Dirty Dinar

The title says it all, doesn’t it? I’ll spare you all from reading the post and just declare it.

Okay, first of all, I can’t believe I’ve neglected the blog for 3 months! Time flies when you’re spending money!

The last time I wrote here I was considering jumping into debt. I needed a car and I wasn’t willing to settle for a cheap second-hand car. A lot of you advised me against taking out a loan, others told me to think about car purchases seriously. I honestly had to take time out to figure things out for myself. In the end, I took out a KD 7,000 loan. I know, I know. It hurts but the good thing is that I shopped around for the best interest rates and I took out a loan that still allows me to save. I won’t bore you with all the details now, I’ll save those for another post.

In a nutshell, what’s happened in the last three months:

1. The government announced they were increasing salaries by KD120 per month (this is on top of the KD240 governmental allowance we get in the private sector)
2. I took a loan for KWD 7,000
3. Parliament was dissolved and I’m interested to see if new faces get voted in on May 17th!
4. I have gone on a few business trips that depleted the few savings I had
5. I started researching finance programs that will help me reach my financial goals

I need to update my sidebars. My savings are in a bad state, having been significantly reduced by both the new car and business trips. I have been spending without thinking. I need to get back to my budget! I also have to put down a sidebar counting down the amount until I’m debt-free.

The first quarter of 2008 has not been good to my savings goals. Like I said, my finances are a complete mess, but 2008 isn’t over yet! Now excuse me while I go read your comments and try my best to reply!

As some of you may have noticed my Emergency Fund amount has increased from KWD 668 to 968. I’ve put aside 300 from my January salary towards my savings, which has me 32.3% closer to my goal.

I was originally supposed to set aside 500 from my salary but I decided on a surprise splurge, my hair treatments. They’re going to cost me 200 so I deducted the amount from my Emergency Fund money. If I continue to save up 500 a month until May, I’ll reach my goal in time so I’m not too worried.

With the return of the money I had lent out, my Emergency Fund had more at the end of January than I expected. My goal was to have KWD 500 and I ended with KWD 968. It’s not a bad start to the year.

I’ve added some progress bars to the left to track how I’m doing when it comes to my saving goals. Each bar will constitute the percentage of how much I’ve accumulated and how close I am to reaching my goals.

My first priority is to have a minimum of KWD 3,000 in an Emergency Fund. Yesterday, my friend deposited the 1,000 she owed me into my account and I used the extra funds to pay off my credit card expenses. I put aside 668 towards my Emergency Fund which comes out to be 22.3% of my target. If I stick to my budget I’ll be able to reach my goal by the end of May, a month earlier than I’d anticipated.

My second goal is to save up enough to start investing in the Kuwait Stock Exchange. In the meantime I will have to educate myself or attend seminars on how to invest because I don’t know the first thing about it.

I’m excited about the progress bars because I think they’ll have me stay focused on achieving my saving goals! It’s a stroke of luck that got me to reach 22% so soon!

The Good News

My friend who owes me KWD 1,000 called me and told me that she will deposit the money into my account on Monday.

I’m trying not to get excited over the fact that she is returning back the money so early (or even at all!). She borrowed the cash nearly four and a half months ago and I thought I was never going to see it again.

The Bad News

I have to book a hotel for my business trip next month today because I found a good deal that may not be available by Monday. I’ll have to charge KWD 332.511 on my credit card which means I’ll have a debt again.

I’m hoping my friend does manage to pay me back on Monday. If that happens I can pay off my credit card and have 667.489 remaining which will go towards my Emergency Fund. My company is giving me a per diem while I’m away but I think it only comes to be around 40% of the hotel expense. I will need to use it for transportation and meals so the per diem won’t be money that’s reimbursed back into my savings. It’s a one-time loss that I’ll have to work around.

I’m counting a lot on the good news to offset the bad news.

A good emergency fund can tide you over in times of unemployment for a period of 3 to 6 months. With my base salary of KWD 1000 per month I would need to maintain an emergency fund of KWD 3,000 to 6,000.

Typical advice from financial planners tell you to save at least 10% of your salary. Because I get a government supplement that’s over 20% of my salary I can afford to save a higher amount of money. With an income of 1163 my goal is to save quickly and that’s why I want to save up to 50% of my salary each month until June to have KWD 3,000 in my emergency fund.

My first priority is learning to control my spending habits by establishing a budget. I have KWD 172.149 in my current account. I also have KWD 68.500 in cash and a jarful of loose change. That gives me a total of KWD 240.649 to see me through until the end of the month without having to resort to using my credit card.

After writing up what a typical week is like for me I have determined what expenses I have during the week and what I can trim them down to and still maintain a social lifestyle.

My weekly expenditures are:

• Daily Parking 2.500
• Phone Bill 20 (My average monthly bill ranges from KWD 80-100)
• Lunch at Work 20
• Dinner Out 30
• Salon 20
• Gasoline 5

That brings my total to 97.500. I have not included shopping or miscellaneous expenses such as birthdays, travel, and random trips to the grocery store. I can tighten the hold on my expenses by withdrawing 100 in cash at the beginning of every week and recording every purchase I make. That would still leave me with 163 for emergencies.

Going through my weekly expenditures was an embarrassing exercise to go through, especially because I tried to lower my expenses to the bare minimum that I could survive comfortably on and that was 97.500. I’m going to be budgeting myself to 663 and that is still more than some families make in a month! They manage to pay rent, feed and clothe their children and save yet I have been incapable of saving anything for the past four years. It’s a shameful thing to admit. I really believe Kuwait needs to implement mandatory personal finance courses. Many people are in debt because there is a lack of awareness on how to control your finances.

My emergency fund is the first savings strategy I want to pursue. Kuwait may be sunny most of the year but you never know when that rainy day will come along. Once I reach my minimum goal for my emergency fund I want to continue placing 10% of my salary into it on a monthly basis until it reaches KWD 6,000. The other 40% of my savings will go into another savings account for investing. I have no idea what interest rates there are for savings accounts so I will have to start shopping around for a bank that gives a good rate.