Dirty Dinar

Another 3 month gap and I’m amazed at what happened with my finances! I was right not to give up on 2008! My finances are still a mess because I haven’t been keeping track of my expenses but I’ve bounced back somewhat. I quit my job after receiving a generous offer from another company and it’s helped me recover from my financial misteps, but I still have some months to go until I’m in the green again.

Here’s a run-down on my new earnings:

• I make KWD 1425 - KWD 1200 of which is my base salary and the rest are benefits granted by the company.
• I also get a supplementary allowance of KWD 310 from the government (Thank you to the last Parliament! Now let’s see if it keeps up with the inflation you’ve accelerated!).
• My deductions include my car loan and Social Insurance, which brings my total earnings for the month to  KWD 1411.867.

If I stick to my old budget I should be able to save KWD 1000 a month but I have to factor in my new financial state. I’ve accumulated debt since my old budget, with both a car loan and credit card debt. My car loan will take several years to pay off and in the months when I first took out my car loan I used my credit card a lot, but that should take a few months to pay off.

To counter the debt, I opened a trading account with KWD 560 and have invested in one stock which has gone up since I’ve bought the shares.

Life is a mixed bag of blessings. I’m glad my finances are back on track but I need to return to my weekly budget to better handle my money. I get paid by the end of this week and I’ll have to take stock of every fils I have to my name.

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!

I got some bad news on Tuesday. It’s going to destroy my saving goals and put me in debt. I’ve been agonizing over the issue but figured I should share and see if anyone has some good advice for me.

I’ve mentioned from my first post that my car is in my father’s name. I’ve been driving this car for the past four years. Although I am the one who drives it, and usually think of it as my car, the reality is that it’s his car. My father had originally purchased it to be our driver’s car and it was - for a year or so. But we had to let our driver go and that meant we had an extra car in our garage. It happened around the time I was looking for a car to buy and my father persuaded me to avoid taking on debt and use the car we already had.

Now my father wants to sell the car I drive. He took this decision for a number of reasons and he says it’s about time that I got my own car. This is where my emotions and logic start sending conflicting signals. I have KWD 968 saved up. Other than that amount, I haven’t got anything to pay towards a downpayment unless my father helps me out. I’m not sure how I feel about that. We’ve discussed using some of the money from the sale of the car towards my downpayment. It will be taken as an interest-free loan that I will have to repay. I will need to get financing in order to buy a car so any money would be a help even though the whole purpose of this whole blog thing is to quit depending on my parents and manage my own finances.

He’s willing to share his car (the one he uses daily, not the one he’s selling) until I save up enough money to make a downpayment. That means the second I reach my emergency fund goal that 3,000 is going to be spent on the car. Not only will I lose my emergency fund but I will also have to go into debt. The degree of debt will depend on what car I choose to buy. I’ve spent the past two days thinking about this and it’s made me realize a lot of things about myself that I wasn’t aware of.

1. I have an aversion to buying a second-hand car. I don’t like the idea of someone having used the car before me. That’s a general hangup I have about all things second-hand, whether it’s clothes or cars.
2. If I’m going into debt I would rather buy a car that’s from a reputable company and with great service.
3. I’m superficial when it comes to cars. I want to drive a car equal to the standard of what I’ve been driving all those years. I don’t want to downgrade. I would rather go into higher debt than buy an affordable Honda or Toyota. I know it’s crazy but I’m thinking if I do go into debt why not go into debt for a car that’s worth it? I’d rather have a car that I’ll appreciate and enjoy for years to come even if I will need to pay off the balance for 4 years.

I have to start visiting showrooms and see what type of car I can afford. Then I’ll have to figure out how much I will have available towards the downpayment and how much I’ll have to take out on a loan. The next step would be to talk to my bank or check out other financing options.

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’m excited that people are beginning to leave comments on my blog! I found two fantastic aggregators. One is the Personal Finance Aggregator and the other is the Kuwait Blogs Aggregator. I have been trying to follow blogs in both aggregators and leaving comments whenever I can. Now people are beginning to share their advice with me and it’s a wonderful feeling!

Bader left me a comment on my Monitoring my Progress post saying,

Hope you reach your goals even sooner, I have a system I’ve been using for a while now, each salary I get, I divide it as follows, 40% of it goes to my savings, 30% is divided up into a daily allowance, and the other 30% is used for bills and anything I plan to buy like cloths, a cell phone i’ve wanted, etc. Now, lets say that my daily allowance is for example 20kd, its not everyday that someone would spend 20 kd, sometimes more and sometimes less, it realy depends on what day it is. If you spend less than your allowance on any given day, you add that to your next days allowance, so if you spent 10kd today, tomorrow you would have 30kd and so on,because on work days, you might not spend much but on your off days you may spend way over your daily allowance but you have the remaining allowance from days that you didnt finish your allowance. Sorry for writing so much, Im really bad at explaining things Also setting goals, like ur doing, is also necessary. Hope this helps. All in all, I wish you the very best.

I love reading on how people budget and try to pay off their debt or increase their savings. Thank you, Bader, for your input.

I decided to take Bader’s budget and apply it to my own total pay of KWD 1163. The current budget I have for myself is to limit myself by spending only 663 per month. I will try to deal with cash only by withdrawing 100 at the beginning of every week and leaving 163 in my account for emergencies or extra expenditures (birthdays, etc.). The remaining 500 from my salary will go towards my savings.

The table below demonstrates my money breakdown according to Bader’s 40-30-30 % rule and my own budget.

As you can see from the table, we nearly have the same percentages allocated to Savings, Daily Allowances and Miscellaneous expenses. The one that is drastically different is the miscellaneous category. Bader budgets 30% of his salary on bills and purchases. I choose to keep mine on emergency standby in case I have obligations during the week like birthdays or surprise expenses.

Now I’m curious about how others out there save their money. Do you deduct a specific amount or a percentage of your salary?

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 3-day weekend was bad for my purse. I spent a total of KWD 74.480 from both my cash and bank account. I actually spent more but was reimbursed 50 in cash from my friends.

Losing my Way

I lost track of my expenses, which was a major slip-up. The only receipts I have in my purse are 7.640 for groceries and 9.500 for a cake. I need a better system of monitoring what I’m spending my funds on so I will have to hold on to my receipts, something I’m not used to for ordinary expenses. Usually, I keep my receipts after shopping trips for clothes in case I need to return anything.

Cash in Hand

Because I was reimbursed 50 in cash by my friends, my cash for this week starts out at 68.500 again, just like last week’s Purse Watch. I have to make an effort to stretch it out as much as I possibly can.

Account Balance

There’s 92.980 left in my account that I’m allowed to spend for the rest of the month. I have to be more diligent about every fils I spend from this point on in order to avoid dipping into my savings.

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.

Three days ago I had KWD 68.500 in cash. Today I opened my purse to find 54 in cash remaining. Where did the 14.500 go?

• Parking - 1.000
• Gas - 5.000
• Lunch at Work - 5.500
• Dinner Out - 3.000

Parking
This is an expense that I can’t do anything about. Tomorrow is a day off so I will be saving 0.500 on parking then.

Gas
Again, this is an expense that I can’t do anything about. The price of gas is what it is and I needed a full tank to get me through this week and the next.

Lunch at Work
Of the KWD 5, only 2.300 was the cost of my food. I realize that I have to stop treating my coworker to lunch until I have better control over my finances.

Dinner Out
My dinner cost KWD 2.750 but I included a 0.250 tip. My average dinner out is around the KWD 7 mark, so spending 3 was actually a bargain for me. It helped that we were at a cafe and that I only had a salad.

Goals

Over the weekend I plan on spending time at home with family and I have been invited to my friend’s house for lunch. That will somewhat curb my expenses. However, I have a birthday that I will need to chip in to buy a birthday cake for and present so my good intentions may come to nothing.

I’ve been reading a lot of personal finance blogs and saw that many people mention their salary in terms of annual earnings. For example, “I make 40K+”. I’ve never heard that said here in Kuwait.

Companies pay a weekly or monthly salary. I haven’t come across any employer that pays an hourly rate. Employers pay a base fee and sometimes you’re entitled to government allowance or various company allowances (housing, relationship, car, etc.). Not all companies have a bonus scheme and I have never heard of anyone getting a signing bonus. When people ask how much you make they mean per month instead of your annual earnings.

I was curious how I ranked compared to the salaries in the United States so I tried to work out how much I make in US dollars. To calculate my earnings I took today’s currency rate of 1 KWD = 3.663004 USD.

My monthly salary of KWD 923.117 over twelve months comes to KWD 11,076. When I converted that amount to dollars I found out that I make $40,575.

However, I get a government supplement (KWD 240) in addition to my salary each month which bumps my total up to KWD 13,956 annually.

That pushes my total earnings to $51,126. The difference is $10,550! That’s not a bad chunk of change.

Kuwait doesn’t tax individuals (yet!) and the company I work at does not pay out bonuses so that $51,126 is the full amount I get to take home.

Now some problems with my example is that I don’t get taxed and I live under my parent’s roof. That skews my comparison to those living in the United States. I have more disposable income. That’s a good thing but doesn’t make for a tidy comparison.

Of course it doesn’t help my case that I’ve continuously lived beyond my means. I have no idea if I’m making what I should be making in my job position with my experience. I will have to continue my research into that.