Expense Tracking vs Budgeting

Image courtesy of coffeusa.org

After getting out of debt, I am ready to take action.

I spent considerable amount of time researching for ways to save, invest and eventually secure my family's future.

Though late, I started tracking down my income and expenditures so I could actually see where my money was going. I purchased YNAB or YouNeedABudget, a personal finance software to help me keep track of everything finance-related.

It's all good. For the past year, I'm no longer clueless about my spending patterns and trends. I get to see my net worth and actually monitor the progress each month with a few clicks.

Problem is, until now I'm still using YNAB as an expense tracker instead of its intended purpose which is budgeting. I'm having trouble committing to my budget as evidenced by a lot of reds each month.

I have savings but I'm not even sure if I'm fully buffered.

I thought I have an emergency fund in place, but now I'm not so sure.

I have to immediately transition from expense tracking to real budgeting if I want to achieve my goals, ultimately take control of my finances and afford the future I desire for me and my family.

Since August is already a failure with 4 overspent categories, I will try again next month. I have to think of a strategy that will work and will suit my lifestyle.

I am used to frugal living because I grew up in a poor family, but my husband is quite a spender. He spends a great deal on clothes, he drinks and smokes. But he sacrificed his job to take care of me and our kids so I'm cutting him some slack.

BUT. THERE. GOES. THE. CHALLENGE.

My Financial Background and History

Hello again, I'm L and this is my story.

I've been working since 2001, shortly after I graduated from college. I had the privilege to work for 3 different government institutions and 1 private company. When I got married in March 2007 and became pregnant 4 months later, I was already working 2 jobs - an 8-to-5 and a night shift online job. And then I decided working from home is what I really wanted. It suits my lifestyle, I can be with my family all the time and I never have to miss special occasions ever again. 

7 years of being employed, and you would think that I was able to save at least a small part of my earnings during that time. But nope, I only had my first savings account in 2009.

Where did my earnings go? When I was still single, I gave half of my salary to my parents every pay day and the other half was spent on entertainment - movies, dining out and shopping with my siblings and friends.  I liked dressing up for work, and shopping for new clothes and accessories every month. I never thought about saving or investing during those days.

By 2008 I already had my first child, D, but I was still living paycheck to paycheck with no savings at all.

A WAKE UP CALL

In January 2011 my father was diagnosed with stage 3 stomach cancer. That was when I started to evaluate our financial status. It was a sudden wake up call. I wanted to help my parents but I only had about 30 thousand in my bank account so I ended up getting a loan from my American employer for $2000. My parents' only source of income was from our 1 hectare agricultural land planted with rice but we had to have it mortgaged as well for Php 200,000. Family and friends extended financial help, we even received money from the government thru PCSO for hospital and chemotherapy expenses, but my father still succumbed to the illness in October 2011.

All in all, when my mother and I summed up all expenses for my father's surgeries, chemotherapy sessions and 5-month long hospital stay including 2 weeks in the ICU, the amount almost reached 1.5 Million. Until now, we still have no idea how we were able to come up with that amount of money and how our family survived and thrived after the tragedy of losing a great and beloved head of the family.

THE NEED TO ELIMINATE DEBT

I felt the pressing need to evaluate our financial situation and do something about it in order to eliminate our huge debt.

My father had a life insurance of Php 200,000, a Php 50,000 group insurance and a dividend income of about Php 20,000 from Knights of Columbus. He also had a memorial service package of Php 50,000 from St. Peter Life Plans. Add to that member contributions from his PGBI group, and financial assistance from the local government he served for 3 years as a barangay secretary.

We used every peso from above to pay for all our outstanding debts in the hospital, funeral home and individual lenders.

My employer's mother paid for half of my loan and the other half was covered by the company. Meaning, I didn't have to pay for even a cent for my $2,000 salary loan. An undeniable proof that good and compassionate people still exist in this world and I am glad I get to know some of them.

By 2012, our only remaining debt is Php 120,000 for our mortgaged agricultural land. By then I was able to save Php 80,000 from my salary and from other side hustles I had. I never liked getting loans but I took a leap of faith and secured a personal loan from a friend for Php 40,000 with 5% interest per month so I can get our little rice farm back.

DEBT-FREE AT LAST

With my full-time work, income from our rice farm and occasional side hustles, I was finally debt-free in 2013.

I felt a sense of relief, but I couldn't relax knowing that I don't have any savings still.

After all, being debt-free is not the end of the journey. It is just the beginning.

Big Day Tomorrow!

Tomorrow, 8/8/2015, is gonna be real HUGE for our family.

I'm scheduled for a C-Section and BTL (Bilateral Tubal Ligation) and I'm nervous though this will be my third time (and definitely the last!). Our bags are all packed, but I still have a few errands to do for the day.

- I still need to rent a Barong Tagalog  for my son D and buy black shoes (a pair he can also wear to school because his current pair's is already worn out and needs replacement) for my husband's cousin's wedding in Cabanatuan City tomorrow.

- We don't have a car so I need to borrow Tito H's for two days. I already talked to his wife last Monday about it but I still have to notify them of the time and schedule, and probably discuss if I will have to pay rent or just pay for gas.

We're all excited to see our new baby girl. I hope and pray that everything goes well tomorrow. By the time I post a new update on this blog, we're already five in the family. :)

Net Worth Update: ₱385,039.45 (Down ₱24,886.98)

July 2015 Net Worth

 

Total Spending - July 2015

Quick post before I hit the bed tonight!

July was not too great for us financially.  Our net worth continued to take a dip at ₱385,039.45.  Income for the month was just average at ₱44,162.30.  Expenses has really gone sky-high at ₱82,049.28. *sad face* Good thing I have an emergency fund of some sort to cover all those expenses we had for the month.

Anyways, I intend to have a budget meeting with my husband as soon as possible. Ideally, I wanted it at the first day of the month but something came up and we didn't get the chance to sit down and talk about this month's goals yet. But we'll find time for it this week.

Our net worth is down by ₱24,886.98 since last month. *sigh* We really have a lot of things to work on to straighten our ways financially.

The chart and the graph in this post were take taken right from my budgeting software YouNeedABudget, by the way. Pretty slick, right? Awesome software. :)