Job Loss - Utilisation of the Emergency Fund

Dear readers, I was just thinking to myself how I would handle loss of income should both my wife and I happen to be jobless at the same time. Not that it is happening now, but who is to say that it will never happen.

My wife and I are currently in the midst of starting a new company and we have decided that in order to increase the success rate, she would have to quit her current job. The reason as to why her and not me is because she knows the sector way better than myself. Therefore during these few months ( 4-6 ), we will be relying only on my income which means that our savings and investment amount will be cut down by a lot.

I was thinking, what if during this period of time, I was to lose my job as well. Would it be as disastrous as  I  think it would be? Upon careful consideration, I do feel that the emergency fund would suffice for these 6 month. We would have to cut down on eating out or going for holidays as my planned emergency funds was supposed to cover just our basic needs - plus or minus.

Everyone has different needs to be drawn from the emergency fund. Here are mine should I have to ever utilize it. - Fingers crossed that I will NEVER.

1) Car Expenses - About $300 ( should be a lot less since won't have to commute to work.)
2) Utility bills - About $250
3) Food - $700
4) Wife's Transport - $150
5) Mobile - $60
6) Cable - $50 ( would most likely cancel this, but would be a good replacement for going out which would cost more money)
7) Toiletries  - $50
8) Condo Fees - $350

Total a month would be about $1500-$1900
6 Months would be about $9000 to $11400

I used to be pretty paranoid about having a huge emergency fund to last me a long time, somewhere along the line of 2 years worth. However, I have deemed it to be totally unnecessary and have cut it down to about $15k. The rest were put to better use in investments.

How much emergency funds do you think is enough? 3 months? 6 months or like the old me, 2 years? What are your basic needs and how much can you cut it down to? I'm sure I can cut mine down by quite a bit but I do not see the point as I do not feel that both my wife and I would be out of job at the same time for too long a period of time. An emergency fund is a definite, the question is how much.

As always, save more, spend less and invest wisely.
P.

Want Something? Do Something!

We are all creatures of comfort, we love to dream and talk about having this and achieving that. We all know that talk is easy, talk is cheap but we stick to it without any form of action anyway. How many times have we seen someone else selling an idea we had years ago but did not put in the effort to get off our butts to kick start something?

Why is it that we do not always have enough drive to get something started? Majority of us would cite reasons such as:

• It might not even work or sell.
• What if I fail?
• I do not know how to do this?
• How do i even start?
• What if no one supports my idea and people start laughing at me?

From what I see, it boils down to 2 main issues, fear and laziness. Sometimes, we just need to want it bad enough or be pushed to the edge to give ourselves no choice but to bite the bullet and jump in. Would you want to put in the effort and take the risk of starting your own company if you are currently having a secure job with a comfortable salary?

How about if you just found out that your current employment company was going to fold soon? Would you be pushed to take the leap and start your own because you have nothing to lose? ( Just an example )

What I'm trying to say is that, if you do not have that drive to get something done, you have 2 choices.  The first is to find a partner who is action oriented. Someone who will get the ball rolling and push you along as well. The other is to develop a mindset that to start that something is what you really NEED and have no choice but to push yourself off the edge.

Whatever the method and whatever the reason, the most important part of anything is the 1st step. Without it, no one is going to get anywhere. It relates to everything from your new start up, your savings plan or even getting the leaky faucet fixed.

 Get something that you have been procrastinating on done today, take the 1st step, no matter how small and get the avalanche flowing.

As always, save more, spend less and invest wisely.
P.

The Rat Traps to Savings

Dear readers, to save money is one of the most important, if not the most important step to financial independence and retirement.Without this step, nothing will be achieved. No emergency funds, no investments, no safety net. So why is it that so many out there who are able to save still not saving or saving way too little?
I guess the main reason is that they have hit one of the several Rat Traps. Rat Traps are traps that stop you from getting out of the Rat Race. It traps you and keeps you there until you die. Sad but true.

For today's post, I'm going to talk more about the Rat Traps that keep you from saving money. I hope that you are not currently caught in them and if you are, I sincerely hope that you will realize it after reading this post and get out of it and eventually the never ending Rat Race.

So without further ado, here they are.

1. Ready, get set.....NOTHING 
• The hardest part to doing anything new is to get started. There are so many thoughts running through our heads that keep us from taking that first step forward. The 2 largest killing factors are fear and procrastination. For savings, it's mainly procrastination. We always have something we need the money for first, so wait. Too lazy to open a savings account, so wait. Remember, every single day you procrastinate will delay your target date of retirement. Push yourself out of your comfort zone, tell someone or everyone that you are going to start a savings plan and do it. This will push you to not procrastinate and friends and family will from time to time ask you how your plans are going, thus reminding you to keep on doing it.
2. Inconsistent Savings.
• If you are not saving on a regular basis, you will not be able to form the habit of saving. Your conviction to save will be too rubbery. You might fall into the trap of eventually telling yourself, why save and stop saving altogether. Combat this trap by setting up an automated savings account. Most banks have these and the best part is that you wont even have to think about it.
3. Eenie meenie minee mo!
• This trap is, to me, the deadliest of all traps. Conflicting goals. It makes you weigh and choose which situation is the more important one. Conflicting goals are when  you have to choose between saving for that period, or using it to go for that year end holiday you and your family have been talking about all year. If you save, you will be on target to retirement. If you spend on the holiday, your family would be happy. So hard to decide...Set your priorities right, and sometimes, its okay to compromise. The best thing you can do here is to, if you know that you are going to spend on a year end holiday, start setting money aside throughout the year for it. This way, you will not eat into your retirement portions of your savings and your family will be able to have a nice holiday.
4. I'm going nowhere..forget it.
• This is where most people get caught, they have taken the 1st step, and the 2nd and maybe even reached the 10th step. But at a certain point, you will definitely start to doubt and wonder whether all of this is worth the effort at all. Your savings and investments seem to be going nowhere. The balance doesn't even look like its moving. But please, you have pulled yourself this far. Nothing good is ever free or easy. There is a saying that the 1st $100,000 or the 1st $1,000,000 is the hardest and as you go on, it gets easier and easier. Just put one foot in front of the other and keep on going. Set mini goals in between this large goal to keep yourself motivated. Set yearly or monthly goals to save a certain amount, invest a certain amount or pay of a certain amount of debt. This helps, trust me.

Having read about the traps, can you relate to any of them? Are you currently in one? Or did you manage to get out of all these traps? I sincerely hope that we will all escape these traps as soon as possible and get on with out journey towards an early retirement. To those that are still there, don't give up. Try again and never be afraid to ask for help. We come and go from this world alone, but for the span of time that we are in it, we are not.

As always, save more, spend less and invest wisely.
P.

Are you commited to your cause? Hear no Evil, See no Evil.

Good morning everyone, its finally Saturday. What a relief after such a long week at work.. Thankfully there are only 4 of those next week.

So...What is everyone planning to do later? What??? Window shopping at the mall? (HisssSsSsS!!!)... Just kidding. Anyway, have you ever wondered how committed you are to your cause? How much temptation or peer pressure can you resist to in order to get to where you want to be faster?

To me, I have never felt the need on spend on most, i repeat MOST consumer goods. My only kryptonites being the latest gadgets and drinking. I kind of understand the obsession my wife, C has over shoes and bags and clothes and jewelry and wallets and macaroons and... did i mention shoes(100 pairs...OMG..WTH... FML..feel free to add any other abbreviations.)

On second thoughts i realize that i don't. How can someone be obsessed with so many different things..erm.. ok, enough of my rants.. back to the topic.

I'm very sure that many of us who have made the decision to retire early would have set a goal or goals as to how much they must save a week, a month or a year. In order to attain that early retirement, we would have to strictly adhere to this goal and not waiver as every waiver would cause that much awaited retirement date to be pushed further and further.

We must not give in to the temptation of buying these wants, and if we really do, we must not impulse buy only to realize 2 weeks after that we don't really want that item at all. What i normally do is procrastinate ( naturally gifted in the art of procrastination). This is one of the only few scenarios is life whereby procrastination serves a good purpose. I would start by reading reviews, scouring Cnet for bad review(while secretly hoping to find none). Then i would talk to my wife about it, weighing the reasons as to whether i really do need the items or not. and finally going to a few thousand shops to view the item multiple times - I Kid.....you...not.

The outcome usually turns out the same, i realize that i don't really want the item. ( Mainly because i procrastinate so long that the next version comes along..and my wandering eyes...wander..) On the other hand, when after all the procrastination and pondering and I still want the item..I would then purchase it. With money on hand and not on credit.

That said, as i grow older, I feel that my priorities are changing. I do not feel the need to buy so often anymore. I now shift my focus more towards experiences rather than on consumer products. I would want to learn and experience new things. Learn a new language, a new skill, go hiking and so on. I am beginning to feel less need of material things. I kinda like this change and hope that one day, my other half - that shopaholic, with her morbid obsession to buy - will share my views in life.

Any suggestions as to help her see things my way without counseling will be welcomed! I'll buy you an 8 course meal at a top restaurant if it works.. yes..I'm pretty desperate. =)

ps. you are only as strong as your weakest link.

As always, save more, spend less and invest wisely.
P.