Posted: 26 Dec 2008 12:06 AM CST
Do you enjoy watching movies? I love movies and one of the interesting spaghetti westerns I ever watched was “The Good, The Bad and The Ugly” directed by Sergio Leone. Of course, back then when I watched it, I didn’t know who Clint Eastwood was but it was an entertaining movie nonetheless.
Today’s post is not to discuss the movie, but to talk about Panzer’s own reflections for 2008 in terms of his journey towards financial freedom. Let’s break it down to the three areas. I’ll start with the good bits first.
The Good
1. Fatherhood (different dimension to life!)
2008 was an eventful year. My mini-boss (a.k.a. my daughter) was born in March 2008 and I became a father. Fatherhood is an expensive business if you want the best (or close to it) for your child and I found myself using my medisave for childbirth related medical expenses and also buying big ticket items like my 1.6 litre Suzuki SX4 Sedan as well as baby cot, stroller, high-chair etc.
Infant formula today costs much more than the stuff I used to drink when I was a baby and it’s no surprise the top formulas are sold by pharmaceutical giants. Costs aside, the good part of being a father is that you become less self-centred and begin to look at financial freedom in a different perspective. For instance, my fully-paid home is also a form of insurance that I can leave my daughter and spouse should anything happen to me since they can sell it or rent it out for income if ever anything happens to me.
Having a child changes your perspective about life. You realise it’s not about you only but what you work for is for someone else who will survive you and be your living legacy.
2. Health
Fatherhood made me slim down as the first six months was a period of broken sleep and zombie-like state during daytime. It resulted in me having a better body-mass index now compared to 1-2 years ago. I feel healthier and have less fat around my waist as my pants feel much looser and I don’t eat as much as I used to.
The Bad
1. Reduction in net worth
The global financial crisis must have hit many of us. I was not spared as I saw my equity portfolio decline by 55%. If I had needed this money for living expenses, it would have been a bad hit on my finances. Now I will probably have to bequeath my equity portfolio to my daughter when she turns 21 and in the meantime, collect dividends towards her university education fund.
Paradoxically, the more my equity portfolio and net worth melted, the more I realised how unstable one’s equity portfolio can be in times of global financial turbulence. It started me thinking more on how to build an alternative source of income instead of relying only on earned income from employment.
2. Increase in lifestyle expenses
Having a child increases your expenses. Before you know it, you have to pay childcare fees, foreign maid levy (for the period I had a maid, but now I don’t), higher utilities charges, medical bills for check-ups etc. Despite pay increments, certain months saw expenses exceeding income, a major breach of living within my means! I became more aware of the need to be vigilant against lifestyle inflation.
The Ugly
1. Changes in career
I count myself fortunate that I am employed in a time of economic recession in Singapore. But I was forced by circumstances to change jobs even when my daughter was still young partly due to office politics and personality differences.
2. Obsessing over net worth
During the year, I found myself at some stages being super obsessive in growing my net worth. I kept thinking of ideas to grow my means and rein in expenses that I adopted a scrooge-like mentality. This meant I even tried eating bread for lunch to see if they would save a few dollars. However, I was missing the forest by focussing on the trees. i.e. I was denying much too much and forgetting to enjoy life a little.
Luckily, I got back my perspective after talking to some good friends and also seeing an acquaintance collapse from a heart-attack with no apparent warning and pass away after a few weeks in the intensive care unit. What good is net worth if you’re not around to enjoy it?
Overall Assessment of 2008
2008 was a year of firsts. Fatherhood, global financial crisis, car-ownership. It was also a period of learning. I learnt more about myself as an investor, as a father and as an employee. I learnt to see my journey towards financial freedom in a more balanced light. To keep focussed on achieving it but to also not neglect the little things in life that make each passing day, a joy and a privilege.
Even as we bid farewell to 2008 and welcome 2009, what are your thoughts as we near 31 December 2008?
Share with Panzer the good, bad and ugly bits of 2008 in the comments section.
Be well and prosper.