Spending Report – December ’13: Closing the Year in the Red

A little late on the spending report for Fiscal December – the return of school (and basketball) has meant the return of work days spanning anywhere between 10 hours if we just have practice to 16 hours if we have away games.  The good thing is, long hours mean less of a chance to blow money out of boredom.  The bad thing is I’m grabbing food on the go all to often.

Fiscal December finished in the red, mostly due to Christmas shopping.

spending-decemberI was able to keep Christmas shopping well under $200, which was big.  That allowed me to go over in a few areas without totally obliterating my budget.  Throw in a wedding gift and it is pretty remarkable my miscellaneous spending was as low as it was.

Groceries were remarkably low… Gotta love free food from relatives!  Throw in no work lunches and nearly hitting my take-out goal, and it was a great month from the nourishment perspective.

$50 in gas cards helped cover all the driving around during the holidays.

All together, it was a solid month.  If I can replicate that spending this upcoming month, while taking out the $200 in gifts, I should be able to hit my goal of cutting $100 out of my budget.  My main focus continues to be groceries and limiting take out.  I’ve made one trip to the grocery store already and avoided picking up and soft drinks which routinely add around $15 a month to the budget.  Cutting out diet coke, while a great move for my health, will also be great for my budget.

The other thing I’m thinking of doing is cancelling my iPhone insurance.  It’s $10 a month.  Of course, I’m scared that the second I cancel it my phone will leap from my hand and into a concrete wall at 120 miles per hour and shatter into a million pieces.  I’ve been burning that $10 a month for 7 months now.  That’s $70 that has gone pretty much nowhere.  But again, the minute I cancel it…

There it is, spending in Fiscal December.  Onto 2014!

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I Have an Emergency Fund Problem

I have an emergency fund problem.  That problem being that I don’t really have an emergency fund.

Well, I kinda do.

My emergency fund is big enough that I’m comfortable and growing I’m by the month.  The problem, is I’m growing that emergency fund with the intention to use most of it to kill off my student loans at the end of this three years.  The bigger problem is, at this current rate, I won’t even have grown it enough to do just that!

So here I am, with an emergency fund that I am forcing into double duty.  Knowing that I am currently not growing it quickly enough (or paying down my debt quick enough), I am very hesitant to use it!  Like this last week.  When the temperature dropped to -10 fahrenheit.  And my car refused to start.  For six days.

Luckily for me, the car finally started yesterday and I didn’t end up spending a ton of money unnecessarily… so maybe my emergency fund problem isn’t that bad after all!

Anyone else hesitate to use their emergency fund in a certain situation, even though it’s there for that very reason?!

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Friday OscarQuest #4

It was a crazy week, so OscarQuest is a little late.  With two snow days this week, I was able to get back into some classic movies… Until my DVR failed and I lost a good 4 movies I had saved on it!  And those snow days?  Well, when school got back going I paid for it!  A 14-hour work day on Thursday following by a 17-hour (!) work day on Friday… And that’s with no lesson planning or grading!  Gotta “love” basketball season, away games, and Friday night late games.

Just two movies this week:

Witness (1985)
Some say this is Harrison Ford’s best film and I was pretty impressed.  Surprised it took me this long to see it!  And it was a reminder for all that time I spent out in rural Maryland near Lancaster County with the high Amish population.

Love Affair (1939)
It pains me to admit, but I struggle watching most old films.  I got through Love Affair, though I wasn’t thrilled by it.  Not bad, but when you combine a genre I’m not thrilled about together with everything that is 1930′s filmmaking, and I just couldn’t get into it too much.  C’est la vie.

 

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I Challenge YOU to Cut a Benjamin

cuta100

Ok, personal finance peeps.  It’s a new year and we’re all looking for ways to have a great 2014.  A measly 8 months ago I thought I was living month-to-month, paycheck-to-paycheck.  Then I tracked my spending for a month and was astonished and disgusted.  I was wasting SOOOOOO much money.  Since, I’ve put a budget together and have been able to stick to it, give or take some unexpected expenses.  I went from paying $650 a month on student loans to $850.  Then, with an increase in income I went from $850 to $1,000.

When I sat down and looked out the projections for my student loan pay-out, I was dismayed.  I would come up waaaaay short if I stuck to $1k a month.  I needed to not only find extra income to make additional payments, but I needed to make more of a monthly commitment as well.  I decided to find a way to put another $100 a month towards my student loans.  I’m not sure if I can pull it off, but I thought I was living paycheck-to-paycheck twice already, so why not raise the bar again!

I welcome YOU to join me in my “Cut a Benjamin” challenge.  Cut $100 out of your monthly budget.  However you want to do it!  Get creative!  For me, it’s going to be focusing on maximizing my grocery/food money while being careful with unnecessary costs.  Here’s my plan!

cutabenjamin

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State of the Paydown – 2014

Day 258 | $17,274.17 paid | $54,801.41 to freedom

It’s time to analyze exactly where I am at and what needs to happen in order to get to the finish line.

$55,231.08 left in principal to go (prior a $500 additional payment last week).

37 monthly payments before my 30th birthday.

I have a big spreadsheet that lays out my path to financial freedom using the following recursive formula to calculate each month’s new balance:

recursiveThis is a bit of a conservative estimate, I believe.  Most, but not all, of my loans carry a 6.55% APR.  To play it on the safe side, I calculate as if all of them do. According to the math, making $1,100 payments each month* (then graduating to $1200 a month and eventually $1250) for the next 37 months results in a balance of $21,049.33. 

3yearplanYikes.  Of course, this doesn’t account for any additional payments.  If I were to evenly space out $3,000 of payments per year, that balance drops to $11, 575.

That still not quite enough.  If I can grow my savings balance as expected, I need to get the loan balance down to about $8k by January of 2017.  Therefore, I’m looking at the following to kill my student loans by 2017:

  • $1,100 a month payment
  • $4,000 in additional payments per year
debtpic

Initial Game Plan

This will be tough to do in year 1, but would overshoot my initial plan of $12k.  Theoretically, I should have more income (knock on wood) as the years go on and the first year would be the toughest.  My initial graduated plan ($12k, $15k, $20k) assumed this to a hyperbolic extent.  If I am able to pay down $1,100 a month plus an additional $4k this year, that would result in a principal deduction of $13,859.1 (minimally).  Repeating this for the remaining two years gets me to a remaining balance of $9,700.  Therefore, it is a good plan for year 1 since, if I can pull it off, I don’t need to improve on it tooooo much in the subsequent years.  Of course, that extra $4k will not be easy.

As I mentioned in my New Year’s Resolutions post, this is a “make or break” year.  If I am able to pull off the goal of $12k+, then I probably continue with the quest to defeat these loans by my 30th birthday.  However, if that doesn’t happen, then it will probably be time to re-evaluate.  After all, what’s the difference between paying off my loans in 3 years versus 4 years?  Emotionally, that’s a big difference.  Financially, it may be only a difference of a thousand or so dollars in interest.  Though, it is also another year that I don’t fully contribute to my Roth IRA and another year I don’t contribute extra to my 401k.  Lots to factor in.

The bad news is it looks to be quite the uphill climb.  The good news is I have a plan to get there that isn’t too unrealistic.  And that’s the key, right?  It’s one thing to say “I’m going to pay off my student loans in 3 years.”  It’s quite another to say “Here’s how I’m going to pay off my student loans in 3 years.”

*By the way, I have that big post I’ve mentioned before coming out on Wednesday… A bit of a challenge for any other PF bloggers out there that are interested…

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Friday OscarQuest #3

I decided to simplify my OscarQuest posts as well as put them on Friday, because why not!  It’s been a while since I’ve updated, so this will just be a quick post where I list what I’ve seen recently.

  • Amour (2012)
  • A Serious Man (2009)
  • Gosford Park (2001)
  • Chocolat (2000)
  • Ben-Hur (1959)

Those are the most recent films I’ve seen, but there were several others earlier in December.  I’ve now seen 145 of the 503 Oscar nominated films, including all since 2008.  I’ve got a little work to do on the older films, however.

And come January 16 there will be up to 513 Oscar nominated films.  I’m excited to see the new batch of nominees – I haven’t seen any of the films yet (unless Catching Fire gets the most unlikely of nominations).

As always, the best part of all of this is that I see all these films FOR FREE!!! Wooo for free entertainment!

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More Resolutions, and That Special Little White Space…

401kJan13Do you see it?  No?  Let me zoom in for you…

401kjanzoomThat little white space is crucial.  The purple line represents the value of my 401k.  The blue line represents the contributions I’ve (my employer) made to my 401k.  That space in between is the wonderfully magical money my investments have made for me.

You’ll notice, that white space has not existed very long – not nearly as long as it should have.  Unfortunately, I thought I had allocated money into the stock market way back and it turns out I didn’t quite complete the process.  Back in October, I fixed that so that a much higher percentage of my contributions went to stocks instead of money markets.  Finally, just recently I was toying around and found how to easily move funds from one allocation to another.  Now, nearly a year later, I have the asset allocation I want.  Unfortunately, that means I missed out a bit on the huge year stocks had, but at least it is fixed.

This comes to mind after reading CNN’s recent article 4 money resolutions to make now.

It’s an easy and quick read – check it out.  The first resolution is  don’t be too risky with your investments.  The article mentions a rule I had not heard of before:

One rule of thumb: subtract your age from 120 to determine how much of your investments should be in stocks.

According to that, I should have 94% of my 401k invested in the stock market!!!!  Seems a little high.  After finally fixing my 401k allocation, I have about 55% of my 401k invested in stocks and equities.  That should creep closer to 60% and eventually 70% over the next year.  Gotta get that money to work a little better for me!  Now if I can follow the article’s second resolution…

2. Stop checking your statements so often

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