Tuesday, November 10, 2015

Not Earning Enough Or Just Spending Too Much?

How To Determine if You Are Not Earning Enough or Just Spending Too Much.

5 Days before payday... tiningnan mo ang wallet mo ... patay! YAIKS!!! Wala nang laman!?! Saan napunta ang pera ko?

empty wallet, where did my salary go?
Where did my salary go?
I was like this for many years, specially on my early years as an employee.  I was always excited when I received my first salary. We celebrated that night, drank a case of Red Horse beer... dalawa lang kami. Dahil lasing na, nag-taxi na pauwi. A few days before the next payroll, my wallet is already empty and had enough money for the jeepney fare for a few days.
So, in order to have lunch, utang muna! Pagdating sa hapunan, punta sa suking karenderya at... syempre utang! 

Buti na lang kung minsan nagpapadala pa ng pera ang parents ko noon, at least hindi ako nabaon sa utang!

Marami sa ating mga pinoy ang nagkakaganito. Kung hindi baon sa utang, walang naipon, dahil palaging ubos ang pera. Isa na ako sa mga dumaan sa ganitong sitwasyon. Isa na ako dun.

For so many years I had been working on an above minimum wage, plus I get commissions from time to time. Ventured into a couple of businesses, went self-employed and employed again. For more than twenty years since my first employment, I have at least half a million pesos debt, and no savings at all --- until a few months ago.

Was I not earning enough?

If I remember it right, during my first job, I was receiving the minimum salary rate at the time, a little less than Php 4,000.00 a month. It was in Cebu. Since I'm not from that place, I rent a room at PHP 1,000.00 a month. That leaves, 3,000.00 a month for my daily expenses. That's a hundred a day. Was it enough? Definitely not! 

Is my salary not enough?
Was my salary not enough?
So my parents have to send about a thousand or two a month to support me. I remember I buy my lunch on credit a few days before payday. Almost everyone in our office was doing it then. Every time it nears, payday, all the money I have left is just enough for the jeepney fare for a few days. Then we buy our lunch (and dinner) on credit.

I got a raise after a few months. Maybe, my employer liked my performance. Then my salary increased every year. After a year working with them, they offered me a free room.

I worked in the same company for more or less four years. By the time I left my job I was earning PHP 7.000.00 a month. At the time, this is about 50% higher than the minimum salary. Plus I earn commissions from time to time. 

Question is, was PHP 7,000.00 a month was not enough?

Maybe it's enough, then again, it maybe not. But I was wondering why I had no savings at the time. I
was practicing regular tithing already at that time. Sure tithing has it's rewards -- which I will share in the future-- but my bank account is always zero even before the next payday.

Thinking about the cost of living in Cebu at the time, and my lifestyle... and if I had been smarter and monitored my expenses during those years, maybe I could have saved a lot. 
Not enough income or spending too much?
Or I was just spending too much?

Not Earning Enough Or Spending Too Much?

During those times, I drink probably three to four bottles of Coke or Pepsi. Almost every week I watch at least one movie. Every time I watch a movie, I always have a Jollibee Champ or a Smokey's Hotdog with me. Not to mention the frequent visit to Subway for a submarine sandwich. We go out and drink often, specially on payday. Not to mention the number of times I eat on a restaurant in a month. 

Let me put this into numbers:

Note, The prices I use here are as close as I could recall

Coke/Pepsi - P 6.00 per bottle x 3 = P18,00 /day x 30 days =  P 540.00 a month
Movies       - P40.00 x 4 a month                                                  160.00              
Champ             50.00 x 4                                                              200.00               
Beer             P20.00 / bottle x 4 per payday                                  160.00              
Total                                                      P 1060.00            

As you can see, in this partial list alone I could have already saved PHP 1,060.00 a month, or at least half of it. And If I kept doing it these days, I may have been wasting at least twice as much! At least now I know I have saved a lot.

How To Know If You Are Spending Too Much

How do you know if you are spending too much?  The answer is two simple step.s

    Make a list of your expenses
  1. Make a list of your expenses. If you don't know where your salary goes, you will end up wondering where you have spent your money payday after payday (Read: Do You Know Where You Have Spent Your Salary).  If you still haven't started doing so, make a list of your daily expenses. You can start by using a small notebook or pad paper. Just make sure you don't loose it. In making the list, include every expenses like:
    • Daily expenses- e.g: candies, transportation fare, bottled water, lunch, snacks, etc..
    • Weekly expenses - gas (if you are filling the tank once or twice a week) groceries - or just put them under the date you spent on these
    • Monthly expenses - utility bills (electricity, water, cable TV, etc..)
    • Debts and mortgage payments - Never forget to include your payments for mortgage and debts.
    • Other expenses - something you don't spend on regularly like a new pair of shoes, clothes, cellphones and accessories.

      Try to keep your list updated for at least two months. The more updated your list is, the better. But don't worry if you would miss out a few days, specially when you are just starting to make the list.
  2. Study Your List - After making your list, study it. From your list:
    1.  categorize each expenses, e.g. food, transportation, grocery, utility bills, etc... then
    2. determine which of these expenses are real necessities like food, electricity, water, etc... number them according to importance.
    3. Minus your mortgage and debts payment, get the total of your monthly expenses.
    4. Try to reduce your expenses on less important things, like vices (if you have), soft-drinks, movies, junk foods, etc... If you could, eliminate these expenses from your coming months the better, if not just try to cut down on the numbers. 
By now, I hope by studying your list of expenses, you can now answer to yourself, if your income is really not enough or you are just spending a little to much.

What if this activity really proved that my income is not enough? Before I answer that, I will talk about "How to Cut Down Your Expenses" in detail on my next post!