My financial train just derailed

December 31, 2010 at 10:07 am (emergency fund, truck, unexpected expenses)

I was *so* close to paying off my last credit card and tackling my final big SBA loan. Argh! And my truck has turned into a serious money sink this month. It was overdue for an oil change. Got it done and it turned into fixing a bunch of oil and fluid leaks. They didn’t tell me about it, so I got $50 in labor for free and just paid for the material/fluids. $52. Then they told me it was more than overdue for some things. It’s been months since the last big overhaul, so I made plans for it to go in for a tune-up and engine cleaning (to find out where leaks are occurring). Total: $532. However, during this time, they found out that that the clutch was slipping (badly) and it needed new a new clutch, and all the bells and whistles that go with it (resurfacing the fly wheel, yada yada). ARGH! $1200 extra. And it still needs new front tires, but I’m going to have to wait on the $200-$300 on that. I guess that’s what I get for having an older used vehicle. It’s at 170,000 miles now. It better not having anything go wrong for at least 6 months or I will cry.

This has turned into a very expensive month. I have cleaned out my emergency fund, my vehicle fund, my xmas fund (obviously since I spent everything this month!), and pretty much everything except for the kitten fund (which I am not going to touch, as that is for a true emergency with my 2 cats).

So I’ve cleaned out all my savings, and still will have $1,600 to pay on my credit card, which puts me back 2 months on my informal payment schedule. J still owes me rent and his half of some big home purchases this month, so I should be getting about $600 soon. That will help quite a bit, once he actually gives me the money.

The new year starts tomorrow and I’ll be starting it from a very low financial position. I think I’m going to start really tightening the belt. Seriously curtailing the eating out, buying more cheaply at the store, significantly reducing the amount of alcohol I purchase (no more bottles of wine). At least for January. I need to get back on firm financial footings.

We’ll see if my salary changes (negatively) on Jan. 20 – the company I work for has been losing money, so I expect if no raise, then a possible salary cut, or reduced hours.

I will make this vow. If they choose to cut my hours I will get a part time job.

Here’s to wishing you all health, wealth, and financial stability in this coming year!

Best,
debtmaven

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Has anyone used their EF? I haven’t…much

September 9, 2010 at 6:48 am (emergency fund)

If there is any such thing as a 10 commandments to personal finance, one of the most important is to build up an emergency fund (hitherto known as “EF”) before paying down debt. I totally get the concept – save up a reserve of money for those bigger unexpected events so you can pay them off without resorting to using credit cards. It’s especially difficult in the beginning. For me, I was all gung ho about wanting to reduce my debt to ashes! I wanted to start RIGHT AWAY! Unfortunately, $45K in debt won’t just disappear overnight, no matter how hard Iwanted it to. So I built a budget, paid all my debt minimum payments, and paid myself first (into an EF of course) before paying extra towards any actual debt.

Once I got to $1,000, I was set. I had that cushion…just in case – something – happened. Only it never really did. Oh sure, my truck has broken down, 3 times in the last year!, but my mini-savings fund for my vehicle covered it mostly (every so often I would be short say $200). My computer broke last month and had to be repaired. I had to move and poney up last month’s rent + deposit and all that. I have had to consistently cover reduced income from J’s unemployment checks (60% of his prior income!) since March. But ya know what? I haven’t really had to dig into my emergency fund almost at all.

Most of the time if something unexpected comes along, I just pay less towards debt that month. I have used it on a rare occasion to cover rent if I don’t have time to deposit my paycheck in time, but I’ll transfer the funds back within a day or two, but I really don’t use it.

I also have access to several credit sources that have fairly low rates. My SBA loan has 5%. My BECU visa is 6.9%. If it’s a difficult amount to cover all at once with my usualdisposable income, then I put it on a credit card – that’ll give me a few weeks of breathing room, and up to 2 months to pay it before any interest accrues. Plenty of time to not use my EF, and just pay less in debt for both months. You see where this is going?

I know I’ve been quiet on the blog in the past few months, but if anyone is reading this, have you used your EF? Has it been helpful?

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Revisiting the ideal emergency fund

February 21, 2010 at 9:21 am (emergency fund)

Up until this past week, I thought having a $1K emergency fund would be more than sufficient. My job is ultra-stable, not in danger of disappearing or being cut down even if other people have reduced hours. So I never worried too much about it – if something really BIG happened, more than I had saved up for, then I could always temporarily dip into my (now paid in full!) personal line of credit.

I get the concept of having 3-6 month’s of living expenses saved up, “just in case.” I’d love to do that! But I really want to pay my debt off first. Saving and increasing my 401K percentage and contributing to an IRA will just have to wait until my debt is GONE. It should be about 3 more years. 

There is one major flaw with my accepted theory. An injury or health problem that causes me to be unable to work. A co-worker broke her wrist a week ago, outside of work. So worker’s comp won’t apply. She’s unable to do most of her job (it is physical and requires movement and range of motion). In effect she will be losing quite a bit of work until the whole healing process is complete. 

If I had a similar situation, say I get into a bad car accident, or fall on a hike and break my leg or something, how would I handle that? Right now my EF is at $700 (but as I’ve mentioned recently, when I get my tax refund in the next 2 weeks, I will drop in another $300 to fully fund it). I think I’ll continue to gamble on nothing catastrophic happening. In the long run, having no debt and needing to use some to pay for it vs. having a big savings fund to deplete but not being able to make any headway on paying down debt come out equal in my book. So I guess I’ll continue with my status quo. 

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A few financial tidbits for the month

November 13, 2009 at 12:22 pm (emergency fund, unexpected expenses)

From my $450 car repair total (2 tows, a triple AAA membership and a $250 mechanic bill) $200 will come from my car fund – I had completely forgotten I had anything left in it!, and $100 will come from this month’s budget, so I will only have to deplete my emergency fund by $150!!! Not as bad as I had feared.

I can return my purchased (and unused) alternator at Napa and refund my credit card by $200.

I saved a tank of gas by not driving this past week, carpooling with J in his car (we have slightly divergent schedules, so we often don’t carpool), and using J’s car to do errands or just not go anywhere. I saved about $30-$35.

Found out that my landlord has paid the electric, water, sewage bills through the end of the year, so I don’t have to pay for December. Though once I do live in my house, these bills are paid quartly, so I may get burned when I move out (unless they prorate them with a refund at the end?).

I have to go get boxes for moving at the supermarket. I alsorealized that I can utilize a TON of used cube boxes from work, so I can pretty much start packing this weekend.

We had an unexpected transport to do last night at work, so I got a nice 4 hour overtime addition at the last minute, to my timecard. Whoo hoo! This was going to be an otherwise lean paycheck.

I also got a major deal on a rental truck from a vendor we work with. A flat $25, no mileage, for a truck  for Weds night through Sunday. Can’t beat that!!! And I can get all the padded blankets, foam, boxes, straps and ratchets that I could possibly use from work.

Things aren’t looking as bad as I had thought financially. I will spend a little from my EF, but still make my debt payments this month. I don’t want to fall behind, I’ll just have to build up my EF again. There are $750 of extra deposits that I’m going to have to supply, and I may just use part of my EF for that and pay extra in savings each month until I can get it back to $1000.

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Emergency fund: milestone reached!

April 20, 2009 at 12:27 pm (emergency fund)

Today I hit the $1,000 emergency fund milestone! I now have a sizeable stash of cash in the bank available for last minute emergencies. I can stop contributing $100 per month for the fund and can instead send that towards paying down my debt!! Whoo hoo!

This month will also see me reach past the 50% paid off amount on my personal line of credit – by the time of my next paycheck on May 5, I will have more unused credit available on my personal loan than what I owe. That will be a nice side to be on!

My job continues to be extremely secure (really, no chance of that changing unless the company goes under, and that is highly highly improbably, we’re definitely head, shoulders, and waist, possibly even knees, above water even in this economy). At this time, I have no plans to save up a 3-6 month EF in case of job loss or illness.

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Latest news after a long absence

April 14, 2009 at 2:07 pm (emergency fund, paying bills, selling art)

Haven’t had much time to blog inthe past month. I hope to change that, but it may not be possible for a few more weeks. A few things to note:

Regardless of my previous post, I am *not* considering bankruptcy. I agree, paying off $42K is doable, and I don’t want the irreparable damage to my credit. Plus, I owe it.

I landed yet another art show for June – at a very large, very public, and very busy location. I’m a bit overwhelmed – it will take every single framed work I have, and then some. It’s a VERY big space. I think I’ll be showing easily 30-40 works. Hopefully something will sell. It will also take me hours to hang – they  have an art rail at 10′ high, so I’m in for some major stress getting up in time! But way to go me!

My previous art show in March did not sell anything. Oh well. A lot of people saw it, but I wonder if my prices are too high for this economy. I’ll be trying some non-editioned work (ie, cheaper) in the next few shows.

I have about $150 in fees to get ready for my next show in May at my company’s other location. I have to get a bunch of mats cut for my photos. Luckily I have a bunch of mating free frames I can use, and I can assemble them myself, so expensive framing costs will be avoided. I think I have to increase my photo budget to $100 a month and I think I’ll be taking it off of my goal mini-funds. I don’t think I’ll be able to save up for it for many months, so it’s a waste of time to save extra. In fact, I’m expecting to go over my budget for a while in it.

This month will see me meeting my emergency fund goal of $1,000!!!! Psych! After this month, an extra hundred will be available for debt payment.

I will be getting $550 back from the IRS. Not much. But when it does, I think I’m going to break down and buy some needed software for my computer (Photoshop). I can use my bf’s educational discount to get a good rate. The rest will go towards debt, I hope. I may use part of it as a birthday sushi present next month ($50 max).

I found out bad news about my debt payment plans. My SBA loan will mature in mid-2011. That means I will have to come up with a plan to move about $20-25K into other funds. My personal line of credit will be at $0 at that time, so I can move $15K into that, as long as Wells Fargo doesn’t lower my credit limit. I’ll have to find another place for the remaining $5-10K. UGH.  This has made me reevaluate my payments – I need to really rein in my food/restaurant spending habits. They  have been atrocious.

That’s all the news for now. My debt/savings tally is correct on the sidebar. I also think I may be able to move up my goal payoff by a year if I apply myself.

Until later!

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Saving up mini funds for large yearly expenses

January 7, 2009 at 9:53 pm (budget, emergency fund, tools & tips) (, )

I’m trying to resolve the logistics of saving not just an emergency fund, but extra money for unexpected vet bills, car expenses, and gifts for the end of the year (xmas), plus a few other small categories. Originally I was going to dump them all in one big lump fund, but I started thinking it would be hard to manage the whole shebang, especially as they are used or built up (and before they are full). One lump sum wouldn’t really mean anything, all jumbled together like that! I decided the best method to handle this was to save categories in separate accounts. But to open 4+ savings accounts seems ridiculous! Instead, I will be saving up each separate “fund” in cash. Maybe I’ll start a piggy bank collection (after all, they are *so* cute), or just put them in various envelopes. I am definitely going to keep them separate from the emergency fund, which is strictly for emergencies beyond yearly car maintenance (as unexpected as those can be).

Here are the totals I’m thinking of establishing:

Car: $1200 (originally I had thought $1500, which seems too high)
Pets: $500 (just for emergency vet bills)
Gifts: $500 (xmas + anything else throughout the year)
Clothes/Shoes: $400

I may need to increase the clothes/shoes. My danskos have a huge hole in them that I’m just living, and they are my everyday winter shoe. I wear chacos in the summer and the sole is almost in 2 separate pieces (they are in exceptionally dire straights), and my running shoes are not really healthy to use for running; the padding is very very worn. Total for all three should be about $250-$270. That doesn’t leave much for major clothes purchases, but I think I can manage; I’ve been becoming a thrift store queen lately. I think the key is to shop at least once a month to keep the wardrobe fresh, replenish worn or stained clothes, and keep finding enough, as thrift store selections are severely limited.

To accomplish this, I started out with my regular monthly expenses (for the car, nothing; for the pets, I have a $90/month food and care budget). Then, I extrapolate that for the year, add the extra fund amount, then divide by 12, to get a monthly category budget. I’ll be making some adjustments from my December budget. When the end of the month occurs, any unused amount (between actual spending and what I’ve budgeted for) will go directly into the mini fund. Thus, if I didn’t spend any money on the car (gas has its own category), and it has a $125/month budget, I will put that entirety towards the car fund for the year.

Once the fund total is reached, no more saving in that area will occur. I will put all unused money beyond a full category fund towards debt repayment. For example, with a $125/month car budget, once I meet my $1200 car fund, any unspent money in the car category in the next month’s budget will go completely towards debt. When I finally do need to dip into that category (for expenses that are larger than the monthly budgeted amount), I can take it out, then replenish as needed. This may not occur until the next month’s budget, but it will happen. Best of all, a big expense one month won’t require dipping into the emergency fund (which should be strictly for actual emergencies), AND I won’t have to stop debt payments OR pay with credit cards. It may take a few months to get up and running and be a useful enough size (since I have zero saved at the moment).

This idea just happens to coincide with the new year, so starting in January will work out fabulously. After this year, I expect I’ll have money set aside as needed in plenty of areas so that I can hedge against all those annoyingly large unexpected, last-minute spending needs that usually wreck the budget.

Do any of you already have such mini-funds set aside?

I hope this idea of compartmentalizing funds for different spending categories is a useful idea. I’ll report back later on with an update on how it’s all going. It’ll be frustrating to concentrate more on saving money than actually putting money towards debt payments, but in the long run I think it will be a good idea.

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December Results

December 26, 2008 at 4:58 pm (budget, emergency fund)

I finally got my paycheck deposited and caught up on keeping tally of my expenses. I looked to be in good shape this month, with a 1 very low initial paycheck and a 2nd very large (due to mega-overtime) check. I’m just going to squeak by on meeting my food expenses, and I’m under in every other category, though I did go over significantly for coffee (I blame snow days, being housebound and getting stir crazy). I didn’t budget for gifts, so that will be a new item to add for future months.

I had $116 in snowflakes.

I just paid $500 towards my Personal Line of Credit principal. I’ve decided to focus entirely on paying down this debt – it has the highest rate of anything I owe. The SBA is low enough that I will pay the minimum only – which is simply the interest only. They do not require payment on the principal, which lets me pay even more towards the higher percentage Personal Line which is at 10%.

This month saw me have a big expected expense, my laptop. I’ll have to pay that off next month, when it hits my citibank statement. I may not be able to make any extra Personal Line payments next month, and if I don’t have enough to cover the laptop payment, then I’ll dip into my EF to pay the full balance.

I’ve also decided to put $255 towards my emergency fund, which will bring the balance up to $500! This will put me halfway there!

Totals are now updated on the right side of the page, and I’ll post a budget spreadsheet after the end of the month.

How many of you are saving or budgetting, and how did you fare this month with the economy and holiday shopping?

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My When Under Budget Pledge

December 10, 2008 at 7:12 am (emergency fund) (, , , )

Until I have my full $1000 emergency fund saved up, I will put all unspent budget directly into savings.  I think I’ll keep this pledge for any future time that I need to dip into it for a big car expense, or some other unexpected spending that I didn’t budget for (or that my budget deferred expenses for, like car maintenance).

For December, that means a lean debt payment month – I think I’ll only be able to put $200 towards my personal loan principal (much lower than I would like, but I’ve decided to make savings a priority).

Not sure yet if I’ll spend the EF on a new laptop in early 2009, or if I should save up the EF PLUS the $900 or so for the laptop. I may be trying to live frugally, but I need a more high-end computer to last me another 5 years and one that can handle 250-300 MB files in photoshop without choking! A computer is not something I will skimp on.

And to think 2 months ago I would have been amazed at the idea of both savings AND paying money towards debt! At the same time no less!

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