Recalculating

12 Mar

My ideal loan balance as of March 12, 2012: $9,083.42

My actual loan balance as of March 12, 2012: $10,341.01.

I think it’s time for some rethinking of the plan.

No, I’m not giving up.  I’m just recalculating.  This time with the help of a financial calculator I found on Google, since we all know about my track record with math-related subjects.

Based on my current loan balance and interest rates (4.75% for two groups, 6.8% for the other two groups), my monthly ideal payment is now $1335.28 for a final pay-off in December.  My monthly income is around the $2,000 mark each month.  My fixed bills (ie, things that can’t be changed) are  $839 each month, plus another $400 in flexible costs (ie, things that change each month).  That leaves me with about five hundred dollars to make up each month if I want to hit this new goal.

Take a deep breath, because the belt is about to get tighter.

Here’s what’s going to change:

1. Retirement and vacation funding: drops to $10 each per month.  I can’t drop these completely, since Roth IRA contributions are tax-deductible at the end of the year and the vacation fund gives me something to look forward to, but reducing the payments into each saves $100 a month.

2. Entertainment budget: drops from $50 each month to $20 each month.  That’s still enough for one fun thing each month.  Plus, I can get free books from the library and free video games from work.  The hardest part will be breaking myself of the “I really want a new book/ DVD/ CD/ t-shirt” habit. Doing this saves $30 a month.

3. Grad student loans: $50 payment each month drops to $0 each month.  This will probably come back to haunt me later when those go back into repayment, but right now that’s $50 a month that I can use elsewhere. This saves $50 a month.

4. Savings budget: drops to $5 a month.  I have an emergency fund in place in case the bottom drops out of my employment (or some drunk totals my car again).  The savings fund was mainly going to support my tendency to go over the $50 entertainment budget each month.  Cutting that out saves $10 a month.

5. More work hours.  This seems like common sense, I know, but it’s an actual possibility for me.  I’m not getting all the hours I could be at my various jobs, which means I’m not getting all the money that I could be.  Therefore, I am going to attempt to schedule myself a bit better.  This means setting aside specific work hours each day, and not letting the “I work from home therefore I can move work around” mentality convince me otherwise.  This also means not letting others try to pull me out of the office before I’ve finished work.  And maybe turning off the internet so I can focus. Doing this can add up to $600 a month.

All in all, that will save me an extra $190 each month.  If I can shave off a few dollars from other places, then I can probably make that an even $200 a month.  If I can succeed in better time management, then I can easily hit my new monthly goal.  I just have to stay focused.

Oh look, a kitty.

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8 Responses to “Recalculating”

  1. Dan and Shan March 12, 2012 at 6:11 pm #

    “Roth IRA contributions are tax-deductible” is actually not quite true. Traditional IRA contributions are tax deductible, but when you take that money out in retirement you are taxed on everything including the growth. With a Roth you still consider that contribution part of your ordinary income for the year, but it GROWS tax-free so you won’t owe anything on it in retirement. Definitely talk to your tax advisor, though.

    Great job on the debt payoff so far. You can do it!

    • Losing My Cents March 12, 2012 at 7:52 pm #

      This made me check out which kind of IRA I have, just be sure I’ve been doing taxes right. Haha. It’s confusing, but my bank assured me that I have been correct in deducting the contributions each year. They’ve never steered me wrong before, so I’m glad I checked with them. Thanks for the advice.

      • Dan and Shan March 12, 2012 at 9:42 pm #

        Check out the IRS website here: http://www.irs.gov/retirement/article/0,,id=202510,00.html. “Roth IRA contributions aren’t deductible.” Maybe you do have another type of account? Your bank representative may not be a tax professional either.

      • Losing My Cents March 12, 2012 at 10:34 pm #

        I do have a regular IRA fund. I also have a separate Roth IRA money market fund. The regular IRA is the one that gets the contribution each month, and therefore the deductions each year, not the Roth one. I’ll have to go back and edit the post.

      • Dan and Shan March 12, 2012 at 11:11 pm #

        Well good for you for contributing to a retirement account no matter which one it is. It will add up over time! 🙂

  2. John M March 12, 2012 at 9:54 pm #

    December will be here before you know it! Hopefully you have this stuff on a spreadsheet (OpenOffice? It’s free.) so you can create a histogram to watch your balance steadily being hammered into nothing. There’s nothing like visual satisfaction!

    Great job!

    • Losing My Cents March 12, 2012 at 10:35 pm #

      I am tracking this on an Excel spreadsheet. I’m also tracking my monthly budget, so that I can see where I’m spending more or less than I think I am. This helps me fine-tune the budget each month. And yes, the visual satisfaction is wonderful. 🙂

  3. Crystal March 14, 2012 at 7:48 pm #

    If I had $ I would pay you to figure out my student loan situation. But maybe if I had $ I wouldn’t have the situation to figure out!
    🙂

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