My Finance Blog

I’ve talked a lot about saving up and scrimping to be able to pay loans already. This time, I’ll discuss a way to NOT take out loans unless absolutely necessary. Planning out what to do in the future might be the way to financial freedom and stability. First of all, before anything else, determine your net worth and see where you need to direct your efforts more — into investing or into saving up.

1. Make a List of Goals

What are your end goals? Why do you work? What do you want in life? What do you want for your children? What do you want tomorrow? If you can’t see where you’re going, you’ll never be able to focus on the end point. You need to know what you want and what you need. List them all up. I’m not talking about your goals for the far future only. List even your goals for the immediate future. You want to buy new shoes for Christmas? List even that.

After listing your goals, give them an equivalent monetary amount. It doesn’t have to be 100% accurate, even a conjecture would do. This is important so that you can look at these goals as something real instead of just plans written on paper.

2. Prioritize Your Goals

Which do you really want — the new house or the new car? When people don’t have plans, they end up buying whatever they want. Having a solid priority means you know what you’re saving up for. That way, the probability of going over your budget or splurging without a thought for the future is avoided.

3. Don’t Forget You Need To Save Up a Bit

Even if you plan to buy properties or invest in various ventures, don’t forget you still need to have cash in case an emergency comes up. Be realistic and think twice before doing anything drastic.

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While you work or while you spend another hundred grand on those new diamond earrings you saw in Tiffany’s on your way home, have you ever wondered how much you’re worth? I mean how much you’re worth in financial aspect. To be able to plan your future and to know when it’s the right time to save up or splurge, you need to know your next worth. That way, everything you do is calculated and you make the right decisions at the right time. You don’t want to purchase a new car when unbeknownst to you, you’re already drowning in debt. So just how does one calculate his net worth?

First step is to get a pen and paper, you’re going to make a list.

1. List all your assets. Assets are what you have or what’s currently with you. Before anything else, calculate your cash — cash on hand as well as money in the bank, foreign currencies, etcetera. After listing your cash assets, list your investments such as insurances, plans, stock market bonds, mutual funds and the like. Add the amount of your cash assets and investments together. Now list all your fixed assets (house, car, real estate, jewelries, etcetera). Add everything up to find out your total assets.

2. After listing your assets, here comes the hard part — remembering your liabilities. List ALL your liabilities. By ALL, I mean everything from short to long-term liabilities. Short-term liabilities are your every day expenditures including utility bills and household budget. Long-term liabilities are loans and anything similar in nature.

After listing both assets and liabilities, subtract your liabilities from your assets and you should come up with your net worth.

Net worth = Assets - Liabilities

Basic accountancy — I learned that when I was 16, I hope you did too. Having a positive number means you’re being tame and you’re still financially free. Having a negative number means you have to forego buying those new earrings as of now. Know when’s the right time to save up, computer your worth.

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Once again, I feel like playing the devil’s advocate. No, not really. But this post will be related to my prior post, Does Cheap = Savings? Basically, when we’re trying to minimize costs, we tend to do everything ourselves. If the pipes break, you fix it. If a bowling bowl suddenly flew through the air and smashed your window, you’d fix the window yourself. If the bowling bowl made a huge crater on the wall, you’d fix that wall yourself. Not that I intend to smash houses with bowling balls, but you get my drift. When you’re saving up, I think sometimes you forget that you’re not capable of doing *some* things — that’s only normal.

But is it really viable to do everything yourself? If your favorite jeans suddenly got ripped, what would you do? If you’re good at sewing, then it would be no issue. But if you’re someone who can’t even work with a needle without pricking yourself every five seconds, how would you think your jeans would look like after you’re through with it? After going through pains trying to sew your jeans back to perfection, you’ll most likely get a professional to mend it later anyways.

What I want to say is, if you know what to and how to do it properly, by all means, if anything needs repair, do it yourself. However, if you have no idea how to do it, research first. If you think you can and you want to take the risk, then go ahead, knock yourself out. But if you’re feeling anxious and you’re not too sure about it, it’s better to have someone in the know do it instead. Why? Well, if you’re going to get someone re-do what you did later, you won’t have only wasted money but also your valuable time.

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I have a friend who use to live the lavish life until one day, she found herself buried in massive debt due to numerous shopping sprees and trips to the spa. She started cutting costs since then, avoiding the use of her credit cards and just plain saving up without compromising the value of her purchases. However, since it’s the last days of November and we’re nearing the Holiday season, my friend forgot all about her goal to curb compulsive spending and just like a shopping zombie, spent an entire month’s budget in one day. In short, all her efforts went in vain.

Compulsive spending is very hard to control, believe me. I, myself, suffer from it. But I manage not to spend all my money in one go. Here’s how I do it:

1. I don’t keep big amounts with me.

I do have emergency money stashed away with my parents. However, generally, I only have *enough* cash with me to last for a few days. The downside is that I have to withdraw every so often. But I believe this is best for me because whenever I do have a large amount inside my house, my hands just itch to spend it all.

2. I don’t have a credit card.

The reason why I’m not in debt is because I don’t have a credit card. I have a debit card, because I do import online goods every now and then. But since the amount of money in my debit card is limited, I could only spend so much. I don’t end up in debt. Thank god for debit cards.

3. I don’t go straight to the mall from the bank.

Whenever I withdraw, I make it a point to go straight home. I don’t linger in places where I know there’s an unlimited avenue of spending.

How about you? How do you try to curb compulsive spending?

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I’ve tackled a lot about saving up and living only within your means in this blog before. When I read back, I can’t help but feel I’m beginning to be a cheapskate. However, I believe all of my arguments were valid and every piece of advice I gave — a great help to anyone who wishes to implement it. However, I will digress from the usual with this post and instead convince you NOT to save up. It might seem out of place here, but I felt the time was ripe.

I remember a month ago or so, I was watching Rachael Ray when they featured this woman who was so tight-fisted; her children had branded her as the “Cheapest Woman in America.” The woman never bought anything not from a sale and her dresses ranged from around $1 to $14 or so. Rachael then challenged her to shop for a dress without looking at the price tag. After fitting a handful of dresses, she decided on one and it was revealed later that the dress costs $399 — a far cry from the usual cost of dresses she owns. Which brings us to the question, does cheap always equal savings?

My answer to that would be, not at all. Let’s say you’re buying a hand bag. You go to Wal-Mart, find a nice handbag for $9.99, pluck it off the bin containing more $9.99 handbags and take it home. In a few months, you find the handbag in tatters. You go and buy another handbag for $9.99 — the cycle repeats itself. Now, say for example you go to Macy’s instead, find a nice bag for $99.99, lift it off the shelf and take it home. I’ll bet it’ll last a lot longer than the $9.99 bag. In short, don’t always settle for less. Find quality at a reasonable price and when you find it, go for it — it’ll save you boatloads of money in the long run.

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Do you remember those days? I remember when I was in college, I lived in a dormitory above a Burger King outlet and beside a Wendy’s. Did I mention it was also only a block away from McDonald’s? Needless to say, I splurged quite a bit on food and that’s being very polite about it. Good thing I was a whole street away from Starbucks or else I won’t survive a whole week without loaning money from my friends. I remember, I even used to borrow money from my friends so I could have money to go back home during the weekends. I don’t doubt it’s the same for many of you.

For those still living in the dorms right now, here are some tips to save money on food while in a dormitory:

1. Buy Microwavable Packs

In our dorm, we used to have a common microwave we could use. I’m not so inclined to use it, however, but my roommates did. Microwavable packs are a lot cheaper than buying fast food. And also, you’re confined to eating only what’s with you unlike when you’re in a fast food restaurant and able to order more.

2. Cook Your Own Food

An abominable thought? I know, I know. But cooking your own food might be the cheapest and if done properly, the healthiest way possible. If your dorm has a kitchen, it won’t harm you to shop for raw materials once in a while. Granted, I could only fry food and boil noodles so I can’t exactly speak for myself but this is a great way to be able to save some cash.

3. Don’t Be Tempted to Buy Excess

While there’s no one holding you back in the dorms, don’t buy more than what you can consume. This is not only harmful to your budget but to your health as well.

And if you’re still inclined to spend more, then perhaps it’s time to try this piggy bank bomb to scare you into saving up.

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When people are talking about curbing expenses, it always sounds like a chore to our ears. Saving up means you have to limit spending and deny yourself your luxuries and perhaps, vices. And we all know how difficult that is — those who don’t admit it, included. Now, when you’re strapped for cash and you KNOW you need to save up or else suffer the consequences later, don’t mope just yet. You could incorporate fun into your plan and forget about how hard it truly is to save up. Here are a few recommendations:

1. Stop Thinking of it as a Chore

Maybe it’s hard to accomplish this, but if you can, don’t impress upon yourself that you’re saving up. Instead, try to incorporate it into your daily life and see it as something “normal.” Don’t treat it as out of the ordinary, see it something you’d do in everyday life. It might take some time for someone to be able to do this, but in time, you’ll get used to it if you try.

2. Indulge Yourself Sometimes

Saving up doesn’t mean you have to deny yourself everything. If there’s a luxury you deem essential, by all means, splurge a bit. I remember when I denied myself all kinds of luxury before, one time I lost my mind and just spent all the money I had in my pocket. So to keep you sane and grounded, splurging once a while would be of great help, believe me.

3. Don’t Lose Sight of Your Goal

Although you should stop thinking of your chose, you should never forget the end results of what you’re doing. If you’re saving up for your future or for something of immense importance, just imagine the feeling when you get there.

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In this blog, I’ve talked about money meant for education a few times including student loans and whether home-schooling is the right thing for your budget. Many would agree how important college education is nowadays, what with the recent decline in worldwide economy and people competing for jobs all around. Although someone who has not graduated college could just as equally fare well, a college degree is an edge most especially in a degree-driven society. If you have a child or sibling or anyone you know you’d be sending to college in the future, it’s always best to start early on into their lives.

Why? Well, for one, the strength of your country’s economy at the time of your child’s birth might be extremely different from the strength of the economy by the time your child goes to college. And another is that, if you save money for college education by investing it in something which would yield returns, then that means more help for you when the time comes. Saying all of these, however, is much easier said than done. If you’re not that focused and driven, you might forget what you want to do. Here are some tips on how to start saving for college early:

1. Start as early as you can. If you can afford it financially, start as soon as your child is born.
2. Allot an amount each month for it. Don’t look at it as money you’re saving which you can spend when in dire financial straits. Treat it as expenditure you can’t get back.
3. Be realistic. Invest or save only what you can. Don’t save a big percentage of your monthly earnings only to live beyond your means later because all your money has been compromised.

Saving money for college early on would be a smart and prudent for you. It might be hard to do so while in the process, but it’ll definitely benefit you and your loved one in the long run.

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Over the weeks here in the blog, I’ve discussed various tips on how to help curb your credit card spending, how to determine how much cash you should bring, how to live frugally and how to save for charity among a whole lot of others. Readers may take a look at the posts, read them, nod their heads in agreement and then afterwards, forget about the tips mentioned. That’s just how it is. When people are faced with the potential to spend, they throw all cautions to the wind and just splurge — especially if someone is a chronic spender.

In that case, reading all these personal finance tips may be useless. If you’re not taking what you read to heart, if you merely read everything and not “learn” anything, then you might as well stop pretending and just splurge to your heart’s content. However, it’s not too late yet. If, after reading all the personal finance blogs in your RSS aggregator, you find yourself still splurging the next time you go to the mall, then you know it’s time to reassess your goals and decide on whether you really want to change your habits.

1. Understand What You Want To Do And Why

It’s easy enough thinking “I want to cut my expenditures a bit.” But do you TRULY understand what you want to do and why? You have to be able to digest your decision and truly take the reason behind it to heart. If you fail to truly comprehend, needless to say, you will fail in the end.

2. Don’t Give Up

Whenever you find yourself behaving like a zombie — spending when you told yourself to save up, don’t give up. Get up and try again. And then afterwards, try again! Just remember, every time you do indeed lose yourself to spending, try suggestion number 1.

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I’m sending my kid sister to college right now, and let me tell you, it’s anything but a cakewalk. First of all, when you or someone else in your family goes to school, you don’t only have to worry about tuition fees — you also have to worry about every day expenditures such as rent, food, clothing and everything related to such. Of course, if it’s tertiary education we’re talking about, you could get a student loan, but in the end, you’d have to worry about miscellaneous expenses that you feel like you’ve aged a couple of years or so.

In reality, there might be an instance wherein you’re forced to choose between having to spend everything you have for schooling and having to cut down on educational expenses for other things in life. When you’re on a tight budget, home-schooling is a possible solution for your educational needs. You can curb expenses allotted for transportation and save money meant for allowance and allot it for something else instead. However, being home-schooled doesn’t mean there are no other fees to take care of. Of course, there’ll always be the tuition fees, as well as the materials meant for the student. However, compared to the costs to be spent if the student goes to a traditional school, the amount you’ll be spending for home-schooling would be smaller.

Take heed, however, that home-schooling isn’t for everybody. Someone who prefers being around a lot of people or being in a school environment to learn would have a difficult time adjusting to being alone. In the end, despite the fact that you have to take your finances into consideration, you still have to take into account the personality of the student in question. Don’t force it on someone who can’t handle it, or else you might end up spending a lot more in the long run.

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