The Coffee Break Accumulation

>> Friday, July 21, 2006

So, I've been thinking about my future. Rare, I know... but I've got to think about it someday. Owning a house would be nice and I also got this concept for a restaurant that I think would work. But since I don't have the capital or much savings to speak of, I've got to find out how I can realize my dreams.

I've been keeping tracks of my financial spending, after my efforts all I found out is that I do spend a lot. I think in some subliminal it changed my spending pattern. I'm not the person who spends all he earns anymore, and I quit buying extravagant gifts for my friends and colleagues on their birthdays and such. (since there's not much reciprocity going on) Honestly, I think keeping tracks of my finance is how I manage to have some savings in my bank account. Although, it is nowhere near how fast I want it to grow.

From my college years, I have accumulated some credit card debts. Although it has all been paid off by now, I have gotten through some hassles along the way. I imagined my credit score to be extremely horrible, but last year when I checked I was surprised to find out that my score is in the average, around 650-683. I understand now that if I want to own a business or a home in life, I will need to depend on getting a loan from a bank, and that largely depend on my banking and credit records, some things that the credit card application assistant with the tiny free radios standing on the side street of my campus failed to mention 7 years ago. After learning the lesson with the credit cards, I cut them up and stopped using them altogether. But now, if I want to improve my credit scores for my future's sake I must start using them again.

Saving money seems to be the other way to go. Somebody like Albert Einstein has said that he couldn't believe accumulated interest is an amazing concept. A sum of money goes untouched in the bank for decades will accumulated into a very large sum. I think it that largely depends on the interest rate, and how frequent the interest is accumulated, and the trick here of course is for you to not touch it.

There is an advice that financial consultant always give out to people and they often use coffee as an example. If you have a habit of spending $4 each day on a mocha-frappa-chai-whatever, and if you abandon this habit and just drink water (which is better for you anyway), you'll be saving $4 a day which will amount to $1,000 - $1,400 a year. Cigarettes would be another good example. You don't even have to quit that habit, reduce the frequency would help too. I'm thinking what kind of habit of mine can be reduced to save money. Dry cleaning would be one of them, I spend an average of $20 per week on dry cleaning. Although, I don't enjoy ironing clothes. Taking a cab to work is another habit of mine, I should just wake up earlier and walk to work, it's just a 25 minutes walk, I can use the exercise and it's an extra $6 everyday. Maybe I should stop drinking soda and juice with my meals, I don't do that often. I bring my lunch in most of the time, I only buy a bottle of tea when I don't bring lunch. So potentially, I can save anywhere from $2,500 - $3,200 a year from changing these habits.

I guess I better start applying for a credit card. Maybe something that would give me mileage or points for hotel rooms. I don't think I'm going anywhere, but at least there is some incentives to it. Who knows? Maybe further down the line a bank would like my idea and give me a loan. Maybe I'll own something nice for a change.

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