I’ve decided the following break-down is what I will use for my monthly budget in 2013 (plus a little bit of a #pfconfession toward the end). This is excluding January because of two reasons. Firstly, my income was about 25% less than it will be for any other month, and secondly because I still had to pay my December rent, so double rent! This may look simple, but it took a lot of finagling in a notebook and looking at my spending habits from 2011 and 2012 before creating something I can realistically stick to while also achieving my goal to be financially fit.
This is based on an estimated $1200/mo income. This will definitely change in August/September because I will begin school again, but I don’t know my schedule and won’t be full-time, so I’ll reevaluate then. This also isn’t taking into account months like May (3 check month anyone?), or any additional income that could come from being employed by Princeton Review (which is sort of an “as we need you” basis) or my (hopeful) tax refund. Regardless of whether I’m a little over or a little under in income, the “basics” (everything but Savings/Specialty) will stay the same. I know Savings/Specialty says $380, but my rule of thumb is “anything left goes into my savings account.” Also, if you say “Hmm. Don’t you have a roommate? Shouldn’t your electricity be cheaper?” you may be right, but I’d rather be safe than sorry. I’m also pretty happy I remembered a miscellaneous category this time. I always tell myself I’ll never need one if I stay in my budget, but it’s always a load of nonsense.
Also…I would love love love to pour every penny I have “extra” into paying off my Discover card…however… #pfconfession … I’m not going to. At least, not right now. Wait! Before you yell at me…
I did think about this decision a lot, and even after talking to a financial advisor over at LearnVest, I just don’t think it’s the most financially sound decision for me to make right now. As of last year my EF is completely drained (balance of $0 drained) and I really have no assets whatsoever. After discussing my work schedule with my boss, I know I will be employed at least through the summer, but my luck in that is a different story for a different post. I want to be prepared to pay for at least a month or two of rent (which I can’t do with a balance on the card) and expenses that go along with that. But even more than that, I have a few “large rock” expenses which are why I deemed that category “Savings/Specialty.” These are one-time payments that are going to be large, and the primary ones that come to mind are Car Insurance ($450 before a special program I’m applying for as a safe driver) in March, $500 I owe my university before being able to schedule for the fall, and $2000 in tuition for August (which, I can defer half of it, but I would prefer not to have to worry about it the whole semester). And it feels…silly to me to put money on my card that I know I’m going to have to use for something else. Especially when I could be acruing pennies in interest in my savings account!
Once those “large rock” expenses are out of the way (hopefully August) and I know my income, I’ll be splitting the “Savings/Specialty” between my Discover card and savings account (to keep up with creating an EF). I really do understand that ultimately I am paying more because of interest rates, but I feel that this is really the only reasonable way to pay for what I need to pay for and graduate, as well as the only way to give myself a little financial wiggle-room with the beginnings of an EF.
What do y’all think?