What a weird time we are living through.
It’s been difficult to pause my brain and not expect to make any progress. Some of my gigs have dried up a bit and money has flowed out of my account faster than usual. Weird and stressful, indeed.
My significant other recently got the green light that he is approved for disability so we can breath GIGANTIC sighs of relief that we will have definitely have two incomes moving forward from here. Living on one in the midst of a pandemic is no bueno.
So, that being said, I’ve decided to rethink my budget and the things I pay for. I have long been frustrated by bloggers who “PAID OFF $80K IN 24 MONTHS!” or similarly paid off “$16K in ONE YEAR on a $31k salary!” Of course people will want to know your story with a title like that. I believe if you are going to put that out there, you should put all of the details there as well. Tell us what you paid every month, how you paid it, how much you make, where you made cuts, how you got creative. That’s the only way you can really help other people on a similar journey.
I’ve been reading such blogs for a few weeks now. Unfortunately, none of them have really spelled out how they were able to pay off such extraordinary debt sums in such short amounts of time. I can only guess that they had higher incomes and spent more lavishly before they decided to tighten up.
These type of stories are unhelpful to me because I don’t have a high income. I also don’t spend extravagantly to begin with so all of the advice to cut the “extras” don’t really apply. There isn’t much “extra” to trim.
So, I’ve decided to apply a couple of tactics I have pulled from a couple of these stories and decided to reevaluate every line in my budget. What can I cut? What can be optimized? How can I do this better?
Here’s my starting point:
Netflix: $6 (family plan)
Cell phones: $167
Health insurance: $127
CC minimums: $116
Discover loan: $369
Car insurance: $220
These are the bills that I am personally responsible for in my household. My s.o. pays the mortgage, his own gas, his health insurance, the lawn people, and the electric bill. I realize everyone has a different set up and that’s why I’ve decided to spend more time thinking about how to optimize all of this for our lifestyle. You must make it fit for your life.
This list does not include any fun spending or taxes/retirement/savings. I also set aside $250 a month for taxes (as I am a gig worker extraordinaire) and $100 for retirement savings.
I sat down on several different days to determine how to come up with approximately $2500. This would pay all of the bills, allow me to set aside the tax amount, save a little for retirement, put some into a regular savings account and have a little fun money.
I built a schedule around all of my gigs on a weekly and monthly basis. I have found that both of these timelines are helpful as I can have an idea of whether I am on track or not but also see that I have the entire month to hit the goals if one week falls short.
I teach English online with two different companies (EF and VIPKid), walk/host dogs on Rover, sell on eBay/Poshmark, and deliver orders via Grubhub and Doordash. For the time being, I am not delivering orders and am instead focusing on things I can do from home while sheltering at home.
If I can check these boxes, I can hit that $2500 goal. Anything beyond these numbers would be extra to go into savings or debt payoff.
92 VIPKid clases
80 EF classes
8 Rover walks
$500 on eBay/Poshmark
This is a reasonable schedule for me to keep up with that allows me to take weekends off. Next, I brainstormed ways to cut back.
I decided to follow Jordan’s (of Fun Free or Cheap) concept of budgeting weekly. I also used her baseline for groceries/household spending ($300 for 2 people) and cut it back a bit more aggressively to $250. She also includes dog food in her grocery budget but we have 3 dogs and we just couldn’t make that work.
I also cut a larger bill (that Discover loan) into weekly payments as well. I canceled the automatic lump sum payment and I’ve instead been paying 1/4 payment each week. I anticipate saving on interest and accelerating the payoff this way too.
We were fortunate to have some extra money come in from a lawsuit that’s been pending for years. We used some of that money to pay off our cell phones last week. I switched us from Verizon to Mint Mobile and expect to pay $30 a month instead of $167 in the coming months.
My car insurance renewal amount is lower for the coming period because we have driven so little in recent months. My s.o. hasn’t been working outside the home for the last several months and the shelter at home orders have kept us at home as well. I’ve also inquired about changing the status of one of our vehicles to a secondary car since it is driven very little. I’m waiting to hear if this will further reduce the premiums.
I’ve lowered the gas allowance a bit (although it’s still higher than it probably needs to be), and expect to have extra in that category each month. I always project higher than I think I will need so that I will have the wiggle room if it it turns out that I do need it.
The revised budget now looks like:
Cell phones: $30
Health insurance: $127
CC minimums: $116
Discover loan: $369 ($92.25 x4)
Car insurance: $195
= $1171 (+$162)
Total: $1693 (+$280)
I anticipate having extra leftover funds in the gas budget (especially while we continue to shelter at home) and am waiting to see if Trim was able to apply a discount to my internet bill.
Now that $2500 can cover all of the bills, pay the taxes, save for retirement, go into savings, buy some fun things, AND pay extra towards debt payoff.
I plan to show how I’m tracking income, debt payoff, and new ways to save in the coming weeks. I couldn’t find a blog with the total transparency I was looking for, so I’m going to create it.
Here’s to progress moving forward!