Financial Wellness, A Personal Opinion

What is Financial Wellness? This may be subject to different interpretations depending on the person you ask, I generally see it as a state of wealth that is achieved by an individual. It is to have an understanding of your current financial situation and handling it in such a way that you are prepared for any financial changes, good or bad. But before I go any further, there 3 aspects of Financial Wellness that must be grasped:

1 .      Financial Wellness can be created.

2 .      Financial Wellness can be maintained and conserved.

3 .      Financial Wellness can be lost.

The quickest way to assess your financial situation is by asking the following questions: “Where is my money coming from?”, “Where is my money going?” And the most important question, “Am I comfortable with this situation I am currently in?” If you answered yes to the last question, I congratulate you because you have attained a state of financial wellness and you need not read any further. But I know that most of us, myself included will answer “No.” to the last question and this because you are not happy with your answers to the first 2 questions.

Let me cite some general answers to the first 2 questions:

“Where is my money coming from?”

1 .      Active Income: Comes from a job (full-time, part-time, freelance, self-employed etc.)

2 .      Passive Income, this is a great source and I’ll just the most common because there are a number. Comes from Investments (Interest earnings, dividends, capital appreciation).

3 .      Semi-Passive/Semi-Active Income: Comes from Home-Based Business, Personally Owned Businesses and the like.

“Where is my money going?” Listed from most common to least common in my opinion:

1 .      Necessary Expenses (Food, Utilities, Shelter, Sustaining Children, Medicine, Transportation, anything related to sustaining your health and the health of those you are responsible for.)

2 .      Business Expenses (Overhead, Payroll, Equipment, etc.)

3 .      Debts

4 .      Hobbies

5 .      Unnecessary Expenses (I’ll leave this for you to label on your own because what it is unnecessary to me may not be the same for you.)

If you have the specific answers (I highly doubt you wouldn’t have them since this is money we’re talking about.) then it’s easy to formulate a solution to turn your answer to question 3 from a “No.” into a “Yes.”, I’m not saying this will happen overnight but if you play your cards right and make sound choices, then it should happen. It really varies from person to person and can change depending on life circumstances and over time. For some it may be easy, for others more difficult, but it is possible, for everyone.

 Personally, when I started working, I didn’t really have a fixed strategy, all I knew was to set aside a set amount from my salary and put it into my BPI SDA account (Special Deposit Account), it’s an account that I’ve been putting money into since I was in College, that would represent my Life Savings. Then I got myself a Credit Card aka “The Loaded Gun”, I got it pretty late in my life because I never saw the necessity or convenience it provided until I found myself in one situation, I was about to run out of gas and pulled over at a gas station and I had my car filled up only to realize that I had no cash (I know, I should have checked first.), long story short, I had to leave my Driver’s License and my car (I brought the keys with me.) with the Gas boy and walk pretty far to an ATM to withdraw and pay for my gas. After that, I decided that I needed a Credit Card for times like that. I also found the convenience of being able to defer payments into 6, 12, or even 24 months (depending on the bank) giving me breathing room when it comes to making big purchases. And I also found that having a Credit Card, when used properly and strategically, if you take advantage of the float period (the period between the date of purchase to the actual date of repayment). A quick example: You bought a PS3 game today using your credit card, you’re not actually paying today for the game, you pay for it on the due date that is stated on your Credit Card account, which is usually 20-30 days after your cutoff date. My due date falls a week after my payday so it’s easy to budget when it comes to paying. But when it comes to Credit Cards, you only need to remember 2 things, keep your spending in check (don’t spend more than what you can afford to pay for.) and pay on time and in full because it’s not only going to save you interest charges, but it will also build you good credit. My way of keeping things under control is using a Spending Tracker App where I input all my credit card related expenses. After having my credit card, I decided to employ a different strategy or formula, it’s a little more advanced and it’s worked well for me and I’ve been using it for the past 2 years of employment.

Here is the formula/strategy: Salary = Debts -> Expenses -> Savings and/or Investments -> Leftover for personal consumption.

I personally use this formula with the “and” instead of the “or” in the Savings/Investments area because I achieve more by doing both instead of just one or the other. For the benefit of knowledge transfer, savings and investments are not the same thing; the simplest way I can define both are as follows:

Saving – It is the act of setting money aside in a safe place with the intention of using the money in the future or putting in a place that is very low risk and has the chance to earn some interest while keeping a medium to high degree of liquidity. (Ex: Savings Account, ATM Account, under the mattress, etc.)

Investing – This involves the commitment of money into an investment vehicle which can possibly produce a financial gain at a higher degree of risk and a low to medium degree of liquidity. (Ex: Stocks, Bonds, Mutual Funds, Variable Life Insurance, Real Estate, Business, etc.)

The two main differences of saving and investing is the degree of risk and the degree of liquidity. When it comes to saving, the degree of risk is generally very low, meaning your capital will almost always stay intact and it has a high degree of liquidity meaning the money is very easily accessible when needed, a very good example of this is an ATM Account, the money is there and you can withdraw it without any problems or issues. And when it comes to investing, the degree of risk is higher, meaning there is a chance that your capital may be decreased (or increased as the saying goes, the higher the risk, the higher the reward.) and it’s not as liquid as savings, meaning you cannot access your money immediately whenever you choose to do so. A good example of this is investing in the Stock Market, the market fluctuates on a daily basis and the chances of you losing money and earning money (depending on the moves you make.) are very likely to happen in the same day, however, if you wanted to liquidate your stocks by selling them, you wouldn’t get the money on the same day, you’d have to wait before you get your hands on it.

Now going back to the formula, I understand that we aren’t living in a perfect world where everything is balanced so I will cite a few examples of common situations where the formula I mentioned earlier may be very difficult or even impossible to achieve and some proposed solutions that can turn that difficulty or impossibility into something comfortable and possible.

For the situations, I will be using a base amount of P20,000 for the salary part of the formula.

Situation 1: Credit Card Debt = P8,000, Necessary Expenses = P3,500, Unnecessary Expenses = P3,500

P20,000 - (P8,000 + P3,500 + P3,500) = P5,000 left even before saving and investments come into the picture. This position is a very difficult one to be in, assuming you are only living off of that P20,000 paycheck, you might end up going hungry until the next paycheck. Not only that, but you have not been able to set aside anything to save and invest yet because your survival is more of a priority given what is left over from paying for your debts and expenses. This situation could also lead into something that will be worse in the long run, skipping debt payments and expenses which both have their negative repercussions (ex: Compounding Interest Charges for missed or partial Credit Card payments) that will affect people over the long term. Now looking at the variables in the situation, there are two elements that can be worked with that will directly affect the final result of the equation in a positive way. The two elements are Credit Card Debt and Unnecessary Expenses. Let me first tackle the Credit Card Debt element, the first and most obvious solution would be to lower the amount of things you charge to your credit card, I know this might sound blunt and straightforward but there is no other way to put it, things that you can pay off in cash and immediately, you’re better off doing that, I usually use my credit card for big purchases that can be deferred or for loading gas and a few online purchases. Secondly, before making any purchase with your credit card, you should first take note of how much you already have charged on the card so you know what you can and can’t spend, be sure you log everything you charge on the card as soon as you swipe it so you can easily keep track of it either through a mobile phone application (Spending app is what I use as mentioned above.) or go old school and write it down, nothing too complicated, just what you spent on and how much it costs. Now moving onto the second element, the unnecessary expenses, this is a very simple solution but not as easy to execute. You simply ask yourself, do I really need this? Is there a cheaper alternative? Then a thousand reasons of justification come flooding telling you “Yes, I need this”. But if you really want to reduce this element, sacrifices must be made. I’m not saying complete deprivation, I’m talking about reduction. Let’s look at a Starbucks Daily Habit as an example. Do you really need (I repeat, NEED.) to buy coffee from Starbucks every single day? Perhaps you could make it an M-W-F habit? Or if you really need a daily caffeine boost, I’m sure a coffee sachet or an energy drink could do just as well as a cup of Starbucks without being nearly as expensive. This is just one of the many examples that can be used to discuss the “Unnecessary Expenses” variable above. But by being able to reduce and lower the two variables above, I can assure you that the end result will positively change in a significant way. It may be difficult in the beginning but it will definitely be worth it.

Situation 2: Credit Card Debt = P2,500, Necessary Expenses = P3,500, Unnecessary Expenses = P2,000

P20,000 - (P2,500 + P3,500 + P2,000) - P2,000 (Set aside for Savings) = P10,000 left. This situation is slightly better than the previous one, there is more left over now because the Credit Card Debt and the Unnecessary Expenses have been kept under control. Now with this situation, we can start talking about saving or investing, hence the additional subtraction of P2,000. Take note, I said or here despite mentioning above that what is ideal is to do both, but given the situation only one of the two options should be made so that you are not left in an uncomfortable spot until your next paycheck. What I would suggest is that building up your savings (if you haven’t already.) should be put into priority here so that the risk is kept relatively low and that your capital will remain intact. For the formula used above, I chose P2,000 as the value to be set aside for saving, this value may seem small, but assuming that you maintain the same formula above every month, it will compound into something big despite the interest earnings being low. Also, with the amount chosen to set aside for savings, you are left with P8,000 which should be enough to get you through until your next paycheck since all debts and necessary expenses have been already paid for.

Situation 3: Credit Card Debt = P1,000, Necessary Expenses = 3,500, Unnecessary Expenses = P1,000

P20,000 - (P1,000 + P3,500 + P1,000) - P4,500 (Savings and Investment) = P10,000 left. This situation is now the most ideal situation to be in because you’ve covered all debts and expenses have been covered and a significant amount has been set aside for saving and investment. Now as for the saving and investment instruments to be chosen, it’s entirely up to you, up to your appetite for risk, your goals and your time frame to achieve these goals.

The things I’ve written are not an absolute rule to follow nor will they work for everyone, it’s a personal opinion that has worked for me and I put it out there in the hopes that it will help educate people.

Somewhere Between I Want It And I Got It

It’s six in the morning; the alarm clock on my mobile phone is going off until I shut it off. I stare up at the ceiling; rays of the morning sun lick my face through the glass panes of my window. “Am I alive? Or am I just breathing?” I think to myself. I take a deep breath and let it out. I’m actually a little bit of both. Somewhere between I want it and I got it. Perhaps everyone has come to that point at least once in their lives, that point wherein one feels like everything is going generally well in life but it still feels like something is missing. With furrowed brows, I take a look into my life. I have a wonderful, loving and caring family. I live a very comfortable and blessed life and I’m able to enjoy a significant amount of luxuries and privileges. I have all my senses intact and I’m in pretty good shape. I am in a good, stable and happy relationship with a wonderful woman. I was able to buy my own car and split an investment in a condominium with my father, I was also able to buy him a car with the help of my mom. I have a few side hustles that have not yet fully panned out but I think are getting there; I have significant investments and savings. I am really thankful for these blessings and I have a feeling of happiness, contentment and a sense of accomplishment when it comes to these aspects of life. But there is something missing. And deep inside, I know what it is. I know what is eating away at my overall happiness. It is the grind of my day job, the day job where a huge majority of my life is spent at. The same day job that provide me the money to fulfill my financial responsibilities, that provides me the money to buy things and experiences that bring me the happiness I seek, that can make up for the unhappiness and the lack of fulfillment that I feel where I am right now. The dead end cycle that I am in where I have to do what doesn’t make me happy in order to earn money to pay for things that do, to reach the goals I’ve set. Some will say that this is the sacrifice that needs to be made in order to build a good future; some will say that this is something that everyone needs to do in order to live a better life later on, to a certain extent, this is true. But I can’t fully accept that, I can’t fully accept that this is how life is supposed to be. I do believe that sacrifices need to be made and there is no substitute for hard work but what is it all for? For money? Yes, money is a huge factor and it is important in life, it is required but the way to make it is something that I believe is not fixed. A part of me is telling me to just say “Screw it. Leave your job.” But it isn’t that simple because of the financial responsibilities that I have which are covered by what I make at this job. I only have a few things going for me there, the fact that I get to see my girlfriend every day, the pay is more than decent and the location is very convenient. But other than that, I see it as a means to a few ends. But these ends (Fulfilling financial obligations, saving and investing) seem to be so shallow. There is no higher purpose for me here; I have no aspirations in this industry. Then that inner voice whispers to me, “Then go switch industries. Find another job.” I could do that but I am highly doubtful that there is another job out there that pays the same way that I need it to or if there is one, I have not found it yet and I am also doubtful that it will pay the way I need it to right off the bat, it took me 3 years to make what I’m making now and the financial obligations (both these obligations are necessities to me (My car and the Condo Investment) I need to fulfill have a long time horizon before they are complete. So you see, it’s like falling into a trap. But don’t get me wrong, I am very thankful for the job I have and what the salary does for my present and for my future. But I really can’t shake this feeling that’s eating away at the very core of my being. I often ask myself, is this all that life is cracked up to be? This can’t be it. There has to be more to it than this. There has to be more meaning than this. Then I stumbled upon this article on www.artofmanliness.com and it is a 5 part series (http://www.artofmanliness.com/2010/05/24/finding-your-calling-part-i-what-is-a-vocation/ is the link to Part 1 which has the links within it for Parts 2 to 5.) that talks about “Finding Your Calling” and reading through entire series really opened my eyes and some quotes hit home very squarely and moved me. I would like to take this time to share them with you and add a little bit of how I feel about them.

“A Job. Those who see their work as a job are those who belt out “Everybody’s Working for the Weekend” with great gusto. They live for breaks, for vacation. The job is simply a means to the end: a paycheck. They need to support their family/pay their rent, and this is the ticket they punch to do it. The job may not be terrible, but it offers the worker very little real satisfaction.” - This is where I am at right now.

“A Vocation/Calling. A vocation is work you do for its own sake; you almost feel like you’d do it even if you didn’t get paid. The rewards of wages and prestige are peripheral to getting to use one’s passion in a satisfying way. Those in a vocation feel that their work has an effect on the greater good and an impact beyond themselves. They believe that their work truly utilizes their unique gifts and talents. This is what they were meant to do.” - This is what I am searching for, this is what I am seeking. Although I already have a general idea as to what it is, it’s more the “how” that I am seeking, that I am hustling for.

“True, I know men, and I’m sure you do too, who are working in jobs that don’t fit them at all in order to make a living, and outwardly they put on a fairly happy face. But I often see an anger in these men emerge in less guarded moments-in road rage, heavy drinking, and resentment towards others. It can just eat at you inside, literally. More heart attacks occur on Monday morning than at any other time; men return to jobs they loathe and their blood pressure soars.”

“Find what you really love to do and then go after it-relentlessly. And don’t fret about the money. Because what you love to do is quite likely what you’re good at. And what you’re good at will likely bring you financial reward eventually. I’ve seen too many people who have plotted a career, and often what’s behind it is nothing other than a stack of dollar bills. You need to be happy in order to be good, and you need to be good to succeed. And when you succeed, there’s a good chance you’ll get paid.” - This is a very striking quote for me, it really hit home and made a whole lot of sense.

“Staying in a dead end job is often seen as the more practical choice, but there is an irresistible practicality to the idea of vocation as well. The man in the job he hates may sometimes make more money, but he also spends more money, trying to buy things and experiences that will make up for how miserable he is at work. He has to do what doesn’t make him happy to earn money to pay for things that do. In contrast, the man in a vocation is the truly frugal man. He’s not living for the next vacation; he doesn’t need a big screen TV to make him happy; he’s not paying a shrink and a doctor to tend to his diminishing mental and physical health. He doesn’t need much to get by and that’s true freedom.” This is another one that struck me very much because it is currently where I’m in right now, where a big chunk of my life and my time goes to. It’s hard to believe I’ve survived 3 years in this situation.

“The way to a larger opportunity is never meanly sneaking out from under the little duty of to-day, but climbing bravely through it and off the top; and then the better chance usually comes.” You may need to moonlight in a second job until you can quit your day job; you may need to find the expression of your talents in your avocation; you may simply need to find more opportunities in your current job that allow you to use your unique strengths. A determined man who knows how to hustle can find a responsible way to balance his duties and his passions.” - This is what I am hustling towards, what I am aspiring towards, although what I’m currently moonlighting in may not be my passion, it does bring a certain degree of satisfaction, but for me, it is not enough but it is also geared towards the freedom I so desire.

Faced with these set of questions from Part 4 of the series, this allowed me to really think about it, to really ponder on it, I will share these set of questions along with my answers as well.

·        As a boy, what did you love to do? Write? Read? Sports? Working on models? Playing with a chemistry set? Spending time outdoors? Pretending to be a solider or a spy? – As a kid, I liked to play with my toy cars and action figures or spending time outside riding my bike and playing with toy guns, building some out of my large Lego blocks too. I also enjoyed climbing trees and just being on the move outside.

·       During school group projects, what job did other students assign to you, or did you volunteer for? – Hmm, this is a tough one to recall but most of the time, I found myself reading the reports or presenting them.

·       What aspects of your current job do you love, which do you loathe? – I like the flexibility and leniency of the schedule and the fact that it pays well. I loathe the fact that it isn’t what I went to school for nor is it my passion, plus the fact that I am just at a cubicle all day.

·       What kinds of projects and jobs at work and at home do you get excited about? What kinds do you dread? – At work, there isn’t really much that excites me, I suppose the last thing I enjoyed was presenting something via WebEx. I dread or dislike the kinds of tasks that are boring and long and the ones that involve heavy math formulas. At home, I like to read a lot and view photos and if I have taken some photos of subjects that I really like or for a shoot, I enjoy doing post-processing on them and analyzing my work after to see where I can improve and make changes the next time around.

·       Have you ever talked to a friend about a topic, a dream, or an aspiration and everything just clicked inside of you, and you felt a surge of excitement throughout your body? – Yes, I have, quite a number of times.

·       What things do you see other people doing that make you ache with jealousy because you wish you were doing them? – For me, my friend Nicky Calanoc seems to have the ultimate dream job (He is a Deputy Editor at C! Magazine.) He gets to photograph cars, test drive them and write about them for a living, I think that’s pretty awesome, I’m sure this job has some mundane factors but to me, it’s pretty sweet overall. Or whenever I browse through the Speedhunters website or see the works of various car photographers, I always find myself saying “I could do that! I would love to do that!”

·       What issues get you really fired up? – Issues that involve cars and photography, also issues that come to investing and money.

·       What dream has nagged at you for as long as you can remember, the thing that always pops into your mind no matter how many times you dismiss it? – A dream that has nagged at me for as long as I can remember is wanting to become a professional racer or being a part of a racing team, to make a living doing what I am passionate about. The thing that always pops into my head is how can I make a living being a photographer of cars or how I can make a living by putting up a garage and tuning cars or making a living off that combination.

·       What fills your thoughts in the quiet moments when you’re riding the train or lying in bed? What do you think about incessantly, what captures your imagination? Politics? Spirituality? Relationships? –My loved ones, Cars, Porsche’s, Racing, Speed, Tuning Cars, Photography, Money, Ideas for businesses.

·       If time, money, education and any other obstacle was a non-issue, what kind of work would you choose to do? – I would probably be car photographer/car photo journalist of some sort for the day as well as a business owner.

·       What were you doing the last time you totally lost track of time? – Reading a stack of car magazines, browsing Tumblr and deviantART for photos of cars and various subjects that really capture my attention from the standpoint of a viewer and a photographer, writing short stories (I recall writing a short story back in the summer of 2003 that I never finished as well as writing my own version of Harry Potter Book V back in 2001 which I didn’t finish either and sadly can no longer find.)

“Levoy suggests thinking of yourself like a compass. You keep one of the points of the compass fixed, while the other one is free to draw circles. Keep part of your life stable, while part of your life seeks after your calling. Eventually, you’ll be able to put both feet into your vocation.” – This second to the last point is a key point, it’s a big key to being able to pursue and embrace your passion/vocation, after realizing all your fears and obstacles and deciding to face and work to overcome them, that doesn’t mean you jump into it right now, it won’t happen overnight that’s for sure, but as mentioned, if you take the steps and formulate a plan and stick to it, eventually, you will make it to where you want and need to be.

“Sometimes we imagine that doing what we’re meant to do will feel effortless. But it’s going to be hard work. Really hard work. There will still be plenty of “dead work.” You will still have days when you won’t feel like going to work, when you want to quit. Such is the nature of all work.

But it will not be work that feels done in vain. It will be work that expands instead of contracts your spirit, that leaves you feeling more, not less alive. It will be work that stretches you, grows you, and helps you reach your potential as a man. It will be work that fills not only your hunger, but a hunger in the world. Most of all, it will give you the insurpassable feeling that there is a reason and purpose for your being here, and that you have fulfilled that purpose. That you are where you are supposed to be, doing what you were meant to do.” – This parting piece is one to remember, it serves as a reminder that it won’t be easy, but it will definitely be worth it.

As much as this started out to be the ramblings of my unsettled mind and a part of it even sounding like a rant, but writing this out actually calmed my mind and helped answer some of the questions I had. Reminding me of what needs to be done.