My Financial Business Intelligence

At the end of 2014, I made a resolution to dutifully track ALL my income and expenses for 1 year.

I am really glad I followed through and did exactly that. 5 months onwards, I finally have some results to show for it!

What's more - Hey, I'm in the Business Intelligence field.

This is only for a 5 month period (actually only till 29th May), so I'm really looking forward for the full year results!

*All figures excludes CPF, investment gains/losses (but includes dividends).

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Total Income VS Expenses



My 5 months cashflow statement is summarized by 2 simple graphics. The huge spike in February was of course due to my major mattress hoot.

Yes. I have only spent 16+% of my income so far!!! Sick!

Of course, this is largely bias due to the bonus income in March - That expense % will slowly increase for the rest of the year. There are also some other major expenses I am preparing for the 2nd half of the year (e.g. Vocation!).

I reckoned it'll be in the region of 20% to 25% by the end of the year.



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Recurring Income VS Recurring Expenses
- Income excludes 'one-time' items like lottery, CNY angbaos, SAF allowances, bank special promotions, etc.
- Expenses excludes 'one-time' major hoots




Again, this is largely bias due to the bonus income. If I normalize it, my expenses is around 20% of my monthly income.



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Expenses Breakdown
Food: Breakfast, Lunch, Dinner, Supper, Snack, Groceries
Entertainment: Toto, 4D, KTV, Video Games, Movies, Etc
Healthcare: Doctor, Dentist
Household: Household Items
Personal: Clothing, Personal Care Items
Social: Wedding, Social Functions
Travel: Public (e.g. EZ-Link Topup), Taxi
Treat: Non personal expenses
Utilities: Telephone, Internet

 

I was quite surprised when I first saw this breakdown. Nearly 50% of all my expenses are on food.

The absolute essentials, Food, Utilities and Travel expenses already make up 70% of all my expenses.

I don't spend a lot of food, that means I'm spending too little on entertainment and life. Life of otaku. :(



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Passive Income VS Active Income

 

The most important chart of them all, and the best measurement to my ultimate goal - financial independence.

My short-mid term goal is to have passive income form 10% of my overall income.

Since I spend around 20% of my income... If I can increase my passive income to 20% as well... does that mean.... !!!

...

Long way to go man. Long way to go.


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Miscellaneous

Some other interesting facts...

I spend $2.46 on Breakfast, $4.96 on Dinner, and $5.15 on Lunch on average.

The approximately cost per restaurant visit (includes low-end ones also) is $19.14.

I also spend approximately $8.6 per month on lottery. And no, I haven't won back any for the year. :(

I highly encourage people to take up this challenge of recording your expenses.

It's a huge pain at first, but it becomes habitual very fast.

And the insights you gain can be quite invaluable. 

The Rat Race

I came across this article by a fellow blogger, Bully the Bear, which resonates greatly with me.


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Have you ever wondered why you're working/saving so hard for?

To fund our retirement, our homes. So that we can be "financially free" one day?

But what does "financially free" really means?

It is not about who saves the most. Who can survive the longest with the least resources. Who have the most passive income. It is definitely not about living an extremely frugal life, giving up the things you want along the way.

...

When we remove all these, we stripped down financial freedom to its essence.

It is when we reach the point that we are not concern about the pursuit of money anymore. We get a life where we don't compare with others anymore.

If in the end, you still benchmark yourself against other people achievements, comparing your incomes, savings, assets, etc... Then you haven't really achieve true freedom. You haven't got out of the rat race at all.

...

"If in the pursuit of financial freedom, you're still bounded by the rules of the rat race, then what had changed?"

You're still a competitor, just that you're taking part in another event.

The Lure of Quick Money

Met up with a couple of friends today and the topic on 'investing' came up.

People were sharing about how they made few thousand bucks on a single trade, and up to hundred of thousands a month. Some even quit their jobs to trade full time.

I would be lying if I say I wasn't the least tempted. Who doesn't want easy money?

In their opinion, I was too 'conservative' with my capital allocation. I should take the chance to "compound" my net-worth quickly by trading and speculating using margins.

Is it really that way? Can I really not feel seduced by the lure of "easy money"? When they are talking about how they can earn your annual income in a month by speculating?


...


I kept thinking about it on the way home.

That's when I finally understood what Warren Buffett, Benjamin Graham and the other greats meant by the "irresistible lure of quick money".

I never met the devil until today. And I pray I can resist selling my soul to it. I guess I consider myself lucky to not succumb to it.

When I first started investing, I was exposed to long term value/growth/income investing. The friends I knew use portfolio balancing, dollar cost averaging and other 'conservative' methods of investing.

I followed the likes of dividend warrior and Brian who are mostly advocators of long term investing. I learned about the importance of keeping a war chest/armageddon funds. I learned about defensive stocks with recurring incomes.

I am 'psycho' daily by Motley Fool and Fifth Person about the risks of speculation and leverage, and the benefits of long term investing (how you never lose money over 20 years).

I idolized AK, an ordinary Singaporean who built up his portfolio brick by brick and is now making $120k per year in dividends alone. I was introduced to the art of 'nibbling' and starting my own dividend machine.


...

I guess all the above help ingrained in my brain the dangers of speculation, and the benefits of the long term. It's slow. It's unexciting. You can't boast about your accomplishments.

Is it a blessing or a missed opportunity? Only time will tell.

There may come a day when these friends are sitting on big cars and bunglows while I am still collecting a puny dividend per month. Or maybe one day they will be burnt badly and what I have learned are proven to be right?