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Ashley’s April Debt Update

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I’ve seen lots of comments (on all the bloggers) asking for more openness and transparency. Hopefully this post provides you with that (but, as a result, its a long one so maybe get a quick snack ready!):

April Debt Amounts and Payments

 Place APR March End Balance April End Balance Monthly Payment
Capital One CC 17.9% $0 $0 $0
Wells Fargo CC 13.65% $7429 $5705 $800
Bank of America CC 7.24% $2198 $2175 $35
Carmax Car Loan 7.75% $23736 $23385 $470
License Fees 2.7% $5720 $5672 $55
Mattress Firm 0% until Sept 1st $1281 $181 $100
Medical Bills 0% $8328 $8228 $75
Total $48692 $45346 $1535

 (See the starting balances from when I first started blogging here) A couple notes: Remember that I’m also paying low monthly payments toward my student loans (not in table, but can be seen here. Amounts to $87/month), so our monthly debt payment actually amounts to $1622 (not $1535). Additionally, we made 2 big snowflake payments at the beginning of the month (with extra money from last month since we had a higher income than normal – discussed here). We paid $2,000 in snowflake payments ($1,000 each toward Mattress Firm and Wells Fargo), for a total of just over $3500 toward debt in the month of April!!! (that’s the $1622 “regular” payments + $2,000 in snowflake payments).

April turned out to be another good month financially. Our take-home pay after taxes was $8290. I just want to say that these really good months are NOT “normal” for us. Our annual average is right at about $5,000/month so this was one of our best months….ever! We’re going to talk about what to do with the surplus and will update with our May Debt Update (since the snowflake payments won’t occur until during the month of May). Right now, I’m thinking 2/3 or 3/4 will probably go straight toward debt (paying off Mattress Firm and the rest to Wells Fargo), and the other 1/3 (or 1/4) will go toward making a debt-sinking fund. This is something Adam and Emily did and a commenter suggested it, too. The reason is that summer is Chris’ “busy” time at work and I worry about what happens when winter rolls around and we start having more “lean” months again. The idea is that we keep some money in a savings account but once it reaches a certain dollar amount, I make a big snowflake payment. In hypotheticals, I could save a portion of our income until we get to $5,000 then take half ($2500) and put toward debt, then save back up again and repeat. That way we always have some extra cash on hand in case Chris’ business has a slow month, but if things continue going well we can siphon some off and put toward debt, instead. I will update (in the May Debt Update) with exactly how this surplus was handled. I hope this isn’t confusing. Basically, anything “left over” after paying our basic bills has been used as 1-time “snowflake” payments toward debt, but it doesn’t get applied until the following month (since our income is variable, we wait until the month is completely over to assess how much “left over” we have, so our snowflake payments are always a month behind the pay, if that makes sense). Now, onto the budget:

How We Fared in April

We ended up coming in at- or under-budget in all categories except one.

Category Budgeted Actual Spending
Rent 1055 1055
Electricity 100 62
Water Bill 75 53
Gas bill 75 25
Sprint (2 phones) 150 150*
Cable/Internet 85 85
Car Insurance 90 90
Health Insurance 350 350
Waste Management (trash) 35 35
Debt Payments 1500 1622**
Groceries 400 398
Baby Purchases 600 566
Gasoline 100 57
Miscellaneous 250 355
Savings for Irregular Bills 190 190
Total 5055 5093

*Remember, I got a deal on our phones, but I won’t see the savings until our next bill.

**This was our “normal” debt payments (minimums for everything except Wells Fargo bill), but does not include large 1-time snowflake payments (because those were paid using leftover funds from March)

Quick re-cap:  In April we made $8290 – $5093 = a surplus for the month of $3197

As you can see, we barely slid in under budget with groceries, and I want to try to reduce this category so I’ll have to pay close attention to figure out why we’re barely making budget ($400/month). I’ve switched to making so much homemade (bread, bagels, tortillas) and DIY (cleaning spray, baby wipes) that I feel like we should be spending less on groceries, but for some reason we’re not. I’m going to examine this closely during May and figure out WHY. Soooo, the one category where we went over-budget: “miscellaneous.” I budgeted $250/month (down from $350 last month) for this category and broke it down into 4 sub-categories:

Category Budgeted Actual Spending
Entertainment $20 $19
Eating Out $75 $110
Personal Maintenance $30 $7
Other $125 $219
Total $250 $355

Clearly we went way over budget (by more than $100!), with the culprits being “eating out” and “other.” I think some of this was growing pains. I just slashed the budget in this category by almost a third, and you can see that our spending was definitely in-line with our “old” budget(<<link to old budget).

I’ll admit it – I hate the envelope system. I don’t know why (bulky? annoying? inconvenient?). But I have to admit, I think it may help with this situation. If I look in my envelope for “eating out” and there’s only $5, I can’t say “screw it, order a pizza” when I’m exhausted and don’t want to cook (confession: that happened once last month). Instead, I’ll suck it up and make dinner. If for whatever reason I really can’t handle it then we’ll eat PB&Js and live another day. It’s a mindset-change from what I’m used to but it needs to be done.

So….May = Month of the Money Envelopes I’ll let you know how it goes.

Envelopes:

  • Groceries = $380 (trying to cut it by $20, down from $400)
  • Entertainment = $20
  • Eating Out = $75
  • Personal Maintenance = $20 (trying to cut it by $10, down from $30)
  • Other = $125

Have you tried the envelope system? If so, did it work for you? What other system(s) do you have in-place to curb over-spending? Given our current debts and APRs, (and also knowing our variable income and wish to do a debt-sinking fund) how would you appropriate the surplus $3200 from April?


Gift-Giving (Second Try)

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Editor’s Note: Sorry guys! I had intended for this to be published on Friday! I goofed and accidentally set it to publish on Thursday. I pulled it immediately when I discovered my error so I apologize to Stephannie (for hijacking her day!) and to you for the confusion! I still value any discussion surrounding this topic, so please feel free to comment! For those of you who commented yesterday, I did see your comments (and THANKS!!! for your suggestions). I just wanted to let you know they didn’t fall on deaf ears! When I pulled the post they were deleted but I DID see them!!

On Monday I’m going to do a full budget update so you can see how I did for the month of April (I already told you here that I went over budget in one specific category).

Something came up in the comments that I’d love to get readers’ opinions on…..

GIFT-GIVING!

I had told myself that we were only going to do cards right now (from the Dollar Store – 2 for $1), until we get out of credit card debt. I’ll probably spend a little on Christmas, but not on regular birthdays and other special occasions.

Well, I’ll just admit….that didn’t go so well last month.

I’ll spill the beans and say the category I went “over” on in my budget was…miscellaneous. Shocker.

One of the reasons is I went out and got a couple gifts for people! I spent $15 each on 2 separate people (so $30 total) for birthday gift cards to tuck inside the cards. These are close friends of mine that have sent me things for my birthday and I feel indebted to each of them for going above-and-beyond to help me out when Chris was sick at the end of last year. We don’t live in the same city, but they sent care packages and cards and were just beyond sweet. All of this to “justify” (I know, there’s no justification!) why I spent the money.

Well, then May rolls around.

I check out the calendar and – to my dismay – realize that we have FOUR family birthdays this month: My Dad, my husband’s Mom, and both of husband’s brothers. Plus, there’s Mother’s Day.

If we were to spend $15 per person per event (birthday/mothers’ day), we’re looking at $90!!! Just so you know, my “other” budget only allots $125 per month, so $90 basically wipes it out!

What should we do??

The only answer is to NOT send gifts. I am struggling with it.

I know our parents want us to be out of debt more than they’d want some little trinket or something for $15 or less, but there’s an emotional aspect to a gift, too. It says, “I love you! I am thankful for and appreciative of all you do! I wish we were spending Mother’s Day/Birthday together! We miss you!!”

I feel like it’d be easier if we lived in the same place because we could cook for our Moms and have them over, or same thing for the birthdays. But we don’t. So……yeah. I’m at a loss.

What do you do for loved one’s birthdays/Mother’s Day/special occasions?

I’m leaning toward maybe sending some pictures for Mother’s Day inside a card (the cost would be less than $2 each for both cards & pictures). But what about the birthdays? I know my Dad and husband’s Mom don’t care about gifts (maybe I can send more pictures?), but the husband’s brothers probably expect some sort of gift. Ugh! This is one part of budgeting that is no fun! Surely everyone will understand in the end, but I still want to do more than just send a card with a couple pictures. I just don’t have the funds to do so! : (

BONUS QUESTION

Since this post is a repeat for those who saw it yesterday, I wanted to ask one additional “Bonus” question for your opinions.

Here in Tucson it is already H.O.T. Really hot. We had hit the mid-90s almost 3 weeks ago. This weekend was a bit cooler (mid-80s), but now we’re right back into the mid-90s.

I had been holding out on turning on the A/C for as long as possible. But when its in the mid-90s and upper-90s its too hot to not have air conditioning running.

So my question to you is…..At what point do you turn on your air conditioning? And what temperature do you have yours set at?

I have our A/C set to 82 degrees when it runs during the day (and turn it down to 78 at night), and I try to not turn it on for as long as possible in the Spring but I cave and turn it on when the outdoor-temperatures hit 90 or higher. What about you?