What Will You Do When You Get a Salary Increase?

I used to work from home for more than eight years as an Independent Contractor. I received the same salary for seven years and I did not complain. Yes, that’s right. Although I was paid a rate that is enough for my skills, I negotiated a rate that would somehow cover everything that my daughter and I would need. Unexpectedly, on the eighth year, I received an increase. =) It was the largest salary I ever had in my entire working life, even if I did not have benefits.

When I returned back to the corporate world, I knew I would receive a pay cut because I applied for a full time position that offers benefits. And that was okay with me. I have been working for the same employer for more than two years now.  Unexpectedly, this year, after I came back from my vacation sometime in June, I was surprised to find out an unexpected amount on my payroll atm card. I inquired from the Payroll staff and they have confirmed that I was given a salary increase.  It is not normal to have an annual salary increase in my current employer. It is the first time I had a salary increase ever since I started with them way back in 2016.

 

 

Since it was really unexpected, I thanked my boss for giving me an increase. She told me that I did a great job and that I should continue with it.

So what did I do with my salary increase? I did not do a lifestyle upgrade. In fact, it is timely since my daughter is in Senior High School and there are just a lot of expenses especially that her strand is Fashion Design.

There is only thing that I really did feel. Gratitude. It has been my constant feeling after surpassing a lot of trials. As a token of gratitude, I donated a certain amount to charity.

I believe we do not have to be crazy rich before we share some of our blessings with others.

How about you? What will you do when you get a salary increase?

Building My Retirement Fund

Retirement is one of my worries as a single parent even though I know I have been funding it. Why does it worry me? I know how my father’s SSS pension is not enough for his monthly needs. He still works as a consultant to augment his and my mom’s daily needs.

After having attended the Associate Financial Planner’s Training early this year, I was able to compute how much I will need for my retirement. With that, I decided to find more ways to build my retirement fund.

Retirement is something I would really like to look forward to.  Having that said, here are the things that I have been doing in order to build my retirement fund.

1.  I have been investing in the stock market through Citisec Online since 2014.  I will continuously invest in the stock market.

2. I availed of Sun Life’s My Future Fund 2040 two years ago. I am paying for it on a quarterly basis. My annual premium is P48,000.  I lessened the insurance coverage on my My Future Fund 2040 so that the premiums will be placed on the investment.

3. Our company has a retirement plan and mutual savings fund. I became eligible after one year of continuous service in the company. In this plan, my employer will contribute 4% of my basic salary on a monthly basis. If I reach three years tenure, my employer will contribute 5% of my basic salary on a monthly basis.

On top of that, I enrolled in our company’s mutual savings fund. I am currently contributing 2% of my monthly basic salary. I plan to increase this once my daughter finishes college education, which is six years from now.

Vesting starts at 30% for at least three years of service, increasing 10% per additional year of service from years 4 to 10. Full vesting is attained at 10 years of service.

4. Since the stock market is volatile, I researched for other alternative investments and discovered Vidalia Lending Corporation (https://vidalia.com.ph).  With this company, you can invest in loans. It is like FundKo. The difference of Vidalia Lending Corporation is that it is a managed peer-to-peer lending company. You don’t have to choose who to lend money to since it is the company who will do it for you. They also handle the collection of loans.

Vidalia Lending Corporation guarantees returns on your investment. You can earn as much as 18% in interest earnings for a 12 month term. For this year, I invested P72,000 for three months with an interest rate of 3.5%.

Upon placement of my investment, I received an email with my investment confirmation. Instead of having the check delivered to my house, I opted to pick it up in Vidalia Lending Corporation’s office.

After this initial investment placement matures, I plan to re-invest it for another three months. Why not re-invest for one year? I plan to add to this placement on January 2019 when my remaining leaves are encashed. That is the time when I will invest it on a twelve month term.

I know I can make additional investments anytime. I just want to be organized and have a single check for this purpose. I want to be able to track my retirement fund in an organized manner.

All these four items comprise my retirement fund. Some people may think I am uptight. Reality is I have only myself to rely on. It is better to have a plan for this very big goal.

Retirement is something I would really like to look forward to.  It would be the stage in my life that I would like to see myself be involved in charitable causes.

Real Emergencies and My Emergency Fund

I used to work from home previously for eight years and three months. Back then, I was working as an Independent Contractor for a company in Ireland. My contract was an open-ended contract and it offered me no benefits. It was a no work no pay contract. But I was paid on an hourly basis and charged if I was called during my on-call schedule.

I realized that I needed to learn to be wise with money. I saved for a lot of goals as I wanted to maximize my earnings that time. I saved for emergency fund, personal retirement fund, and college fund. I even zeroed out my consumer debt. By the time my house was fully paid, I adjusted my emergency fund to the reduced monthly expenses that I had.

In 2015, I decided to go back to the office. I needed benefits like leaves. It took one year for me to be hired. And I was really excited!!!

There were a lot of projects going on when I was hired. I also had to work overtime and some weekends. On my third month at work, I felt some chest pains. I went to the outpatient department in the hospital near my house for consultation. Since there was no doctor that time, I was told to go to the ER. And then, I was confined for four days. After that, the doctor instructed me to be on bed rest for a week.

I was not a regular employee yet that time. The time that I was confined and on bed rest, I knew that I will not be receiving any pay. Thankfully, for the first time in my life, I did not panic. Why? I have an emergency fund. And I was ready to use it to cover the expenses for two weeks.

I also had 65 hours of overtime and I don’t have overtime pay because of my position.

Can you guess what happened?

My boss allowed me to use my 65 hours of overtime and convert it to lieu day. This is actually a policy in our company, that we can convert our overtime hours into lieu days and it should be taken within three months.

I was very thankful for that.

I was also thankful to myself because  I did not have to worry should I touch my emergency fund to cover the two weeks expenses.

Emergencies are real. They can happen anytime. We should be prepared when emergencies happen. What about you? Have you had any emergency?

For single parents, the emergency fund is our best line of defense. I hope you learn something from my story.

Debt Free Since 2017

Last year, I made a commitment to myself to stop borrowing for other people. It’s all because of several experiences that brought me to a rude awakening.

Let me do a flash back.

Admittedly, there were instances when I was asked to apply for a personal loan. And I was also asked to renew a personal loan. There were also times in the past when people related to me asked me to use my credit card for some of their purchases for daily living.

Yes, it was difficult for me to say no.  I have to admit there were times I was so stressed that I did not want to look at my credit card statement. I was promised that the person would pay what he purchased using my credit card. The due date came and the bank called me to remind me of my payment due for that month. Well, of course, the credit card was in my name and it was me that the bank had to remind, not the person who rode on my credit card.

Then, there were times, that I had to foot the monthly amortization for the personal loan when the person promised that he would pay the monthly dues. That happened more than twice. I recall the instance when it was two succeeding months that I paid for the monthly due for the personal loan. And then, my daughter had to be confined in the hospital. After my daughter’s confinement, I called the person who owed me money and politely requested for it. The reason was I took some money from the envelope that was supposed to cover my daughter’s tuition fee in order to pay the hospital bill. The person said, “Wala!!!” Ouch. That hurt. But later that day, a certain amount of money suddenly was reflected on my savings account.

It did not feel good living life like that.  Honestly, I felt so overburdened. I am trying to stand on my own two feet and survive. I do pay my bills on time, send my daughter to a good, private school and finance everything on my own. It is a burden too heavy to keep.

At some point last year, I reached my threshold. I finally decided to stop applying for personal loans for other people in my name. I also stopped letting people use my credit card for their needs.

Since May 2017, I have been debt free. I even told the person this year to stop borrowing money from financial institutions because of the high interest rates. I also advised him that it is not good to keep on borrowing money.

I feel so relieved. It feels good to be debt free at 40. Well, it is not just good. It is wise to be prudent in our finances.

I Fully Paid My Daughter’s Education Plan!

Nine years ago, I purchased a pre-need education policy from Sun Life. The policy that I purchased has to be paid for 10 years. I paid for it on a monthly basis. Well, I could only afford to pay it monthly even though I knew I would be able to save by paying annually.

The pre-need education policy is Sun Education Plus. I know it may not be enough to cover the whole expenses during my daughter’s college years. It’s better than not having an education plan at all. Since I only have one child, I can simply add funds during her college years by looking at the benefits I have. Since I am a regular employee, I have 13th month pay and leaves that are convertible to cash.

Now, the only thing that made the expenses bigger is the implementation of Deped’s K-12 program. It added two more years of high school education before entering college.

Because of the sudden change, I decided to fully pay the Sun Education Plus policy this year.  I paid it full on January 2018.  Where did I get the funds? I took it from my leaves that were convertible to cash. I changed the payment mode to annual to be able to save on the last premium payment. My proof can be seen below.

It’s a nice feeling to have fully paid this education plan. I am free of the premium payments now.   I know I made the right decision by purchasing this policy.  Aside from being able to fund my daughter’s college education, I will get the contract price in a certain number of years from the last availment in two payouts. It can be used to avail a health insurance plan for me. Now that’s money that has been properly managed.

The Three Big D’s of Personal Finance

The journey to personal finance is not easy. It requires three big D’s: drive, discipline, and determination.

Drive. This is what fuels your desire to effectively manage your finances. This is simply what motivates you in your journey to personal financial freedom. This is your WHY.

I believe we all need to have this big drive in order to push us to action. It is the fire that will keep burning inside you. Without this, our journey will be meaningless.

Ask yourself, “Why do I want myself to be financially free?”

Discipline. Discipline is necessary in order for you to be able to attain your personal financial goals. You need to be able to stick to a certain habit every month. If you want to be able to save for an emergency fund, you should be able to religiously allocate a certain amount for the fund every month. And you need to be able to continuously do it until you reach the desired goal.

It will not be easy at first especially when you are just starting your personal finance journey. The key here is to remember your big drive. Your drive will remind you to continue doing what you have started.

Determination. Ultimately, determination leads to success. When you continue doing a certain habit for a certain period of time, you will reach your goal. In personal finance, determination is very important. Why? You need time to be able to grow your savings and investments. Have you seen someone who has become financially free overnight? I bet the answer is a big NO.

For example, preparing for retirement will take a long time. This needs your determination to be able to set aside a certain amount every month.

Drive, discipline and determination are the three big D’s of personal finance. Without it, the journey to personal financial freedom will be meaningless.

How I Say No without Saying No

We have that experience when somebody would come to us and try to borrow money for various reasons. It is one of those moments when I used to impulsively say YES because I did not know how to say no.

Honestly, this has been my problem. There were times when I lent money and I did not get it back. And there were times that there were repeat borrowers.

I tried to overcome this by researching on the web the different ways that I can say no. It was not easy to do this. And it wasn’t an overnight process. I would actually practice mentally the line that I was going to say. I know some people were probably surprised when I started saying no without saying no.

A good friend suggested to me that I shouldn’t give details on why I am saying no. It turns out she was right.

Here are the lines that I used to politely refuse lending money to people.

  1. “Pasensya na, madaming gastos.”
  2. “I’m sorry but I value our friendship.”
  3. “Madami akong bayarin.”
  4. “Pasensya na.”

Ever since I started to say no without saying no, I eventually became used to it. In fact, I would consciously remind or ask myself if I am in a position to lend money. This is because I live on a budget.

This new habit has certainly empowered me. Everytime I politely refused, I was in fact saying YES to myself and to my financial well being. At the end of the day, it is just me fending for myself and my daughter.

Financial Awareness

There are things I wish that were taught in college. One of it is personal finance. I admit that I knew nothing about investments when I started working. All I knew was that I need to save. I have experienced saving when I was young and still studying. My dad encouraged us to save. Whatever we saved, he would double it. I was addicted to saving because of the interest that I would get from my dad.

Finishing college education and working opened a whole new world to me. Real life education started. Yes, I had a job. I did account for where my money went and I tried to save. I started working as a Programmer in one of the software companies in Ortigas Center. I managed to save especially when I rented bed space in Pasig.

I got married and had a family of my own. Due to unfortunate circumstances, I became a single mom by choice. Another unfortunate event happened in my life and I found myself leaving my parents’ house. I found a one-bedroom condominium unit to rent and started raising my daughter all on my own way back in 2008.

Yes, there was child support. It did help. I was lucky I got a stint to become an independent Oracle DBA consultant which allowed me to work from home and earn in US dollars. Full of ambition to give my daughter a good life, I vowed to myself that I had to make it all on my own.

The journey wasn’t smooth. I started reading blogs on personal finance and educated myself. I bought personal finance books and devoured the knowledge I gained from it.

 

I just did not read these books. I started applying what I learned from it. Slowly, I zeroed out my debt. I finished paying my housing loan back in 2014.

I did not have the time to attend seminars because of the nature of my work. But it did not stop me to learn. I still continuously invest on my knowledge by buying personal finance books and educating myself on best practices.

It has been almost a decade since I left my parents’ house. It was a blessing in disguise. I am still living independently from them as a single mom and raising my daughter all on my own.

Before 2017 Ends and 2018 Starts

Before the year ends and before 2018 starts, I reviewed and created my projected expenses for the year 2018. I have adjusted some numbers to reflect the changes that will occur for the year 2018. What is the change?

My daughter will be in Grade 11 for the school year 2018 – 2019. She will be moving to another school that offers the track and strand of her choice, Technical-Vocational. Her choice is Fashion Design strand. This choice comes with a higher tuition fee and a higher school allowance.

Actually, this is something I do every year before the year ends and before the new year starts.

I also plotted the projected costs for other expenses that occur on annual basis.

(I had to omit the numbers for privacy.)

Why do I do this? Doing this gives me a visual overview of my income, expenses and cash flow for the incoming year. This exercise prepares me for what lies ahead.

There is another task that I did before 2017 ends. For some time, I have been planning to organize my policies in one place. So I bought a bag that is big enough to hold all my policies (life insurance, health insurance, educational plan, investments, etc). I reviewed my policies which are active and discarded the policies that I have surrendered for reinvesting.

All my files are here. The contents of this bag are:

  1. Life insurance policies
  2. Current house insurance
  3. Education plan
  4. Health invest policy
  5. Retirement and other investment policies
  6. Diplomas
  7. Birth certificates
  8. Other relevant files pertaining to my civil status
  9. Green folder which contains all the files should I pass away

This is not to scare anyone. But as a single mom, with no other adult in the house to rely on to, I deeply feel the need to organize everything that is needed should something happen to me. It’s something that my daughter can easily access.