Paying Down (My Sanity)

Last week I wrote about how instead of driving myself crazy by only saving for my “shoulds,” I’m contributing to a fun savings fund for my wants as well.  I thought of that fun wanderlust fund when I saw this Sunday’s PostSecret, which including this exciting card:

(The front says,”I’ve booked and paid for a vacation 8 months from now that I won’t be able to take unless I quit my job.”)

I love it.

Moving on, today, I wanted to mention something else I do with my money simply for the psychological benefits. 

Once a month, I withdraw everything from my bank, in small bills so it looks like more and I do the whole throw it in the air, roll around in it thing.

Just kidding.  That would be weird, right?  Thought so.  Yeah, I definitely don’t do that.

What I meant to say is that I know it makes sense to pay off higher interest debt first.

HOWEVER…

My only debt currently is student loans.  Ugh.  I have two loans I’m repaying, both with relatively low interest rates, but the one with the higher interest rate is a larger balance, so for the sake of my sanity, I’m focusing my extra payments on the smaller loan with the smaller interest rate.

Even as I type it out, I realize it doesn’t make sense. 

There is much debate in the personal finance world over paying off smaller balances first v. paying off higher interest first (and which is truly the “snowball method”).  You’re more likely to stick with a plan when you see the progress, but in the long run, you’ll pay more if you go with the small balance theory.

For me, the psychological benefits outweigh the minimal difference in interest I’m paying on the larger debt.  I really want to cross that sucker off and, because I’m overpaying, I will be able to by the end of this year. 

Should I find myself with credit card debt again, I would definitely focus on getting that paid off because credit card companies are the devil and I refuse to give them any more of my money than necessary, but for now, my plan to pay down my sanity works for me.

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Me V. The Budget

December is not going down without a fight.  I’m participating in Reverb 10.  I’m continuing my training for my half-marathon.  I’m taking my personal training certification test.  What am I most scared of tackling next month?

Spending my money responsibly.  I’ve been tracking my spending for years, but have never come up with or attempted to follow an actual budget.  Until now. 

My spending has been out of control.  It doesn’t feel out of control, but when I look at what I’ve spent, the little things are adding up like I can’t believe. 

I have an idea of what I can live off of per month because it’s what I was spending before.  Before being when I had a job that paid absolute crap and that’s all I could spend.  It’s not anywhere near what I’ve been spending lately, although the idea was to maintain that and focus on saving.  If I can avoid spending money today, I’ll have saved $123 for the month and that’s because of a last-minute hail Mary (I’m still getting paid out PTO from my last job).  Not what I had in mind. 

For December, though, I’ve worked out a plan of how I can spend that amount – gifts, charity and fun included.  It’s based on what I have been spending in certain categories and what cuts I think I can make.  Here it is:

$30           groceries 
$70           eating out (including dates, bars, etc.)
$820        rent and bills
$120        gas
$100.61  insurance
$21.68     entertainment (Blockbuster subscription)
$127         health
$15            toys for tots
$150.25   school loans
$25            credit card 
$370.46  gifts
$50            travel
$100         misc. spending 

It definitely seems manageable, but like I said, I’ve never followed a budget.  I’m such a rule follower, except when I’m the one setting the guidelines (diet, study schedule, stay away from this or that bad boy…forget it!).  If I stick to it, I will also be able to exceed my savings goal for the year.  The idea, of course, is also to NOT put anything on my credit card.

Tightening the Purse Strings

I’ve been in my new job for two months now.  I can’t believe how time has flown.  Getting this job was such a blessing.  My last job (and a lot of my coworkers) made me miserable, it wasn’t in the field I wanted to be in and it barely covered my monthly expenses, as in, it usually didn’t and I was frequently dipping into savings, working two jobs and/or milking overtime.

In my new job, I like my coworkers and I’m utilizing my degree.  It also came with a nice salary bump that also contributes to my wonderful feelings about it.

However, the salary bump isn’t as big in reality as it is in my head.  Before I got really good at saying no to, well pretty much everything…nights out, grocery shopping for anything but the basics, fun shopping of any kind.  I had to. 

Now, if I want coffee while I’m out, I say, sure, why not?  I suggest going to happy hours.  If I’m feeling lazy, I don’t pack my lunch and go out instead.

And the clothes.  I forgot how oppressive clothes shopping is.  Every occasion is a reason for a new dress, shoes, accessories.  I shop at discount places and usually only buy on sale, so what’s the harm, right?  Once I get it in my head that I need NEW, I waste SO much time trying to find it, when instead, I could spend 15 minutes in my closet and guess what?  The end result would be the same.  I would be clothes when I left the house. 

The saving – or unsaving – grace is that I haven’t activated my new credit card, so all these expenses, particularly the BIG ones (hello, breakup couch) I’d like to pretend I’m not making and would normally buy with my “fake” credit card money, are actually coming out of my bank account, taking my real money instead.

Which is why, when I checked my account this morning, I got a wake up call.  Just because my new employer values me as I should be valued, doesn’t mean I need to spend all of that extra value (and then some).

Practicing self-restraint is good.  Saying no is good.  It felt good to learn it earlier when I had to and I need to remember that.  I also need to remember that sometimes free things rock, actually they ALMOST ALWAYS rock way more.

I have a free gym membership to use.  I have a pile of library books to read.  I have beautiful fall weather (think 70s) to enjoy from my porch.  I don’t want to spend evenings at the mall seeking the right top.  It’s not going to fill any voids (uh oh, we’re straying from finance into mental-health-issues-land again, let’s get back on track). 

I have bigger purchases I want to make (hello, dying computer).  I have people I love who I want to buy Christmas presents for.  I have experiences I want to save for (running tourism, international travel and the joys of pet ownership).  Oh, and I really want the breakup chair-and-a-half to make a matching set.  Healthy, I know.