Cleaning up my act

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I had a minor balance on my credit cards from last month that I was carrying. Although the amount was minor, it still gave me anxiety. I had planned to clear half of it this month and the rest in the next month.

I started this month by resolving to not use credit card for anything. ANYTHING! No matter what. Every time, I opened my wallet to pay, I decided to use cash or debit cards. Swiping credit card always seemed like buying time towards any payment. But that buying of time came with a price, a fact I conveniently ignored and hence always carried a minor balance. The first week was scary. I constantly worried about running out of money every time I paid for stuff by cash or debit card. By second week, I got slightly better at planning and not feeling anxiety of not using credit card. I am in the middle of third week of going without credit card and I am feeling alright. Next week won’t be any different. I can do this. February will be a successful month of not using credit cards.

Something funny happened on Monday though. I had a bad day at work so I logged in to bank accounts to see my financial health – looking at it helps me feel better and reset my focus on my goals. I saw the credit card balance of last month, checked my cash reserve and swooped it in one go and cleared it all. It set my saving goal a bit behind – I am currently sitting on 48% savings rate against the goal of 50% or more, but I am not bothered.

I never perceived that credit card debt as a problem – the problem was me not using credit cards correctly and my lack of planning. There were months when I would make purchases on my credit card which were more than my income for that month, so I would pay a small sum and carry the rest of the balance in the next month thinking of it as me just buying myself some time to make payments. Then over a period of couple of months I would clear the balance and do it all over again. This was a pattern of bad money management. Since the amount was always small – INR 10,000/- to 30,000/- I never felt the pressure of “debt”, just a minor anxiety. But an argument with boss and the feeling of helplessness triggered something meaningful. I have set myself on the track of being a better planner and learn to only spend and pay for things if I have money in my wallet/account. All my credit cards are paid in full. For the month of February, there are no transactions on my credit card other than the payments made. Simultaneously I also saved 48% of my net income.

February has been a good month. I feel better. I truly do. It feels like I am on the right path. I just need to carry this momentum for the rest of the year.

Photo by Two Paddles Axe and Leatherwork on Unsplash

Personal Challenge: Save 50% of my income

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I have some of my favourite blog posts bookmarked that I go back to and read over and over again to keep myself motivated. Browsing them this past weekend, one such article was by the ever-amazing Mr Money Mustache, in which he says every expense you reduce has double benefit – it increases the amount of money you have each month to put into savings, plus it also lowers the amount you need every month for the rest of your life. #Mindblown

This time around, the more I read it, the more I wanted to live by that philosophy. To be honest, although I brag about being a personal finance nerd, I have never been frugal. I rarely live cheaply. Whatever I have is high quality and cost a pretty buck – I just have never pushed myself personally to live uncomfortably to save money. I am conscious but not cheap. I have always been able to control my lifestyle by wanting less. So I indulge myself with a Starbuck’s hot chocolate whenever I want, buying books whenever I want, buying good clothes whenever I want, but wanting less in the first place.

But over the last one year I have sort of got too comfortable with my expenses. Not that these expenses have led to any debt or lack of saving. But still it has been bothering me that I am so comfortable with so many good things. I have started to wonder if I should pull back a bit and start putting myself uncomfortable and realign my lifestyle in terms of my expenses. Maybe go a month without hot chocolate? Not buy any books before I finish reading all that I already have? Really confront if I can live on less than I already do? Can I reduce the things I need in life right now so that I accelerate my retirement savings now and then learn to live on less in the future?

This is why I am planning a “Frugal Month” with a goal of living on 50% or less of my net salary in February 2019. I will be basically living bare bones and only buying/spending on stuff that are necessities. I usually have a clear idea how much I spend on my non-negotiable expenses (groceries, commute, bills etc). I want to reduce my frivolous expenses – clothes, Starbucks, eating out, books. Keeping a hawk-eye on these expenses will be the real goal and trying to divert the funds to savings instead. The purpose of this experiment is simple – live on less now to save money for retirement and learn to live on less for the future. The rules are simple and same as Cait Flanders ‘Shopping Ban’ – just spend on essentials and let go of all other expenses. End result should be saving 50% of my salary.

Of course it is not as straight and easy. Keeping a track of expenses is the easiest part (I already do it) but changing the behaviour and self talk around my triggers is what I have to keep tab on. There is also a possibility of some unexpected costs, emergency that may come up. But overall, I think I can do this. Feeling overall positive.

I will try to keep a weekly track on this blog for my sake to see if it can help me week-on-week in planning my overall month in terms of spending. But no promises, I might have a chaotic month and things may go downhill. We will have to see!

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Tools of Trade

todd-quackenbush-701-unsplash.jpgI am not only a personal finance nerd, but a productivity nerd as well. So it is an understatement to say that I live and die by my ‘tools’. My arsenal keeps me going and I have loved them over a period of time. These are some things that keeps me sane:

  1. Bullet Journal: There are enough blogs out there that have dedicated to the joy of bullet journaling. I am no different. I started on my BuJo journey around four years ago and have been an ardent user since. Over a period of four years I have tweaked my system to suit my life best – organise my day, help me keep track of my goals, make lists, brainstorm ideas and everything in between. The founder of the system has the best explanation of the system and mine is quite close to the original system. But the beauty of Bullet Journal is its customisation and the freedom it gives to use the system any way you want.
  2. Money Manager: I keep track of all my expenses in this app. Love it immensely. I simply start each month on 1st and add the salary and then keep adding my expenses every day as I go. The app is the simplest spending tracker I have come across – it has no fancy bells and rings. It doesn’t link to your accounts (I am skeptical of letting apps access my bank accounts) or your cards. It is a simple tracker that helps me track, review and plan my spending.
  3. Google sheets: This is the granddaddy of all my finances. Eventually it all goes into my google sheet. My current google sheet has evolved over a long period of time with thousands of tweaks. Multiple graphs, and tables later, what I have today is the clear picture of my past finances, present situation and future plans. It keeps track of my investments, cash balance details, debts, credit cards, and my monthly spending tracker (in which I download an excel from money manager and add to my google sheet). This google sheet helps me plan – it tells me if I have been falling off the wagon, or if I need to pivot my plan or stay the course. I access the sheet from all devices I use (my laptop and phone mostly).
  4. Kindle: I wasn’t big on e-book readers as I loved the feel of physical books. But now I have come to love my e-reader. I literally carry it in my bag all the time, read constantly on it and have found a cheaper way to keep my habit of buying books in check.

Of course there are other tools, my laptop, my phone and journal but I consider them necessities and not necessarily a ‘productivity tool’. The above list is what helps me stay truly productive, in my style.

Photo by Todd Quackenbush on Unsplash

Financial Philosophies

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I love making small tangible goals every year to keep myself engaged and focused on something. But when it comes to my finances, I have less goals and more philosophies. These strategies, or philosophies are distilled over a period of 4-5 years that I have nerded-out on learning everything I can about personal finance. Looking back at my financial journey of last three years, these are the things that worked for me:

  1. Track my spending: Big or small, I recorded every penny I spent/saved in some form of a tracker. I went through various method of tracking them – written notes, excel sheets, different types of apps – but the end goal was always the same, record every penny that comes and goes. Tracking is not equal to budgeting. I do not make budgets. I do not have any number assigned to expenses – I am ok to spend whatever I spend as long as I have recorded it and can track it down whenever I want. Over a period of time, looking back at my spending tracker – weekly, monthly, bi-annually and annually has helped me realise the necessary and the unnecessary costs I have incurred. It is the data accumulated over a period of time that helped me see and make decisions on what I can let go and what I am ready to pay for.
  2. Focus on Savings Percentage: Each month has it agenda. There are months where you barely spend anything and then there are months where half way through, you feel broke. Some months comes with sudden windfalls (bonuses, incentives, increments), some come with deductions (taxes!). Early on in my personal finance journey I struggled with having control on my monthly spend, but quickly realised that if I focused on my savings percentage, I can let go off my need to control everything. Meaning, irrespective what my income looks like in any month, I strive to maintain a minimum savings percentage. Currently that number is 30% minimum of my monthly net income. Of course there are months where I am unable to save even the 30%, but I don’t beat myself for it. I go back to my tracker, analyse, question my spending and start again in the next month. But the strategy remains the same – save/invest at least 30% of your net income.
  3. Spend on what makes you happy: I love books, so I spend on books. I have an obsession with a specific type of stationary (Moleskine journals), so I buy them whenever I feel like. I do not like to spend on makeup, shoes, bags, clothes, eating out – so I do not bother with them. I used to feel guilty for spending on books and stationary, but realised that its ok spend on things you love as long as you are aware of it and are ok to sustain those expenses without compromising on your future self (these spending do not affect my goal of financial independence). The most important thing I learnt was to not judge – myself or anyone else for the way we spend money. So now, I have made a deal with myself – to allow myself to spend on what I love and makes me happy and in exchange I will ensure not to let it affect my savings and cut out all expenses that do not make me happy.
  4. Focus on earning more: Tracking money, saving 30% and all such things are good strategies – but futile if you are not growing your income at a comfortable pace. There is no limit to how much you can earn, but there is always a limit on how much you can save. So it makes sense to focus on earning more – develop relevant skills, build network, acquire tools to help you get better at work, or start side hustles. The fastest way to reach a financial goal is to earn more money – all other tips and tricks are mostly trivial and only work in short-term. The real impact comes from having more money in the first place.
  5. Future Self is first priority: Whatever financial goals we have, tips and tricks we follow, if they don’t help us get closer to that ‘Ideal Future Self’, it is all futile. We should know where we want to be – a year, five years, ten years down the line and then break that ideal future self into ideal daily self. It’s a game of patience and single-mindedness. But the end results are always more satisfying.

Whenever I feel like I am not making a headways in my financial goals, I go back to these five philosophies (I have them written in my daily planner). They help me stay focused on the big picture.

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Lessons in Minimalism

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I was sitting at my desk working away when a colleague quipped “Your workstation is so bare and stark and always in order. Like a minimalist!”. I wasn’t sure if she meant it as a compliment and I wanted to reply something witty and intelligent, but instead I said thanks and moved on. Obviously I kept thinking about it for rest of the day ¯\_(ツ)_/¯

I am an accidental-turned-intentional minimalist. I was born poor and stayed solidly poor up until I was 25 years. Which means I lived with acute awareness of constant struggle of coping with limited resources and its value. A full wardrobe of clothes brought just for myself was unimaginable. More than 2 pairs of shoes was extravagant. Family vacations were foreign concepts. Up until I broke out of the cycle of living paycheck to paycheck, I simply knew nothing but to live with less.

When I started to see my bank balance swell a little, and got some shiny new credit cards, I did go through the phase of buying stuff I did not need – the phase where you have been too tired of constantly holding yourself back due to lack of money and then let yourself go a little knowing you can afford stuff. But the phase passed away quickly. Being able to buy stuff meant living with and dealing with the stuff. Clutter became an irritant part of life. And then came the realisation that true satisfaction came from quality of things and not its quantity.

I am one of those people who went from involuntarily living with less, to voluntarily living with more and then voluntarily living with less again. The full circle. The experience came with a few lessons.

  1. Buying quality is real wealth: Buying 10 cheap T-shirts is not being rich, Buying that one T-shirt that fits you perfectly, lasts long and ticks every box of what you want in a T-shirt is real luxury. And when you find that good quality T-shirt and realise you can afford it is true wealth. 
  2. Clutter weighs you down: When you have random stuff piling on, it bogs you down. You end up spending way more time in arranging, cleaning, organising stuff than you should. You have to spend time finding stuff you actually need in the clutter, making decisions. It is stressful and distracting.
  3. Clutter is a waste: Buying thoughtlessly and piling on stuff for the sake of it is a waste of a lot of things. Waste of your time, money, energy, space, and ultimately earth’s resources. It doesn’t help anybody.
  4. Minimalism is not owning less. Minimalism is owning enough: This took time to understand. Minimalism gets a bad rap for propagating living with less which is interpreted as living uncomfortably. That is a wrong way to look at it. Minimalism means you own and live with just enough stuff to be comfortable and let go of everything else. Think of it this way – Mark Zuckerberg is famous for wearing a grey t-shirt and blue denim. That is his uniform. That all he wears all the time. But he doesn’t just own one grey T-shirt right? He owns a few, just enough for him to wake up everyday and open his closet, pick out a t-shirt and go to work. Owning stuff that he really needs in the quantity that he perceives is enough is a good example of what minimalism truly is.
  5. Simplicity is the ultimate splendour: I don’t mean this in aesthetic sense of things. I mean it in a design point of view – how things are built to work. Minimalism helps you focus on beauty of experience. You learn to appreciate quality, function, craftmanship, and integrity of things around you when you focus on their true nature and how it helps you live your life.

I try every single day to live with just enough. I still think I can let go of a lot of things I own and purge a little more. I am glad I have that awareness. From a financial point of view, it has helped me save a lot of money and time. Yes I am a minimalist and proud of it.

Photo by Alexandru Acea on Unsplash

Lessons in Healthcare

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I have had a mild acne problem for over a two years now – a couple of cystic acne always showed up on my cheeks every now and then. Thinking of it as a sign of stress and my lack of skin care, I started spending time, money and energy on skincare. It won’t be an exaggeration when I say that I spent a small fortune on skincare in last one year. However, it wasn’t until last month when I had my cheeks, chin and forehead all covered in sudden outburst of acne that I thought something to be seriously wrong with me. I panicked. I went to dermatologist who recommended me to go to OB/GYN. The OB/GYN asked me to do a battery of tests. After two months of recurring acne, two weeks of doctors visits, bunch of tests, panic, stress and another small fortune spent on consultation, tests and medication, I realised few things…….

Emergency Fund is non-negotiable: Between dermatologists, OB/GYN, consultation fees, tests, and all the medication, I spent a five-figure amount in last two weeks. This is not counting the money I spend on my routine skin care. When the acne problem aggravated, I was mentally prepared to have to spend on some medication and consultation fees. I even earmarked some money aside for it in my monthly expenses. But I was not ready for all the tests I had to go through. I had to take a couple of half-day leaves at work to be able to complete all the tests. Mentally I was swinging between panic and stress in anticipation of my test results. But that was all the stress.

This was the first time since I started my building my Emergency Fund that the Fund actually came to my rescue in an emotionally tangible way. I had zero stress about having to face an unexpected cost. Yes, it did hurt to shell out the money, but it did not really bother me. I did all the tests as soon as the doctor recommended them, and went for the second consultation as soon as the test results came. Not once did the unexpected cost or the bills worry me. Nor did I had to look at anyone to help me out of this situation. I could keep the whole thing as personal as I wanted and cope the way I wanted, since I had no obligation to share it with anyone. It was a very liberating feeling knowing I have some grip on my life, and I am prepared for any unexpected situation. I always believed having Emergency Fund is the one of the best thing one can do for oneself, but now I know for sure.

Healthcare should be your biggest investment: Looking back at the whole situation, I wish I had made preventive healthcare a lifestyle choice and visited doctor earlier. I really wish I had taken my health more seriously. We all know health is paramount, yet we do not practice it that well in our day-to-day lives. We are too busy making plans, paying bills, and being grouchy about everything that we forget that it all boils down to having good health to be able to do anything. We love being busy. We love being stressed. But we don’t love it when we are forced to take a downtime and pay doctor’s bills. Good health, both physical and mental must be preventive – to make such choices in everyday life that you stay as healthy as possible. That involves exercise, proper diet, regular visits to doctors and living a life of minimal stress. And as far as finances go, and if one has to pay a price, it’s better to pay to stay healthy.

Money is not everything. But good health is everything: Like I said, the biggest stress and panic I felt was not knowing what is wrong with me, and then waiting to hear that something is wrong is with me. Up until all my test results came normal, I had only one thought – there is nothing in the world that can replace my health. Nothing. No amount of money or emergency fund would have helped had there been some serious setback in my health. A small acne problem triggered something deeper in me and has shifted my mentality completely. I am now making healthcare of my loved ones and me a priority, and will be slowly and steadily making choices towards a holistic, healthy lifestyle.

I count myself lucky that I had no serious condition, and I came out of the whole experience slightly wiser and healthier. Besides some medication for a few months, and making changes in my diet and routine, I have nothing to worry about. I thank my stars to be able to afford good healthcare, make my own choices about my health and not have to expose my family to any stress. I am fully aware of all my privileges and do not wish to take any of it for granted.

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The beginning

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With a new year just around the corner, I have been evaluating what I want for 2019 – general life plans, travel plans, health plans, but also specifically, financial plans. Meh, I know. New year, new me and the influx of over-enthusiastic list-making which fades away in first week of new year! We have all been there. I have been there.

Hence this blog.

I have a laundry list of goals I want to achieve in 2019, and I need to make plans and keep myself accountable. This blog will be that record. A documentation of my personal journey towards building a life I want and the lessons learned along the way.

I will write about a lot of things, but mostly about my journey towards financial freedom – my big, hairy, audacious life goal. I will write about saving, investing, keeping myself on track, lifestyle changes I made along the way and everything in between.

I had earlier planned to start this blog on January 1st with a bang, but it didn’t seem to be a good plan considering I might wake up with an epic hangover. So here goes my first blog post as a head start.

Let the countdown begin!

Photo by Lukas Blazek on Unsplash