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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2014 Goals – $12k in debt reduction

Here we go!  It’s the last day of 2013.  No reason to wait until tomorrow (or the next day since we’re celebrating New Years.  Or why not just wait until the weekend?).  Here’s are my goals for 2014!

Professional Goals

  • Attend a prestigious institute for teaching.  This one is a little specific… I’m applying to a 2-week professional development opportunity in New York.  There’s quite a bit of competition to get in, but I’m fairly optimistic.  Hopefully I’ll be kicking off my summer “break” with 2-weeks in NY learning with a bunch of other young teachers.
  • Find a solid work/life balance.  The two coaching positions I hold are perhaps the most time consuming positions at my school.  This isn’t necessarily a bad thing – I love coaching.  But in the next two months I’ll need to make a decision.  There’s a part of me that is considering dropping a sport.  I don’t want to do it, but it would probably do my personal and professional life wonders.  The monetary hit is noteworthy, but not significant.  The real question is if I’d regret dropping a coaching gig. This will be a bit of a dilemma, so my goal is to come out with some kind of decision that I am happy with in 1 years time.

Personal Goals

  • Go on 1 trip – keep it under $1k.  Other than the potential institute in NY.  I have a tentative plan for Vegas.  I think I could keep that trip under $800 (with, of course, the small potential to come back with a few extra dollars).  Last year I spent $1200 on a 6 day trip in Denver.  This year I want to scale it way back.  If Vegas ends up happening, I think it can be done for less than $800 and perhaps cheaper.  And just like Denver, I know it would be money well spent.
  • Drop 10 pounds.  It wouldn’t be a list of New Years resolutions without this one, right?
  • Bike more, drive less.  I guess I would call myself a pseudo-biker.  I have a bike, I like using it, but I’ve yet to transition to it as my main means of transportation.  Come spring, I’d like to give it a shot.

Debt Reduction Goals

  • $12,000 reduction in principal.  This is what “The Plan” calls for.  It will be a tough goal to hit.  In actuality, I want and need to exceed it.  That will require about $4k in addition to my regular, monthly payments.  It’s going to be a stretch.
  • Find a new Summer-Income source.  Last year I pulled in about $1,600 in umpiring softball.  This upcoming summer, that gig is gone.  I’ll reach out to another softball league and hope to be able to replace that income.  Otherwise, I’m going to branch out a bit and see if I can find a more steady, hourly gig.  The problem is, I only really have 6 weeks of “free” time in the summer so it might be tough.
  • Hit $5k in additional income.  This is what I’ll need to hit the goal.  Right now I can expect about $2k.  Where that additional $3k will come from, however, is uncertain.
  • Make “the decision.”  To put it bluntly, I don’t know if it is possible to pay down my debt in three years.  I’ll be detailing it in my next post, but I intend to use this year as the “test year” on whether or not I go all in for the following two years.  Sure it would be nice to clear the debt by age 30.  But I have to consider the negatives a little more: could I get a condo if I saved for a down payment?  Should I be growing retirement money?  Should I just enjoy my 20s and head to Thailand for a month (seriously, that last one… tempting…).  One year from today, my goal is to be ready to make that decision.

There you have it – my goals for 2014.  Anyone out there putting together some New Years Resolutions to hit?

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2013 In Review

I didn’t set many explicit goals in 2013.  However, that’s not to say I didn’t have many goals in mind.  In fact, I think the whole point of writing out a review of 2013 is to really set up what I want to do in 2014.  That’s a post for another day (as in, a week from now 🙂 ).  Instead, here’s the big things that happened in 2013.

Blogging – Success!
I started a personal finance blog!  Early in the year I was inspired by No More Harvard Debt to actually sit down and reflect on how I plan to get rid of my student loans.  Since, I’ve went from what I thought was living “paycheck to paycheck” while paying $650 a month to living “paycheck to paycheck” while paying $1000 a month.  That’s quite a spending change.  Blogging has held me accountable to my spending, even if what’s being written isn’t being read by many people.  At the end of the year, I’m averaging around 17 visitors a day.  Nothing huge, but still a start!

progress-barDebt Paydown: $5,000 – Success!
I set the goal of paying down my debt principal by $5000 since April.  I have surpassed that goal by $1,203.12!  A pretty big step towards my ambitious goal of knocking out 62k in 3 years and 9 months.  This initial goal wasn’t set too far out of reach, so while I was happy to hit it, I was more happy to clear it by a significant amount.

Read Books – Fail.
I don’t exactly remember if this was something I specifically set out to do.  But I always tell myself I should read more.  And I always fail.  Sigh.  Next year.

Drop 10 pounds – Fail.
I’m in fine shape, but as someone who considers themselves somewhat athletic (or previously athletic), I know I can drop 10 pounds.  I’ve been sitting between 175-180 for 3 years now.  I’d love to get back to under 170.  This would involve running more and eating better.  I hate running and I’m too lazy to make my own food, for the most part.  The good news is I know I can pull this off if I actually make it a goal.  So, I’ll make it a goal 🙂

Make $5k in additional income Success!
I pulled in nearly $5,500 in additional income in 2013.  The bulk of that was teaching an additional class on top of my normal course load.  While the additional income was nice, the extra class has been a grind and had a pretty negative impact on my work/life balance.  I won’t be doing it again.  Therefore, I’ll have to find ways to increase my additional income during the summer in 2014.

Take on More Responsibilities at Work – Pass.
Because of that extra class and the sports I coach, I was already putting in more hours than I probably should have been.  Taking on other committee work or adding a club sponsorship or something like that would have been too much.  Hopefully next year when I’m down to a normal teaching load I’ll be able to look at some options to get more involved.

It’s going to be a busy week on this here web-log!  Tomorrow I’ll be posting my 2014 goals and then on Thursday my “State of Paydown – 2014”.  Get excited!

Anyone out there have any big 2013 goals that they are celebrating successfully achieving?

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Progress Report: December ’13

Day 245 | $16,794.50 paid | $55,281.08 to freedom

Merry Christmas Eve!  And a late Happy Festivus!  Let’s air some grievances!

  • Car repairs.  I hate car repairs so much.  In the last month I have spent $300 on my car.  And the result?  Well, problems fixed lead to new problems I guess.  An estimate of $800 to repair – well a bunch of minor-ish stuff.  If I really do have to invest that much into my car, then say goodbye to my Christmas gift to myself of making a large extra student loan payment.
  • Christmas Shopping.  I loathe Christmas shopping.  And this year I’m not even that excited for any gifts I’ll receive.  It’s just money spent on things that I’d rather have spent on paying down my debt or to put towards bigger things I need, instead of overpriced unneeded things.
  • Winter.  Michigan winters are always a topic of complaining.  I don’t really understand why.  We live in the north.  It’s going to snow.  It’s going to be cold.  The thing I hate is those heating bills!  I’ve finally turned on the heat in my apartment and the result is a heat/electric bill that is $30 higher than my previous one!winter
  • Final Exams.  Believe it or not, teachers hate them just as much as students 🙂

I’m not sure if I’ll be able to make that nice bonus payment.  The good news is, unlike the previous two Decembers, I have been able to budget for the wonderfully happy holidays well enough such that I have not dipped into my savings at all.  Ballin’.  Let’s take a look at the numbers:

The Brass Ta(cks)x
– $1000 paid
– Principal reduced by $706.96
– 2013 Annual Goal Surpassed by $1,203.12 (!!!)
– 2013 Complete!

decgraphI’ve made an aggressive pay-down decision: I am not going to count the $1203.12 that I went over towards my 2014 pay-down goal of $12,000.  This is a huge decision that will make hitting my 2014 goal very difficult.  However, my overall pay-down plan (which I’ll have a “State of” post on in the next week or so), is already overly aggressive.  Therefore, I need to find ways to surpass my goals if I am to actually hit $0 by my 30th birthday.

I am under $300 in interest per month!  This is a tiny baby step that is an awesome feeling.  It also makes some of the math easy.  If I pay $1000 a month towards my loans, that’s really paying $700 off my principal per month.  On the year, that would mean $8,400 in debt pay-down, well short of my $12k goal.  Though, that doesn’t account for the interest continuing to fall.  According to my mega-spreadsheet, I’ll actually get to $8,628.  Still about $3,300 short.  That’s a big chunk of debt pay-down that has to come from extra income.

Hopefully, I’ll be able to start the New Year with a $500 extra payment.  That’ll go a long way towards killing that excess $3,300.  That is, if I can figure out my car issues…

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