Day 1: The Game Plan

Don't we want them all.

Ahh, 2010 is finally here! I’d been looking forward to it. My beloved and I started the year merrily by having a delicious breakfast and watching the visually fabulous Avatar (did I hear “2-D plot on a 3-D movie”?). It has been a lovely, lovely day.

Now it’s time to get serious. I have planned to make January as a month of review and re-assessment. Some people have done this last month, but I’d rather do it in January as I have the full view of the whole year. Reviewing the past is as crucial as planning the future. As Einstein said, “insanity is doing the same thing over and over again and expecting different results.” If we want to change the future, then we have to acknowledge the past. Here’s the breakdown:

Week 1: Budget and Finance Review

Week 2: Career Review

Week 3: Health and Spiritual Review

Week 4: Relationship Review

Personally, I find the budget and financial review to be easy and enjoyable so that’s why I want to get the ball rolling with it. Budget review will look at how much I have spent last year, what I spent it on and why I spent it.

Mortgage: Increase in interest rate indicates national economy improvement and personal budget battering (thank you RBA). Here’s a few questions to ponder: is my interest rate better than the market rate? What are the fees involved? Is it better to refinance after considering the fees? Fixed rate, variable rate or both? When do I plan to pay this off? How much extra should I add each month to reach that goal?

My review: Our mortgage has been on 50/50 fixed and variable rate due to volatility in economy in the past few years. We’ve also been putting most of our extra money in the mortgage account to offset the interest while still have access to withdraw anytime. There is no fee on the account or for doing any transactions. With current rate of payment, we could pay it off in less than three years. However, with the travelling plan in place, we estimate it will take another five to six years. So far so good, we will leave it as it is.

Mobile Phone: With low cost package,cheap or free phone and disappearing landline telephone, mobile phone has become ubiquitous. There are a few things to consider: what is included in the package? Does it include internet? Are you using internet? What about international calls? How long is the contract? Is it better to upgrade or downgrade?

My review: We have downgraded our mobile phone packages last year and it has been great. Our contract means the carrier will ‘own’ our souls until end of this year. Done!

Transportation: This includes petrol, public transportation and parking. Experts predict the oil price will see more of the upside this year. It seems like the oil companies are quick to increase the price and slow to adjust the price slump with variety of excuses. So, is it worth to keep car or is it the time to switch to public transport? Is there a better parking option?

My review: My car has been an efficient petrol drinker due to its tiny size. The only problem I’m facing is the parking fines. Last year I spent almost $700 in parking fines, that’s more than $58 per month. Unfortunately, there is no permanent parking spot for me so I need to park my car on the street, vulnerable to the prying parking inspectors. This year I will only work for 4 days a week so that reduces the chance of getting fined by 20% (down to $560). And in summer and spring when the weather is friendly, I will take public transport at least twice a week. My target this year is to reduce the parking fines by 40% which is down to $420. Since this will be my main parking cost, I think it’s quite reasonable.

Car Repayment: Sometimes I call this the ‘mistake of youth’. I bought a shiny new convertible car three years ago which was coincidentally around the same time as I earned my first decent income. Long story short, while I still love the feel of autumn wind blowing my hair, I loathe the repayment. Is the car worth the repayment? How much is the fee if you pay it off early? Or better yet, is it better to sell it off and downgrade?

My review: This is probably my biggest financial mistake so far. Yes, I’ve thought a lot about selling it ever since I acquainted myself with commandments of personal finance. However, since my beloved and I are going to travel the world next year, I find it better to sell it later after winter. This way I will keep the normal repayment and pay it off after the sale.

Well, that’s not too bad for the first day. Tomorrow I will review other budget items such as food, groceries, insurance, utility and charity.

How are you doing so far? Are you happy with the way you structure your budget? How would you make the budget better and more efficient?

Cheers.

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