New Years Resolutions — Blabber

It’s that time of year again, the time where we sit back and examine our lives and say what we plan to do better in the next 12 months. I have quite a few “regrets” from the past 12 months that I’d like to make up for in the next.

This is such a big thing, especially with the economy going to the shitter and hence my safety net getting drastically smaller every day. I made a good plan for myself in September and followed through with it flawlessly in October. However the trip to San Diego in November crushed the progress and I’ve spent most of December trying to make up for it and Christmas. Thankfully this year I spent comparatively little on Christmas, but still enough to feel the burden. I NEED, NEED to get back on the envelope system, but part of the problem of this is that most of my money is in my BofA account, which has overdraft protection, but there is no BofA ATM here. There used to be one in the mall here, that didn’t do deposits, but now it doesn’t read cards. So essentially I can only use my BofA card as a check card, not an ATM card. Which is fine, but part of what made the envelope system work in San Diego was that the ATM was very convenient. Anyway, I’m belly aching here. I need to get back into the envelopes. AT MINIMUM for everyday spending. However, I’m beginning to recognize that part of the problem is that the amount that I put in the envelopes is too small. It really is just a “food” envelope, and to be truly successful it has to be all spending expenses. As well, it has to include the money that I get from tutoring and it has to pay for Jack’s daycare. I’ve been taking him every day because he loves it so much and I like not having to worry about him while I’m at work, but I know that he could get by on 3 days a week, and right now I’m spending $50 a week for him to go.

So the question is what is a good budget? What is an amount that I can feel like I’m not scrimping by on and yet still be saving money? Well, let’s say that I plan for the “maximum” amount:

Food: $15/day — 7 days a week
Daycare: $10/day — 5 days a week
Entertainment: $20/week
Incidentals (i.e. Target runs): $20/week

If I kept to this schedule I’d spend in January, $845.

I suppose this is why I keep “losing” money every month. I budget myself about $500 for all of the above, when I am most likely spending up to $900. Jesus, that’s a lot of money. Nearly 1/3 of my paycheck. I’m honestly not even sure that I have that much discretionary money in my budget as it is. So obviously something needs to change here and fast.

When I do a budget analysis of what I should be paying on each bill and subtracting the money that I make, taking into account the lowest amount I’ve ever made from tutoring and factoring in Jack’s daycare as a bill, I should end up with ~$550 every month for “spending money” — this would include food, entertainment, incidentals, and savings. With the maximum amounts that I’ve calculated above, I would need $625. And thus I’m about $100 short of the lifestyle that I’d like to live.

I also calculated it, and right now I’m spending $545/month on revolving debt. So to me this is debt that isn’t my student loans. I really can’t afford to spent this much on it. Thankfully my computer will be payed off in March. Then I have my Express card and Limited card which are low balance amounts. I pay off my Limited card every month because I’ve only used it twice and both times have been less than $80. So after these things are paid off I will lower the money I spend every month to $500. I still want to keep it close to what I can afford now so that I can make strides towards getting the credit card debt lower. Fun fact: when using one of the online calculators to see how long it will take me to eliminate my credit card debt I found out that as my current balance, rate and payment amount it will take me 5 years to pay it off. FIVE YEARS! That is just ridiculous. After I increase my payment on my credit card after paying off the computer it goes down to 4 years. If I wanted to have it paid off in 2 years, I would need to double the amount that I’m paying on it now. Just insane. Completely insane. Obviously I can’t afford this right now.

However, since I had to fix my car this month, which cost me $1650, I opened up a Firestone card to put it on. I had the money to pay it, but I saved 10% by putting it on the card. Also it is 90 days same as cash. So it ended up costing me only ~$1400 for the repairs. I paid up front for 1/3 of that and put the rest on the Firestone card. I have (most) of the money now to pay off the rest since I pulled out money from my stocks. So when I get the bill for that in the mail I pay on paying the entirety of it off since I can’t afford to have this balance hanging around — especially accruing interest.

I need to get myself a better financial safety net than my stocks (rapidly going away) and my credit card (not enough credit left on it sadly and I’m not opening another one). So my answer to this is my emergency account (i.e. savings). At the end of November it was up to over $300, however, because of the disaster that was December it now has less than $50 in it. I want to get the amount in this account up to $2,000. Part of me thinks that the way to do this is just pay the minimums on my credit cards for the next few months and just funnel money into that account. I could do this and yes, I would lose money in the short run because of interest on the cards. But in the long run I think it would be better because I’d have a more reliable, less costly way to deal with unexpected expenses (like my car). However, I know I won’t be able to do this until after my computer is paid off. And the amount I would be funneling in would only get me to about $250/month. Which would still take 8 months to get to $2,000. There is bound to be another “emergency” in the next 8 months that will make me take out the money. So is there an alternative? Well, I can just progress at the rate I am on depositing $100/month into this account and any leftovers in the Chase account at the end of the month. I could also just deposit ALL of my tutoring money into this account until it reaches $1,000 and then half of my money into it until it reaches $2,000. This could work, but of course would decrease the amount of spending money that I have every month.

Obviously, there isn’t enough money to go around. And no matter how I try to reorganize it the real answer here is that I need to spend less money. Period. I think that the envelope system will help with this. So I’m going to try an envelope budget of $150/week, with the week starting on SATURDAY this time instead of Monday, and hoping that this will help. It is easier to save money during the week than the weekend.

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