I am a 26 year old full time student. I also hold two part-time positions, 2 executive board positions, and am active in organizations at school and in my community. I just happen to also be a 26 year old woman who lives in a room in the basement of my parents house who's in a ton of debt. Yes, it may sound tragic, but trust me, it could be worse.
My motivations for moving back into the nest were two fold: one, I have a heaping scoop of debt from my irresponsible spending that I am starting to climb my way out of, and two, this location is closer to school and allows me to focus on my education while saving money on gas, tolls, and the other incidental expenses of living in an apartment with my boyfriend.
It's not all peaches and cream. For example my mother and father, whom I love with all my heart, are not exactly the people I want to see when I walk in the door every single night. My boyfriend Marc is. Formerly, we shared an apartment in the créme de la créme of areas in the city and I enjoyed preparing complex nightly meals that we would share upon his arrival from work. I miss the "Honey, I'm home! How was your day" type fare, and I certainly miss our pillowtop queen size bed...though I must admit that I selfishly stole the mattress warmer when we split our living arrangements. It is a comfort beyond words in the cold basement of my house. I also miss having a place to entertain, and being the envy of my friends because of my fancy apartment with the top-shelf view of the city skyline. As they say though, desperate times call for desperate measures, and here I am, blogging from my basement. Marc and I have liquidated most of our furniture and other luxury items, and he has downsized as well, moving to a quaint, and adorable little apartment about 45 minutes away from me. We are both now comfortably living within our means :)
The purpose for this blog is to share the hardships and victories I encounter over the next 12 months as I try to shave down my spendings habits and pay off my credit cards and other expenses. I will also be contributing money into a savings account.
So, what's the damage, you ask? Here is my current monthly payments:
Credit Card - $163.00 minimum
Cell Phone - $122.50
Car Insurance - $217.00
Car Payment - $277.00
TOTAL - $779.50
Net income per month - $2217.00.
THE CREDIT CARD
As you can see, my take home pay far exceeds my monthly payments, so in an effort to speed up the payoff of my biggest debt, a credit card with a total amount due of $8900.00, over the next 12 months I will be paying $800.00 a month. I used a rate calculator from www.bankrate.com to estimate my payoff needs. According to that, I will absolve my debt for that card by May 2010, perfect! Additionally, I have cut up this card so that my desires to spend will be mitigated.
This brings my total monthly expenses to $1416.50. I will then have an excess of $800.50 per month.
SAVINGS
I've always heard old people talk about this whole "save, save, save" concept and never understood it. Why save when you can spend, right? SO wrong. I'll be depositing $266.00 into a seperate checking account at my local bank until I find something more lucrative.
I found another blog that pretty much lays out why we should save our money here: http://www.whatithinkabout.com/why-you-should-start-saving-money-today/
Makes sense right?
INCIDENTALS
Of course, I need money to eat, play, and live, so after all my expenses and the savings I contribute, I will have $534.50 leftover. $150.00 I plan on giving to my parents for food (and pity), but the other $384.50 will be for all the other stuff.
So, I'll keep posting if you keep reading and please feel free to share any of your advice on saving and paying off this debt...I sure do need it!
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Start with Mint.com or similar site if you haven't yet. Good way of keeping track of where your money goes, as well as setting budgets. Mint.com and other sites will even go so far as to email and/or text you when you've reached a maximum on a certain budget goal...
ReplyDeleteIronically though, I try to use a credit card whenever possible so I can keep track of all my expenses and categorize them online. (However, VERY importantly: I never allow myself to have an outstanding balance on a credit card, the exception being a CC that had a 0% APR promotion for one year I used to pay off the remainder of my student loans- and I had a carefully crafted plan to make sure I would pay it all off within that one year.)
All that being said, if you can't handle the temptation of spending when you have a CC, then, sure cutting it up and not having one is the way to go. An alternative could be having a separate checking account that has a monthly budgeted amount automatically transferred to it- and when the money's gone, you simply won't be able to use it anymore. That way you could still track your expenses but not go over budget... the caveat is that you'd have to find a bank that definitely does NOT have over-limit fees or non-sufficient funds fees based upon pre-authorizations/attempted but refused transactions by the merchant.
I have plenty of other tips I will post at some point, but one important thing you've done already is realizing the problem and committing to fixing it- The tricky part is to keep with it. Checking your progress regularly on a consistent basis (by blog post or otherwise) is a must.
I'm sorry if I've only mentioned things obvious to you, but some are things I use myself for the goal of saving more money. I'll be following this blog for sure. Good Luck Steph!
For serious - good luck! I tend to fall on the saver side of the fence, but you are getting a good foothold on all this.
ReplyDeletePut the savings into a savings account (I used INGdirect and really like it) rather than a checking. It'll grow more interest and it's harder to get to which means you're less likely to tap into it. -cass