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Plan #2: Change to My Savings

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As previously mentioned, I have been adamant in my savings since I started my new W2 job back in March. I have saved 10% of any money that has come in with the ultimate goal of $10,000 in savings. Now that this goal is in sight, it is time to turn my focus to my debt and cut down on my savings.

Where I’m at Now

I’ve recently posted my Monthly Budget and my overall Debt Load. Then I took a cut in works hours and added a new sport. I am LOVING the freedom of working less hours per week.  I get home and get to sit down with the kids without feeling like a weight is on my shoulders to get back to work. I get to spend some of my “down time” when the kids are at practice reading a book for fun rather than focusing on work projects all the time.

However, I do need to look and see where the money is going to come from for Princess volleyball. I do not want this new expense to adversely affect my Debt Payoff Plan. I’ve spent about an hour a day reviewing my budget line by line to see what I can cut or move some money around.

Cut My Savings

Two things stand out as the places to cut…kids’ activities and related costs AND savings.  I think most everything else is pretty bare bones; although, I am looking at that too. But for now, I have decided to change my savings plan.

Instead of saving 10% of all income, I am now going to save 10% of my W2 income only. This cuts this line item almost in half and makes up some of the deficit.

This savings in coupled with my 401K deducted automatically from my W2 income and my Self Lender account where I save $97 per month. I’m looking for a few more cuts before I finalize my new budget.

Thoughts?


56 Comments

  • Reply debtor |

    Hope,

    Your monthly budget doesn’t account for savings in the expenses section so where does that money come from? Did you already deduct it from the amount listed as income?

      • Reply debtor |

        No.

        I’m asking the following:
        Your total personal + business + debt payments sum to $6063. This does not include savings. Your total income sums to $6662. Where is the $700 coming from? $6063 + $700 = $6763 which is less than your income.

        • Reply Hope |

          The shortfall based on that budget was right at $101. Many of those bills are yearly versus monthly, and there is wiggle room in my monthly spending. It was the truest picture of my finances to post that way.

          The $700 was based on my regular income. I have been very savings conscience the last several months. And my 1099 income has fluctuated based on what work I can pick up, any over flow went right into savings. Does that answer your question?

  • Reply Ruby |

    Looks like that can work. I’d love to hear more about your plans for your savings ie is this a job loss savings? After your experiences, how much are you aiming for (certain amount of money, # of months of income replacement)?

    I do think you are cutting it a bit close. It’s definitely doable, but not if you add any new expenses or debts. That was my main concern. Not that I think sports for children are not important or not valuable. But that you were adding several new expenses and debts in the last month, before paying any other debts off. If you can maintain this budget for awhile, and knock out a few debts (And snowball that amount) you’ll be in a good place.

    • Reply Hope |

      Ruby,
      You are right it is alot closer than I would like. I think that’s why the income loss has hit more harder than expected. On paper I can make it work, but psychologically, it’s a bigger hit than expected.

      At this point, I am looking to have $10K as I never touch it EF – job loss, housing issue, etc. In my head, that number sounds like a good cushion to prevent us from repeating our last two years. After that, there are a couple of things I would like to do…first is save for a couch. Our only living room furniture are two recliners that are 25+ years old each. I am longing for the day I can have a comfy couch to sit on. Most likely after I am firmly in the $10K savings range, I will start saving for a couch.

      I don’t know what after that. Haven’t thought that far.

  • Reply Jess |

    So you’re saying that 10% of your income over only 7 months is equivalent to $10,000???

    • Reply Hope |

      My 1099 income fluctuates, the $700 what I published based on my regular income.
      And I am not at $10K quite yet, but I am close enough that I am ready to start turning my focus.
      Make sense?

      • Reply Jess |

        No, it really doesn’t make sense. Where is all this money coming from? You’re net income is almost $180,000/year?

        • Reply Hope |

          I do websites, I create training presentations, I help small business owners with systems, and so on. I am always advertising to do odd jobs. Anything over our monthly obligations for those first months went into saving. I was really tight. I didn’t ever want to go back to where we were these past two years. I work 3 jobs consistently. The money comes from working.

  • Reply Rebecca |

    If your savings is approximately $700 a month, how did you reach $10,000 in only 7 months? 7 months of $700 deposits is only half that – $4900. I’m confused; in order to reach $10,000 in 7 months, your deposits + interest would have to be double that $700 – over $1400.

    • Reply Hope |

      My 1099 income fluctuates, the $700 what I published based on my regular income.
      And I am not at $10K quite yet, but I am close enough that I am ready to start turning my focus.
      Make sense?

    • Reply Hope |

      It’s still a plan, but decided to focus on the 3 debts first for end of the year…Amazon (done,) computers and one of the collections accounts. To do that, I had to cut the monthly payment back to $400 for right now. But it is still my plan to play that off ASAP. I like not having a car payment!

  • Reply Cory |

    I think what people are trying to say is: If you want me to spend my time reading your story and investing energy in motivating you and giving you advice. I want you to be honest and transparent. Put all the numbers out there, don’t leave off some income or some savings, don’t round. Be 100% transparent, lay it out, you don’t need to apologize for your decisions. That would be a lot more engaging. Trying to give advice on half information or partial truths isn’t helpful for anyone it just causes frustration for all parties. I think you would get more out of your efforts if you were 100 % up front, gave all the numbers, ran your decision making through a blog post (example would be the competitive volley ball team). Ultimately you are only looking for advice. You make the decisions. Put out what you are noodling, you will get a range of opinions. They may or may not help you make a choice and then YOU make the choice of what to do and live with the consequences. Just my $.02

    • Reply debtor |

      omg, this is precisely what I just wrote on her previous post!

      Transparency and not half stories. It always feels like we’re not getting the full story. It makes it hard to want to give advice.

    • Reply Hope |

      Thank you, Cory. I definitely need to be more upfront with my thoughts of what is coming for us (am doing that in my next post.)
      As for transparency I have put a lot out here that is uncomfortable. I have always said I hustle and work side jobs, it’s what I have done for 10+ years now, my income is variable. I based my budget off my steady income. That is what I live off of. All the extra, it’s going to savings, and I’m not touching it. It does not come into the mix when it comes to my debt journey. But I now have a cushion that I am comfortable with…and now I am ready to once again turn to debt.

    • Reply Lucy |

      I agree with you, Cory. I understand that budgets can change, but on a site titled “Blogging Away Debt”, I also don’t understand how Hope would add debt that isn’t totally necessary. To me, changing the numbers to somehow justify and make extra expenses (such as sports) work just doesn’t make a lot of sense. Why not be 100% committed to getting out of debt? Isn’t that what this blog is all about?
      As someone who is also digging my way out of debt, I like to encourage others who are on this journey. While it is my choice to take the time to read this blog, I wish Hope would stay focused on her goal of getting out of debt.

      • Reply dh |

        As for transparency I have put a lot out here that is uncomfortable.

        If being transparent is too uncomfortable for you, do everyone a favor, and stop posting on this “get out of debt” blog that YOU opted to post on. Stop wasting people’s time … both your time and everybody else’s.

        • Reply Lucy |

          BOOM! I so agree! I so wish blogging away debt would add some new bloggers who are serious about getting out of debt….and willing to do whatever it takes, without making excuses!

  • Reply cwaltz |

    You need to relook at your budget your numbers don’t work based on what you put on this site. You had a $599 savings with your income at 100%, not $700(that’s why your budget with the $700 savings line item read a $101 deficit.) You have said you are taking an $800 pay cut voluntarily. That means your budget now has a $201 dollar DEFICIT. That’s zero savings even with no changes to budget pay off and you really need to pay off the computer to get rid of the $85 payment(that with your Amazon gets you to $110 of that $201 deficit.) you posted a $400 allotment for the car with an actual payment of $302 to accelerate your pay off but with a $91 deficit still existing you really can and should only pay the minimum. Doing so would net you $88 of the $91 deficit. That would leave you with a $3 hole before taking into consideration that you are talking about adding an expense line of $300 this month(you could technically take from savings to cover the cost) and a $175 line item for 4 months following which would also need to come from savings since you technically ,with the pay cut, have no more cushion in your budget(unless you are intending to not only eliminate savings but pull from self lenders or as you called it your Christmas fund. Now it is feasible that you could tell the kids that their activities are part of their Christmas gifts but even with the elimination of ALL of the self lender line item you still only net $97 of the $175. That means the $78 x 4 months will need to come from your cushion. So……. in order to eliminate the $85 line item you would need to take $2600 from the $10,000 leaving you with $7400. You would need to pull $300 from the fund to fund this month’s volleyball. That puts you at $7100. You would need to, in addition to giving up the self lending Christmas fund, pull 78 x4 or $156 from the fund leaving you at around $6950 or essentially a little more than a month in expenses.

    It is doable but you need to be honest with yourself, you are choosing the children’s recreation and activities over having a safety net that you are adding to regularly. There will be no savings because there is no money in the budget for it. As a matter of fact to make the additional line item work you are deciding to PULL from what you have worked hard to save.

    Again I implore you to consider very, very carefully where the money for your new line item is going to come from. You have allowances at $400. Is this number bendable? You have a “spending” line item. What is that? Is it bendable? Your groceries and eating out are set to $600. Is that number reasonable or do you end up pulling from spending or allowances to cover more of the costs?

    A budget will not work if you are not honest about what numbers are needed to make it work.

    I think most of us are not opposed to Ms Volleyball getting an opportunity to have fun and socialize. We’re concerned though that your numbers aren’t going to make sense once the reality of that pay cut sinks in.

    • Reply debtor |

      i’m not sure if I’ve understood perfectly, but from Hope’s responses, I think she is saying she has extra income from her side job that she did not account for in her budget post that covers all these shortfalls?

      Is that right Hope? Maybe you don’t want to put the actual numbers out there, but i think you should at least note it so people grasp the situation better (ie – that note could be, $700 from side earnings – even if the actual amount you earn is more).

  • Reply TENN |

    Why not report what your savings was as of 10/31? Close means different things to people. To me, it means within 1-2 months (i.e. under $1000 to be fully funded) of being fully funded. To others it might mean more than halfway (i.e. under $5000 to be fully funded).

  • Reply Sarah |

    Hi Hope,

    Maybe to help straighten out the confusion, you should post an October income/expense/savings report that shows your numbers for the one month. Sometimes it is easier to report what has happened than to report what you think is going to happen.

    Also, if you use a credit card to pay for some of those expenses, that is not a “debt”. Those expenses go in the expense column. “Debt” is something that has happened in the past that you haven’t paid off yet. If you use the Amazon card again, that is a current expense.

    I wonder if you should use a debit card to track expenses instead of credit…then you will really know what you are spending.

    • Reply debtor |

      i think this would be useful. I feel like I always get what Hope would like to do and not what happens.

      Remember like a year or so ago, when she suddenly popped in and had bought a car? I remember scratching my head and wondering where the money for that came from.
      I also think (i could be wrong, too lazy to go back and reread) that in previous posts you said so HAD a 10k emergency fund and not that you were close? I think it’s all these things that might seem minor to you (ie, if you have save 8500, to you that’s practically 10k especially if you saved it in a short period of time and you’ll get to the 10 quickly) but adding them all is causing readers to be frustrated.

      It’s like the car salesman who is like, here is this perfect car with low mileage and all that at a great price…then you probe more and more and it comes out it might have been in an accident (but it was fixed by the manufacturer so it’s practically new).

  • Reply dh |

    Everything is always sorta / kinda / more or less. Nothing is ever clear.

    Personally I’m fed up with it. I feel committed to this blog because of Ashley. Hope has disappeared for months on end. Now suddenly she’s present but despite all her many posts, still nothing is really clear.

    And her last post before this one, she wanted kudos because she paid off her $500 Amazon debt. Which would have been great news, if she hadn’t also committed to $1000 for her DD’s volleyball.

    I have always cheered Hope on but at this point it seems hopeless, and personally I like this blog (which I have read for many years) because most of the posters do their best to improve their situation.

  • Reply dh |

    It’s great that you’ve almost reached 10K in your EF Hope … but I’ll say what many posters have said before. Given some of your 25% or more interest rates, those debts ARE your emergency.

    You don’t own a home at this point so you don’t need a 10K EF. Decide on a lower number you feel comfortable with, ie 5K. Skim the rest off the top, pay off or down your high-interest debt, and resave.

    AND STOP MAKING MORE FINANCIAL COMMITMENTS.

    Best of luck as always. But we all know how well you listen to advice.

    • Reply Jen From Boston |

      She has children, so I think $10K is appropriate for an emergency fund. But, I DO agree with you on no more financial commitments.

      • Reply Laura |

        We are in the minority on this one but I also think a 10K emergency fund is not unreasonable, especially since Hope had been unemployed and homeless not that long ago. I do think way too much money is being spent on expensive extra curricular activities. That $1000 would be much better spent paying down some of the high interest loans. The gym fees sound high to me too. I get wanting to give your kids every experience you can but what kids need more is a financially stable home.

  • Reply Anony |

    I don’t think you have a clue as to what your real expenses are. You might think $10,000 is so much money but its not even 2 months of expenses for you. $1000 on volleyball is ridiculous. You cannot afford it. You were homeless less than a year ago. Stop the excessive spending on your kid’s activities.

  • Reply Ann |

    I love reading about Hope (since I am also a adopt-from-foster-care mom). Hope, I’m thrilled that things have changed for you and you are almost at your $10K emergency fund goal. Yes, mathematically it would make sense to pay those high interest loans off. But knowing that you have the money to never get in such a bad place is a wonderful goal. I’m sorry you are getting such difficult feedback.

    I think there is an assumption that the bloggers, specifically Hope, think the same way as ‘we’ do — the ‘we’ being readers of the blog who have made it out of debt or who have never made those financial mistakes.

    I think people are correct in pushing Hope to be more transparent with all her funds and budgeting. But I don’t think Hope is doing it to confuse us or trick us. I suspect that is the way she thinks about things. I have people in my life whom I love, but who are not good with money. And they are just so fuzzy about their money, in a way that I can’t understand at all. And reading Hope’s blogging posts reminds me of that — and that the way to help my people is to not yell at them, but to gently help them get their financial accounting in order. It is not easy for them. I love putting things in a spreadsheet and checking it again. I don’t think everyone likes doing that.
    Anyway, sorry, Hope, that people are giving you a hard time. I agree that it would be better if you put everything out there. And I also agree that funding another expensive activity is going to be rough. I wish you had somewhere else in your budget to cut so that you aren’t putting yourself in a bad position again. We readers worry that if you are saying yes to the volleyball expense, AND the summer camps, that when something else comes down the road, you will say yes to that again, and it is a slippery slope.

    • Reply Joe |

      The high interest loans discussion is the one that I feel like everyone on this blog about getting out of debt could get behind. Yes, I understand that somehow Hope feels better about having the money in her emergency fund even if the debt is accumulating 25% interest. But that doesn’t make it not a TERRIBLE FINANCIAL DECISION. Of course, everyone makes their own choices but I guess I thought the goal of having the blog and commenters was to make fewer terrible financial decisions.

      Just to frame the numbers, the annual interest just on the computer loan is something like $500. So we are talking a week of camp, half a season of volleyball, etc. just down the drain.

      • Reply Hope |

        My goal is to have the computers paid off my the end of the year, beginning with a $500 payment this week. I recognize the mistake and the need and am working to correct it.

  • Reply Reece |

    I’m a bit fed up with the lack of transparency and half truths as well. A few posts ago Hope said oh yeah, I went ahead and spent money on a credit fixing service w/o asking advise from this community…yeah, that’s not true. Last year she asked about it and received a resounding NO DONT DO IT from the community and went ahead and did it anyway….and got suckered. Just like everyone told her. Now she’s lost income and adding pretty large expenses for sports. And maybe another car for her son? Ugh.

  • Reply Helen |

    I’m still waiting for Hope to come clean about the new dogs she’s added to the family. Why aren’t they included in expenses?

    • Reply Hope |

      Our FOSTER dogs do not come into our budget because ALL expenses for fostering animals are covered by the Humane Society. But thanks for asking. And they have had such a positive impact on my children, giving them something to love and comfort them. The intrinsic value of the animals is insanely positive, and when we can and it will be smart, we will adopt again. But for now, FOSTERING ANIMALS, we can do.

      • Reply Laura |

        This sounds like a good compromise while you get back on your feet. I’m sure the kids like having animals around the house again.

  • Reply Chantal |

    Oh dear, your entries are an unreadable tangle. With all your different jobs here and there I do hope that you are keeping up with your IRS obligations?

  • Reply Chantal |

    As one who home taught my two children for three years I cannot get my head around you leaving your children alone at home each day. This is not teaching. It is near criminal neglect.

    Are you keeping up with your IRs commitments, with all your here and there jobs, few of which are explained here?

    I am sorry but it is time this site drops you, this place should not be enabling you to crash your way to disaster.

    • Reply debtor |

      i think it’s a bit much to use the phrase criminal neglect. How would you expect a mother who is doing so much for the sake of all her children to react to a comment like that? Throwing around terms like that is never productive in my opinion. Hope has already said she is reevaluating her schooling options so obviously she is sensing a need for change from the status quo.

      The problem is people lob comments like this nilly-willy and then Hope focuses on these seeming attacks and then doesn’t pay attention to the other more helpful criticism. It’s hard not to take people questioning your mothering personally and I have a feeling Hope might be more receptive to other advice if folks left that out.

      • Reply Hope |

        Thank you, debtor. I think the readers have forgotten that I also have a 19 year old at home who is home all the time with my 12 and 13 year old. In addition, not counting the time that they are asleep, they are only home alone for 25 hours. In no way, shape or form, are my children neglected or otherwise.

    • Reply Jen From Boston |

      GenX former latch key kid here – her youngest are 13. While spending weekdays alone is a bit much, I don’t think it’s quite criminal, especially since I am sure they can quickly reach Hope via cell phone. I do hope her children have been taught what to do in case of an emergency, and not to open the door to strangers, etc. It’s not ideal, but it’s not horrible.

      • Reply Hope |

        Thank you, Jen, I’m feeling a bit beat up regarding my schooling choice. And just to be clear, I have a 19 year old at home who is home with my 12 and 13 year old every day (especially since he totaled his car and no longer has transportation.)

    • Reply Hope |

      In no way is leaving a 19, 13 or 12 year old alone at home criminal neglect.

      I have addressed the tax question before, the short answer is yes.

  • Reply Chantal |

    I’m sorry I thought my first entry had not gone through.

    Hope:
    please, please get advice from whatever social care services exist in your state on how to get your children into school and provide a safe and stable ongoing environment for them.

  • Reply Stephanie |

    Hope,
    Others will disagree with me on this but here goes.
    Thank you for sharing your story and journey at the level of detail you are comfortable. The journey to debt free isn’t always a straight line, especially when kids are involved.
    Readers get frustrated because it seems you make emotional or knee jerk decisions. I trust that you have pondered many choices and made the right decision for you and your family. You lead a different life than me so I may not always agree with your decisions but they are your decisions.
    I know comments here can be stinging ones. I believe that most readers follow along and want to see you succeed. The readers offer their opinions and advice. Take what is useful. Many of their comments are meant to help. I’m sorry that others question your integrity and role as a parent.

    • Reply Hope |

      Thank you, Stephanie, especially for recognizing that I am trying. And for encouraging me to keep going. I am committed to becoming debt free.

  • Reply csdx |

    Hey Look even if I disagree about things or whatever I think you are getting a bit beat up in the comments, so here’s some encouragement. Good on you for having a budget and planning out how to make it work rather than just bury your head about it.

    I think people might have unreaslistic expectations about finance, it’s not just about robotically following a budget, but I think we can also help make our emotions work for us.

    I think you used it in a bad way by trying to trick/justify to yourself that you’re still saving “10%” with your redifinition. I think it’s more important to just own it and say, “I’m only saving 5% but it is going to something I think is more important”.

    Here’s an idea:
    In your budget list your items most important to least. So when an new unexpected expense comes up, and you want to make it fit, you have to take money from whatever’s at the bottom of the budget to fit it in. It’ll reduce the mental load because you’ve already predetermined which category will be the first to drop, so you don’t have to do an entire budget review each time. Also this can help because if you get a response like “no way would I ever give up my current item for this new expense”, you’ll get a to use your gut reaction to that exchange to help inform whether it is a good expense to take on or not.

    • Reply Hope |

      I LOVE the idea of reorganizing my budget from most to least important items. That will definitely help in this situation.

      As for the saving, I have literally been saving 10% of EVERYTHING, any deposit into my account 10% was immediately sent to a savings account. And I mean EVERY INCOME. Now I will only send 10% of the $1786 direct deposited every two weeks from my W2 job. Because my 1099 income typically is larger than my W2 income, I will actually be saving less than 10%, I think. But I am okay with this because I have been VERY consistent over the last 7 months.

      Thank you for your encouragement and understanding. I am feeling a bit beat up, and I am truly trying.

  • Reply Lisa |

    Can 500+ be paid towards the cheerleading next month when the Amazon bill would be due? If so, it could be paid in full in two months.

    • Reply Hope |

      I paid $300 towards volleyball this past week (it was the last of the money saved in No Spend October,) and then must pay $175 per month for 4 months. This amount does not overwhelm me, AND I have asked her dad to kick in some money (I hadn’t heard back from him on this request yet.)

  • Reply JayP |

    I thnk you have a large heart and are definitely trying to do the best for your family, which is difficult as a single parent and also a foster parent! I think a sumamry of a lot of the commenters is that this is a blog about people with a lot of debt trying to get out of it, and showing 100% commitment to that as well as progress. I thought I saw a post where your debt was around $71K. You seem to have a high income now. Is this debt higher than 6 months ago? Lower? You should post your total debt recap every month like Ashley was doing if you want to see if you have made progress. Your budgets are not budgets, they are just one month summaries of your spending.

    You have a lot of justifications for all your kid’s spending, which is fine. But you probably should be posting somewhere else, because if you are really honest with yourself your priority is not getting out of debt(someone with $71K in debt wouldnt be looking at private schools and 3 week summer camps if they really wanted to get rid of it). This is not to say you shouldn’t be very proud in all that you have accomplished, because you’ve come a long way. Seems more like a story for a struggling Mom’s blog, or foster parent blog. Nothing wrong with that at all!

So, what do you think ?