NU 12 - New Spending Habits by KC

Hi Sir,

Below is my blog for NU 12 (New spending habits / routine).  If the images do not load, just let me know.

Thank you,

Kathleen Crisostomo

Crisostomo, Kathleen Lizette C.

ENTREP

NU 12: New spending habits / routine

"Kuripot" is the best word to describe me, but not without a reason.

I once had a La Sallian boyfriend who maxed out my credit card and left me with PHP 20,000 worth of debt and collections letters from lawyers.  I was 21 years old, a fresh graduate from the Ateneo, struggling with a minimum wage salary, and now literally penniless with no savings whatsoever.  The man disappeared without paying me.  On an afternoon where I found myself crying while doing a 1-2-3 (riding a public vehicle without paying for it) from Cubao to Alabang, I swore to myself right then and there—this is not happening to me ever again.

That was when my attitude of extreme thrift and money-consciousness started.

I realized during that time how important money was for survival.  It might sound strange for some people to hear that I only realized that after college, but you can only imagine the burden of not being able to admit my problem to my parents!  Paying it off is one thing; getting back on my feet to start over again is another.

Daily Accounting

For several years now, I have been tracking all my savings and expenses, following the formula: EARNINGS – SAVINGS = EXPENSES.  The common misconception for most people is that they follow the wrong formula: EARNINGS – EXPENSES = SAVINGS.  With that kind of mindset, they will not be able to save up anything.  I started doing my list manually with an old notebook and a collection of receipts.  Soon enough, I started to use MS Excel as suggested by my father who all these years has been managing monthly his personal cash flow statements.

I keep 1 file per calendar year of expenses.  This helps me manage how much I have spent and earned for the entire year.  I have a tab for each month of the year and another tab for the accumulated total year worth of expenses.  There are no exclusions to the data being inputted.  I showed this to one of my classmates, John Ng, and he was surprised to see that even a PHP 9 Cloud 9 chocolate bar was not spared.

I start off with the beginning balance, also known as my monthly budget, and next I put my estimated savings and then the breakdown of possible expenses.  Should I have other forms of earnings such as commissions from work, I indicate the breakdown on separate columns.

Here is my breakdown for the month ending March 2012:

Here is a sample of my daily expense list for the first 2 days of March 2012:

I sometimes exceed expenses, but I make sure it has little effect on my savings.

The Expenses

A huge chunk of my earnings goes to my credit card which I am planning to completely pay off by the middle of the year.  I plan to say goodbye to my credit for good.  It hurts more to pay in cash but it makes you more responsible to know you could lose everything in a snap.  Better to have no cash than to be in debt.

Unlike most women, I do not like shopping.  Honestly.  I like fashionable clothes, bags and shoes but I do not live for them.  My idea of shopping is browsing the net or reading magazines to check what looks good so that when I go the mall it only takes maximum of 1 hour for me to shop.  I sell my old clothes and shoes in eBay and I earn extra for selling things I no longer need while being clutter-free at the same time.  I also buy clothes in eBay for a quarter of the original price in malls.  What I do spend money and time on is to go to our neighborhood tailor and have old clothes altered for only PHP 50 – PHP 250.

I treat myself out once in a while in forms of wellness and food.  Again, I try not to overspend.  I prefer our neighborhood massage service for only PHP 150 than to pay almost PHP 1,000 in a posh spa.

As much as I can, I do not ride taxi's or FX's unless really, really needed.  They take so much out of my pocket.  I would rather walk or take public transportation—a non-air conditioned one is just fine.  I ride a shuttle from Las Pinas to Makati for a whooping PHP 70 when I can ride a bus for only PHP 36!  I walk from AGSB to EDSA (Estrella) every night when I have classes and I do not mind.

I invest a lot in sports from equipment, running gear to specialized drinks.  Sports take a load on my expenses but I believe it's better to invest now than to invest in the hospital later.  I used to joke at the idea that the money I win during competitions can be used for future injury recovery—until I actually got injured because of running using the wrong pair of shoes (I used to wear Vibram Five Fingers Bikila).  I am saving up on another pair of running shoes for long distance runs.  In spite of this, I make sure I do not overspend on sports.  I never buy for the brand name.

The Savings

Majority of my savings go to my tuition fee.  I pay for my own MBA education which is not cheap, but what I have been learning for the last 3 years has been worth more than what I could possibly spend.  I am also continuously preparing for my "contingency fund" in case I get unemployed for any reason or for other emergencies.  My goal is to keep at least 3x of my monthly salary as a cash back-up excluding all possible expenses.  I have not yet reached that level but I will get there soon.

Savings should also turn to investments.  Last year, I was able to save enough to buy 3 pairs of running shoes, a hydration belt, join 13 races and to travel in 3 new locations.  This year, I plan to save up to travel, join long distance races, buy a new gate for our house and possibly invest in the stock market.  I believe the key to saving is dreaming.  If you dream big, you will save to reach it.  My first major investment was in second year high school when I bought my own mobile phone using my PHP 50 daily allowance.  My parents do not want to buy me one but because I really wanted it, I made sure I get it.

April 2012

I am writing this while here drinking milk here in Malaysia, looking at the little Ringgit I have and making very strict computations on what to do tomorrow.  But like what Vivien Leigh said in Gone with the Wind, tomorrow is another day.

I am astounded by people who do not have savings.  I end up asking, "what is wrong with you?" while looking at their new Zara shoes.  I believe people do not need traumatic experiences for them to start managing their money wisely.  It's all about discipline and dreaming.  You should know what you want and start working on how to get it.

Sent from my iPhone via MY MAXIS 4