Over the next few weeks, I will be interviewing a series of personal finance bloggers that I enjoy reading and asking them about their journey with debt, savings and money in general. I hope you find each of their unique stories as insightful and revealing as I did. Most importantly, I hope we can all learn from their experiences with money.
This week I have had the pleasure of interviewing Allan @ The Practical Saver. Allan Liwanag is a personal finance blogger who paid off at least $40K debt in 3 years by adopting simple and extreme saving techniques while ensuring his family’s needs were taken care of. An analyst by day and dedicated blogger by night, he loves to share his thoughts – based on his research, personal knowledge, and experience – on topics related to family, life, and money. Allan lives with his family in Maryland, USA.
Tell us about your ‘money story’. Has this story changed how you manage your money today and how?
I together with my sister built a retail business around circa 2009. We were making money during the first year of operation. But after that year, we our sales began to decline and expense started to climb steeply. Basically, the business was bleeding cash fast. Because I wanted to make our business work, I took my own savings and put that money in the business. Unfortunately, the business was still losing money. We ended up closing the business after a couple of years. I was left with nothing in the bank and became indebted to the tune of $40K. A couple of years forward, I was fortunate to completely pay the debt off.
This experience has thought me to be more frugal than ever. After that experience, I made savings and investing my top priorities. In a matter of 2.5 years, I was able to pay off my debt and save at least $70K.
In addition, the lessons I learned from these experiences helped me realize that I need to diversity my investments. I wish I took to heart what many people say, that is, to never put your eggs in one basket. I learned it the hard way and I learned fast from such experience.
If you could give 3 personal finance tips to anyone, what would those be?
- Pay yourself first. A lot of times, we tend to pay our bills and debt first before we save the rest. This may sound different but I pay myself first.
When I get my paycheck, it is always net of all the taxes and contributions to investments and other saving instruments/vehicles. Yes, I make sure that part of my paycheck goes directly to investments and savings that I don’t and won’t touch. This way, I know that the net amount I receive is the amount that my family can use for bills and for some more savings
- Define needs and wants. Nowadays, it’s really difficult to distinguish what needs and wants truly are. Many products that companies sell are disguised as needs but they really are just wants.
What my wife and I did to pay off our debt and save a ton of money in 2.5 years was we defined what we really needed. Once we defined what they were, we were able to stay away from the wants (without giving a second thought). Defining needs from wants doesn’t happen overnight. I know it didn’t happen overnight to us but with practice and perseverance we were able to do it.
- Finance a balance between saving and having fun. For me and my family, it is really important to save as much as we can. My wife and I want to retire early. We don’t want to worry if we have enough when retire or during our retirement. We save majority of my salary even though we are living on one income since we started our own family.
A lot of people think that we just save and not have fun. That’s incorrect because we do. One of the most valuable things I learned in life is that there always needs to be balance on just about everything (and that includes saving and having fun).
My brother died at a very young age. He was really wealthy but was workaholic. What happened to him helped me realize that balance is key to everything.
What is the smartest thing you did with money and why?
The smartest thing I ever did with my money (for now) is paying for my MBA. Getting an MBA degree truly opened doors of opportunities for me and my family. It helped me developed and honed both personal and professional skills that I always use every day. It helped me get a job that I really love and that pay good money. Oh did I say that I paid less than 3K for my MBA because of money I received through scholarships, by tutoring college students, and others.
What is the dumbest thing you did with money and why?
Hmm, that’s a tough question and I am trying to squeeze my brain right now trying to figure out what the dumbest thing I did with my money.I say the dumbest one was when I bought a car that cost me around $20,000.This was back when I first came to the US from the Philippines. I succumbed to the marketing tactics of the car salesman that I ended saying yes to what he recommended. Looking back at that experience or money, I say that I would have gotten a car worth around $8,000 and got the same features as what the car salesman offered.
If money was not an object, how would you spend your time?
If money weren’t an object, I would spend my time with my family and we would travel around the world. If there’s one thing that my family knows of from each other, it is that we like to experience what the world has to offer (i.e. food, culture, historical sights, and people). We believe the world has so many things to offer and that we will never get tired of experiencing those.
What is your blog theme and why did you choose to start blogging?
My blog’s theme is finance or personal finance. Being buried in a mountain of debt is the worst experience I’ve ever had and it’s also one of the best experiences I’ve ever had. I learned a lot of valuable things from such experience and I like to share those to people who are about to or are going through the process. I like to tell people, through my blog, that it is possible get out of a bad and make something good out of it. In addition, I also like to share the practical lessons that my family has been applying in areas such as frugality, travel, investments, charities, among others. I believe these are lessons that people will find beneficial for whatever purpose they may have.
If you could recommend a book to someone, what would it be and why?
I would recommend the book titled “The World Is Flat” by Thomas Friedman.Though the book discusses about globalization or commerce, I have to say it is totally applicable to one’s personal finance. The book discusses how world has become a leveled playing field, where various opportunities are accessible to many of us, if not all. The same principle applies to personal finance. Nowadays, people have access to financial products and services, which would help them achieve their financial goals in life. This was the first book I read after getting my MBA. I have to say it changed the way I view about the world and about my finances.
If you were given the opportunity to have a one-hour lunch with anyone in the world, whom would it be and why?
Definitely, it would be my father. I would thank him for all the lessons whether it is personal finance, or something else that he thought me.
We were 11 in the family (mom, dad, and 9 of us kids). My dad was the sole income earner back then. He was earning less than $1 a day. We lived in the Philippines back then and the cost of living was decent. Having said that, living on a dollar every day was not feasible for most people there. But we made it through the day. I learned to sacrifice temporary. I learned to appreciate even the smallest things we had. I learned to be contented with what we had and didn’t have. In short, I learned so many things from my father and I would love to have a one-hour lunch with him if I could.
If you could have a ‘do-over’ in any area of your life, what would that be and why?
Could I say have a million dollars to start with plus all the life lessons I learned along the way? If yes, that would be perfect. But seriously speaking, I wouldn’t want anything to be different. I’ve gotten this far and have been able to be the best person I could possibly be because of the lessons and experiences I have learned along the way.
Is there anything else you would like to share with everyone?
I just want to say that anything is possible. When you are in the deepest state of yourself because of all the conundrums you are experiencing (finance, which is a big deal), remember that there are solutions to all the problems. You just need a break, take a deep breath, sit down, and analyze the situation carefully. That’s what we did and have been doing and it really works.