The Overflow System

Everyone has different ways to save money. Some segregate it by the amount needed while some segregate it by the differing levels of priorities. Whichever your case or reason for saving is, we all have to admit that having that savings is important. Save to invest, save to buy something nice, save to go on a holiday or saving for retirement. Everything starts with putting aside that 1st dollar. I do not know what methods you use but here is what I do.

Firstly, I come up with a list of all the things that I would require the money for - just for stuff with larger monetary outlay. For example :

Annual fixed expenses - For insurance, road tax and stuff like that.
Emergency funds - For unexpected expenses like hospital bills, home repairs or unexpected loss of cashflow.
Large Scale Holidays - For example, I want to go on a month long holiday in 2020 to Alaska.
Impulse Funds - For rare occasions when I feel like I deserve to indulge as I rarely buy stuff anymore - even gadgets. I'll just let this fund grow till I eventually want or need to buy something.
Renovation Funds - As I am getting my new home soon, in hopefully about 6 months, I would need money for renovation and furniture. Now, my home is something that I do not want to stingy with as it would be where my wife and I would be living so I guess I'll need a reasonably large amount of funds here.

Secondly, I would determine the level of importance and the amount of time I have before I would have to utilize the fund therefore setting its priorities. Here is an example

1) Annual Fixed Expenses
2) Renovation Fund
3) Emergency Fund
4) Large Scale Holiday Fund
4) Impulse Fund

The reason I did not put emergency fund as my top priority is because I have already set that aside and will only top it up should I ever utilize it. The large scale holiday fund and impulse funds share the same level of importance so any funds flowing into them will be split 50/50

Anyway, here is how the overflow system works. When funds come into the bank, a portion 1 of it would firstly be set aside for monthly expenses. Portion 2 would be set aside for savings and investments. The third portion would then be put into a holding account. This holding account would then be put to fill up the items on the list. Starting with item one. When that reaches its target, the funds would then overflow to item 2 and so on and so forth. It might sound a little tedious or complicated but once you get used to it, its quite a good way to do things. I love having a system so I don's miss out on important stuff.

How do you prioritize and save for items on your list? Sharing is caring - so please help each other out with ideas.

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

Gone too Soon

I realize that the title of the post is similar to that of a MJ song, but there is no coincidence. Recently, my grandmother passed away at a relatively young age due to cancer. It felt and still feels extremely surreal and sometimes I do not even remember that she is gone.

While she was alive, I felt that she did live to the best of her abilities. She made plenty of good friends due to her good and loving nature, she traveled often and she will never let an opportunity to help anyone in need pass. What she left behind were good memories of her.

Throughout this time, waves of thoughts flowed through my mind:

1) We never know when the end will arrive - We often procrastinate what we want to do because we always believe that we can do it tomorrow, but what if tomorrow never comes and today is your last? If you knew the exact day and time you would die in advance, wold you live the way you are living now? Would you still plan to retire at 65 if you know you would die at 66? Hell no. The thing is that we do not know when it would happen. That said, we should not just let go and go mad. We should still save and plan for a long life, just in moderation. Balance the joy you desire between now and later. Die smiling with no regrets.

2) The people we leave behind are the ones who suffer the most - When she passed, I was there, together with a few close relatives. She did not suffer, was not in any kind of pain. She went peacefully( Thank God).
As for the rest of us, the emotional pain was excruciating. This was the first time I experienced such a close and loved relative pass away before my very eyes. But what I felt could not have been even a tiny fraction of what my Grandfather who has been her life partner, friend, confidant and soul mate felt. To me, he has always been a very strong man. Never complained, never cried and never troubled anyone for anything. When he broke down, you could really see how much love he had for her.  - I realize that this is what I want when I eventually die, to have people who love me surrounding me when I pass on.

3) We really have to set up a will, no matter how taboo it sound. - In this time and age, writing a will is less frowned upon but still a taboo subject. It will solve problems of who gets what. When it comes to money, it's really hard to tell. Maybe that's why they say that money is the root to all evil. Causes family conflicts and complications.

4) Just a memory - In the end, all we become is just a memory to those around us. And when they go, even that memory will cease to exist. We would just be a blip in the everlasting stretch of time, the fire in the matchstick that burn for the briefest of times. If that is the case, I want my matchstick to burn as bright as it can, no matter how brief. Let us live our lives to the fullest, love to the fullest, enjoy to the fullest to the best of your ability.

Joy and happiness does not have to cost a lot of money and spending a lot of money does not necessarily bring joy. Take an hour or two to think of what truly brings you joy. To me, joy is having my wife give me a loving hug when I return from work. Joy is going out with best of friends for a simple meal and having a ball of a time. Joy is seeing the look on my wife's face when I surprise her with a simple gift and most of all, joy is having family and friends who loves you for who you are.

As always, save more, spend less and invest wisely - not too much, not too little=)
P.

DUOS/U - Decreasing Units of Satisfaction/Usefulness

More is always better. The saying, while true to a certain extent does not apply to everything. The usefulness and the satisfaction an item brings diminishes as the quantity of that item increases.

Take for example your clothes. Say you are currently naked and you go to the store to buy a set of clothes. The set of clothes would be extremely useful because it keeps you covered and protects you from the cold. If you bought 2 set of clothes, it would still be mightily useful because it allows you to remained clothed while you are washing the 1st set of clothes. Now fast forward to the 100th set of clothing. How useful would that set be? I highly doubt it would bring about much more use or satisfaction then the 99th set.

This applies to everything else, even money. ( Yes, that's right, I said money..so shoot me.) Only we ourselves would know what is enough. Spending $1000 might allow you 100% satisfaction, however, spending $5,000 might not get you 500% satisfaction. Most likely, it will be along the range of 101% to 200%.

If we stop and make the decision to cut out spending on things that brings us little value, we would be able to save the money and use it for things which will bring us maximum satisfaction. Rather than spending on the new tablet with a larger screen size, why not spend it to see a loved one smile. A nice dinner or a short getaway perhaps.

What are the things you continue spending on or doing that are producing diminishing satisfaction and usefulness? Are you ready to take the next step towards life by cutting down on these? Please do share your experiences.

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

The Tiny Ship Sinking Holes

More often than not, as we look back at the past months expenses, we are able to see what the major portions of our money is spent on. All those large purchases are easy to spot however, it's the little tiny ones that are slowly doing the damage. It's the many tiny little cuts on your financial body that hurts the most.

These tiny expenses are those that we deem too tiny or insignificant to bother about. But over the long run, can accumulate to quite a substantial sum. Everyone has these cuts I'm sure, even the thriftiest of us. Examples of these tiny leaks are as follows:

• Forgetting to turn off electrical appliances when you are not using them.
• Food wastage.
• Credit card annual fees.
• Phone or cable contracts that are above what you need.
• Too much snacks (Harmful to both body and fiance)
• Leaky water taps, pipes or toilet bowls.
• Taking long showers too often.

These are some of the examples that I have thought of. I have to admit that i am guilty of some of them, especially showers since its so darn hot and humid here in Singapore. These are habits that we have formed over the years which are bad. We have to try our best to either reduce these habits or cut them off completely.

Patch the tiny leaks and holes in your financial ships as soon as you can, lest it sinks you before you are able to reach your port of freedom.

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

The Spine of Early Retirement

I'm sure that most of you are familiar with some of the steps you have to take to reach early retirement, but bear with me as I repeat them once again for the benefit those who do not. These steps are not concrete and you can choose to take them or not to attain your early retirement but I believe that paths are similar to these. Only difference being your personal tweaks, luck and mistakes.

Without further ado, here they are:

• Start as Early as Possible - This applies not only to those seeking early retirement or financial freedom but to everyone. The earlier you start, the more time you have to allow the magic of compound interest to work. What's more, having more time allows for more margin of error. No one is perfect therefore we should always make allowance for mistakes.

• Manage your Consumption - One of the main reasons why most people are not able to save enough for an early retirement is because they spend to much. We are all wired to consume and many of us can't help it but conform. However, there is this rebel within us that does not want to conform, we want to break free from the norm - these are the people that are able to achieve extremely early retirement. Reduce spending now, stop spending money on too much wants, stick with the needs. You do not need that new hand phone just because it has a battery life of 1/2 an hour more than yours or a screen 1/2 an inch bigger than yours. Remember, you choose your enough, not your neighbor.

• .Cut down on Excess Spending -  I know it's often hard to form new good habits, but trust me, this will benefit you. For just 1 or 2 months, track every dollar you spend and at the end of the month, you will be able to see where you have been spending unnecessarily. These are the parts of your spending tree that you must prune away. If you feel comfortable keeping track of your expenses by then, you can continue doing so. If not, try to stick to your current monthly expenses less those unnecessary expenses and do a follow up 6 months later to find out your monthly expense status.

•  Be Frugal - This step is an acquired taste, once you get it, it becomes something you actually enjoy doing. However i urge you to do this is moderation if you are not alone in your journey. Your significant other might not share the same joys as you in being frugal. You have to take baby steps to let them see the benefits of being frugal. What you must do to be frugal is to view money as an extremely precious resource not be to exchanged for something of lesser value. For me, i feel that lesser value means items that bring no benefit or new experiences to your life. Most of the time, these items just bring you momentary satisfaction that last for a month at most. Not worth it.

• Never Trade Early Retirement for Happiness and Family - This is the last and most important key. You should never trade anything in this world for happiness and your family. What is the point of forsaking your happiness and family to gain early retirement? The point of early retirement is to be able to have time for both. Don't be over obsessed with retiring early that you forgo your current happiness or spend so much time tweaking your spreadsheet or monitoring your portfolio that you neglect your family. You have to set your priorities right.. what is most important in your life. For me, its family, for without them life would be quite meaningless even if u have all the riches in the world.

 I know that everyone will make mistakes as to err is to be human or was it to err is human... Anyway, i hope that on your journey to financial freedom or early retirement, you will make more right choices than mistakes. Ponder upon what is most important in your life, keep it close and never ever trade it for anything this world has to offer.

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

Thou Shall Not Covet

" Look at your own life to see what is enough, don't look at your neighbors to compare. " Saw this quote or something similar at a blog  i once read. My memory seems to be failing me. Can't decide whether it's due to me getting on in age or just too many things flying around in my mind.

The quote is so true. Since young, we have been 'trained' to always do better than others. Get better results than others, run faster than other, earn more than other or get a better car than others. We often look to our neighbors to compare but is one-upping our neighbor going to improve our lives significantly? There will always be someone else to compare with and in the end, it will form a never ending cycle.

Ask yourselves this, do you really need that extra million to retire? Do you really need that new phone? Do you really need a new car? Sure, these things are definitely nice to have, but do you need them? After earning that extra million, will you stop or will you want to earn another.. and another .. and another.

The important thing is to figure out what you deem is sufficient and work towards attaining that. If you want to get from point A to point B, especially in Singapore, a Honda Civic would do as well as a Porsche. Why get it just so you can feel 'better' than someone?

At the end of the day, what stays with you are memories of the experiences you went through and not the material things that you have accumulated. Don't get on the never ending roller coaster ride of endless consumption. Know what is enough and spend the rest of your energy enjoying the rest of your life.

P.

Compromising on differing financial and retirement goals in a relationship

Being married has taught me several things in life. To be patient, go give and seek nothing in return, to always try to find a compromise and most importantly, to always have to work and put in effort into something or someone that means everything to you.

Firstly, i would like to say that like many other couples out there, my relationship consists of a spender (A.K.A the wife) and a saver, me. More often than not, especially after reading books and blogs on being frugal, i would start preaching about the importance of being frugal to my wife, C. Which almost always leads to 3 different scenarios. A hardly convincing agreement, a roll of her eyes plus sneer combo and the worst... the I don't agree to this, we should spend what we earn as a reward conversation.

Through the years i have known her, i have learned to compromise and come up with tweaks to my obsessive saving habits so as to integrate her obsessive spending habits ( 100 Pairs of shoes and counting.."'Retail Therapy" she calls it... ) into my life. One of the very effective methods was the use of the bad mood fund or the B.M.F in short. I can't remember where i read this from but thank you whoever blogged about this.

What is this bad mood fund you might ask? Well, its a simple concept whereby we set aside a sum of money every month and deposit it into a separate savings account. It is left there to accumulate till THAT WOMAN my loving wife feels like spending it -  bad mood or not. This way, she does not feel that she is being restricted or bounded.

I feel that it is extremely important to communicate with your other half to get a feel of their views on both your financial and daily lives. Find out what they think of your views of financial planning and retirement while in turn finding out theirs.

The key is to be comfortable talking to each other about money as it can be an extremely touchy subject. Once you have laid out everything on the table, you can then decide how best to work things out and compromise so that everyone is happy.

I wish you all the best in your financial and daily lives with your loved one/s.

As Always.. Save more, spend less and invest wisely
P.

About me and my goals

Where do i start? So many things to say but so little time.. I guess it's the same with life. So many things to do and goals to achieve but with such a limited time to do them. What if i could give myself more time to do the things i want to do? No, not by extending my life, ( although that would be nice in the distant future) but by retiring earlier than what most Singaporeans would call the norm. In order to do this, sacrifices will have to be made and rules will have to be strictly adhered to.

Through this blog, i will try to record my thoughts and methods i will use to achieve this early retirement. I am currently in my late twenties working in the engineering sector and I plan to retire no later than the age of 45. I am currently married and am waiting for my home. (Mortgage payments are a killer to my early retirement planning). As for kids, i am definitely planning for at least 1, hoping for 2. I am pretty sure that if i plan my finances well enough, my wife and I, together with our future kids would be able to live pretty comfortably when we retire.

I hope that through this blog, more Singaporeans would be encouraged to save more, spend less and invest more in order to be able to spend more time with their loved ones instead of sitting alone in a cubicle wherever they are in Singapore.

I'm kind of running out of time and would have to sign off here. Loads of work to do and daylight is running out. I'll be trying to post as often as i can with a minimum of 1 post a week. Till then, see you and live well.