Bye Debt

The great budgeting future…

Last week I discussed how my budget isn’t working for me right now, and it hasn’t been for the past couple of months. I mentioned how I have revisited my budget, and once July is over, I will be implementing my “new” budget. Let me clarify something and say this isn’t a new budget, but rather me sticking to my original budget. I want to go through where I will be distributing my money beginning in August, and how I will be putting my money towards meeting the goals I have set.

The first step in this budget adjustment is establishing an emergency fund. Vee and I have both discussed how we adjusted this step to save it over a longer period of time or skipped it altogether. I have been budgeting for my emergency fund to be funded by December, but I was tracking to meet my goal much earlier. Like it always does, life happened a few times, and I needed to use my partial emergency fund. Unfortunately, due to the social events going on during the summer months that I already committed to, it has been difficult to reload my emergency fund. Therefore, the first thing I will be doing in August is reloading my emergency fund. As long as I am able to meet the $1K mark, I will have accomplished this goal by the end of August.

The next step I am taking in adjusting my budget is establishing sinking funds for the remainder of the year. The categories I am interested in doing this for are the following: car fund, gift fund, and medical fund. I will be saving money towards these budgeted items, unless an expense should occur within the category that needs to be covered. For example, if my car needs to be registered, the registration fee will come from the car fund for that month and the remainder (if applicable) will be saved in the sinking fund. The money that I will be saving for the car fund will be put toward any car expenses or repairs, and eventually for a new car. I mentioned Betty is getting older with her mileage, and I need to start preparing for the future! Gift and medical funds are self-explanatory. With the holidays coming up, I am wanting to make sure I budget enough money so I am not surprised when we hit November and December.

I currently am working on paying off a credit card and student loans (from undergraduate and graduate school). This is the next portion of my budget I have updated. I have reignited my gazelle intensity, and based on my predictions, I will be consumer debt-free by the end of this year. What I have found difficult was that I still have my credit card, and have used it as a crutch from time-to-time. I am embarrassed to admit that, but it is the truth. After I finish paying off my last credit card, I will then move onto my student loans. I am so excited to be done with consumer debt and focus onto my education debt. As long as I stay on-track, I will pay-off two of my loans within 2017. As of right now, I have only paid off one of those loans, and I am ready to tackle the rest of them! It was a feeling of accomplishment when I received the “paid in full” email for the previous loan, and I cannot wait to receive several more of those.

Now, I will say I am going to deviate from Dave principles a little here. I am doing that by paying off my credit card before paying off one of my student loans. The balance on my credit card is larger than my smallest student loan, but the interest rates differ drastically. After mapping out the difference of money going to interest, I would save over 5% of interest if I pay off my credit card…not to mention the time I will also save. I did consider whether or not this would impact my timeline for paying off my debt, and in fact, it did. I will pay off my debt SOONER rather than LATER…significantly sooner, like a difference of a year.

What did I learn from this? Yes, you should stick to the timeline and principles, but you should also consider where you can save some money, especially on interest! Another lesson learned: don’t forget to revisit your budget (current, short-term, and long-term) on a regular basis. You may be able to pay your debt off sooner, or may have overlooked some details – I sure did!

Have you ever lost sight of your goals and strayed from your budget? If so, what did you do to get back on-track? Please share your experiences and suggestions in the comments below, and as always, if you have any questions, email us at contact@frugalfoxes.com

-Cee

 

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