RSS Feeds: Personal Budgeting and Making Ends Meet
While I'm going to share some of my personal budgeting details with you, you can take my experience for what it's worth. I've been living in the Philippines for more than three years, so my monthly budget is fairly stable. The biggest reason is that I don't owe anyone anything — I have no credit payments whatsoever.
Military Retirement Pension
I get a monthly pension, courtesy of the US government, for my 20 years of active service plus 10 years of reserve service with the military. I've been receiving it since 1998, when I was released from active duty. It's more $1,400 per month now, but I don't exactly know how much is it because I don't check the deposit amounts.
While I was living in the US, it paid my mortgage and that's about it. As high as some mortgage payments are now, even for modest homes, it probably wouldn't be enough.
The Luck of the Draw
I was extremely lucky when I sold my house in 2006, while the housing prices were still inflated. I feel sorry for the people who got hosed when the prices went back down to where they should have been in the first place. Nevertheless, I considered it a windfall.
You see, I bought my house in 1994 for a little over $100,000 including all of the fees, taxes and other miscellaneous closing costs. The base price was a mere $89,000 and even with upgrades up front, it still didn't reach $95,000. The closing costs nickel and dimed me to death. Somewhere along the line, I refinanced the house to change it from a variable rate mortgage to a fixed rate mortgage, but I didn't extract any cash from the equity.
Towards the end of 2005, I did a quick refinance again (with zero percent interest good for three years, I might add) for the specific purpose of extracting equity. I and my wife had already planned to move to the Philippines, so we needed to make sure all of our credit loans were paid off and the house was spruced up. It turned out that we used all of the money because some our appliances decided to quit on us at about the same time. We painted the interior and exterior, replaced the wall-to-wall carpeting, replaced linoleum with ceramic tile (even in the three bathrooms) and other miscellaneous chores.
When we sold the house, we owed about $142,000, which included the equity extraction (which was obviously more than we started out owing). The sale of the house was for an incredible amount of $288,000. Do the math. Even after the realtor got his cut, we still had over $100,000 remaining. When we moved to the Philippines in 2006, we built our house and bought a new car with that money. Yes, we have a 2006 Toyota Corolla Altis sitting in the driveway, bought and paid for, with only automotive registration renewal and insurance to worry about.
The Monthly Budget
You'd be surprised at how little you need to live on when you don't have to make house or rent payments, when you don't have one or more car payments to deal with, and live day to day without using credit.
The amount I receive for my pension every month is more than enough. My monthly bills, which include electricity, water, cable TV, my telephone land line (required for DSL) and DSL, all cost around $180 per month. Of course, the cost will go up when I finally get one or more air conditioners along with a washing machine and clothes dryer.
Right now, I only spend abut $200 per month on groceries (my wife isn't here, or it would probably be double that amount). Other incidental expenses may add up to another $200. I also support two brothers-in-law and their families due to an incident which happened in 2001, but I won't get into that right now. My total monthly expenses still don't add up to more than $1000 (in US dollars).
So… I have money in savings most of the time, taking it out only when needed for improvements to the house and other specific things. If I had to pay rent or make a monthly car payment, I probably would never have any money in savings if it wasn't for the extra money that Google sees fit to keep depositing in my account every month.
If you're living beyond your means, then you can't do anything remotely like what I've done. I'm not talking about moving. I'm talking about keeping a budget and sticking to it so you can live without credit. I know it's hard to do, but it can be done. I am living proof.
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Mmmmm… Stuff like that would makes me pretty nervous, with a little of your sticking to it, you could have had your house payed off long before you are 60. Miliary retirement, social security and making a little on the side would make for a pretty good life,with no house payment. Dumping your money into property in a very unstable country is damm risky. What will you fall back on if you have to retrograde out of there? Seems you would have a rough road to go if you have to return to the states. Also, if you haven,t figured it out yet a new car soon becomes an old one, so you can write that baby off.
I'm an optimist, not a pessimist. The cup is half full. Unstable is a matter of perspective — the US isn't as stable as people are led to believe. The recession proves it. What good is social security if doesn't exist 20 years from now?
I believe in making my own future, not being dragged into it by circumstances. My online endeavors will do more for my future than being in any one place, including the Philippines. And as for dumping my money here… better here than some other places.
Truth be told you have accomplished more than most people ever do. Living debt free is when the bank starts paying you for your money vs the other way around. That is one of the reasons the rich get richer. Also amazing timing in selling your house I did much the same with my house in the early spring of 2007. In the upper Midwest housing prices didn't get as crazy as other parts of the US. But non the less it was a great move. A lot can be learned from the actions you took.
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You want to know something, Josh? Anyone could have done what I did. The problem is that most people try to wait for things to happen to them instead of making them happen.
You are absolutely correct. People that believe things happen to them in my opinion are sadly mistaken. If you didn't get yourself into your current situation how in the world are you going to get yourself out of it. Sitting idly by "waiting" for things to happen is a big mistake. Cheers.
My last blog: What do you want me to ask Gary Vaynerchuk?
My husband and I were trying to refinance our home mortgage and we found sites to put us at ease during a very scary, and like you said, very overwhelming, first time experience.
Great post! Thanks!
That was a pretty balance budget and you handle it well. Simple lifestyle would be more practical nowadays.
I looked over your site and to my suprise my situation is allmost a mirror to yours.I visited Davao in 2007 with my wife and fell in love with the Philippines.We bought a piece of land on samal island and built a house with the proceeds from my rental house.Now we are wrapping up loose ends in the states for a permenant move to the philippines.Having spent nine months over there while the house was being built i know what to expect.My pension is around 2100 a month.We still own a house in the states,but while it is shut down it cost only 400 a month leaving us with 1700 a month then after paying the help and paying for the education of her siblings we are left with around 1300 a month.But the point is no house payment,no car payment, no house insurence,low car insurence,low land taxes,cost of food low,beer at 36 cents a bottle,a bottle of run a dollar,go to the movies maybe 2 dollars and scuba diving at 13 dollars for the day two dives and on top of that the egg,beer,vegtable and fish vender come by twice a week.Man it aint for everyone but it sure is for me.Jim.
Interesting. I was thinking in living in the Phillies for a little bit on the saved money, maybe even through a mortgage refinance, taking out some money of the equity. How is the country itself though?
Your best bet is to look it up on Wikipedia. The information there is pretty up-to-date and explains it better than I can.
My husband and I were trying to refinance our home mortgage and we found sites to put us at ease during a very scary, and like you said, very overwhelming, first time experience. auto insurance