Five Cents Ten Cents

It’s the end of the year again and time to reflect on what Panzer has achieved (or not) during the last 364 days of 2009 in his journey towards financial freedom.

Living within your means

Ever since Panzer started his Excel expenses worksheet. He has recorded to around 98% accuracy most of his expenditures. His approach has been to take a cash flow approach, i.e. he records when cash goes out rather when expenses are accrued for simplicity sake and also to give a gauge of how much cash (life force) flows in and out of his life.

The net result is that he has managed to continue to live within his means by ensuring that on most months i.e. 11 out of 12 he will have cash savings on top of CPF contributions.

Panzer hasn’t drastically changed his lifestyle and continues to focus on meeting needs first and satisfying wants later. His approach in spending 10%-20% of windfall gains or passive income on small luxuries gives him the impetus to continue on this path of living within his means.

Saving and investing

Arising from his spending below income, Panzer was able to generally able to save some money each month and slowly build up his investible capital. He was fortunate to realise some small losses only and was able to free up his capital during the run-up since March 2009 to date and manage to hit 10% return on investible capital. This refers to realised capital gains / losses from share trading, dividends, interest and blogging income.

He was fortunate because he managed to catch some of the upward correction in Singapore stock market to do so. Next year would be more challenging as he has liquidated a fair portion of his portion in anticipation of purchasing of property for residential use.

Panzer’s returns of 10% were contributed by realised capital gains (55%), dividends (34%), interest (1%) and blogging (10%). This showed him how dismal interest rates have been resulting in poor returns if he had not actively managed or deployed his capital and let his money rot in fixed deposits.

It was interesting to see blogging income contributing to 10% of total investment income though technically blogging requires slightly more effort though it gets easier over time.

Growing your means

Panzer’s career continues in his practice of internal audit and it has allowed him to develop a decent career. He believes he can continue in this field for the next 25-30 years and build up his retirement savings as CPF would continue mainly to be locked up in home equity.

He learnt now more to manage people in his career and going forward, his managerial skills would come in useful on top of his skills as a Certified Internal Auditor, Certified Public Accountant (non-practising).

Protecting your means

Panzer has not done anything significant as he is already covered by whole life policies, investment linked policy (which he knows is not the best solution and intends to let go before mortality charges get too high) as well as hospitalisation and surgical insurance.

Health is the next big focus as Panzer realises he must continue to spend time exercising, eating healthily and managing stress to keep himself in good condition to last the next 30 years of working life.

Personal Developments

Panzer’s daughter is coming to 22 months and she is teaching Panzer each day about being alive, being curious about the world and having fun no matter what.

He realises that family is critical to having a happy life and would continue to remember not to neglect family just to achieve financial freedom as it would have little meaning without family.

Friends of Panzer have also helped him let off steam and counselled him when he ran into challenges in life. He will continue to develop the close bonds with his ex-colleagues or “gang” as they are a source of inspiration and support throughout life.

The key reflection that Panzer has for 2010 after looking back at 2009 is to be ready for CHANGE.

Change is inevitable but how we react to it is the experience we gain from managing the challenges of life.

How was your 2009 and what are your thoughts for 2010?

Be well and prosper.