What % are you paying towards debt?
I recently created a 10-month average of my budget and expenses and have been having fun playing with the numbers. Including my paychecks, rent reimbursements from my bf (he only pays 1/3 rent) and that yearly IRS refund, my income averages to $3,400 monthly.
Here’s how it works out.
Food = 15%
Bills (rent, utilities, insurance) = 36%
Savings = 2% (my EF had a big chunk in it prior to 2009)
And finally…
Debt = 26% (both minimum payments and extra towards principal)
Kinda fun to see it all laid out on paper.
So what percentage of your monthly budget is for debt payments? To calculate it, add up all your minimum required payments plus any extra you might make. Divide that number by your total monthly income. Move the decimal point two places to the right (ie, multiply by 100) to get the percentage you pay towards debt.
If you are one of the smart, hardworking types that are on the other side of the coin, meaning you have no debt and are saving or investing money, what percentage are you saving/investing?
$18 for the next week
I have $18 in my checking account to last me until Nov. 5. Even with a pretty solid budget, here’s how it came to pass: Flu season has already started where I work. I maxed it out and rather than eat into my vacation, I elected to have unpaid days off in my timecard, resulting in a smaller paycheck than usual (by about $200). I’ve been aggressive with my debt and bill paying this month, probably more than I should have been, but I was making up for the last 2 months of no extra debt payments. I think I was also behind on my car insurance and ended up overpaying a month (rather than deduct what I had sent in after their bill made it into the mail).
So last night, I looked at my checking account balance to find only $18! Ugh! And I don’t get paid until next Thursday, 11/5. I did transfer some cash over from my savings account, which I fully plan on replacing when I get paid, in full. However, I also plan on NOT SPENDING MONEY as much as physically possible between now and then.
I’m out of gas, I have some food in the fridge, but no big protein sources (ie, chicken, pork, beef or tofu). I ran out of frozen food entrees in the freezer at work. What’s a gal to do? Well, enter the week of living frugally (much more than I have ever done in the past). It will be even more challenging with my bf being in the same boat (his financial reasons for being broke involve bad spending, no planning, and not debt repayment like me, but the results are the same).
Today I had leftovers. I ate oatmeal that I had kicking around in my desk drawer for breakfast. I plan on bringing more in through the duration. For lunch I had leftover chicken pho soup (Vietnamese chicken soup) and rice and fried tofu from Uwajimaya that I bought yesterday (enough for 3 meals). I have apple, bread and peanut butter. That will last me through the afternoon munchies.
I will be creative and more vegetarian at home for meals. There are a bunch of eggs, I can scramble, make a quiche (we have leeks in the garden p-patch that we haven’t used yet and there’s a rasher of bacon in the fridge that is probably still good inside its paper wrapping). I have a can of chickpeas that I can turn into a pasta dish with cream, onions, and bacon. I will probably have to go buy some carrots to make some split pea soup, and I’ll buy a tub of lettuce from Costco (all should be less than $10). I can make cookies for snacks, got the butter, flour, chocolate chip or preserves (for choc chip or thumbprints). I have lots of bulk grains and legumes. I don’t have a ton of fresh veggies though. I think I can scramble a can of tuna for lunch tomorrow, or maybe I’ll do baked potatoes, which are always filling and warming on these cold days. I think I still have ramen left over from a case bought at Costco.
I put $15 of gas in my truck and will not allow myself to buy a coffee, go out to lunch or dinner, drive anywhere unnecessary that might use my precious ½ tank of gas, or use my credit card at all. I may have to dip into my partial savings, but as I mentioned above, my next month’s bills will be lower by about $90 due to my overpayment.
ARGH, bad timing, but the lessons are good ones to take to heart.
Budget check-in
I’ve caught up on my budget for the last few months, after ignoring it recently (you’ll notice my recent hiatus). I did a significant check-up this weekend seeing where I was at, and realized I’ve been budgeting for about a year now! I have been tracking my expenses for longer, but November 2008 is when I started my first full month of budgeting.
I averaged out everything that I spend and came to a few realizations:
My budget is pretty accurate
My budgeted amounts for each category are pretty spot on. They may be a little high or low, but I’m able to, after a full year, see what needs to be raised or lowered a smidge. For example, I had $40/month budgeted for home expenses. I scrounge a lot of materials from work and from other places (I live in an industrial area) and I don’t need to buy a lot of kitchen things. I have always invested in that, since I cook so much, and I’m not young, so I have pretty much what I need. I’ve been spending more like $20, so I’m going to cut it to $25 for next year. It’s nice to have a year’s spending to use as a benchmark.
Not much to cut
There are 2 catagories that I can potentially reduce in order to spend more on debt-reduction – food and photography. I spend waaay too much on food and restaurants. A lot of that comes from being the primary shopper – I get food for me and often my boyfriend, but he rarely contributes to the small scale food shopping (that $15-$30 spending that happens 1-2 times per week). It’s been difficult to get reimbursed for this, and I’ve decided to just let it slide. It’s not worth the tension, since I don’t think the resolution is changeable. So I’m just going to let it be as it is. However, I have been making positive strides in using what I have in the fridge, even if I’m bored with it, and want something else. I’ve definitely been cutting back the restaurant spending a bit, but there’s always room for improvement. It helps that my bf is under a money crunch right now, so he’s also much less willing to eat out. Yeah all around.
Photo expenses are also much higher than I’ve estimated them to be. I came to realize in the last 2-3 months that I need to scale back or fully commit to doing photography. I’m right in the middle right now. I think I am going to pull back and focus on debt and my health in this coming year, so I plan on spending much less on photo projects. I’m not going to push to have shows as much. I’m not going to take classes. I’m not going to get things framed. I’m going to rest on my laurels a bit, simply my life, lower my expenses, and reduce my stress and project load. That’s the plan.
Missing a category
I realized that I don’t have a category for health, medical, or grooming, so I’m going to make one. I get haircuts every 2-3 months. That’s $50, at least 4x per year, so $200. I have some procedures I’ll need done this coming year, so I need to plan on having larger out of pocket expenses. Dental work. And my IUD needs to be removed ($500, not sure if insurance covers), and then new birth control. I should probably build up about $900-$1000/year for this category I’m thinking. It may be enough some years, but not enough in others. So I will need to put in $100/month and save it for the inevitable expense.
I’ll be updating my mini-funds soon to take out the photo category and add a health fund.
All in all, here’s a real quick overview:
Monthly income average: $3300
Monthly budget average: $2800
Monthly debt payment average: $400 on fixed minimum payments, $500 on extra payments, $900/month extra.
Have fun
I last thing I realized. It’s unrealistic (for me personally) to expect myself to stick to the budget and not spend extra on occasion. I might buy a piece of art, or go on a trip, or throw a party (I know, I know, not necessary expenses, but a small splurge here and there on occasion is not always a bad thing). I need to have some extra spending money set aside. I’m not the most frugal of people, and I don’t think I can maintain that type of attitude for more than 2-3 months at a time. So I’ve decided I need to have about $100 or so every month to spend for fun. Going out with a girlfriend for happy hour, going to a spa, driving to Portland for the weekend, something like that.
Am I on track?
How much do I need to pay towards my debt each month to reach my payoff goal of May 2014? I tallied up the number of months. If I started making payments in December 2008, that will be 66 months of payments. My total starting debt was $45,117. So I will need to pay $684 per month to stay on track.
My monthly budget is:
$150 for SBA (all interest, plus a ‘lil extra for an annual fee)
$200 for Personal Line (interest currently $70/month)
$100 for Discover (0% interest)
—————————–
$450 total paid – $170 in interest payments = 280 paid towards principal in my budget.
I would need to pay $684 – $280 already paid = $404 monthly extra to stay on track.
I am currently paying about $400 a month. I have been wondering and thinking of increasing my payments, since I think I can, to $500 monthly extra.
As I continue to pay down my loans, my interest rates will continue to diminish and more of my budgeted debt payments will go towards the principal and thus help pay it down faster.
Let’s see how I’ve been doing so far… I’ve been paying down my debt since December. That’s 5 months including April. I should have paid $3,420 to be on track. I have currently paid off $3,357 – that’s $63 short! Not bad! I can still contribute additional money this month, too, as the month is not yet over.
I feel pretty good about this. I have saved my emergency fund, I continue to save up for larger yearly expenses every month, and I have bought some dearly needed larger ticket items in the last few months that I couldn’t put off any longer. Even with my restaurant overspending, I’m still doing quite well. I know that if I tighten the belt I can pay it down ever faster! My budget is pretty accurate and my spending is within my means. My debt payoff plan is on track, established, and maintainable. Things are looking good! It could be the spring weather, but it’s always good to check in and see how plans are progressing.
Have a great weekend all!
Whoops! budget adjustment
So I have this big involved plan to shift my debt payments to the day I deposit my first paycheck of the month (on the 5th). so that I don’t run short before my next income happens, and so I can put every possible penny towards it. The thing I forgot to think about is that my budget should now run from the 6th of the current month through the 5th of the following month, not ending on the last day of the month!!!
After all, how do you track your monthly expenses and such if you’re paying for things 4 days after the monthly budget closes? So d’oh! I’m going to start February’s budget tomorrow, 2/6, since that’ll be the day my first income is availble in my checking account.
And as a side note, due to my computer purchase and payoff in January, I didn’t really have enough extra to do a debt payment after all. I put $125 towards savings, paid a ginormous credit card bill to pay off the full balance incurred during the previous month, than adjusted some of my bill paying to cover February bills. That forward bill-paying adjustment means that I didn’t have anything extra to pay this month, but watch out for next month! Oh, and instead of putting $350 towards my mini-fund savings (pet, car, gifts, clothes, photo funds), I only had $250, so I’m $100 short. Oh well, but it’s only for January.
Have a good day all!
January 2009 budget – Part I
This is part 1 of my January budget.
Still working out the kinks, but the numbers are in for the month. I am realizing that my food spending is always going to be my biggest challenge. I also decided that any money not spent in the budget is going to be put in little mini-funds for a few select categories. If I go over in restaurant spending, that overflow will have to come out of the leftovers (to stay with the food theme 
, so while I hope to put $1200 towards the car for the year, I may not always be able to put down $100 (the monthly budget for that category) each month as savings, or whatever is left unspent for the month. I think this is going to be the best system for me to have savings that are not the emergency fund, and are readily available for miscellaneous spending that I expect to have throughout the year.
With that decision made (whew!), here’s my results for the month. Overspending is shown in red. 
| Category | Spent | Budgetted |
| Food | $317 | $350 |
| Restaurant | $123 | $100 |
| Gas | $101 | $90 |
| Bills | $1,202 | $1,190 |
| Credit Payments | $388 | $400 |
| Pets | $16 | $115 |
| Coffee | $44 | $25 |
| Liquor | $15 | $45 |
| Entertainment | $14 | $25 |
| Photo | $0 | $50 |
| Clothes | $0 | $40 |
| Fees/Subscriptions | $0 | $30 |
| Home | $10 | $40 |
| Car | $6 | $120 |
| Gifts | $26 | $40 |
| Unexpected | $14 | $0 |
| Total Budget | $2,250 | $2,700 |
A few things of note: I realized that I don’t have anything set aside for medical necessities (like emergency items from the drug store, or a co-pay if I need to go to the doctor). I don’t really want to put MORE money into my budget; it’s already fairly high, so I think I’ll just let those unexpected, unbudgetted spendings come out of the overall unspent money that I was planning on saving. I don’t ever expect to spend EVERYTHING in my budget in any given month. I mean, I should be at least $300-$500 under, always, for all categories.
I’ve also decided I’ll need to save money in the following categories: car (for large repairs), gifts (xmas 2009!), clothes (expensive shoes or a coat next winter), photo (see my previous post on my upcoming art show for an explanation on framing costs), and pet (for vet visits).
Here’s my entire income/spending layed out:
| Income | $3437 | $3437 starting |
| Budget | $2600 | $837 left over |
| Snowflakes | $0 | $837 left over |
| Debt Payment 1 (Citibank) |
$1065 | -$228 overspent |
| Debt Payment 1(Line of Credit principal) | $0 | -$288 overspent |
| Savings | $125 | -$353 overspent |
As you can see, I “overspent” quite a bit this month. I had $400 in my checking account to start, plus a little extra in cash, so I’m not actually in trouble, but this was a particularly expensive month due to my laptop purchase and my FSA spending ($300 which will be reimbursed shortly).
My goal is to have about a $400 checking account balance outside of the budget, so when I get my FSA claim check for $300, it will probably stay in the checking account rather than go towards debt. So I may not be able to make any extra debt payments this month, dangnabit.
Part 2 will go into an explanation of the why and how my spending is as it is (ie, my excuses for overspending .
