Tag Archives: expense

Beware of the bank

Bank is our best friend and our worst enemy in managing our personal finance, it provide a relatively safer place for us to keep our fund. But as said in the universal statement “There’s no such thing as a free lunch”, bank as a business entity also trying means and ways to earn money from us, sometimes without our knowing if you are not careful.

One of the most popular way bank use to take your money without your knowing are all the annual fee of their card product. The waiver of annual fee for the first few years helps them kept you as a customer and as a barrier to make sure you spend money when you are holding the card. Even thought the product was promoted to you as a saving account (with a debit card feature), you cannot let your guard down. I just made a mistake for not paying attention to all this small detail of my saving account.

I have 2 saving accounts, one of them is there for daily expense and the other one is for me to keep my saving in there. The second saving account come with debit card feature and was not charging any fee for the past 2 years. The bank start charging annual fee of SGD 12 this year and my account was affected. I was lucky because I have the habit of recording all my expense and I normally deposit my saving at the start of the month, so I call the bank immediately to put in my waiver request.

So, lesson learnt. Always be careful and paying attention to your finance matter, nobody should care it more than you do. 🙂

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How Much Does Your Life Worth?

“Your Money Or Your Life” is one of the personal finance books I read during my undergraduate time. The ideas outlined in the book were new and interesting to me during that time, particularly the ideas of “real” hourly pay and life energy.

If you haven’t read that book, you might be asking what the hell is “real” hourly pay? Is there a “fake” hourly pay? Well, let read on and see whether the answer will surprise you.

The idea of “real” hourly pay is simple; it basically means you need to consider your extra expense and time you incur when you are holding a job when you are calculating your hourly pay.

For example, if you are getting $1,600 a month, working 20 days per month, 8 hours per day, you might come to the conclusion that:

Hourly Pay = $1,600 / (20 X 8 hours)

= $10 per hour

1.) Traveling: 2 hours per day, 40 hours a month

When calculating your “real” hourly rate, you will need to consider the time and money spent due to you holding a job. For example:

Unless you are the minority who are working from home, you will spend some time every workday travel from your house to your work place. Assuming you spend 2 hours per day traveling to and fro your workplace.

2.) Business attire: $100 per month

Obviously you won’t be wearing your T-shirt and short pant to impress your boss and client when you are climbing the corporate ladder. So, let’s assume that you buy a decent business attire every 2 months, and that cost you $200.

3.) Business lunch: $4 a day, $80 a month

Let’s face it, packed lunch at workplace are more expensive than your home cook meal. And we are not even considering the health issue involved if you can only get junk food for lunch around your workplace. Let’s assume that you spend $4 more a day if you buy your lunch from workplace, and in a month, it is $80.

4.) Relaxation: 1 hour and $5 a day

So, you finally finish your work, you sit through the peak hour traffic jam, and step into your house. Are you coming home more energized that the morning and all ready to spend quality time with the family or you are insanely busy at workplace today and you need a beer/popcorn/cake/TV to relax yourself first?

I am guessing here, let just say you spend one hour and five dollars a day to relax yourself after work, which is 20hours and 100 dollars in a month.

5.) Work related sickness: $100, 10 hours per month

Do you have any work-related sickness either physically or emotionally that require long-term treatment? Let’s assume you spend $100 and 10 hours a month to treat or prevent work-related sickness.

6.) Others: $100, 20 hours per month

Any other expense that you think is work-related in your situation? Childcare? Laundry? Housekeeping? Car maintenance? Time spent on fighting with your partner due to stress at work? Everyone’s situation is different and you will have to find out yourself what other expense (either time or money) that occurs because of you holding a job. For the ease of calculation here, I will pick an arbitrary number of $100 and 20 hours per month.

So, now let’s calculate your “real” hourly pay:

Monthly pay: $1,600

Working hours: 160 hours

Traveling: 40 hours per month

Attire: $100 per month

Lunch: $80 per month

Relaxation: $100, 20 hours per month

Sickness: $100, 10 hours per month

Others: $100, 20 hours per month

The “real” working hours = 160 + 40 + 20 + 10 + 20

= 250 hours

The “real” monthly pay = $ 1,600 – $100 – $80 – $100 – $100 – $100

= $1120

The “real” hourly pay = $1120 / 250

= $4.48 per hour

So, here you are, your “real” hourly pay you are getting now. Is it less than what you expected or more than what you expected? The idea you need to keep in mind here is remember every time you spend $4.48, one hour of your life energy investment is gone forever. I bet you will think twice next time when you see that fancy smartphone that cost you 40 hours of your life!

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Filed under Passive Income

Caution! How to avoid accidental expense in your spending plan?

One thing you might encounter during the process of tracking expense is there are always unexpected expense pop up and disrupt your spending plan (insurance premium, car maintenance, income tax, property tax, etc.…).

However, if you look into those spending closely, it might not be a unexpected expense. Did it appear before during the last 3 months? Last 6 months? Or during the same time period last year?

Yearly payabl bills are the most neglected bill category when we are consolidating our spending because it don’t happen frequently in our daily live and it easily slip out of our mind. This can cause frustration when you are trying to calculate your monthly spending if you didn’t pay attention to it.

There are few ways to accommodate this type of expense into your calculation of your monthly spending:

  1. Divide that yearly payable bill into 12 equals amount and add it into your monthly spending plan. Prepare in advance every month for this expense.
  2. Keep a payment schedule of all the yearly payable bills to avoid unexpected spending situation from happening.
  3. Reduce the numbers of yearly payable bills to simplify your spending plan, the simpler the better.

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How To Reduce Your Spending and Increase Your Happiness?

Track Your Expense

So, you have been tracking your expense for maybe few months now, and you got your own answer to the question “ Where are all my money gone to?” You know you have feed that little cute vending machine near your office way too much money for whatever value it provided you.

Looking at your “real” hourly pay you are getting now, I bet it should not require any effort to convince yourself that which expense is essential to your long term happiness, worth the life energy you pay for it and which expense is nothing but impulse purchase that provides only short burst of satisfaction to you.

Ask Question

Ask yourself the right question to determine your spending plan. What is the more efficient way to use my money and my time? Buying expensive junk food as lunch at work place and gobble down the food without knowing its taste or cook your own less expensive healthy lunch and enjoy every mouthful of your food? Spent your time in your car stuck in morning peak hour traffic jam or cycle to work with a decent bike and get some exercise at the same time?

The word necessity means different meaning to different people at different phase of their life. The principle to retire earlier is simple; there are only 2 variables involved, your passive income and your expense. You can work toward increase your passive income or learn how to reduce your expense. I recommend you direct the money you saved from reduced spending toward paying off your debt if you are holding any or invest for passive income to achieve your early retirement goal, at least this is what I am doing right now for the time being.

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Filed under Save

How To Keep Track Of Spending?

In order to cut down our spending, the first thing we need to do is keeping track of our spending. I have been using the tracking style recommended in the book “Your Money Or Your Life”, which is keeping track of every cent that flows in and flows out of your life. You will have to design your own unique category because everyone has his or her own spending habit and financial situation.

“Your Money Or Your Life” is one of the earliest personal finance book I read during my undergraduate time, but I didn’t followed its advice on tracking expense until 2 years after my graduation.

I used my own designed Excel sheet to track my daily expense, income, total of each category and my “real” hourly pay.

If you want to use my designed Excel sheet to track your expense, you can download it from the resource page. There are instructions on that Excel sheet that outlined how to use it to track spending.

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