Monthly Spending and Budget Report-April 2013

To those new in this blog, This is my personal finance journal where I track my monthly spending. My goal for 2013 is to spend 60% and invest 40% of our income to help me (and hubby) to retire comfortably in our early 40s.

How hectic the renovations of one rental unit kept us. I couldn't escape to sneak more posts. The costs of the renovations reflect in our April expenditure and will hit hard on our May one again. We lived on an impressive 40% of our income in March. We stuck below our target budget of 60% spending and 40% investing. This month took us above 100% spending. I wish it was a joke.

Our April 2013 monthly spending and budget report:

INCOME	APR'13	MAR'13	NOTES
Real Estate	37	17%	Target is 25% .
Personal Income	56%	82%	We are working on growing other income streams to bring this lower and thus diversify risk.
Interest/ Dividends	6%	1%	Our emergency fund interest and dividends were good.
Online Income	0%	0%	Next month.
Other	0%	0%

Interest on my Emergency Fund is 4.65%, which is below the inflation rate. I took some money to the stocks in January. If the Governor and the Reserve Bank cut rates, I will be very sad.

SPENDING	APR	MAR	NOTES
Real Estate	32%	10%	Renovations.
Transportation	0%	0%	Paid mostly with cash left over from last month.
Online	4%	2%	Freelancers paid
Internet/ Phones	1%	1%
Consumer	6%	10%	Includes food
Credit Card, Cash & Fees	1%	7%	We used the Mr's credit card and paid it off over 50 days spread.
Giving	3%	3%	This should be at around 10-12%. It will even out during the scholarship payment months.
Life Insurance	1%	1%	Fixed
Invested	51%	61%	We didn't pay more into our homeloan like we usually do. This is only automated unit trusts and a small amount on the stocks. I no longer top my Just Invest (Nedbank) savings up.

We lived on just below 134% of our income in April (comparing to 40% in March). Our Net Worth grew by a tiny margin. For which I am grateful.

TRACKING 2013 GOAL PROGRESS

1. MAIN GOAL: net worth growth by at least 25%.-- 12% so far.
2. BUDGETING: invest at least 40% of income.-- 73% so far.  
3. EMERGENCY FUND: 3 months worth of living expenses.-- DONE.
4. GIVING: give of more than 10% of income.--5% so far.
5. REAL ESTATE: Construct at least 4 flats/ increase the rental income by 30% .-- not yet.
6. MORTGAGE: Pay up our home .-- not yet.
7. STOCKS AND DIVIDENDS: Get at least R12,000 in dividends.-- not yet.
8. EXTRA INCOME: Online income to R8000 per month by December 2013.-- +/-R3700 April.

Read More

READER'S PERSONAL FINANCE

I don't make any money with this blog. Maybe not yet. What gives me joy is when someone says it has changed their lives and made them better at taking care of their finances. I got such an email this week. Such emails keep me going, honestly.

Hi there. Thank you for your blog - hubby and me have decided to start learning all there is to know on investing etc. We are not so young anymore (I'm 35,and hubby 40) and due to bad financial decisions in the past we need to start planning for the future ASAP. We have so much to learn as we never bought property before and investing in unit trusts, etc is very new to us! But I am on every site I can find on investing, wealth growing tips etc - one have to educate herself in order to make good (better!) financial decisions. I still want to read on some of your articles. Just wanted to thank you for putting it out there - so we newcomers can learn!

 I wish you all the best in what you are doing S. Its never too lat to start. The best part of this personal finance journey is the beginning and consistency. Never give up on your dream of financial independence. It DOES get easier with time.
And thank you for making my day.

You too can ask me questions or send comments by clicking here.

Read More

LANDLORD MISTAKES I MADE

Before dwelling on a few of many landlord mistakes I made throughout my property investing journey, I want to apologise for the silence. I am so busy with the remodel/ renovations of a rental duplex. I am crazy excited about the whole renovation, like a kid in the candy store. We live on site, which MrSISA and son find to be inconvenient. Meanwhile, I feel like an adventurer in the bush. This is the closest I can get to camping. We have no kitchen and I cook with a hot plate just like I did at varsity. And we are not restaurant people because I am extremely particular with what I eat. The renovations are quite pricey but the returns are worth it in my opinion. We are re-doing both bathrooms, the kitchen, the patio and all floors. I am planning to give the staircase and all bedroom closets a facelift by a lick of paint and changing the handles.

Duplex Renovations

Back to bad landlord mistakes I made.

MISTAKE 1:
I am now busy undoing what I paid for only two years ago. I got a highly experienced guy to renovate this very duplex in my absence. I didn't know the guy but my friend did. So naturally I had my friend hire and manage the guy and the project. A lot of bad decisions were taken (not that I would have made better decisions). This guy knows how to do a great job but decided to do a VERY shady job in the place. The tiling was below mediocre. I had to chase him away with my money and a job half done. I couldn't risk having a lot more work to undo. For two years I had this duplex off the market and used it as a holiday home because we had no time to take care of it and needed the place where it is. So we decided to have a working holiday in it for two weeks to have it properly fixed. That's the reason we live with all this dust and clutter. Yes, we could have gone to live in the hotel, but I don't see any sense in that expense.

The landlord mistake I made is renovating from a distance without a proper brief, contract and plan. That cost me a lot of money and a friendship. No use crying over spilt milk, I have to fold my sleeves and work.

MISTAKE 2:
When getting a tenant for a smaller duplex, I went all emotional when a single mother was desperately in need of the place. She had a decent salary but I ignored her trail of problems. One landlord mentioned how single mothers are a huge pain. I disagreed with her and still do. I think, like the rest of us, single mothers are not the same. But unfortunately for me, this woman was in a serious financial situation. She started having excuses after excuses. Needless to say we agreed to part ways. She left with some of my money. But all I wanted at the time was my apartment back to collect rentals. This was the first ever time that I had someone miss a rental payment in my 11 or so years as a landlord.

The mistake I made was to do a rush job at screening the prospective tenants, after doing a great job of marketing the place. I sometimes forget that this is business and not an emotional venture. This tenant obviously had her priorities crooked. She had a great job and was by no means a charity case. I need to toughen up a bit.

MISTAKE 3:
My property manager has been with me from the beginning. He is OK for me. I have written about him here before. I tend to trust him to take the right decisions. My motto is that "if things break, please fix them immediately. I don't want the tenants to suffer. Don't try to get hold of me when a tenant has no stove." Indeed my property manager does just that, except, he fixed one stove 3 times. The cost of fixing this stove was close to the cost of a new one. Fortunately for me, I managed to find out that the stove broke again before he had a guy fix it. I called him and politely asked him to buy a new stove. Happy tenants stay longer.

The mistake was that I failed to micro manage my manager. It does sound odd but there is nothing passive about property investing. You will always be hands on. But my manager is great in many other ways.

MISTAKE 4:
Similar to the mistake above, I assumed that my manager understood the property laws. I am lucky in that, I decided to do a Masters in Real Estate and have a good understanding of South African property laws in general. This is definitely not necessary for one to be a property investor. I just have an interest in real estate. When stuff that belongs to the body corporate broke, my manager went ahead and fixed them. I have been pointing him to the Sectional Title Act and I must say its been a learning curve for both of us. I realise that most real estate practitioners know zilch about the SA real estate laws. Its horrifying. So a landlord has a responsibility to learn about the laws that govern his investments.

MISTAKE 5:
When I was on to buy property number 3, a charming real estate agent told me all there is to know about the property in question. It didn't hurt that she was a pretty French girl. She was climbing up and down the stairs in an impressive way. Except, most of the details were WRONG. She mentioned 160 square metres when the property was 126. She enticed me with the spot to put a swimming pool when its actually against the Sectional Title Act and the space in question has some servitude conditions. Off course I had an apartment already but knew nothing about the Act and servitude.

What gives me comfort is that I would have bought the place even if I was told the truth. Just DON'T take your estate agent's word. It may be very dangerous. Do your own research.

I can go on and on and on. These are only a few of the landlord mistakes that I made in my property investing journey. I have grown from each of them and forward I move.

Read More

Monthly Spending and Budget Report-March 2013

To those new in this blog, This is my personal finance journal where I track my monthly spending. My goal for 2013 is to spend 60% and invest 40% of our income in order for me (and hubby) to retire comfortably in our early 40s.

I am very busy with the renovations of one rental unit, hence the silence. This is very costly but a story for the next post. How amazing is it that we lived on a mere 20% of our income in February. And yes we did double that to spending 40% of our income in March. But whats great is that we are still below our target budget of 60% spending and 40% investing. I am quite impressed with us, especially given the fact that we traveled a bit.

Our March 2013 monthly spending and budget report:

INCOME	MAR'13	FEB'13	NOTES
Real Estate	17%	13%	This is nicely toned down. I love it. 25% wouldn't be bad.
Personal Income	82%	72%	We are working on growing other income streams to bring this lower and thus diversify risk.
Interest/ Dividends	1%	1%	Our emergency fund has been reduced. Interest will be low. But we expect dividends to fill the gap..
Online Income	0%	14%	I received a small cheque and deposited it last week. It takes about 6 weeks to be cleared.
Other	0%	0%

One thing that makes me unhappy is that the interest on my Emergency Fund is 4.65%, which is below the inflation rate. I took some money to the stocks in January.

SPENDING	MAR	FEB	NOTES
Real Estate	10%	7%	Wish this would stay his low a contribution to total income.
Transportation	0%	1%	We live closer to Mr's work and I hardly ever drive.
Online	2%	1%	Laptop was fixed
Internet/ Phones	1%	1%
Consumer	10%	3%	Mainly food
Credit Card, Cash & Fees	7%	4%	We used the Mr's credit card and paid it off over 50 days spread.
Giving	3%	2%	This should be at around 10-12%. It will even out during the scholarship payment months.
Life Insurance	1%	1%	Fixed
Net Income (Left to Invest)	61%	80%	We didn't pay most of it to our homeloan like we usually do. We are using it to revamp one rental unit to hopefully get a decent rental. Thats one month delay in our mortgage pay-up plan. I no longer top my Just Invest (Nedbank) interest up.

We lived on just below 40% of our income in March (comparing to 20% in February). Our Net Worth grew by a tiny margin. Thanks to the misbehaving JSE. Being a newbie in stocks doesn't help either.

TRACKING 2013 GOAL PROGRESS

1. MAIN GOAL: net worth growth by at least 25%.-- 7.8% so far.
2. BUDGETING: invest at least 40% of income.-- 75% so far.  
3. EMERGENCY FUND: 3 months worth of living expenses.-- DONE.
4. GIVING: give of more than 10% of income.--5% so far.
5. REAL ESTATE: Construct at least 4 flats/ increase the rental income by 30% .-- not yet.
6. MORTGAGE: Pay up our home .-- not yet.
7. STOCKS AND DIVIDENDS: Get at least R12,000 in dividends.-- not yet.
8. EXTRA INCOME: Online income to R8000 per month by December 2013.-- +/-R3500 January.

Read More

Monthly Spending and Budget Report-February 2013

To those new in this blog, This is my personal finance journal where I track my monthly spending. My goal for 2013 is to spend 60% and invest 40% of our income in order for me (and hubby) to retire comfortably in our early 40s.

Do you remember how we lived on 38% of our income in January and thought it cant possibly get any better? It did. Its an artificial jump due to the income I received for my tiny online business.

Our February 2013 monthly spending and budget report:

INCOME	FEB'13	JAN'12	NOTES
Real Estate	13%	17%	This is nicely toned down. I love it. 25% wouldn't be bad.
Personal Income	72%	82%	This is a new category.
Interest/ Dividends	1%	1%	Our emergency fund has been reduced. Interest will be low. But we expect dividends to fill the gap..
Online Income	14%	0.3%	I will get three months worth this month. I received a fat cheque and deposited it in January.It takes about 6 weeks to be cleared, I was told.
Other	0%	0%

One thing that makes me unhappy is that the interest on my Emergency Fund is 4.65%, which is below the inflation rate. I took some money to the stocks in January.

SPENDING	FEB	JAN	NOTES
Real Estate	7%	13%	Wish this would stay his low a contribution to total income.
Transportation	1%	1%	We live closer to Mr's work and I hardly ever drive.
Online	1%	0%	Laptop was fixed
Internet/ Phones	1%	0.4%
Consumer	3%	10%	Mainly food and clothing
Credit Card, Cash & Fees	4%	6%	We used the Mr's credit card and paid it off over 50 days spread.
Giving	2%	10%	This should be at around 10-12%. It will even out during the scholarship payment months.
Life Insurance	1%	1%	Fixed
Net Income (Left to Invest)	80%	62%	We paid most of it to our homeloan and some to top my stocks. Our debt-free days are fast approaching. I no longer top my Just Invest (Nedbank) interest up.

We lived on 20% of our income in February (comparing to 38% in January). Our Net Worth grew so so well again. This growth is from various sources. The unit trusts did quite well and so did the general JSE. I wish we would do this well throughout the year to be sure to hit our goal of R1M net worth growth by year end.

TRACKING 2013 GOAL PROGRESS

1. MAIN GOAL: net worth growth by at least 25%.-- 7% so far.
2. BUDGETING: invest at least 40% of income.-- 71% so far.  
3. EMERGENCY FUND: 3 months worth of living expenses.-- DONE.
4. GIVING: give of more than 10% of income.--6% so far.
5. REAL ESTATE: Construct at least 4 flats/ increase the rental income by 30% .-- not yet.
6. MORTGAGE: Pay up our home .-- not yet.
7. STOCKS AND DIVIDENDS: Get at least R12,000 in dividends.-- not yet.
8. EXTRA INCOME: Online income to R8000 per month by December 2013.-- +/-R3500 January.

Read More

FULL TITLE VERSUS SECTIONAL TITLE

My personal preference on investing in full title versus sectional title schemes. Don't worry, this is not a long lecture on the Sectional Titles Act. Its just more and more rant by myself on how investing in a sectional title scheme can be a bummer. And the few property investments we have are townhouses and flats. Meaning, I have been in a slight irritation for a while. From other occupants blocking the garage of my tenants, to penalties for my tenant's barking dogs, to levies that are sometimes out of hand... you name it. But benefits are undoubtedly there. The huge one being pooled resources for odds and ends like security.

What irritates me the most is home owners not taking care of their investments. Some tend to just collect rental income and never participate in any of the decision making, nor monitor the dealings of their tenants. This obviously leads to various problems for other owners. Overcrowding of units is but one. In one block of flats the water usage is just beyond acceptable levels. And the trustees started panicking and throwing the decision making at us as suggested by the law.

Section 39(1) of the Sectional Titles Act, 1986:

“The functions and powers of the body corporate shall, subject to the provisions of this Act, the rules and any restriction imposed or direction given at a general meeting of the owners of sections, be performed and exercised by the trustees of the body corporate holding office in terms of the rules.” 

This Section gives the members of the Body Corporate some powers to put some restrictions on the Trustees. This is especially handy on budgetary matters. So the admin company issues an email for us to vote for or against water being a responsibility of an individual owner, instead of the HOA. I must add that I'm one of a few owners with a garden and therefore my tenants could be using a tad bit more water than the rest of the people. Here is their suggestion:

"RH BODY CORPORATE – WATER USAGE TO BE BILLED AGAINST THE OWNERS ACCOUNT

The following has reference to the above mentioned and also to the instruction in terms of Section 39(1) placed on the Trustees at the Annual General Meeting held on the 21st of February 2013. Instruction was placed on the Trustees that they must implement the payments of water usages by each unit to be paid by the owner of the unit. The owners can then keep their tenants liable for this usage of water. The main reason for this instruction placed on the Trustees was to save money on the monthly Council Water Account, combat overcrowding of units and also to have a possible decrease in monthly levies. Water meters are already installed at the units, but some meters need maintenance... With reference to the above mentioned we need to have a majority vote from the owners to proceed."

The questions I'm beginning to ask myself are:
Is this whole real estate investing business worth it?
My response is always YES because I wouldn’t have managed the little I managed without property and the power of leverage. I started with NOTHING, zilch and “nothing” wouldn’t have helped me grow any other form of investment. If I were a trust baby with some small fortune stashed away by my parents and grandparents elsewhere, I may not have started with property. But at the moment, even with all the risks and hassles, I still choose to have a bit of real estate exposure in my portfolio. I think this started as a survival technique but is now some sort of passion. With the small growth I achieved over a decade plus, I feel I can enjoy looking at shaking my property portfolio by looking at options like commercial vs residential vs industrial or full title versus sectional title properties.

Should I invest in Sectional Title Schemes or just slide towards Full Title more?
My response depends on a number of variables. For starters, buying in a sectional title scheme can be money saving. That is if everyone in the Home Owners Association is responsible and the tragedy of the commons doesn't exist. Which is impossible. People like free-riding. In a perfect world, a sectional title would mean some risk diversification as one shares the risk with fellow home owners. But it also means increased risk from the decisions taken by other investors. And I have seen over the years, investors caring less and less about their property investments. Sectional title schemes that are well run and looked after seem to be the ones with the majority of occupants being the owners themselves. When the majority is tenants, owners tend to keep their distance from taking responsibility and taking decisions.

On the  other hand a multifamily investment within a full title property can be costly to buy or develop. I am a small investor in the mercies of the banks for the most part. But I am so fed up by the way landlords in some sectional title schemes behave. Failure to attend general meetings is the biggest problem. And that leads to them not filtering the decisions taken through to their tenants and failing to follow up on critical issues. This is the reason we decided to start looking at the multiple family properties that we can afford. We are looking at the student accommodation or accommodation for young professionals as investments of choice. I have identified a few possibilities already. We will also consider selling a couple of problematic townhouses/ flats soon.

That way we'll carry the full risk and deal with stuff as it happens. Its not going to be easy but life is never easy. Even with a property manager, I imagine that I will still stress. Theres security, dealing with the municipality, setting and implementing tenant rules, etc.

 Full title versus sectional title - Where would you rather invest?

Read More

MY LEVY INCREASES

Before I dwell on my increasing levies and property cost inflation, let me be a bit personal. My decision to keep track of both my and Mr’s financial comings and goings is proving to be a pain. That’s the reason my reports are almost always late. We have a very different way of handling administrative stuff. We never do the joint accounts and things like that that other couples do. But we know exactly where each other’s income goes, and it works like a dream. Except for when I have to track his transactions, like I do mine. In time I will get an easier way to do all this.

I’ve also been a bit scarce because of the plans I am working on for the medium term. An expansion of my tiny online business is in the cards. So is student or young professional accommodation. I just don’t have much to say about the latter, as it’s still early days. I will draft a separate blog post later today on these.

Today is a small rant day. Prices of everything are just climbing up high all of a sudden. I am in shock at how property costs are climbing up. And, especially because I can’t inflate the rental at the same pace percentage-wise. I take pride in charging slightly below going rates in rentals to retain my great tenants. So these hikes in property costs are pinching a bit deeper than the surface for me. But I’m not complaining, I have it far easier than most people. And I am grateful and try to pay it forward in many ways by making someone’s life easier through setting my tiny scholarship programme and charity work.

February seemed to be the month full of such bad news. This is one of the letters I received:

“LEVIES
The Directors discussed the budget of the HOA in detail and presented it to the Annual General Meeting on 14 November 2012. The budget was approved by the meeting.
The levies as from 1 March 2013 will increase from R650.00 per month to R765.00 per month”

Did you notice that the levies increased by 18%. I just stopped myself from making a big fool of myself by complaining because in July last year we had the most exciting letter that:
“During the recent meeting of the Trustees, the budget of the HOA was discussed in detail. It gives great pleasure to announce that the Trustees resolved to decrease the levies from 1 July 2012 as follows… “ 

I went ahead and wrote about my shock here... Its true that what goes down will eventually go up. In real terms we had a reduction in levies as the current increase is a mere R115 in comparison to the R136 drop we enjoyed in the large part of the past financial year. Sometimes I feel these decisions are taken by people looking at their personal pockets…JOKING.

My point with all this yada-yada is that, when your property costs go down, don’t be short sighted about rental rates. Continue to evaluate the market to see the reasonable rental rates and increase (reduce) rentals accordingly. Don’t be like me and be merry, and think you will just look at it the following year. Then you get slapped by 18% increase in costs, which you can’t share with your tenant. In my defense though, my tenant agreed to pay a little more with the costly security measures I put in place last year. I wouldn’t increase again, even though my neighbours’ tenants pay a lot more. I like to retain a happy tenant and avoid a costly high tenant turnover.

Hope your passive income from investments is going great, or your debts are dying a fast death.

Read More

REAL COST OF CREDIT CARDS

A sad reality is that most holders don't even know what the real cost of credit cards are. Some have an idea but don't think much of the amount they pay to rent the card. I don't have a credit card because I don't have a real need for it. I have loyalty cards and consumer store cards that are interest free for 6 months and have no monthly fees. I feel a credit card is too expensive to own. I am talking about the monthly charges and not interest here. The Mr got a call from FNB offering him a credit card just the other day. Off course they mentioned the nice eBucks rewards, which are undoubtedly amazing. The quote came back with the detailed figures, lets take a look:

the real cost of credit cards

Monthly fee of R50 for his card,
R11.25 per month for an extra card for me,
Mr and my petrol card: R11.25 X 2,
Total charges per month R83.75
That's a hefty R1005 per year without a possible interest.
Say for interest sake you miss the payments of this fee and your bank charges you 20% per annum interest rate (it may be more than 20%).  In that case you would be billed R1092.57 after 12 months.

This is before you even swipe the thing. I know, most of people are thinking that R83 is nothing to write a blog post about. I also understand that those lovely people live in the "real" world of wasting money on a daily basis. R83 is a well put together meal on a table in an orphanage for all kids. It is also a good chunk of money if stashed in a unit trust or index fund. Lets say you decide to stash R83 per month in your index fund or in stocks and rake a good 12% per annum for 10 years. You will close with R19,093.21 in the 10 years period, with R9,133.21 of it earned in interest. That is if the monthly contribution is not increased yearly. This R9,133.21 is what your credit card is actually costing you in fees. Except, its higher because the fees go up annually. Shouldn't the real cost of credit cards in South Africa scare you? It probably should.

Off course the Mr said "Thanks but no thanks". He is with a free Virgin Money credit card. Any kind of a fee will interfere with our goals to give to the less privileged, pay up our mortgage, buy the next car cash, and grow our net worth. So mister credit card, thanks but no thanks we'll pass.

Read More

Monthly Spending and Budget Report-January 2013

To those new in this blog, I track my spending every month. My goal for 2013 is to spend 60% and invest 40% of our income in order for me (and hubby) to retire comfortably in our early 40s.

I am so excited about 2013. I now track the whole household spending. I also reduced our target to investing 40% of our income. I think we can do far better but we have a HUGE relocation that we need to embark on around mid year. Getting into the new house, painting, fixing, renovating, etc. 40 % is not bad too.
Do you remember how taxing December was, with close to R40k gobbled by my small online business?

Our January 2013 monthly spending and budget report:

INCOME	JAN'13	DEC'12	NOTES
Real Estate	17%	32%	This is nicely toned down. I love it. 25% wouldn't be bad.
Salary	82%	62%	This is a new category.
Interest/ Dividends	1%	5%	Our emergency fund has been reduced. Interest will be low. But we expect dividends to fill the gap..
Online Income	0.3%	0%	I will get three months worth this month. I received a fat cheque and deposited it in January.It takes about 6 weeks to be cleared, I was told.
Other	0%	0%

One thing that makes me unhappy is that the interest on my Emergency Fund is 4.65%, which is below the inflation rate. I took some money to the stocks in January.

SPENDING	JAN	DEC	NOTES
Real Estate	13%	12%
Transportation	1%	-%
Online	0%	65%
Internet/ Phones	0.4%	1%
Consumer	10%	2%	We had one of those expensive mini holidays.
Withdrawals&Fees	6%	0%
Giving	10%	18%	This should be at around 10-12%.
RA, Unit Trusts, Investments	3%	5%	Fixed for unit trusts and the rest of small investments. Some of which I regret.
Net Income (Left to Invest)	62%	-2%	Great start, 62% not spent!!! We paid all of it to our homeloan. Our debt-free days are fast approaching. I no longer top my Just Invest (Nedbank) interest up.

We lived on 38% of our income in January (comparing to 102% in December). Our Net Worth grew by about R105K in January. I wish this was sustainable. The unit trusts did quite well and so did the general JSE. If R105K was our average, we would be sure to hit our R1M net worth growth by year end.

TRACKING 2013 GOAL PROGRESS

1. MAIN GOAL: net worth grown by at least 25%.-- 2% January.
2. BUDGETING: invest at least 40% of income.-- 62% January.  
3. EMERGENCY FUND: 3 months worth of living expenses.-- DONE.
4. GIVING: give of more than 10% of income.--DONE.
5. REAL ESTATE: Construct at least 4 flats/ increase the rental income by 30% .-- not yet.
6. MORTGAGE: Pay up our home .-- not yet.
7. STOCKS AND DIVIDENDS: Get at least R12,000 in dividends.-- not yet.
8. EXTRA INCOME: Online income to R8000 per month by December 2013.-- +/-R4500 January.

Read More

FOCUS ON WHAT YOU CAN CONTROL

The key to achieving personal finance goals is keeping the focus on what you can control. A cloud of temptation to set a bar high and getting a burnout along the way lingers on many newbies. Its not bad  being excited about taking charge of our finances, as long as we bear our limitations in mind.

Focus on What you can Control - image

In my previous post I documented My main goal this year as growing our net worth by 25%. I cant control anything about this goal as is. However, I can break it down into smaller parts that I can measure. The first and most important control piece is LIVING BELOW MY MEANS. I can fully control my expenditure and that's where my focus should be.

Most people shiver at the mention of the word "BUDGET". I, myself never sit down and plan my expenditure prior to the actual shopping trips. I am too lazy to do that. I track every cent I spend though. I no longer find that tedious. Keyword is "no longer" because it was not always easy to track and record every cent I spend. I no longer find it overwhelming, as I simplified my expenditure tracking system over the years. I also do this the old fashion excel spreadsheet way. I avoid withdrawing and using cash so as to keep the records in my internet banking statement. That way I don't have to keep individual receipts.

When I do withdraw, I never bother to record what I used cash for. I usually have some of that cash roll over to the following month when I actually do withdraw. I then use it for buying an odd burger, juice, tea, etc. My expenditure tracking system keeps me on my toes. I know that whatever I spend on is finally making its way to my spreadsheet and seeing it in black and white is always sure to raise my brow. When I do get to have bad months, like school fees months,  I am sure to have a much better spend month next. Its always in my head to improve after a bad month. In December I had to spend a lot of money to help boost my online business. It felt so bad to spend 102% of my income. This was followed by our holiday in January. And holiday months are usually the worst. But my December's overspend was singing a loud hum in my mind that I passed all the bold red "SALE" signs in the malls and focused on stationery shops. Budgeting can only make you better at this.

See how the BUDGET ties into our main goal of growing the net worth by at least 25 percent?
We will strive to live on at most 60% of our combined income. 40% will be invested to make more money. I know, 60% sounds high (or is it just me). All expenses on the rental properties, like rates, taxes, management and maintenance are part of our expenditure. I should look at keeping that separate in order to account for my own residential property separately. I might just do that. This 60:40 goal is easier to measure than the huge goal of building on net worth. Always remember to focus on what you can control and measure whilst you keep your overall goal in mind. That huge goal is just a driver to help you intensify on what you are measuring.

2013 is still as young as dawn. Its time to make a clean start. If you have some debt, focus on paying it up, one credit card at a time. Its easier than you think. It may be overwhelming at first but you get to find your rhythm. And when you do, there's no stopping you.

I wish you well this year. Whatever your goal. Just focus on what you can control.

Read More