside an amount. I was once  living from paycheck to paycheck until I learned my lesson. I guessed almost everyone had been where I was once.

It is a fulfilling journey to finally be able to get a hold of our hard earned money and be able to enjoy its purpose without overspending and getting in debt.

In the future, I plan to save at least 50% of my income. That is if I am still with the same company. Otherwise, I will have to re-adjust if I have a new job and a new salary.

I Stopped Tracking My Expenses!

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Yep, you read it right. I have stopped tracking my expenses altogether since I get out of debt in 2017. I get tired writing every centavos that I spent in a daily basis and tallying it at the end of the month. It was tedious and painstakingly hard doing the additional step of writing it down. And to be honest I am not consistent.  There were days when I was so tired that I don't even get the chance to write down what and where I had spent my last centavo in my wallet. Later on, I get frustrated with my graph because it is not tally.

Eventually, when I no longer had debts to pay, I quit tracking my day to day expenses. It no longer makes sense to me anymore. Not tracking my daily expenses has been working for me since then and until today. But mind you, I do not disregard the importance of tracking the expenses. It has been a vital part of myself when I was in debt and working my way to a debt-free life. It has helps me identify the unnecessary expenses I should have cut earlier so I would haven't had incurred any debts. It has established me a routine I followed nowadays so I became conscious with consumerism. It is now ingrained in my life that I can now easily determine what is and what not to spend my hard earned money. Talk about the habit I developed through the years.

What Am I Doing Differently Now? On Budgeting

Yet, I would like to let you know that though I no longer track my expenses in every single day, I am still conscious with how I spend my money. This also does not mean that I completely ignore my finances. I BUDGET. There is the difference. I budget the income and allot every centavo to where it should be accounted for. Because I was able to determine the fix expenses such as the monthly rent, electricity, Internet connection, my parents' monthly stipend, office fare, and school fees, I have now a definite (sometimes it varies) amount on each expenditures. The technique is to allot a little over the amount especially for the electricity bill. During summer, we usually have a higher electricity bill due to frequent use of air conditioning unit. I have to anticipate that. Otherwise, these bills are fix every month and therefore is non negotiable.

I prioritize saving and investment too so I have included these two as part of our fix expenditure. I treat them as non negotiable too. (I'll try to come up with a blog for this and how much we are actually saving and investing). The rest of my salary goes to our food and entertainment. This is the biggest variable in our budget. We have grocery money, wet market money, and miscellaneous. Grocery money is pretty straight forward. We've allotted a wet market money because from time to time, we buy the fresh market produce from the wet market rather than in the grocery. It is way cheaper and fresher. The miscellaneous money is either the dining out money or if we suddenly crave for something at home or the entertainment portion to go outdoors or stroll around the nearby park. It works this way because at least it is a guilt-free money.

At the end of each payday, there is something usually left which mostly comes from the entertainment/miscellaneous part. There are weekends we choose to stay at home and just hang around the apartment, thus it saves us with dining out money.
If this happens, I usually put the excess amount in our savings and when there is an opportunity invest it at a higher interest rate. This is what we call the Zero-based budget and it works for us.

Ways to keep me away from too much consumerism

Know that before I have reached this stage, I was once writing my daily expenses in a notebook and had been graphing it on an excel sheet. From there, I had a clearer picture of those unmindful expenses. I cut a lot of shopping and buying. (This was not the easiest part) It took me years to finally be able to identify my wants and needs (easier said before but in reality this is the most difficult part). I could not be able to identify my wants vs my needs because my mindset that time was that I needed all this stuffs. I was focus on consuming goods that ended up in our storage room and never been used for a long time.

 I don't watch tv anymore because the commercial advertisement enticed me to buy more.

I am more aware with Instagram scrolling because I feel envious with the new stuffs and travel features of the celebrities and even some friends. Please, don't judge me here. I just don't want to take self pity because at the moment, I cannot afford all those things. I am happy my friends can travel and has new stuffs but I am still a work in progress with my emotions. At the same time, because I wanted to enjoy the things that I have without keeping up with the Joneses.

Lately, this zero waste management movement is also getting into me. I've been reading a lot about it. The only thing that I can contribute at this time is not filling in the garbage can in as much as possible. Thus, I have been conscious with buying food that were wrap in flashy plastics. Candies, bite size chocolates, biscuits and drinks, I stopped buying it for myself. But remember, I have a 5 year old I am also trying to teach on this so at this time it is not completely zero waste. Hoping that soon, my little family can do more about this zero waste management. So why am I talking about this? This is a guilt free getting rid of consumerism, saving the difference and at the same time contributing to save our dear planet.

Thoughts

One of the things that help me become better (not yet the best) with budget is the use of automation. The automation ensures that I get to save and invest at the same time. When my salary comes in, the money allotted for savings and investment is automatically deducted from it. No fuss.

I think it also helped when we moved to our own solo apartment. Because, back then I saw, I needed more space than stuffs untouched for the longest time. And I have been in the process of getting most of the things we own into selling and donating to free up more space.

My mindset now has also evolved from the old self set who consume goods to a mindful consuming of goods. There are many products out there that advertise improvement of our own selves but for me going back to basics is still the best. Drinking plenty of water. Having a healthy diet. Exercise. Enough sleep. A ray of sunshine and the morning breeze at the beach.

Right now, I am more comfortable with the way I spend my hard earned income. It has some portion which is difficult because we are still living in a single income household and that is my current salary, but fairly improved since the year I started writing in this blog. (The other side hustles goes directly to re-investment)

It is a nice feeling that we are no longer paying debts because the money that should be going there is now part of our savings portfolio. Plus now I can say that I am really in charge with my salary.