Paper or Plastic?

I was doing pretty well on the cash envelope system for 2 or so months so I decided to take a month and see if I could budget just using the debit card.  The main reason for this is that I feel slightly uncomfortable carrying a giant wad of cash around and also feel slightly uncomfortable leaving it at home too.  But it’s also because I use a credit union that’s nearest branch is a pretty decent drive away.  I mean, there are ATMs everywhere, but ATMs can’t give the change I need to separate everything into envelopes.  So I thought I’d experiment for a few weeks and see.

The first two weeks were an experience for sure.  What I discovered is that, no,  debit card money is easier to spend than paper money and infinitely more difficult (for me) to track in real time.  It’s way easier to glance into my wallet before entering Trader Joe’s than to sit in my car looking on my phone to see my bank account and adding/subtracting the scattered deductions from my bank account.  So I went a little over the first two weeks.  The last two weeks I decided to try a hybrid where half of my money was paper and the other was plastic.  This might have worked but since I got sick and had to dip into additional funds for doctor bills, prescriptions, over the counter stuff, Gatorade, etc, I couldn’t really test it out fully.

Basically, I learned that I need to just pull out the cash.  I’ll likely be adding a bank (I plan on keeping my current credit union right now simply because I like them and it’s super simple in the age of direct deposit to manage a savings account online) once I move and I’ll make sure that this time I pick somewhere with a ton of branches.  

Speaking of moving, I’m still job searching.  I have a lot, like, upwards of 300, inquiries out there and I’m basically planning to take the first serious offer that comes my way.  I’ve been glancing at apartments, mostly in the DFW area, and it’s amazing what I can get for my money out there.  For what I’m paying for a basement studio without a bathtub or dishwasher in a nice but older neighborhood in Minneapolis, I can get a 800+ square luxury apartment in a super fancy area with up to two bedrooms, two full baths, in unit full size washer and dryer, and a dishwasher.  They also throw in things like stainless steel appliances and granite counter-tops but I don’t really care about those so much.  I just want a light, bright, spacious place in a nice area.  And a vent hood over the stove.  And windows that open.  You don’t realize how much it matters until it’s gone.

A Woman's Perogative

I missed Money Monday because my work schedule has been nuts.  On top of that I feel like I’m going through a financial midlife crisis and I’ve only been on a budget for a 4 weeks!  So much has changed in such a short amount of time that I honestly feel dizzy!  For starters, in 4 weeks I’ve managed to put $800 in my savings account.  I’m not sure how I managed to not only spend that $800 every month but dip into savings pretty regularly too.  I don’t feel as though I’m super deprived.  I am able to pay all of my bills, grab a burger every once and a while with friends, prepare healthy whole meals to eat on all week, and still have some cash in my pocket for fun stuff.  

My outlook has changed significantly.  Originally, the main reason I put myself on a budget was to buy a house.  Only now, I just really want to see zero balances on my cards and loans.  What finally made me turn a corner into full on Dave Ramsey mode was the fact that my variable rate student loan just hit 10% interest.  Up until now it had always been the same rate as my federal loan so it didn’t seem like that big of a deal.  Then I sort of fell down the student loan rabbit hole and discovered that I’m not even paying the monthly interest on my federal student loans!  Every month $30 or so dollars has been added to my overall debt.  

How did I not realize this before now?  I seriously berated myself.  I SHOULD have been more on top of my balance.  I SHOULD have educated myself and became more knowledgeable about where all my money had been going.  I think a lot of my issues came back to denial.  I didn’t want to be almost $50,000 dollars in debt so I fooled myself into thinking I only owed so and so much a month.  I perpetuated the myth that everyone has student loans and everyone pays on them for the rest of their life and there wasn’t a problem with it.  NO BIG DEAL!!!  Except now it is a big deal.  

Another reason that I didn’t realize what was going on?  Trying to get a real monetary number online from lenders is a real headache.  I can never actually get anybody on the phone.  Finally I was able to get one page up that showed how much interest I accrued on my larger loan.  At first I thought it was super reasonable!  Until I pulled up my taxes last year and figured out that the tiny number right under my gross owed wasn’t my yearly interest owed.   IT WAS MY MONTHLY!!!  And it was $30+ more a month than what I was paying!  I take full responsibility for not being as smart about things as I should have but I feel like most people aren’t going to put in the amount of time I spent researching to try and get an actual breakdown of monthly carrying expenses of the loan.   And the loan companies want that because the longer we pay on a loan, the more money they make off of us.

So, long story short, I drank the Kool-Aid.  Pass the envelopes, please.

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Did your goals change on your way to being debt free?  It’s entirely possible that my debt journey could change from what I’m considering now but probably not until my minimum payment would cover any interest along with a hefty hit to the principal.

Anybody have any ideas for a side hustle to help knock this debt out?  I specialize in employment law compliance and writing poorly on the internet.  That’s got to be a money maker, right?!

Financial Friday

 It’s been one week since Operation: Stop Spending Money began and so far I think it has gone well.  Especially for the first week ever on a true zero balance budget.  I separated all of my envelopes by how my paychecks fall.  Since I get paid biweekly, I’ll be refilling every paycheck approximately half of my monthly budget for those items.  My monthly budget is:

·         Home (groceries/house supplies/basic toiletries/paper products/cat food/any food related purchase, including restaurants): $300/month ($150/paycheck)

·         Personal (mostly for clothes, cosmetics, and any entertainment expenses):  $100/month ($50/paycheck)

·         Gas:  $90/month ($45/paycheck)

Things like rent, car insurance, cell phone bill, etc., all get paid directly out of my bank account.  I tried to give myself a reasonable amount of money so that I wouldn’t just get frustrated and quit.  It’s not quite perfect yet, but I’m not 100% sure if that’s because I didn’t give myself enough of an allowance in personal or home.  When I replenish my envelope funds next Friday (payday), I’ll probably keep the amounts the same and see how it goes.  I’m really hoping that I can get by on what money I have in envelopes through next week but I won’t be too upset if I have to “borrow” $40 from my bank account to get me through just so I can still enjoy the holiday season, especially since I’m not traveling home.

Right now I have $4 left in the home budget (mostly due to an unexpected rodent problem due to a neighbor who is less than immaculate) and two or three restaurant splurges I should have avoided (once I left my lunch for work on the counter at my house, which not only caused me to have to buy lunch but also ruined a frozen dinner.  This left me one meal short for my week.).  I have $20 left in my personal budget and $20 left in my gas budget.  I did go off completely off plan once due to a necessary midday wardrobe malfunction that lead to me putting $30 on a credit card.  (Full disclosure:  I still have money in my checking account but all of my bills for the first part of the month haven’t been deducted yet and I wanted a bit of a buffer zone so the money I have sitting in my savings account didn’t get moved over to checking.  Plus, my interest rate on that card is pretty low so it’ll only end up costing me around 50 cents to get it taken care of next month.)

In theory, any money that doesn’t get spent in the home budgets roll over into my travel fund.  The travel fund doesn’t really get funded like a regular envelope though.  It’s just any extra, unexpected income that I might get.  For example, I just upgraded my cell phone and may be selling my old one on Craigslist or eBay.  Since that’s not money that I banked on coming in to pay bills or direct to another purpose, that money would go into the travel fund.  The gas fund will keep rolling over in case emergency or unexpected travel by car is needed (this would have been great to have earlier in the year for a death in the family).  And the personal money left at the end of the month will roll over month to month into a clothing allowance envelope because clothes, especially winter clothes, aren’t cheap, wear out, and require replacement/dry cleaning/mending/alteration, etc.  (If I had had this earlier this week then I wouldn’t have put any money on my credit card!!)

On Monday I’ll go over some plans that I think might help in planning my  budget for the upcoming year as well as some mini goals to hit by certain dates.

Do you work off of a budget of any kind?  If so, what works for you?

What percent of your take home to you commit to household needs and groceries?  I think I’m around 11% total for all home purchases including groceries.