It’s coming to the end of Q1 2023 and already looking like an intense & painful year. There are a few major life expenses this year that I’m in the process of dealing with. I couldn’t spread them out over the next few years because they somehow all got squeezed together at the same time. I have been selling my profitable stock positions the last few months to raise the cash needed. But the liquidity drain was just too much and I had to take on personal loans to manage. A bad move when the interest rates are so high but a necessary one for the sake of my family.
In addition to my big housing loan, I’m even more leveraged up than before. So any further interest rate increases is going to put more stress on my monthly repayments. In the midst of the current banking crisis, I’m hanging on to my job and hope to do so for the rest of the year. I just received my remuneration review letter – no increase in salary and a small bonus because I joined the bank in the later part of last year. I have never been so dependent on my monthly salary income to keep my family afloat before.
So this is a humbling experience because it just takes a few bad financial decisions, coupled with a series of unfortunate external and internal events. And all of a sudden, I find myself under significant financial stress. Or maybe this is what it feels like to manage a family’s finances with kids in the picture. It makes me feel extra vulnerable because my kids are going to suffer for the consequences of my decisions. By my estimates, I will need a year to dig myself out of this financial hole. That’s a long time to just be building up my cash holdings and not being able to make any kind of investments.
The higher interest income on holding cash does help to soften the blow but it’s only a temporary retrieve. I expect a near complete reset of my cash level to zero by end of the year when I’m done with the major expenses. This experience has really taught me a few things about active income diversification, insufficiency of passive income, importance of cash and the unpredictability of life. Forced me to re-evaluate my entire approach on managing the family finances with kids. As I work to survive this year, I will be doing things differently from now on. I’m in my late 30s and need to get it right by my 40s when my kids are older.
You are feeling the strain probably due to lifestyle creep. ie you are consuming assets (eg new house with loan) , have a new expenses (kids, probably a car -hence personal loan and maybe things like a maid) and your passive income churing assets (stocks , cpf) are being reduced or flatish.
I wont say you are in bad situation because home equity is probably going up and your home value probaly also seen some uplift. If you really feel stressed, then consider downsizing in say 3 years time. New job and low bonus is also normal. Happens to all of us. Look forward to next year. Probably also gets better when you hit the year end with your 13th month.
Cheer up ! you are doing ok as anyone facing your situation.. Write down your stress and dont let those thoughts drive bad decisions.