At the end of each month, I update my cash flow file and go over my budget. Nerdy, I know but, that is who I am. I am also currently tweaking next year's budget and financial goals. I have a bad feeling about the economy and the upcoming elections so, I am setting aside a much larger EF than I normally do. I will also be keeping some extra cash at home.
Recently I have stumbled across some YouTube Envelope Budgeting videos. Some of them were really very detailed and had several envelopes for not only expenses but, also several challenges, additional savings and etc. I enjoyed watching how some people can be so diligent and organized. I wish I lived in a low inflation country i.e. less than 10%.
In a country like mine, you want every single penny work hard for you. There are some hybrid bank accounts which pay a lower interest than a regular savings account but these give you the interest on a daily basis. So, withdrawals on any given day is fine. I like to keep my money in the bank and use my credit card for most of my needs and I always pay it in full. I do not ever remember not paying the full amount on the credit card. I have one mortgage on the Antalya home but since the interest rate is fixed, in this high inflation days, it gets to be a smaller burden every time my pension and my side gig salary is raised. I have 25 months to go. I can pay it now and be done with it but, it does not make financial sense. You may say that I am a pretty terrible bank customer.
Savings interest rates are around 14%-22% depending on the bank and the amount of your savings. The bank where I keep my Sinking Fund/EF (I will explain in a minute) is recently offering 19% interest rate. Their regular savings account is 20% which is less than some other banks I work with. I keep my Sinking Fund/EF in this one but, use my sister's bank which offers a better rate for regular savings accounts.
You may think these interest rates are awesome but, the official inflation rate is over 80% and the government is lying about it being much lower. And, against every economic theory, the president believes if the Central Bank lowers the interest rates, the inflation will go away. So, the offical interest rate is 9%. What can I say? When a d.... runs your country, anything is possible.
I remember sharing that I keep my entire nest egg in USDs, Euros, Gold coins and a small amount of TL. Unlike the US, the stock market is extremely volatile and not deep enough in here. We do not have many of the retirement tools my American friends have. It is really hard to keep an eye on your money and not let inflation eat most of it. However, no matter what you do, you do lose some of it due to inflation and low interest rates.
Now, why do I have one account for both my sinking fund and emergency fund? Well, simply because, the bank allows you to set up only one account that pays the daily interest which is actually called the nightly interest :)
Also, my EF is rather small. It does not have enough to cover for 3-6-12 months of living expenses. Why? Because, I am retired with a couple of part-time gigs only. So, I have a pension and some variable income. Unless a real big thing happens like war or the country collapsing, I will have my pension every month. Therefore, keeping a big EF does not make sense anymore. My EF is there only for extra healthcare costs, some big appliance replacement or an unexpected car break down and such.
I am eligible for the social security healthcare which covers a fraction of private hospital visits. I have additional health insurance to cover surgeries, hospital stays and some imaging requirements. Even so, there are out of pocket costs. For instance I took my Covid test at a private hospital and it was totally out of pocket. I could have gone to a state hospital, stay in line for a long time in the middle of sick people and it would have been for free. Sometimes our choices cost us and it's OK.
In this climate of economic fog and unpredictability, I am trying to do my best and still make the best of life since I am long past the mid point of my life span.
Gotta go and start cleaning. Beware dust bunnies! Here I come fully armed with all sorts of equipment. Resistance is futile!
You are doing great managing your money. I never set a budget for anything. I pay everything with a credit card and the spending report let you know everything you spend by category. We don’t keep a lot of cash because our jobs are fairly secure. The market here is down but I don’t stress about it because I don’t need that money for my everyday expenses. I have a ss now plus a pension soon and have 0 debt. My husband the same, he has SS and a pension and is still teaching. My university stopped increases at the start of the pandemic which it does not affect me much but I think of those who live paycheck to paycheck. They probably having a hard time making ends meet with this inflation.
ReplyDeleteLooks like you and your husband did well during your working years. And you're right. People living paycheck to paycheck must be having a hard time. May be it is time for some of them to pick up side gigs or temp jobs during the holiday period.
DeleteManaging your budget sounds like it would be really stressful, with all of the variability in the local economy. It's similar for my ILs. Sounds like you are doing great, and juggling all of the priorities as best you can.
ReplyDeleteYou're right. It is stressful although I know that I am in a good place. There are so many unknowns.
DeleteMy friend Steve's ex-wife moved to Turkey not long after their divorce and was living off the interest she got on the money from the sale of their house. I have wondered how she and other Brits are doing now. Sure the interest rates on savings are great BUT look at inflation!!! I do tend to keep quite a bit of cash (in envelopes, ha!) and the more we are threatened with power cuts this winter the more I think that is the right thing to do. Heck if there is a power cut you can't buy groceries, put petrol in your car or even take cash out of the bank. These are difficult times we're living in aren't they!
ReplyDeleteI do not think ex-pats living in Turkey has been affected as much as the locals did because, the exchange rate has changed in favor of foreign currencies during the last two years. That is why I keep 70% of my nest egg in USD. Besides, they usually live in southern coastal areas where cost of living is lower.
DeleteI am a little worried about what is around the corner also. You are smart to be doing what you can to shore up any potential holes in your budget.
ReplyDeleteWhen I was younger, I always envisioned some sort of a Star Trek universe in 21th Century but, alas!
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