New money habits led to saving $100K in 18 months.

In quite a few emails I have received, I found that some married couples have been inspired by my blog to improve their financial health.

I find this very heartening because it is not always the case that both parties are on the same page when it comes to money matters.





One person might want to make changes while there could be resistance from the other person and I have heard many such stories before. It could even lead to arguments and disharmony at home.

However, here is a positive example which I find even more heartening because the couple's money habits were very different before reading my blog.

Hi AK,

This blog (7 pertinent questions to help build our wealth) has really come in as a timely reminder to me. Especially now it's towards the end of the year when im doing a wrap up of my finances for 2015.

Although i dont leave comments on your blog often, i check your blog every day. I started reading your blog since JUL 2014 and since then i have never regretted spending my time on it.

Trust me, your posts are really informative and its also the time where me and my hubby bond our time together reading new updates, sitting down together discussing how can we improve our finances. =)

Like your most recent blog on food, we have also started doing our own salads and bringing it to work now. We started packing home cook lunch to work in 2014. 

When we first started this, all my colleagues were saying that this routine wont last because it is too much of a hassle. Haha, but i had proved them wrong.

Me and my hubby seldom eat out now unless its a weekend. Even if we eat out, its at hawker centre. Dining at a restaurant is almost NIL in a month except if we are going out with friends for gathering. Even then, it was always ME who choose the location so that i can control the cost indirectly. Haha

Also in 2015, both of us started contributing to our SRS account and topping up our CPF. The only regret is we started this late (I am 32 this year and my husband is 35). If we had started to transfer all our OA account to SA before the purchase of our HDB flat, i think we could have reached the MS sum quite pretty soon.

We live in a nice cozy 4 room HDB flat and are left with about $50K loan for the house. We do have some funds now to fully pay up this 50K but we were thinking if we should do so. If we do so, it will definitely dip into our emergency funds.

We have about 100K of emergency funds and we were thinking of paying the remaining loan via cash instead of CPF now because i feel that CPF earns more interest than the cash sitting in the ocbc bank.

My husband and I save about 4K per month into our emergency funds (thanks to your blog post that we started this). Prior to 2014, our savings were almost negligible. Now that we are towards the end of 2015, looking back, sometimes I find it amazing how far we have come.

Although there are still a lot of areas for improvement, I am happy that we took our first step on our journey and I wish that you will continue to inspire us through your posts. Thank you AK!

Regards,

Happy Doggy

AK's reply:

Hi HD,

Emails like yours really cheer me up. It makes me feel that talking to myself in cyberspace is the best thing I have ever done in my life. ;)

I would like to talk to myself about whether I would dip into my emergency fund to pay the remaining $50K in my HDB home loan.

First point, an emergency fund is for emergencies. Is paying the rest of my home loan an emergency? ;)





Second point, savings in OCBC 360 could pay me 2.2% per annum (if I do not invest or insure with them). This is slightly lower than the 2.6% per annum in interest which a HDB home loan charges.

Of course, OCBC 360's higher interest applies only to the first $60K. If I had $100K in emergency fund, I would split the money into two OCBC 360 accounts, one under my name and one under my spouse's name to possibly maximise the benefits.

I could also consider setting up a UOB ONE account as the second account. The UOB ONE VISA credit card has a 3.3% rebate for a minimum spending of $500 a month too. If I had $50K parked in UOB ONE account, I could get paid 2.43% per annum in interest for my emergency fund.

Holding cash could be costly but it is important to have liquidity. As long as we can lower the cost of holding cash, it is good enough for me.

You are doing a good job and I am sure your story will inspire many other married couples. :)

Best wishes,
AK





It is never easy to change our habits. It takes a lot of determination. To change habits as a couple could be even more challenging for some.

The journey towards financial security and, ultimately, financial freedom is made much easier if both parties are on the same page, definitely.

Remind ourselves that others have done it, so can we.

It can be done.

PART TWO: HERE.

Related posts:
1. UOB ONE VS OCBC 360 accounts.
2. How big should be the emergency fund?
3. Do CPF OA to SA transfer before buying flat?

7 pertinent questions to help build our wealth.

28 November 2016:
If you have read this article before and if you fell short, have you made any progress? If this is your first time reading this article and if you fall short, there is no better time to take action than now!






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We might want to ask ourselves a few questions:

1. Do we pay ourselves first each month?

2. Do we dine at restaurants frequently?

3. Do we delay gratification?

4. Do we have the right insurance?

5. Do we maximise benefits from the CPF?

6. Do we have an adequate emergency fund?

7. Do we keep an eye on credit card debt?

Increasing our earned income is but one step in our quest to become wealthier. We must also be prudent when it comes to spending money.

We absolutely should have proper measures in place to guard against involuntary wealth destruction.

Finally, we have to recognise legal and ethical opportunities to build wealth and capitalise on them.





Here is an inspiring email from a reader:

Dear AK,

I was smiling when I was reading this post (I'm not mad) but was delighted to find out someone had benefited from your blog like me. (AK says see related post #2 at the end of this blog post.)

I wrote to you in Aug and four months have past..

(AK says read the blog post: here.)

I hope you don't mind me updating you. 

Salary Management - Now, growing wealth and management have been a common topic between my husband and I. So first salary management, for the two months at home as a "free-loader" cum housewife, I decided to make myself useful and forced myself to write down all the fixed monthly recurring payments and worked out some strategy with my husband. 

Strategy: For the first joint account, we credited our salaries and that will be the spending account. A second joint account is created for savings/travel. Once the $10k is reached, we will transfer that sum to the 3rd joint account as emergency funds. Every month, we will save minimum $2500, of which, $2000 will go to the second joint acct and $500 will go to the 3rd account. 

We hardly eat at restaurants. We don't see a point in celebrating any events by going to expensive restaurants. If we want to pamper ourselves, we would buy good salmon and beef from the wet market, and cook at home. 

A good part of the motivation was achieve financial independence. A small part,it may not sound that nice.   

Delayed Gratification - This probably took some mental muscles. My husband and I are active in sports. We run 10k and half marathons. Now the cycling bug has bitten us. We are the sort where we would pay for quality goods so that the goods can last longer. We set our sight on a $4000 road bike each because eventually we would want to do an Ironman in our lifetime. 

AK is also thinking of buying a bicycle. This costs $138. Hmmm.

Every time, we talked about it, we would feel guilty and sometimes your words would cross our minds. (See! You are that influential!). In the past, once we have saved that budget, then we would spend or use 0% interest free installment. Although we have set that budget, both of us agreed that we should delay the purchase until next year June and save aggressively now till it's way above the bikes' cost. Then decide again.  

Insurance - Two insurance agents I spoke to, asked if I want to be a part-time agent. My husband always laughed when I challenged the agents. We are fixed on buying term insurance. 

CPF - We have transferred part of the amount from OA to SA. The painful part was, I should have read your blog before letting HDB wiped out my OA. That's $38k which could have earned 5% in my SA. Ah... 

Investments - Like what you have recommended when I first wrote to you, we have to make sure that our safety nets are secured and now the priority is to grow our emergency funds and get adequate insurance. Yup, so we would be delaying investments until the first two are settled. 

Credit Cards - We are starting to make it a habit to check the credit card usage at least once every week and not wait until the day our salaries come in. This would prevent overspending. We tried those expenses app where you enter every purchase, that has not gone down too well. To start small, we will check our credit card balance regularly. 

Sorry for the long post and I can see why blogging can also be "talking to myself". Halfway through the email, I also felt like talking to myself. 

Thank you AK,

Impressed? I know I am. Well done!

Remember, for anyone, the best time to start on the journey towards financial freedom is now.

Related posts:
1. 2 questions that build wealth.
2. 7 things a reader did after visiting ASSI.
(Read related posts.)