Saturday, 21 June 2014

Frugality: Nature or Nurture?

There was an interesting debate going around at a friends' gathering recently. Why is it that some people can resist impulsive buys but others just can't help themselves? Why are some people easily "contented" but others feel they need to be "rewarded" regularly with things they like?  Are you born frugal or was it your environment that made you so?

The debate got a little more specific and an interesting exchange followed. Two guys in the group were recounting why they were hooked on buying the latest games.

Half in jest, one went on to explain: he came from a poor family and was always envious of his well-off neighbours who could afford the latest appliances and material things. Unfortunately, his parents couldn't and wouldn't buy for him. Now that he could earn his own keep, it was time to make good what he didn't have.  The other friend countered, saying he was the opposite.  He wished his parents were stricter with him.  Instead, they showered him with toys as a kid and now, it was too late for him to quit. He was hooked!

Two completely different reasons, yet the same result.  Was it nature's fault then that some people were born to be spendthrift? To answer that question, maybe we should examine the question itself: "Frugality: Nature or Nurture?"

I admit, I deliberately phrased the question as such.  Many would think it's probably a combination of both.  Either way, it would make it rather easy for one to "justify" one's own decisions without really taking responsibility for it, wouldnt it?  E.g. "I had no choice: I'm born like this" ("Nature") or "My friends are all buying it!" ("Nurture").

Maybe thinking about it another way would help.  It is down to one's belief system - the sum total of my past experiences and influences and ultimately, what I myself choose to absorb or ignore.

I changed my beliefs after reading many financial books.  I was never a true blue spendthrift but over time, became a lot more aware of how my "happiness" doesn't necessarily increase with every dollar increase in my spending. I realized too that when we buy things (except the bare necessities), it is really with the belief that it will buy us more happiness, more time, a better image, increased self-esteem, or will position us with the "in-crowd".  The list goes on.

Being just more mindful of why we spend money, I then began to think of ways on how not to spend money and yet increase my level of happiness or whatever it is I was seeking. There are indeed many other ways and they don't cost as much as before or some even come free. I began to read books from the library, spend more time doing simple things with the people I love, make our own meals, take walks in the park, exercise, care about my friends more instead of showering them material gifts and well, just making the most of what I already have. I also stayed away from so-called "friends" who only care about what you have, not what you truly are.

I suppose, that's how "contentment" sets in.  Frugality was just a by-product of this belief system.

Perhaps the words of celebrity actress, Keira Knightly, neatly sums it up.  She reportedly gives herself a US$50,000 budget every year for personal expenses even though she has an estimated net worth of $50 million, and insists on separating her personal life from her high-flying acting career:  "I think living an expensive lifestyle means you can't hang out with people who don't live that lifestyle,"she says. "It alienates you. Some of my best, most hilarious times, have been in the least luxurious places."

Think of the last time you were really happy.  Did it come about because you spent a lot of money?

Wednesday, 18 June 2014

A 10-year Financial Goal that Took 14 Years - We Finally Did it!

We did it!  My husband and I have officially reached our financial goal that was set in the year 1999.

Our goal was to reach $X dollars in net worth by the age of 40 so that we could be financially independent, with zero debts and a certain specified standard of living.   It  was meant to take ten years but took 4 years longer.  

Truth be told, we weren't even sure if we could reach that goal in our lifetime.  It was a long shot.  A very long shot.    Vividly remembered the scene then.  I was pregnant with our first child.  Financially, we had two home loans to take care of then.  We were also planning to take a loan to buy a used car because the family was growing.  We set down our goals, specifying the amount of net worth we will attain, the type of car we will drive, the house we will live in and even right down to how many vacations we can afford per year.  I had it typed out and we both kept it close to our hearts.

Then life took over.  Our second child came along. I quit my full-time job to stay home with the kids so it was down to only one stable income - my husband's.  My husband was expatriated and the family moved a couple of times.  We were repatriated.

But not a day went by when we didn't keep to this dream and faith that we would be financially free and independent one day.  On hindsight, I think it was a combination of a frugal, prudent lifestyle; regular, sound stock investments and pure good luck that helped us.

To reach one's goals, it has to be measured.  And measured we did.  Every month, I would update our Net Worth Chart on my husband's pay day.  I would then share it with him and we could discuss for a while what happened in the month and what plans we have ahead.  For 14 years and counting, we did that.  That's how we know: small actions done consistently can yield big results too.

Our net worth grew 8.5 times during the period, with an average of 20% per year but that didn't come without some bad years.  At its worst, net worth grew a mere 2% in 2008 (even including salary and dividends) because our stocks were beaten down by the financial crisis.  At its best, and in the very next year 2009, net worth played catch-up with a 50% increase!  We held on to our belief that stocks are the way to invest Warren-Buffett style and bought more when share prices were thrashed.

It helped very much too that we had a few years of expatriation where almost everything was paid for.  That was the "good luck" part.

Our lifestyle hasn't changed much.  Our idea of never over-indulging has rubbed off on our children. So, even though we have lived the "rich" expat life, we did not have much culture shock adapting to living in a cosy apartment or eating hawker food when we returned to Singapore.

I think for our next goal, it is to allow my husband to pursue his interests without having to hold a "job" job.  It is time to go back to the drawing block again.  I can't wait.

Saturday, 14 June 2014

Club Med - 10 Ways to Make It Worth Your Money!

The name "Club Med" immediately conjures up images of sea, sand, beaches, sports or simply "luxury".  So why would a frugal family like ours decide to go for a 4D3N trip there for our June vacation?  Firstly, there was a promotion which reduced the original price by up to 40% and secondly, airport taxes and fees have really gone up and I don't relish paying for flights out.  Finally, after coordinating schedules, we decided to go to the Club Med at Cherating instead of Bintan, hoping to relive the enjoyable family driving trips we had back in the good old days when our kids were still in baby car seats.

It was a pleasant surprise that even though we paid premium prices for this trip (nearly $3000 or $750 per person), I realized there are always ways to maximize your package.  Here are some tips we gathered during the trip:

1) Arrive earlier than stipulated check-in time of 3pm
Although it is stated that check-in time is 3pm, we arrived there much earlier at 12.30pm as our journey there was much smoother than expected.  Apparently, between 12.30-1.30pm, it is standard policy for you to pay for lunch in Club Med once you enter its gates.  Buffet lunch was a hefty RM180 per adult & RM88 per child.  We took the advice of the security guard, drove to the next door (much cheaper) hotel and had our lunch there - at the grand total price of RM64 for four.  At 1.30pm, we were at the gates again and whisked off nicely to the Reception.  Apparently, our rooms were ready for us and we could go around with the activities of the day one-and-a-half hours earlier than check-in time!

2) Get ALL programme sheets at hand & extra copies too
Contrary to the "relax and let go" mantra at Club Med, you do need to do a little bit of planning if you want to fully enjoy the many activities it offers.  So, having all the necessary information on hand is crucial.  There are the standard "daily" programmes and the "special" programmes at Club Med.  For teenagers, there are also "PassWorld" programmes meant for 11-18 year olds.  Also, don't forget to ask for extra copies of the layout map.  I find it strange but for us, we were only given the standard "daily" program sheets and had to ask for the rest from the Recep.  Make sure your children and you each have a set.  The rooms are typically a good 5-10 minute walk from the main areas, so use a harvesack for carrying your barang-barang, to avoid making unnecessary trips to and fro.  But don't worry, after a day or half, you and your kids would get the hang of things and almost no planning is necessary after that.   If not, just check with any of the friendly GOs (Gentle Organisers) staff.

3) Carry sports shoes and swim trunks in your hand luggage
Even after checking in our rooms, it took a while for the staff to bring our big luggage to us.  The luggage contained our sports shoes and swimming gear and we nearly missed the timing for certain events because they were mandatory for sports. So, lesson learnt: don't leave these items in your big luggage.  Bring them along with you when you check-in your room and you are all set for your activities.

4) Outdoor Sports are the most worthwhile activities
My children went for Archery, Sailing, Flying Trapeze, Tree Top Challenge (much like the "Forest Adventure" here in Singapore), Kayaking, Rock Climbing and other small activities e.g. football, futsball, table tennis etc.  My husband learnt to sail solo in a day.  I went for the indoor sports e.g. Zumba and Yoga.  We all came to the conclusion that outdoor sports are the best value-for-money simply because equivalent courses are not cheap here in Singapore.  Just for comparison's sake, a one-time Grand Course Challenge at Forest Adventure is priced at $44 per adult.   However, here at Club Med, you can go for as many times as you wish, so it's really worth your while if you don't mind sweating it out in the hot sun whole day trying out all the outdoor activities.

5) Dine in small portions but try all varieties
You will never go hungry in Club Med. There are mainly three types of meal options: the Main Restaurant where there are standard buffet opened for breakfast, lunch and dinner; the Noodle Bar, which serves noodle meals during the periods when the Main Restaurant is closed and of course the famous Bars, which serve all manners of alcoholic and non-alcoholic drinks, and snacks at regular intervals (set up next to the Main Bar).  After a day and half of going for my favorite foods, I realized it's probably more worthwhile to go for small portions but try out each and every variety.  Of course, this is up to personal preference.  But the way I look at it is, you may never get many opportunities to try that exotic Mexican cuisine but you probably can get good-tasting Nasi Lemak any day here in Singapore.  So, my tip is to go for variety rather than huge portions.  Having said that, I am no big eater myself, so I really "lose out" in this department.  My boys, however, went for huge portions.

6) Not the place to be a teetotaler 
The Bar is a fantastic place to hang out.  Choose alcoholic drinks but please don't drink if you're planning to do sports afterwards. I don't want you going all tipsy while trying out mid-air trapeze stunts.  Best to do it in the evenings when the live bands are playing.  If you were doing this in Singapore, you will be probably be set back by at least $50-$100 per pax in such an environment.  My husband would try out a different alcoholic drink every time we hit the bar.  I see people guzzling down glasses of beer too.  You don't have to go to that extent but well, you get the picture.

7) PassWorld for Teenagers (plus other children's clubs)
If you think babysitting is expensive here in Singapore, then you would really love Club Med. They have programmes for young ones and teenagers.  I am very impressed with the way the staff handled my teenage boys.  They were gainfully occupied for the whole day, including having lunch and dinner with the group.  Being teenagers, they were a little reluctant to join in the performance at night (which was part of the programme for the day) but somehow, they ended up doing four dance items!  The program was a good mix of sports and activities which meant that the parents get a lot of couple-time together and the real benefit was the children ended up doing a lot more sports rather than staying cooped up indoors with the computer or books.  And they learnt to quickly socialize too. 

8) Nightly entertainment shows and dance nights
At 9.15pm sharp, the shows start.  These are performances put up by the staff.  Standards may vary from night to night but for us, the "Circus Show" on the last night of our stay more than made up for all the performances we have seen.  It was a heart-stopping one-hour show put up by the "Trapeze" GOs.  In fact, my yoga teacher by day was up there performing full splits and back bends in mid-air supported only by a strip of white cloth!   It was one thing to watch such acrobatic acts close-up, but quite another to personally know the performer.  And you're free to take as many pictures with the GO staff as you wish.  After that, head down back to the bar to join in the "dance routines" set up by the GO staff. It's like a Zumba-inspired party, plus free-flowing drinks and really spunky instructors.  Can you imagine doing this in Singapore?  You'd be somehow be distracted by thoughts of how you can get home safe and sound or by how much money you're spending on drinks.  Not here, well, because everything is "pre-paid".

9) Don't ignore the small time-filler activities
My husband and I went for the "in-between" half-hour activities e.g. shoulder massage lesson by the Spa.  It was quick and easy and I learnt a few tricks to help relieve my husband's aching shoulders and neck after his long drive.  This turned out to be one of those things I could literally "bring home" from Club Med.

10) Check out on time but stay on for lunch and activities
This is perfectly legitimate because we asked the Front Desk!  Check-out time is strictly 11am or you will be charged for each extra hour of late check-out.  What you can do is place your luggage with the Recep.  We then went to the Forest Challenge and Flying Trapeze again.  There are excellent shower facilities equipped with clean towels and toiletries that you are free to use.  You just need to pop by the Recep to get your clean clothes from your luggage before that.  The four of us then popped in the restaurant again for a lovely buffet lunch.  If you can afford the time, stay on.  However, we had to leave by 2.30pm as we still had a long drive home.

There are more tips but hey, this is a vacation, so I thought these 10 should be good to start you off without too much work.  If you know of any or have any questions, please feel free to drop me a comment.