Getting Financially Fit

A couple weeks ago, I talked about how shocked I was about my restaurant spending.  The grand total for the month of April ended up being $239.22.  Still ridiculously high but a $46.61 improvement from March.

I spent the remaining week of April trying to automate my finances as much as possible.  I switched my mortgage payments from a monthly payment to a weekly payment.  I've also increased the amount of principle I pay, so at the end of the year  it's like having three extra payments but going directly to principle (so the value is actually greater than three months of principle, since at the beginning of the loan term a larger percentage is applied to interest).  I have to pay the bank $2 per processing transaction, but I learned last year I can't do it on my own because their lockbox system doesn't recognize the non-standard payment amount.  However, having it set up outside my control gives me less incentive to go through Bank of America's annoying phone system to get to a representative to change it every week to suit me.  The object here is to be accountable.

I also set up my student loans to be withdrawn automatically every month.  I'm on an extended graduated payment plan so I can have smaller payments now, but end up paying nearly as much in interest as the original value of my loans.  I did this so I can still set aside some savings every month, which will hopefully enable me to pay off large chunks of my student loans every year.  If I'm good, I can have my student loans paid off in five years and end up paying only half of the interest as I would have on the standard payment plan.

Once my student loans are paid off, I can transfer that money to my mortgage payments.  My mortgage, again if I'm good and diligent, can be paid off in 10 years.

That's right.  I can be debt free in 10 years.  On just my modest salary.  In a three person household.  I think that's kind of badass.

I took a page from Dave Ramsey and instead of depositing the rent money I received, I broke it up into two groups:

Piles of money! My monthly allowance for food and gas.

I paperclipped the food cash ($120) and the gas cash ($160) together a put a post-it note on top so I could document where the money goes.  The food pile can go towards groceries or eating out, but once it's gone, that's it.  Same thing with the gas money.  If I have no gas and not enough money to fill my tank, I have to take the bus (which at most would be $40 to commute every day to and from work for the month).  However, anything left over is for me to spend on whatever I want (for now that will be saving up to take a 6 week yoga class when my bellydancing class ends).

There's just one little problem:  Jeff's temp gig that he's been working for nearly six months is just about over.  We're both confident they'll find a permanent position for him there, but we don't know for sure yet.  If the worst happens, I'll have to take on more expenses (like Dan's preschool and daycare) until the issue is resolved.  I'm not worried though.  Reducing my inflated mortgage payment will more than pay for the extras and I can pick it up again at a later time with very little upset to the overall plan.

It's not without sacrifice though.  I can't buy things for the house when I need them (or more precisely, WANT them), I can't contribute as much to potlucks as I would probably like, and I can't fit in as many social activities as I might be inclined to do otherwise (although I can certainly invite friends and family over instead of dinners or coffees out).  Actually, I kind of anticipate this journey being relatively peaceful once I'm fully acclimated to it.

How's your financial health?