Personal finance

Day 8: Ploughing Through When the Motivation Wave Crashes

~ becomingkay ~ Leave a comment

“The three great essentials to achieve anything worthwhile are, first, hard work; second, stick-to-itiveness; third, common sense.” – Thomas A. Edison

Stick-to-itiveness Struggle: Setting up a Financial System

Katinka is too loud and clear today for my taste.

“This is all a waste of time and you shall fail”.

“Do people really want to read about how you’re managing your finances? Oh look at me, I entered a number in a spreadsheet!!” – Eye roll.

The joke is on her though, even if I only write this one line, then it is a tiny step forward. I can see her wrinkling her cute button nose and shrugging her shoulder in a “Whatever!” manner.

Most pressing right now is establishing a solid financial system. Divorce is looming around the corner.

  1. Learn the current status
    • Current account balances
    • Mortage & utilities
    • Recurrent costs (subscriptions)
    • Investments
    • Insurance payments
    • Personal spending including food and clothing
    • Expected monthly income
    • Apartment market value
  2. Comb-through iteration:
    • Can any recurrent costs be reduced or eliminated?
  3. Setup a transaction table.
    • List the flow of money among accounts and the outside world.
  4. Check insurance status – are we reasonably insured?
    • List current insurances.
    • Contact for current conditions.
    • Check if the premium can be reduced.
  5. Divide income into reasonable budgets for:
    • Mortage & utilities
    • Recurrent costs (subscriptions)
    • Emergency funds for:
      • Income failure (3 – 6 months)
      • Large/expensive household items or appliances
      • Mobility repairs (car/bike)
      • Apartment repairs
    • Saving funds for:
      • Vacation(s)
      • Replacing household items/furniture
      • Children
    • Investments
    • Retirement
    • Insurance payments
    • Personal Bugets
      • Food
      • Clothing
      • Fun
  6. Future projection – where will the following be in 5 years, 10 years and 20 years:
    • Mortgage
    • Apartment value
    • Investments
    • Retirement plans
  7. Generate additional sources of income

I am still establishing tiny habits for item 1. The rest will come.

There you go Katinka. I wrote something and put a vote for a stick-to-itive me. I counter your eye roll with a silly toungue sticking out.

Day 7: Financial Tiny Habits

~ becomingkay ~ Leave a comment

“Beware of little expenses. A small leak will sink a great ship.” – Benjamin Franklin

Getting Practical

Cyril Northcote Parkinson claimed that “work expands to fill the time allotted”. Work is not lone in this neat magic trick. Expenses expand to fill the budget alloted. Trouble really arises when the budget boundaries are ambiguous and unintentionally expand via credit, or through displacing other budgets.

One of the best habits to start once earning money, is to put the maximum sum affordable out of the way. The criteria here is that life should be enjoyable without this sum. Doing that helped me live below my means and save a good amount to eventually put a down-payment on an apartment but it did not curb my spending habits. I am still a consumer. I am still a habitual spender.

If I were to pick and choose my habits, I would want money to be spent either on necessities or on things that bring me joy. To put myself on that path, here are the tiny habit I implemented so far:

  • When I feel the impulse to spend money, I ask myself:
    • Is it a necessity?
    • Will it bring me joy two weeks from now?
    • Is it for an imaginary self, I want to be but I am not (eyeing clothes that don’t fit my lifestye)?
  • Every morning I drink two glasses of water; after I put down the second glass, I write on a post-it note one finance-related task to be done that day. A pad of post-it notes and a pen are readily availabe next to where I place my glass. Here are examples of small tasks I’ve accomplished over the last couple of weeks:
    • Print out a letter to cancel a redundant insurance.
    • List one regular cost in the finance sheet (a Google sheet to list my income and costs).
    • Lookup other regular costs in my bank account and add them to the sheet.
    • Ask for a new login to my online broker account (haven’t used it in years).
    • Enter the current balance for an account into the finance sheet.
    • Call cellphone provider to ask for a better deal (ended up saving 20€ per month).

Two weeks ago, I had no idea where I financially stand. Today I have, albeit humble, a finance sheet that lists my income, my expenses and my current balances. All by spending five minutes a day doing a small task.