January: Part I

4 Jan

I’ve called this January: Part I because it’s the beginning of the month and I have no idea where it will end, financially speaking.  I thought I’d talk a bit more about my plan for this…(what’s a suitable word for what I’m doing?  Quest?  Folly?  Adventure?  Descent into darkness?  I’ll have to come back to that. If you know of a good one, please feel free to share it in the comments section.)

First off, I realize that this… undertaking (?) requires the use of a strict budget.  For that, I’m using the Dave Ramsey’s Financial Peace University model.  I took this course about 4 years ago when I was in college, and it has served me very well.  When you’re like me and paid via hourly wage, it’s very hard to find a workable budget model.  The FPU has one.  Basically, you write out all your expenses each month and their associated costs (rent/ mortgage, insurance, food, clothing, entertainment funds, shoes for poor children in Africa, etc.).  Next, you organize those expenses into priorities (is food more important than seeing the newest Russell Brand flick?  Do we really need to put gas in the car or can we just hitch the family German Shepherd to the kids’ sled?)  Then, you write out how much money you actually made that month (for me, this averages around the $1500 mark).  Finally, you run your finger down the prioritized list and draw a line where the money runs out.  And you stick to that line.  (Trust me on this- it sounds scary, but there is no greater joy than telling a bill collector that they are “below the line this month.”  I’ve done it- it’s awesome.  The poor little buggers get all flustered.)

My major priorities are:

1) Tax (because as a consultant, that doesn’t come out of my paycheck.)

2) Living expenses (roof over the head, gas in the car, power turned on, etc.)

3) Eppy (the pet rabbit.  She has to have proper rabbit food or else she eats the carpet.)

4) Entertainment (Ramsey’s very clear on this- leaving this piece out will make you blow your budget quicker than anything else.  I get $30 a month.  That goes a long way when you’re a discount card hoarder like me.)

5) Student Loans

Now, you may be wondering what I’ve put student loans at the bottom of the list.  After all, isn’t paying them off the whole reason I’m writing this blog?  Yes.  Yes it is.  However, living on a budget doesn’t mean you have to sacrifice all the good.  It just means keeping track of where every dollar goes and making sure each amount is reasonable.  TAlso, the order of my priorities doesn’t reflect the percentage of my income that goes to each.  That list would read something like this:

1) Tax (20%)

2) Living expenses (30%)

3) Eppy (a measly 1%)

4) Entertainment (2%)

5) Student Loans (47%)

So while it’s last on the priority list, I am transferring roughly 47% of my income each month via online bill pay (.25% off my interest rate for doing so, btw.  Every fraction of a cent helps.) to a company who only knows my name when I’m behind on payments.  Man, personal responsibility sucks.

One final note- those of you who had a calculator handy might have noticed that I said my monthly income averages around the $1500 mark.  I then said that I send 47% of that to the loan company.  In my first post, I said my monthly payment goal was $961.  47% of $1500 is NOT $961.  It’s $705.  Where is that extra $251 going to come from, you ask?

Therein lies the adventure.

Also, anyone need a babysitter?  I come cheap.

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