Financial Game Plan

After yesterdays post I’ll admit I’m still a little put off by the debt thing. But I wanted to still sit down and make a “financial game plan”.

So here is the “plan” for now.

Step 1: Funnel all “excess” money in to my E-fund until I get to $1,000. Currently this is sitting at around $300.  This should take 2-3 months to get to $1,000. I’ll still be paying my minimum amounts of my cards, but nothing over.

Step 2: “Stop” contributions to my E-fund after $1,000. I put the “stop” in quotes because I’m still not to sure about abandoning the E-fund growth all together. So the way I reconciled this to myself was to continue putting in $100/month in to the E-fund, then at the end of the month if I don’t use the $100, transfer it on to my credit card. If I do need to use the E-fund then I’ll have a savings plan in place to start rebuilding and I’ll essentially have $1,100 that I can pull if an emergency arises.

Step 3: Put all money I’m currently paying on my card ($700/month) and my E-fund money ($100/month) on my credit card. With this payment plan of $800/month total I should be done paying it off without any extra push in 1 year and 10 months. This isn’t soon enough for me.

Step 3b. No soda “challenge”. The BF has given up all beverages except water and tea. I want to join him in this. I sat down and calculated how much I spend and OMG I spend about $120 on BEVERAGES a month.  That money could definitely be going to a better use. Hello… $900/month on my credit card would get me debt free three months sooner!! The plan is to start this over Thanksgiving so I don’t get caffeine withdrawals while I’m teaching.

Step 4: Get more money. I know this seems obvious, but here are a few ways I plan on getting around $3,000 in the next year.

  • Turn in moving reimbursement receipts – should get ~$1,200 depending on what they reimburse. The goal is to get this done within the week.
  • Seasonal jobs. I’ve applied for one position. I’ve decided I’ll apply to Target, Best Buy, Old Navy, and Barnes and Noble. They are all within 2 blocks of my apartment so there would be little commute time and I can buy presents for most people on my shopping list at all these stores. Hopefully I’ll net ~$1,000 from seasonal employment.
  • Summer classes. I’ve decided to  sign up to teach an online general education class this summer. Depending on how many people sign up I could make between $800-3,000. Doing three units of class for $800 puts a pit in my stomach (SO LITTLE!), however, I have to look at the bigger picture of what I’m trying to accomplish.

Step 5: Pull my non-retirement stocks and mutual funds when my debt gets to $5,000. I have about $6,000 in stocks and mutual funds that I can sell to pay off debt. If I can get out of debt without using them I will. I have significant emotional attachment to this money as I received it from the life insurance of my mother and brother passing away. However, if I can make significant progress on paying down this debt now I will feel okay spending my mom’s mutual funds to get me the rest of the way. The key though is that I HAVE to make progress. No progress, no funds.

Step 6: Rewards. I think a lack of tangible rewards for myself kills the motivation. Yes, the debt should be motivation enough. But milestones should also be rewarded. I will need to think of some suitable rewards for myself. Any suggestions? I’m thinking every $5,000 in debt gone I need some fantastic “pat on the back” with an epic party when I get to ZERO debt. Maybe something simple like going to the movies or taking a weekend day trip to a nearby city? I don’t know how I feel about using a tangible item as a reward, but I’d consider it.

Thank you all for your motivation and support. I truly could not do this alone. You are all wonderful.

*sigh* Here we go again…

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10 Responses to Financial Game Plan

  1. ndchic says:

    It must feel good to have a tangible plan in place. I think that you should actually plan a reward with a specific dollar amount for every $5000 paid. It can be something like $100 to go shopping or whatever.

  2. I like that idea from ndchic. It gives you a limit but gives you freedom to do as you please with it as well. I think it would motivate me 🙂 Good luck, it sounds like you have a good plan. I’m surprised about the beverage thing! Although I think D likely drinks AT LEAST that much money as well with his coffees, coke zero, and beer!!

  3. TeacHer says:

    I’m going to second your sigh.

    I read your post yesterday but didn’t get a chance to comment. I am SO in the same boat as you. I just feel sometimes like working so hard to pay off my debt just isn’t worth it. Which is why I’m so indecisive about my financial plan. Should I work on saving? Paying off the rest of my debt? At this point, I’m “ok” with the debts I have. They’re low interest, plus I LOVE my car so I don’t mind paying for it every month, and my student loans are tax deductible debt. Dave would say I need to clear all debts, but really? I manage my money really well. Do I need to be completely debt free?

    I think you have a good plan here. Becoming debt free is really, really difficult. In our insular PF world we think it’s normal to have no debt, but in reality most people have SOME debt. If being debt free was that common both Dave and Suze would be out of business. If debt freedom is your goal, work towards it with everything you’ve got. You CAN do it. Just decide if being totally debt free is worth the opportunity cost of everything you give up along the way.

    • SS4BC says:

      So I think my biggest problem is simply salary. And I know that I’ll probably get flack for saying this. But I look at Debt Ninja for example (only as an example as he’s the first to come to mind). He got out of his debt and is complaining about “only” having $10k in non-e-fund savings. This is our “insular PF” norm.

      But he also makes $20k more a year than me. In fact, that is ONLY with my new salary from two months ago. Before that he was making $40k more a year. And part of me hates that my progress has to be so slow because I’ve chosen a career (teaching, like you) that doesn’t pay well.

      And within this little insular PF world it seems like there are those who make money and can pay off those debts quickly, and the rest of us who can’t because our salaries aren’t high enough. I’d love to be able to put $1,000/month into savings. But shoot, after I pay my bills my “spending” money for the month is only around $500 and $200 of it I put into savings goals. Do I spend that remaining $300 wisely? Probably not, but it also isn’t a whole lot to spend…

      Freakin’ sucks.

      Do I want to be debt free? Sort of. I want to be credit card free. I don’t care about the student loans at this point. But I’m paying 23% APR on my credit cards. I want that money for MYSELF.

      /rant

  4. karen says:

    Wow, 23%, can you get a balance transfer? Or get a consolidated loan?

    • SS4BC says:

      I don’t want to do that for a number of reasons. The main one being that I am afraid of having more lines of credit meaning I’ll eventually get MORE debt. With one card I’m not tempted to do this.

      But this does remind me that I should call the bank and ask them for a rate decrease for the last year of “good behavior”. =)

  5. TeacHer says:

    I’m with you on the salary thing to a point. I think – pretty much every day – “if only I could just pull an extra $500 or so a month, my finances would be so much easier to manage.” It would be easier to save, but honestly, I just think I’d spend more, too. Then I think, yeah, I could work in a different field and make more money, but I’d probably hate going to work every day. I literally get out of bed every morning and think: Yah! I can’t wait to talk about attribution theory/limited government/ethnicity/religion/the Bill of Rights…or whatever I’ve planned for the day. I really don’t think most people do that, and I’m so happy I have a job I love.

    I also wanted wanted to comment on your idea about rewards, which I think are a GREAT idea. When I paid off my credit card, I bought myself a Coach bag (at an outlet, but still!). Then when I paid off my student loan, I bought a pair of Marc Jacobs sunglasses. (I never confessed to those on my blog, BTW!) I love fashion, so these were great rewards for me. I’m a firm believer in making a big deal out of accomplishing goals.

  6. Rewards are important. Especially in this debt freedom thing. I noticed that you’ve been refraining form eating out. Perhaps this could be your reward to yourself. For the first $2,500 (i lowered it since you have 1 year + 10 months, this may mean you reward yourself at a better interval to your debt reduction) go to a cheap place you like. For the next $2,500 up the anti with the restuarant. Continue this way, until the last payment is made – then spend your time and money on a top-of-the-line place you really like and maybe take a friend. Perhaps you like to read or like sporting events or what not. You can vary the rewards as they fit you. Most importantly they reward has to be satisfying on more than one level, and you have to plan them out with your debt so you know how long you have to look forward to it before it gets here.

    Can I tell you though, that comparing yourself to others is only succeeding at making you feel horrible about everything. You can only do what you can with what you have. Envy is a difficult thing. You’re income will change, as will your benefits as you move through your career. Stop looking at what others have and start concentrating on what you need to do with your current status. If we all had more money we’d all be out of debt faster…or would we?

    You could also do something for yourself each month that you make a payment to your debt. At the end of each month, do something to mark how proud of yourself you are for sticking with your plan. Everyone on your journey gets burned out, bogged down, and a case of the “if I could…”. Pulling yourself out of this is what separates those out of debt form those only talking about it and doing nothing “giving up” on it.

    Add a feature to your blog – what I did this month – so you can tell us readers what you’ve accomplished financially and other aspects of life so we can celebrate you! Find a group in your town that you can meet with to do the same thing. Most of all, just dust yourself off and resolve to march on, push through the tired, the pity feeling, the dread, remorse, fatigue, woah-is-me stuff and emerge, plan in place, steps being taken and climb out of the debt whole. You can do it. And we want to watch!

  7. Good luck!

    And definitely call them to ask for a reduced rate. If they say no, call again and ask to speak to a manager. Sometimes it takes 3 tries but if you’re not a delinquent kind of person they’re generally receptive. Especially if you have another offer in hand that they don’t want you to use.

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