Officially Debt Free!

Just a short post and a quick update. As of today, I’m officially debt free! No more instalment plans to service and no more ready credit loan to repay. How wonderful is that? From now on, I have $500 more in disposable income. This means I have $500 more to spend on ME, MYSELF & I! I’ll have one less commitment/fix expense per month, and slightly more freedom!

So how will I be using this $500? I’m definitely gonna reward myself, and no, I don’t mean splurging on shoes or bags. I’m gonna reward my future self by saving this amount of money, adding to my emergency fund.

And one more thing I’m sure of. I’m never getting into consumer debt again 🙂

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Here’s another reason to quit your office job and retire early!

Something happened today that made me, my husband and his siblings all left work early in a mad rush. While at work, hubby called and told me in a shaking voice that his mom had suffered a stroke. Turn out, it was a panic attack (thank goodness). My mother in law was supposed to undergo a cataract removal surgery at a private eye clinic, when she had a panic attack and was sent to the hospital by the eye surgeon, who thought she had a stroke.

Anyway, right after the call from hubby, I immediately went to my superior, told him about the situation, and apologised for having to leave work early to attend to my family. Likewise for my hubby and his siblings, all of them went through the same thing, having to apologise for having to leave work to attend to family needs.

The thing is, why do we have to apologise for something that we are not sorry for? Family and loved ones DO COME FIRST, especially in time of such emergencies. Yes, we do have responsibilities towards our role, our job, our colleagues, and the company we work for. But at times like this, the desire to be freed from having a job we have no control over our working hours is even more acute. It makes even more sense to make good use of our pay-check to redeem our freedom, to do things that do matter, such as having control over how we utilise our time, to have the choice of spending time with people we want to be with. It make sense for me not to be using my salary to buy bags and shoes and beauty products, or dine at expensive restaurants like how I once did. And I can no longer relate to those who are using their hard earned money to splurge on branded goods, a bigger car, or on Italian furnitures. Isn’t having money in our bank account and a seven-figure portfolio more desirable? So that we can retire young and still be full of energy to truly do the things we want, go places we want to visit, and be with people that we want to be with.

My mother in law is still in the hospital as she has to undergo more scans and tests, and we are unsure if she will be discharged tomorrow. It pains me that my hubby and I have to go to work the next day, knowing that our hearts and minds will be with her, and it pains me that I overheard my sister in law calling her boss to apologise (again) that she is applying for urgent leave to accompany her mother tomorrow.

Early retirement. My dream, my goal.

How I got out of debt (Part 2)

I’ve previously posted the first part on how I got out of debt here. Being in debt for years was really painful. I had totally ignored my debt situation and make no efforts to get out of it. However deep down, as much as I tried to ignore it, I know a certain part of my life was pretty screwed up.

Getting a good bonus, working out a debt repayment plan, and sticking to a budget were the first few steps I took to get out of my debt situation. I have to ensure not to fall back into debt again, like how I did before.

1) Changing habits/lifestyles

– Quit shopping

I realized whenever I’m bored, I’ll go online hunting for things to buy. Be it dresses, bags, accessories, or even gadgets. Shopping keeps me occupied and happy for awhile, until I received my new loots, then I’ll get bored and hunt for something else again. The first step to implementing a change is to identify the problem. In my case, it was the lack of self control, and the need for instant gratification. I made it a point to stop online shopping and I avoided shopping malls too, until I’m comfortable enough to just look and not buy. I also stop visiting designer bags forums, and stopped looking at advertisements of luxury products.

– Stop eating at restaurants

I used to dine at places like Ding Tai Fung, Crystal Jade, Ichiban Sushi and Sushi Teh whenever I meet up with friends or my boyfriend for dinner, which is like almost every other day. I even spent over $20 for lunch during weekdays. Now I eat at food courts and coffee shops, and I have to say I enjoy such local treats too! I still dine at my favourite places, but it’s usually reserved for weekends. Now on normal weekdays, $10 is more than enough for both lunch and dinner. One tip here, stop ordering drinks when eating out, just order plain water. They are not only free but much healthier too! I completely stopped buying bubble teas and Starbucks coffee back to the office post lunch too. It’s usually the small amount that adds up.

– Stop taking taxi

Compared to spending a few hundred dollars on transport previously, I now only spent about less than $100 a month on public transport.

2) Goals setting and setting of priorities

I never knew what I want in life and was just drifting through and enjoying life as it is. I guess everyone went through that stage when they were younger. After getting my bonus, I really sat myself down and started thinking of what I want to achieve in life. I want financial freedom. I want to be debt free, to enjoy the small things in life, not be bound by material things, and to finance my lifestyle using passive income. It is then that I realised I need very little to make me happy. Good health, being surrounded by people I love, good food (not necessary expensive), and self development are what matters. All these does not cost me a lot of money.

Once I sorted out my priorities, decisions making became easy. I know clearly what I want, and what I do not want. I’m no longer tempted by designer stuffs and the “finer” things in life. I no longer have temptations to shop and buy thing. Even for my upcoming wedding, I planned and budgeted in such a way that even if we make losses for the banquet, it is still affordable for my fiancĂ© and I. I don’t care if it’s not extravagant. What I want is an awesome marriage, not be debt ridden after all the glamour is over. And we all know the number one problem couples usually face is financial difficulties. I don’t want that to happen to my fiancĂ© and I.

3) Change in environment

I would say the biggest catalyst in helping me get out of debt and turning my financial situation around is due to the fact that I changed my job. I made many good friends from my banking days, and they are still some of my closest friends. However, I’m not entirely agreeable on their spending habits (sorry folks!).

My current colleagues on the other hand, they aren’t the most exciting or fun loving people. They are in their late 30s to early 40s, but they sure know a thing or two about amassing wealth and they know the importance of being debt free. One repaid his HDB loan within two years, and one within seven. My Finance Manager fully repaid his 5 room BTO the day he moved in. They are frugal, yet generous people. Being in such an environment prompt me to save and work hard for my goal of attaining financial freedom.

So all in all, without my current job (for the bonuses and the good influences), I’ll probably still be in debt, and most likely carry debt into my marriage and into my 30s.

Are you able to retire comfortably?

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More often than not, people are not able to retire due to the many commitments in life. In our consumerist society, we need things to prove that we are successful. We need so much money to maintain our current lifestyles that retirement is not an alternative at all. Secondly, most of us are not able to retire due to a lack of savings and losing our jobs means a complete loss of income. This is why it is so important to spend below our means, save and to accumulate assets that can generate us passive income upon retirement. It is so important, yet so many of us fail to do so.

When this happen, we blame the economy, our government, the banks, and everyone around us, but we fail to see how we are sabotaging ourselves financially. We are the reason why we fail to accumulate wealth and attain financial freedom. We fail to plan for our future, fail to save, and over-indulge in life.

Avoid lifestyle inflation
It is so true that the more we earn, the more we spend. I remember years ago during my first office job as an intern in an accounting firm. A salary of $600 was more than enough for my daily needs, for me to pay for food, transportation, to help out at home, for weekends entertainment, and still had room for shopping as well. There was still a tiny bits of money left at the end of the month, right before pay day. It just was barely enough to save, but it was enough to get by. However throughout the years as I earn more, not only was I not able to save, I find myself running out of money the week before payday and needed to use credit cards to tide me over. There was also always an endless list of things to buy. I needed a new pair of heels, more dresses, the latest gadgets, a new wallet, a new watch, or a new bag. There’s a constant nagging feeling in my stomach that I need to save, but I always tell myself I’ll save the very next month, or when I get my bonus, or when I get the next increment, or after I bought what I wanted. I started work at 20. At 28, not only was I not saving any money, I was in debt. I was better off earning an Intern’s salary than a salary of an Finance Analyst in a private bank. My lifestyle had inflated so much over the years that I didn’t realized it. I hardly stepped foot in hawker centres or coffee shops and always had my meals in restaurants. I bought at least 10 dresses and a pair of heels in a month. I needed to do my nails, do treatment/cut/colour my hair, or do eyelash extensions every single month. In short, I had no control over my money.

Budget and keep track of expenses
It is funny how I have been tracking expenses and doing budgeting for all the companies I worked for, and yet I had never done it for myself until this year. I was so shocked when I looked through old bank statements and credit card bills and realized that I spent over $1,000 a month on food and drinks, and a few hundred dollars on cabs. A budget is useful in so many ways. It sounds like a chore at first, but once it became a habit, all I need is just half an hour a week to update my expenses and see how much I have left for the month, on what I can spend.

Cut expenses and SAVE MONEY
I used to find it so difficult to save. Now with a budget in place, I usually do a forecast on how much I need for the next month and determine how much I am able to save upon pay day. The first thing I do when I get my salary is to immediate transfer a certain amount (usually 20% of my salary) to my saving account. Trust me, it’s a great feeling watching my savings grow.

Avoid debt
I initially avoided using my credit cards again for fear of repeating my old foot steps, but I realized I’m missing out on discounts and the chance to accumulate points. Now whenever I use my card, I’ll make payment the very next day or within the week of making a purchase.

Where I’m standing right now
10 months has gone by and not only are there no new debts, but my saving has grown substantially as well. Just by taking these small steps, I have improve my financial life quite drastically. It is drastic because of the good money habits I have picked up, and that I have learnt to invest as well. Looking back, it wasn’t that difficult at all. I only wish I had started earlier.

Now, a comfortable retirement is possible for me because I’m planning for it and am willing to sacrifice material things for financial security and freedom. Don’t wait till you are in your 50s to start saving, planning and investing for retirement. It’ll be too late then.

My Favourite Personal Finance Bloggers

Getting out of debt and trying to gain control of my financial life wasn’t easy. Thankfully, I encountered these Personal Finance blogs which really helped and motivated me.

And now, I hope to share these sites with you.

1) The Simple Dollar

I find Trent Hamm’s blog to be especially inspiring because not only is he partially handicapped (blind in one eye and deaf in one ear), he also went through a complete financial overhaul (like me) and managed to clear his debt within eight months.

He not only writes about every financial related topics from how to save money, clear debt and invest, but also writes about how to be a better person and on behavioural finance, a topic that is of great interest to me. Some of my favourite blog post from Trent includes the following:

does money buys happiness
17k in credit card debt
14 simple money rules of Trent which he lives by, which sounds like very good advice to me

2) Afford Anything

I love this blogger! We corresponded through a few emails and with Paula Pant‘s encouragement, I started my blog and she gave me some ideas on how to go about doing it.

Paula is an inspiration in the sense that she is living the life of her dream and travels and writes for a living. She is also a landlord and bought her fourth house before the age of 30. She is the epitome of living a passionate and financially free life.

Here’s a few of my favourite posts by Paula:
Only rich people invest
You can afford anything, but not everything
Reasons we spend money
Money vs Happiness
Reading Afford Anything helped me searched deeper within myself as to why I had previously overspent. I found out that when I buy things, I am actually using material goods to fill up voids in my life, to try to make myself feel better, and found out that I shop or spend relentlessly when I’m stressed or unhappy (basically with myself).

3) Len Penzo

Len writes in a quirky yet practical manner on most of his posts and I found myself reading his blog the entire Saturday morning and afternoon the first time I came across it.

Here’s a few good reads:
Secrets of the millionaire next dollar
Driving an expensive car is not impressive
Debt free people
15 year vs 30 year Mortgage loan and Reasons not to repay mortgage loan early

Besides reading about personal finance articles, I’ve also spent a lot of my time reading about rich and successful people, and trying to pick up their good habits as well. What better ways to be successful than to learn and read about such successful people?

I hope you’ll like these bloggers and find their articles useful like I did. There are many more financial bloggers out there who had helped me in one way or another, which I can’t possible list them all. If there’s a chance, I’ll like to meet them personally and thank them for impacting my life somehow. And of course, I hope to be an inspiration like them one day. Wish me luck!

What does money means to you?

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Money means different things to different people. At different stages of our life, we also view money differently.

My Early Years:
When I was growing up, my Dad was in a well-paid job and money was meant for spending. I remember my dad bringing the family out for expensive meals every weekend, and my brother and I would get new toys every week. I even had the whole range of Barbie dolls with the house, the car and the full works. Back in secondary school, my dad would shower me with new school bags, watches and gadgets all the time, and I received more than $50 a week for allowance, which was a lot back then. At that point of time, money was never meant for saving.

My teenage years to being an young adult:
My dad lost his job in 2000 when I was 16. Suddenly, everything turned topsy-turvy. I would come home from school to my parents quarrelling, and my brother crying, and with no electricity or water at home. Somehow, we went from living a comfortable lifestyle to not being able to pay for basic necessities. I started working part time to afford my studies, and to help with family expenses. After my tertiary education, I became the sole breadwinner at home. At this stage of my life, the lack of money was like a curse. Money was sacred, and money to me means sacrifices. I had to sacrifice time and having fun, for money.

Moving forward:
I had recently reshuffled my thoughts about money and what it represents.
I begin searching deeper into the meaning of what money can do for me. I used to have a love hate relationship with money as it is something not within my control, especially when I was buried deep in debt.

Here’s what money means to different people:

1) Money means FREEDOM
Financial freedom means the ability to have more choices, more options, and the ability to spend my time however I want it, without much financial constraint. Rather than spending time in doing mundane tasks, I can afford to outsource such tasks like doing housework, cleaning, and washing to outside help. Such freedom also means being able to say no to a high paying job that doesn’t interest me. Of having the choice of selecting the kind of work I like, instead of working just for the sake of a high remuneration. I look forward to the day whereby I can retire from a regular job, with enough passive income to fund for basic necessities and live life without worrying about money.

2) Money means SECURITY
I would never want to go back to the days whereby my family and I would be unhappy and stressed over money. We could not afford to fall sick or for things at home to break down. Security now means a comfortable home, not having to worry about bills, any unexpected expenses or life events like a job loss or medical bills. Having more than enough money means such unexpected problems are easily solved, without much distress, just like the saying “any problem that can be solved by money is not a real problem”.

3) Money is a TOOL
Life is short. It is a short journey for us to make the best out of it, and we can’t bring money to our grave. It is a tool to exchange for a comfortable lifestyle and to buy the convenience in life like a car, or traveling in comfort. It enable us to accomplish goals, pursue passions, travel, to start our own business, to help those in need, or to afford material goods.

4) Money represents status
Although money doesn’t exactly represent status to me, I can’t deny that there are people who look at money in such a way. There’s no right or wrong, just different ways we look at things and values. People see money as a status as it symbolize their high earning power, or how much money they make through their hard work. This could mean bigger and fancier cars, a bigger house, material goods to show off such status, or membership to a country club etc. It also represents success and that their hard work had paid off, hence deserving the finer things in life and wearing it on their sleeve as constant reminder of their success to themselves and to others, making them feeling more superior. They also use their status to network and connect with like minded people.

5) Money represents POWER
Why do so many people want to be rich? It makes them more superior. It enable them to control people and situations, leading into things working in their favour. It isn’t necessary evil. People who see money as power are just utilizing it to get things done their way. Just like how the majority shareholders of a company has more power, authority and influences over the minorities and other stakeholders. It empowers people to make decisions.

6) Money is needed for basic survival
More often than not, money is used for people to stay alive. Most of us need a job to pay for basic necessities like putting food on the table for the family, education for our children, repayment of a mortgage loan, paying for bills, and transportation to get to work and back home. Even in Singapore, not everyone can afford more than the basic necessities with the high cost of living. Yet, I believe it is possible through a minimalist lifestyle, cutting expenses, increasing productivity to earn a higher salary, and better money management skills.

7) Money is the root of all evil
Many people still believe that money is the root of all evil and view it negatively. For example, I just read an article on The Straits Times titles “The number of millionaires here has risen at a sharp rate, thanks to the robust recovery of financial markets in the past year.” and I saw many negative comments posted in response to the article.

– But a whole lot of people still struggling

– If this is only what you have you must to be very poor

– A whole lot of crap

– The rich will get richer and the poor will get poorer

– Yes, exactly. They acquire their wealth through corruption and other evil means, then come here buy house, buy car, buy women, buy whatever to launder their money. Sick

– More foreigners evading taxes and hiding their money here?

Look at the comments above. There are indeed people who hold such views that money is a sacred resource. That if others have more of it, the rest of the population would share a smaller cut of the pie. And that people who accumulated wealth attained it out of greed or by immoral methods/ways, resulting in an increase in the number of poor people.

In conclusion, to me, money is a mix of various things. Having money means being in control of how I choose to live my life, and the ability to eliminate most unpleasant surprises in life. It is a mix of having the freedom to do whatever I want, whenever I want, and as a tool to buy time, and the things I need and want.

Get Out Of Debt

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There are many reasons why people get into debt. Being financially illiterate, poor money management skills, not able to say no to instant gratification, overspending, and of course genuine reasons like unemployment and having unexpected expenses can place a person into a debt situation. Personally, I got into debt awhile back due to poor money management skills, impulse buying, and on a deeper level, my overspendings were due to insecurities issues, and a lack of purpose in life.

1) Make getting out of debt a commitment

Getting out of debt is more of a psychological issue than anything else. It is useless if you have the best method/ system for getting out of debt but are unable to stick to it. Decide once and for all that you are sick and tired of debt. No one likes debt repayment. It is painful, but since you have dug yourself into such a hole, the only thing you can do is to repay your debt as soon as possible. Think of all the extra money you will have once your debt is fully repaid. You then have the freedom to use the spare cash to do whatever you want, without guilt.

2) Develop a budget

Now that you have put your heart and soul into debt repayment, work out your monthly income and expenses. Cut all unnecessary expenses such as shopping, excessive entertainment, eating out at restaurants, and you even have to cut down on vacations until you clear your debt. Yes, it is depressing, but now is pay back time for using money you have not earned to pay for things which you do not need. By developing a budget, you are able to track and cut spending, and to allocate extra money towards debt repayment.

3) Debt repayment

After coming up with a budget, you should be able to know how much money you are able to repay each month. Make sure it is more than the minimal payment required. If you have more than one card, always allocate a higher payment towards the card with the highest balance. Compared to paying the same amount for all cards each month, I personally prefer making more payment towards the card with the highest balance to save on interest charges. Another way is to do debt consolidation using ready credit or a personal credit line, with an interest rate ranging from 4% to 12% per annum. Do shop around for the best rate between different banks. For myself, I am using the debt consolidation method with Citibank’s ready credit at a rate of 4% p.a.

However, the drawback for using the debt consolidation method is that you would not be able to make a lump sum repayment due to fixed monthly installment. Also, there are penalty charges for early repayment.

4) Life after debt repayment

It can be really depressing to just focus on the debt repayment process. To encourage yourself, start planning on how to allocate the money once debt is fully repaid. You might want to go on a vacation to celebrate, or to start saving up for your goals. Regardless of what you do, it is important not to fall back into debt again. Learn to manage your money, save up, and plan for retirement.

 

Good luck and do stay committed!