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Jan 5, 2015    |       20 comments

Matt Here

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Hello everyone! For those who may not know, I initially interviewed to be part of this blog last year with this post (Matt’s Intro). Unfortunately, I was not selected by the community to be one of the original 4 posters (tbh, I was a little heart broken). Despite this, I was not deterred from getting rid of my debt. Now that only 2 of the original bloggers remain, I was asked by Jeffrey (with some help from the other bloggers) to start blogging here on a weekly basis; I will be taking over the Tuesday spot. I could not be happier to share my journey with you.

A couple of months ago, I actually posted an update of where I stood in my debt journey in the comments section of one of Ashley’s posts. I’ll just copy and paste it in it’s entirety:

Well…. I hadn’t heard back from Jeffrey so I figured I’d give you an update…so here goes… From my introductory post, my debts were student loans @ $86,797.91, a car loan @ $10,188.50 and a mortgage @ $71,444.55. My current debt stands at $65,191.89 of student loans, no car loan (paid off last month) and $70,661.61 of the mortgage remaining. A quick calculation shows I’ve paid off $32,577.46 worth of debt in 6 months. I currently make $60,000 a year or $847.50 a week after all my with withholdings are taken out.

My original timeline, when I wrote my introductory piece, was to be debt free in 42 months. My current timeline is to be debt free in 23 months.

Here’s what I did to pay off so much so quickly in only 6 months:

  • I got rid of Directv, firstly. This saved me 89.37 per month. Unfortunately, I was locked into one of those 2 year contracts but you can get out if you pay them $20 per month remaining on the contract. I paid $260 to get out, but I recouped that money in only 3 months. I was only watching ESPN at the time and we have Netflix, which made cutting the cord easy.
  • I had almost $5,000 in an emergency fund which I decreased to $1,000 and used the $4,000 to pay down my car.
  • I had $1,000 in an investment fund which I cleared out to pay down my car.
  • We have a really good system in our house where I pay the mortgage and all the house bills (gas, electric, water, sewer, garbage and internet) and my GF buys all the food. This said, I have a weekly, $0 based budget, where I determine my weekly expenses and “pay myself” $70 cash from an ATM on payday for any misc. food and gas for my car. I then put the rest of the money towards debt. I get paid on Wednesday and by Thursday I normally have $0 in my checking account. The $70 I pay myself was a trial and error of which amount of money allows me to go the whole week with some cash, without having any left over on the next payday.
  • I do a lot of driving for work (which is usually where my $70 cash goes), which they reimburse at $.56/mile. I get paid for this and reimbursement for my cell phone at the beginning of each month. I use this extra to pay down debt, which can be anywhere from an extra $300-$600 per month.
  • I’ve sold a lot of things during the summer to make some extra money to put on debt,
  • By far the biggest thing I did to pay down the debt was withdraw from an old retirement fund I had with the government. When I fully withdrew the account it had roughly $24,000 of pre-tax dollars. After taxes and the penalty I was left with $15,000 or so. HIGHLY controversial (especially if you read over at Man vs. Debt) but I had help making the decision. I sought out a Dave Ramsey ELP (which is a fantastic program) who figured that for my age (27), my discipline and dedication, the amount of money was relatively low, I could pay it back quickly and it was ALL going towards paying down debt then the financial 10% penalty was worth the emotional benefit of having less debt. I don’t regret this decision for one bit.

As you can see, things are a lot different when you’re unmarried and without kids. I can sacrifice in many ways that you could never (and for good reason) do with your husband and two daughters. Although great for paying off debt, my lifestyle is certainly not without its cons either- I’ve lost touch with most of my college friends and even though my family is only 1.5 hr drive from me, I haven’t visited much in the past year. But in my opinion, it’s all temporary, and once the burden is gone, I can budget for night’s out and travel and vacations and all the other fun stuff I’ve forgotten about.

Thanks for listening and sorry for the length, just a lot to go over, lol. There’s light at the end of the tunnel!!

So that’s where I stood as of September 30th and not much has changed. I continued to pay down my debt into October, but given the holidays and needing a little distraction from debt pay down, I took “off” November and then used December to build my emergency fund back up. All said, I’m ready to hit it hard again and cannot wait to get some pushing and prodding from the BAD community!

I’ll be posting my as of 1/7/14 debt numbers at the end of the week.

-Matt

Jan 5, 2015    |       4 comments

Budgeting

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As I mentioned before, I analyzed all my spending from 2014 and have made some budgetary changes to reflect real-life spending. The biggest of these changes is that I’ve added additional budget categories (instead of lumping things together as “miscellaneous”), and I’m allowing for more fluidity; meaning the same budget categories won’t be present every month.

Just so we’re all on the same page, this is a work in progress. I’m still tinkering and figuring out how to do this correctly. I would imagine it will probably take a few months for me to really get a hang of it and to anticipate a month’s needs.

So, that being said, I’ve decided I’m going to do away with providing a “planned budget” for the month and, instead, will only provide summaries of the my spending once a month is complete. I’ll still be doing monthly planning, but because things are going to be more fluid, it will be difficult for me to allocate every dollar to a category at the beginning of the month when I don’t know for sure what expenses are going to pop up. To account for this, I’m budgeting every dollar that I KNOW has a job already (i.e., rent, water, electricity), and trying to anticipate some one-time expenses, but then I’m leaving a good chunk of money (what used to be my “miscellaneous” budget) in the bank and will allocate it as expenses pop up. Make sense? I decided to do this because it doesn’t make sense to me to give you all the boring stripped down numbers at the beginning of every month (rent, utilities, food), because they’ll always be fairly consistent. Instead, I’m only going to provide a spending overview once the month is done. Sound fair?

That being said, I owe you a budget update from the month of December!

December was a bit of a “wonky” month, so it’s a bit unique compared to other months. We had a couple really large expenses ($1600 root canal & $1100 car maintenance). We’ve been living on last month’s income for several months, but with $6550 to spend for the month and well over that amount in expenses, I ended up having to use all of last months income, plus dip into some income from the current month in order to cover all of our expenses.

Here’s what I did:

$6550 = last month’s income

$225 = Christmas money (from my savings account)

$1100 = from current month’s income to cover car repairs

$1600 = from current month’s income to cover dental work

= $9475 for spending in December

 

PlacePlanned BudgetActual Spent
Rent10551055
Electricity170164
Water6056
Natural gas2023
Sprint (2 lines)115114
Cable/Internet100100
Car Insurance5646
Health Insurance350380
Trash3535
Debt20782078
Miscellaneous3003361
Groceries400371
Baby Purchases12001092
Gasoline100103
Saving for Irregular Expenses495495
Total Budgeted65349473

 

After adding in the above funds, we were barely able to cover our expenses for the month. Why so high?

  1. Turns out our health insurance is rising after all. In honesty, I have no idea why it’s higher this month (I need to call and find out). I received notice that our monthly premiums would raise to $400/month for the 2015 year. Still much, much lower than other insurance plans I’d priced, but a $50/month hike from what it used to be.
  2. Christmas & Travel-related spending. Our actual travel expenses were pretty low, and we tried to keep gift-giving reasonable, but it did cost additional money outside of our regular budget.

Here’s how the miscellaneous category broke down:

  • Entertainment: Budgeted = $20, Actual = $21
  • Eating Out: Budgeted = $100, Actual = $61
  • Personal Maintenance: Budgeted = $30, Actual = $10
  • Other: Budgeted = $300, Actual = $3270

But if you take the “other” category ($3270) and subtract the dental work ($1600), car maintenance ($1100), and hotel from traveling to Austin ($140), you’re left with only $430 spent for everything else (including all the “regular” stuff that falls under this category in addition to all Christmas-related spending). Still a bit high, but not as bad once you realize that the overage is mostly due to those two really high bills this month (dental + car maintenance).

So there you go. And then, just to contradict myself, let me tell you about a couple of expenses that I’m planning for the month of January….

First, hubs and I are both getting our wills done! 2015 = year of becoming an adult, remember??

Also, I’m going to try to keep the costs low-low-low, but I have a couple gift-giving expenses to budget for. One friend got married, 3 family members have birthdays (including my step-dad’s big 60th birthday), and a baby shower (I’ve already got the gift for this, but need to mail it). Haven’t decided if the dental stuff (exams & x-rays) is going to happen this month or next month. Guess we’ll see how it goes!

Are you implementing any big budgetary changes for 2015?

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