Expenses review 2015

A year has passed when i picked up my financial game again and it is good to reflect back on what i have wanted to do in the beginning of the year: Game plan 2015

Before that, a personal reflection. I did not realise how much personal finance topics were far away from my mind until i actually sat down and decided to re-focus my energy and efforts on it. While i have always been saving and investing, it was not as disciplined and well thought out as it could have been. Dare i say, it was even quite haphazard.

When we fail to plan, we are planning to fail, and at the rate i am going, i would say i wouldn't have done very well when i reach retirement age. Granted i think i probably would not starve and sleep in streets, but definitely would be less well-off than i could be.

Back to topic. I wanted to cut expenses and increase revenue.

(1) Cutting Expenses

I have diligently used YNAB to record and track my expenses. [for some reason, i find it quite pleasurable to record every single transaction. I think it's my accounting training. I just love to balance my books to the cent] While i always have an idea of where my money went, it was good to have real solid data on what i actually spent on.

And truth to be told, the beginning months were quite tough as i tried to 'live on last month's income', which is a key concept of YNAB. I pay myself first every month when my salary is in, but using February's salary to pay entirely for March's expenses was something i wasn't ready for. After a few months of tuning my expenditure and allocation, glad to say that i have passed this 'test' set by YNAB.

So where did my money go to in 2015? The way i used YNAB is by categorizing my expenses in several buckets for analysis.

Car Expenses: $ 33,198.99
All car related expenses, includes loan, carpark, fuel, insurance and any related expenses. I would be the first to admit that the easiest way to improve my finances would be to get rid of this. Even if i take cab everyday, the savings would be hugely substantial. Something i am mulling about, but it's a lifestyle choice at the moment, and i really enjoy the convenience and experience. Lesson here (i haven't learnt it yet) is to cut this away to accelerate savings.

Fixed Expenses: $ 14,234.21
Insurance and taxes comes in here. I increased my insurance coverage for death and CI this year. This is termed as fixed expenses by me, and not much discretion could be made here from my part.

Monthly Bills: $2,943.24
These are my regular bills (phone + mobile broadband) and membership to my Taekwondo school fees and sports related expenses. A little high because i took my 2nd Dan grading in 2015, and it cost me $450 just to sit for the exam. Additionally, i had to sign up for several preparatory courses, and that cost a bit too. The monthly school (or gym if you will) also do not come cheap at $140 a month. I did rationalize my expenses here a little but cutting away the mobile broadband once the 2 years is up, although that helps only a little.

[My joint family expenses which i track in another budget (groceries, utilities, home broadband etc) comes up to about 5k in 6 months. For simplicity sake, i shall estimate it to be 1k per month. I will use this amount to add to my subsistence level of expenditure]

Daily Expenses: $9,081.47
As opposed to personal spending, these are expenses which i incur for the family, including dining out at restaurants, home maintenance fees (payment for part time maid), changing of light bulbs, family entertainment (movies night) etc.

Holidays: $8,239.05
So i took 3 trips this year, 1 week in Australia, 1 week in the UK and 2 weeks in Taipei. I was lucky that my trip to the UK was part of my work trip, so i managed to save on the airfares. Again, a luxury here which can be removed if need be. For 2016 i am actually trying to plan a trip to the states just to settle some banking stuff as well as to check out my apartment over there.

If you are interested, you can take a look here, where i share some pictures from my trip http://www.casualtaketwo.blogspot.sg/

Personal Spending: $6,175.5
Expenditure which i incur solely. Eg: Office meals, personal shopping (yes, YNAB software comes in here), entertainment expenses (unfortunately these can't be done away unless i'm a hermit), personal dining expenses and other expenses related to weddings/baby showers/birthdays etc

Total personal annual expenses: $73,872.46 [or $6,156 per month]

Quite high, i truthfully admit, and the bulk of it pertains to the car expenses. However, if i DO give up on the car, what is my subsistence level of expenses?

YNAB provides me the option to easily select those categories which i will have to incur to just 'exist', and i came up with the below amount (inclusive of family groceries/houseshold expenses).

Definitely no car and no holidays!

Total essential expenses: $42,140.98   [$30,140.98 + $12,000 [family expenses]]

Works out to about  $3,500 a month.

Gives me a solid target to aim towards for passive income. Will write about my investments in another entry.

And before i forget, wishing one and all a prosperous happy new year!

Cutting out the un-essentials in life

Since reviving my personal finance journey starting this year, have began taking small steps to where i want my finances to be, and that includes cutting out expenses which are not essential, or seldom utilized.

This month, my mobile broadband contract is up, and i took the chance to cut that away. Savings per month = $19.90. Sounds very little, but compounded over a long time, it can certainly add up!

Did other things over the course of the year, but shall leave it to another post. Meanwhile, happy to enjoy whatever savings i can.

I am working on a project called 'Less is more' at work, and glad to apply that to my personal finance journey.

Less spendings = more savings. :)

Achievement unlocked! Mortgage loan cleared

Went HDB today, and wrote a cheque to redeem the loan. Probably should have done this earlier, given the interest rate HDB charges is higher than market rate. [Well, i can probably refinance at a cheaper rate too, but then at this point in time, i think being clear of a housing loan probably works better for me]

Gotten the flat in Sept 2007, and gotten it free and clear in December 2015.
8 years 3 months.

Even though bank account feels slightly emptier, but it's still a good feeling overall!

Lessons learnt from itchy fingers

As you may know i sell options as a means of generating some income, and i made just another mistake in the month of November.

I had a WETF open put position expiring in Dec with strike at 14.75, which is sitting for me a nice profit.

Since we are in the month of November, i thought it would be a good time to close off the position as it was way out of the money (WETF was at 20.75), and i can sell another put option nearer to the underlying's price to expire in the same month, and earn more.

Unfortunately, i closed off my position at USD 265.19, and i subsequently sold options for USD 209.83 (at strike of 16.75)

Now, this is a lose-lose situation for me - i lost USD54 on this trade simply by having itchy fingers. If i didn't do anything, the option would have just expired in December (presumably) and i would be better off by that 54 bucks.

Also, with my new position, the strike is actually higher at 16.75 (compared to 14.75). I run a higher risk of being exercised should the underlying drop in terms of price.

What can i learn from this?

Put in a limit order when closing off a position (i closed at market thinking that the price shouldn't fluctuate that much), or if the potential gains are not too much, don't have itchy fingers!

Adding positions

Just added another 10 lots of STI ETF 2 days ago (really having a hard time adjusting from the concept of 100 shares = 1 lot!). I think i have added 40 lots of STI ETF since July this year. Not sure whether this will be the right decision, but with so much fear in the market that it will drop further, i have taken the opportunity to add to my positions.

I have to confess, i am stressed and jittery over the past few months when i added. I wonder if i am just being foolhardy but i believe that in the long run, markets will go up, and time in the market is more important than timing the market.

The volatile situation allowed me to add more positions than in normal circumstances, and i shall look back to see if i will curse or thank myself in the future!

The handy man can

My house has been breaking down in bits and pieces recently. So the bulbs has been going off one by one. I'm not usually a very technical person (admittedly i was a technician in the Singapore Army), but the wires and stuff usually escapes me.

Hired a contractor to remove the mould and repainted the toilet ceiling. (it was really in a disastrous condition, like those dilapidated haunted house), so when the toilet lights went kaput, i got the handyman to do everything at 1 go. That costed me $280.

The bulbs in my ceiling was off too, and lazy me also asked for the price. Seems like changing the bulb cost me $30. I asked how it was to be done, and seems simple enough. I got myself a bulb at $4.60, and saved myself the labour cost and mark-up of the rest.

Moral of the story - get enough life skills to handle minor repairs in the house.

NB: I had a plumber come once to unchoke my toilet. THAT set me back by $120. Since then, i got a plunger and been a part time plumber for my house ever since.

Compare and Contrast - Insurance

The internet is really powerful nowadays.

Due to my upcoming trip to the UK, extending a few days after a business trip, i need to source for a travel insurance.

Etiqa had a 50% off promotion for travel insurance purchased directly from them, and it must have been one of the cheapest (if not cheapest) available.

Of course, there are differences between coverages etc, but overall, i think this is the best deal available.

Shopping around did save me a couple of dollars this time round!

[although the trip to the UK will likely blow off any savings available]