Good morning

I welcome you to a great new day. Today is special to me, I am starting with my money makeover journey stating with the debt elimination program today. I hope its going to be an interesting journey with lots of ups and downs. I want it that way, as someone said

Its the journey that matters and not the destination

So, the first step today – Budgeting

Filed under: personal finance , debt, finance, money

Hurray!!! The bonus and a salary hike

I have been waiting for this day for a long time ( two months). Today I got my bonus and a decent salary hike. As planned before in my recent post this is what I am going to do now

• Save 1/3 of my bonus as an emergency fund.
• Try to budget within my previous salary.
• Use the salary increment to clear off my credit card debt.

This would ensure that I get out of my credit card debt in 7 months. Then I am going to come up with a plan for clearing off my personal loan debt.

Filed under: personal finance , bonus, credit card, debt, hike, loan, salary

List of don’ts

Don’t

• put all your money in one asset class, either debt or equities.
• blindly believe what financial advisers say, do your own research.
• use credit cards as emergency fund.
• listen to hot stock tips.
• get greedy.

Filed under: personal finance , finance, greed, money, stock

How long…

since you have purchased anything ? (groceries and fuel excluded)

Is it a day , a week, or a month, or a quarter, or a year ?

Why did you buy it ?

Is it a need or a want ?

Filed under: personal finance

Life’s Surprises

Life has the habit of throwing surprises at you, when you least expect it.

Today morning I have been to my kids school to collect his report card for this year. His summer vacation started yesterday. And came to know that his school fees has been increased by 85% for the next academic year.

Though I have the liberty of paying the fees in three parts spread out over the next year, this has put a strain on my planning. The reason being I had planned for a fee hike of 25%(there has been a talk of increasing it by 25%) not 85%.

The solution to all such surprises – Have an emergency fund!!

If I had an emergency fund I would not be as much worried as I am now.

Lesson learnt the hard way, and yes, as mentioned in my yesterdays post I am going ahead with Plan I.

Filed under: personal finance , personal finance, saving

Putting the bonus to good use

I have a plan, infact, I have two plans to spend my bonus. I would be getting it at the end of next week along with my increased salary. I have been waiting for it since two months and also been thinking on how to spend it for the past two months. The amount I will receive is somewhere near to Rs.150,000 ($3750).

And I am confused. Here’s why

• I have Rs.110,000 ($2750) debt on a total of three cards.
• I have personal loans amounting to Rs.300,000 ($7500)
• I have a car loan of Rs.600,000 ($15000)
• I have a mortgage of Rs.1,725,000 ($43125)

That’s a lot of debt to clear off. I accumulated it due to lack of financial know-how, bad planning and carelessness. Definitely not due to lack of intelligence.

Now I have the necessary financial knowledge, thanks to the blogs of J.D at Get Rich Slowly, Ramit Sethi at I Will Teach You To Be Rich and Trent at The Simple Dollar. I intend to apply some of the debt elimination principles to the bonus amount.

Here is the Plan 1

1. Save Rs.100,000 ($2500) as emergency fund ( as I am currently living paycheck to paycheck).
2. Prepare a budget for the month and keep aside the required amount.
3. Start debt snowball on the credit card having the least balance.

My wife disagrees with plan 1 and suggested Plan 2

1. Save Rs.50000 ($1250) as an emergency fund.
2. Prepare a budget for the month and keep aside the required amount.
3. Clear off entire amount on 1 credit card.
4. Start debt snowball on the credit card having the least balance with the left money.

My concern with Plan 2 is that the emergency fund is 50% of the Plan 1. My wife is of the opinion that we don’t need such a big emergency fund and can fall back to using credit card if and when required. I don’t like that idea, here’s an article from Get Rich Slowly on why a credit card is not a emergency fund.

What do you suggest ? Let me know your view in the comments and help me reach a decision!!

Filed under: personal finance , bonus, debt, personal finance, saving

Measuring Success @ Work

Every year my company sets a few goals for me and defines the measures for determining my performance in meeting those goals.  This year they came up with templates, a template for a Software Engineer, a template for a Team Leader and so on. 

I hate templates, they put you in a mould. Templates generalize things ( goals in this case) . They have one serious problem, a template can’t fit everyone. I can’t fit in a template because I am different from the person who sits in the next cubicle to mine and so are everybody else.

How can the goals be same for all of us? I agree that they are based on designation, but still all team leaders are not the same. 

I guess this makes the job of HR easier, cast everybody in the same mould. I differ!

Instead of templates, establish a framework, a set of guidelines within which employees can set up their own goals. Let the managers sit with his/her teams and come up with specific goals aligned to that of the department/company. Then measure them and see if he/r has met them.  Then reward!!!

Is it so difficult to achieve ? What do you think ? Does the company you work for does something similar to templates or something different ? Let me know in the comments.

Filed under: cubicle , goals, job, success, work