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?!

Total Money Monday

 I’m not a natural when it comes to personal finance.  I love shopping and having nice, top-of-the-line, shiny, brand new things.  However, I’d also really like to be financially secure.  I read Dave Ramsey’s Total Money Makeover a few years ago and the envelope system definitely worked for me.  I just stopped when I moved to Minnesota two years ago and since then I haven’t been the best budgeter.

The truth is, I’m in a better financial situation that I’ve ever been.  I mean, I’m not rich by any stretch of the imagination.  There’s just no reason for me to live paycheck to paycheck at this point in my life.  And that’s exactly what I’m doing.  That’s why I was at the bank withdrawing cash on Black Friday instead of standing in line for a new TV (something I REALLY, REALLY WANT too BTW). 

After looking at my particular financial situation, I will be changing a few things though.  For example, I only have two credit cards and will be concentrating on paying off the bigger of the two first.  The interest on the bigger card is significantly more and paying that card off will save me upwards of $80 a month to roll into other debt.  My student loans, however, have the same interest rate so I’ll go ahead and concentrate on the smaller one first.  Those are my only current debts (~$2,800 in credit cards and ~$45,000.00 in student loans) but my student loans are more than what my grandmother’s house cost when they bought it in the 1970s!

The next difference is I won’t be pouring all of the residual cash after I pay my monthly expenses into my student loans or credit cards quite yet.  Why you ask?  Because rent in MSP is expensive.  I’m pretty sure that what I pay for my 500 square foot basement studio actually pays the entire mortgage on my landlord’s triplex.  Since this is actually one of the few major cities where buying actually makes more sense than renting, I’ll be buying a house. 

I’m hoping that I’ll be in a place by the end of winter or beginning of spring in 2016.  There’s no way I’ll be able to save up a full 20% down payment by that time but even if I do an FHA loan with 3.5% down and have to pay PMI, I’ll still be paying less than I am now.  And then I can deduct an interest from my taxes.  I’ll also have more space and the opportunity to have family come visit, maybe even move up, or at least look at getting a roommate to help fund my debt snowball. 

After I buy a house, then I’ll start focusing one student loan at a time, followed by my mortgage.  In the meantime, I’ll be visiting the bank every two weeks and filling up envelopes.   I’ll do another post on how I setup my envelopes to work for me right now.

Do you have problems budgeting?  This method is the only one that has EVER worked.

Do you regret taking out student loans?  I wish every day that I could turn back time and not go to graduate school.