Burning Through P500,000 In A Year

Time is fickle. One moment you’re sitting in front of the television, hearing for the first time about the oncoming lockdown, thinking about all the money you could save and invest while you work from home in your boxers not worrying about bus fares and office dinners. With hardly a snap of a finger, it’s almost the end of the year, we’re still in a quarantine of sorts (I think even the government has gotten confused), and you’ve burned through just a few thousand shy of half a million on… stuff.

Photo by Skitterphoto on Pexels.com

It Used To Be Worse

People who know me in person, especially my colleagues, are well aware that I’m very strict about keeping track of my finances. Back in 2018, coming home from a fiscal trainwreck of a trip to Japan (don’t get me wrong, I have zero regrets about that one, and I might write about it in another post soon enough), I opened up Google Sheets one slow morning at the office and started keeping track of everything I put my money into. The intuition behind it was simple, and it’s the same idea you’re bound to come across trolling the multitudes of personal finance blogs and YouTube channels. Having been trained and working as a data scientist, I know very well the benefits of hard, quantitative data. As my managers all like to say at annual plannings: what you don’t track, you can’t control.

And despite the disaster that the title of this blog suggests, my expenses tracker has been quite effective for the most part. I started working fresh out of college in August of 2017, and excited at my first stable source of income (a major level up from the tutorial and consulting gigs I used to do here and there back in college, and that I still engage in today as an additional source of cash), I immediately got into the habit of treating my family and friends to pricier and pricier dinners, built a rather expensive taste for premium steaks, and frequented coffee shops every weekend. The result was my first year working gone in a flash, and without a centavo in savings. In fact, rather than gain money, I had an old savings account close on me early in 2018 due to lack of funds. Wanting to turn all this around, I made a simple tracker that would alert me when I started overspending in a given day or month, and that readjusted my daily budget based on a conservative estimate that would still allow me to save at least a few hundred. 

Believe it or not, my exorbitant spending today is actually at relatively favorable levels. Enough that I have a few hundred thousand stashed away in time deposits, and with a modest investment portfolio divided among index funds and a few handpicked stocks. So it’s not entirely bad, but looking back, I can’t congratulate myself for anything either. I wouldn’t even hand out a consolation prize.

The Damage In Precis

Comparing my expenses this year with those from last year, I’m actually surprised to learn that my spending on food has decreased by 18%. This despite the fact that while quarantine has had me eating out less, I discovered an online store that catered perfectly to my taste for expensive meats. I’ve been buying steaks left and right, and at one point even purchased a kilo of wagyu beef. And because I’m at home, this means that I’m never just buying for myself. Unlike before, where a random craving for ramen would mean making a quick stop by Ramen Nagi or Ramen Kuroda for dinner on my way home from work, I’m buying home deliveries and there’s no way I’m slurping on a sumptuous bowl of piping hot ramen while my parents and three siblings sit and watch. Still, a spending of 127 thousand still feels a little too much, as it basically means I was spending more than 10 thousand pesos a month on food.

That transportation reduced by only 35 percent is disappointing, but expected. While I no longer have to commute daily to get to work, those commutes really only consisted of train and bus rides, which are pretty cheap. Except for the occasional taxi fares like when I’m traveling around an unfamiliar province on business, I can be very frugal when it comes to my mobility spendings. In fact, my girlfriend has more than once expressed her thoughts against my tendency to walk distances that to me just aren’t long enough to warrant even a jeepney fare. But when lockdown restrictions were eased, and I had to go out here and there for necessities and once even to fetch my personal effects from the office, I’ve since been taking taxis to reduce my contact with strangers outside.

Overall it actually looks like I’ve been spending way less versus the previous year, except for two key areas that saw massive inflation: purchases, which covers all items I buy that aren’t food or books (I classify all my book spendings under Entertainment, unless I’m giving them as gifts), and necessities, which cover bills and rent. The latter was actually due to our moving houses around June. The motivation behind the move was driven by two key factors: one, our landlady kept raising rent and eventually it just hit a point where the cost was hardly justifiable for a small, one-bedroom apartment housing a family of six, and two the building’s maintenance guy had a habit of smoking every night, and because the building had horrible ventilation the smoke would reach us in our apartment.

I think the move would eventually save us some money in the long run, as the rent is cheaper despite the space being twice that of our previous apartment. Not to mention we wouldn’t have to deal with the eventual consequences of secondhand smoke. Though of course it cost us some initial overhead, which my parents and I agreed to split. This included the security deposit and a few other maintenance costs. I also raised my share of the house’s bills. I’m looking forward to seeing the effects of these decisions cascade to next year, when I’m also expecting to pay half of what I used to on my phone bills after renewing my contract with Globe.

But now for the real trainwreck…

The Big Ticket Expenses

To be fair, a lot of my expenses this year were inescapable. Even if I had gripped firmer at my wallet, I still would have had no choice but to put down the money. Some of you reading this may remember that Caecilia, my laptop of seven years, finally gave her last blue screen of death this year, and with a masters thesis underway I couldn’t go by without a computer. Surprising absolutely no one, my largest expense this year was Rosalind, my 2020 MacBook Pro. The 2020 models actually sell at Apple Stores for P74,999, but thanks to a recommendation by a friend I was able to purchase it at a considerable discount price. Said friend also loaned me part of the money that I used to pay for the laptop, as I didn’t want to strap myself to paying for it for a year or two on installment. I wanted to pay with cash, and I wanted the purchase finished the moment I left the store.

I mean, no regrets though.

I couldn’t just buy the MacBook without some gimmick on my end. I had been saving up for the laptop for a while now, having expected Caecilia to give in to her old age since as early as last year. But rather than give up all that cash, I decided to loan part of it from a friend (to be paid off by the end of the year) and put the equivalent amount that I had saved up in my brokerage account, as around these times the Philippine Stock Exchange was still struggling to recover it’s pre-quarantine levels. Using my friend’s loan as leverage, that decision has so far earned a modest 16% in unrealized returns, so while the MacBook was itself an investment, considering the many side hustles that I do, I’ve already earned back some of its value. 

My dad’s own work laptop of four years also started to give, and after months of struggle managing his online classes we agreed to split the cost of a new laptop so he didn’t have to buy it on a loan. In total, I put down P20,000 for the laptop. We got him a 15 inch Huawei Matebook Pro, which so far is proving to have a superb value for money. It’s got a superb screen, fast and spacious storage, and he can now manage having a Zoom or Google Meet call while working on multiple documents and Powerpoint presentations at the same time.

Not all expenses this year were necessary, however. For absolutely no reason whatsoever, around July I decided to buy myself a Kindle Paperwhite despite having a significant number of unread books on my backlog, and while the Kindle has definitely been used a lot this year, it’s a purchase that in retrospect could have been pushed back or not made at all. There’s also the skateboard that I bought in June because, bored in lockdown, I thought, why not learn how to skateboard? I ordered the skateboard online, only to remember that, because were aren’t allowed to go outside, I actually wouldn’t be able to use it to begin with. Talk about burning money.

A Correction Ahead

The astute reader would notice that we’re still almost a full month away from the end of the year, and with December being generally among the most expensive months, I’ve still got quite a lot of room to up my reckless spending this year to even worse levels. But it’s been my yearly habit to review all my expenses this way before the year ends and to draft up personal goals for the coming new year.

While my spending for 2020 has been way below commendable, I was actually able to meet most of my goals for this year. My net worth has been rising at a healthy pace, if not for a sudden drop in the first semester due to my investments all going sour. If anything, I’ve only discovered areas in which I can further improve myself. I’m still finalizing my estimates, but for 2021 I’m looking forward to increasing my net worth with a significant jump of P150,000, which brings me closer to my goal of getting my first million before 30 years old. But that’s a story for another post.

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