Tag Archives: Debt

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2013 Budget (and minimum CC payments)

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.

2013 monthly budget

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?

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Finance Snapshop – May edition

So I said I was back, and I am! It’s actually taken a lot of thought to figure out where I wanted to go from here, you know, fresh starts and all that jazz ;) So after outlining a few ideas of traditional posts I’ve done that I like and figuring out new things to push my comfort zone, I’m starting with the basics. Where I’m at. It’s hard for me to look at myself, because the knowledge of what to do and what not to do is in my grasp, in my head even! And yet, here I am.

Not quite in financial ruin yet

Pretty Much

Pic. Source

So I am in no way in financial ruins. Every time I look at my bank account and get a frog in my throat, or open my wallet with a shudder, I try to put things into perspective.  The well-being of others does not rely on my financial success; I am not bankrupt, I am not homeless, hungry, or sick. I’m just a broke college student with no one to blame but herself who needs to make better life choices and actually stick with them. So where am I at right now?

  • Discover: $1,401.49
  • Checking: $155.01
  • Savings: $0
  • Cash: $100.05
  • Loans & Interest: $13,753

This puts me at a cool -$14,899.43 as far as networth goes. Well, looking back at it almost a year ago, I’m down by $4,752.43 from -$10,146. I was really confused until I remembered that I anticipated $3750 in loans that I ended up not taking out that were accounted for and that I valued my car at $5000 (it has since had some…problems); however, I really tanked my savings and cash (plus I got that…credit card). And even in writing this post I wanted to mislead myself and look at my networth as having “gone up,” when it really didn’t at all. I never had the loans I was taking into account, so my networth was never that low in the first place. Denial is not just a river in Egypt, y’all.

Of course, I’m not exactly pleased about this, but a great quote by Thoreau is “Never look back unless you are planning to go that way.” Of course we should always learn from our mistakes (like don’t charge Christmas to your card, and when you get reimbursed for expenditures, treat it as a reimbursement and not as “Ooooo free monies!”). Or, in my case, even though I KNOW KNOW KNOW that credit card money is not actually my money, to not say “I have $400 left of my limit! That’s $400 I have to spend!” And curbing emotional spending. And hobby spending (knitting can get expensive). And not just avoiding my finance-related life out of shame. I really love the PF atmosphere and am genuinely interested in it and getting better. I need self-control. And I need it soon.

As of right now, I’m living with my parents until I leave for an internship in Pensacola, FL on May 24. There, I will have free housing and meals, and a $3000 stipend. That last bit is pretty important because as of August, many things will come to a head.

  1. My Discover Card will have an interest rate (est. 17-20%)
  2. Tuition. I dropped my 2 minors in order to drop my tuition from $3200 to $1500, so that helps, but at least half of it is due the first week of August…so $750 bones…
  3. Rent & deposits on my first ever big girl apartment
So the plan is to get an additional job while in FL (the internship is 30 hours a week, so I would have the time) so that I know for sure I can take care of all of those financial obligations. The next step is building up my EF  and savings. And loan interest repayment…but I’m getting into another post entirely here :)


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January 2012 Budget

Walking in a Winter Wonderland of Debt Repayment

I’m both intimidated & excited by the amount of spending present here. The former because I’m afraid my income for Jan ’12 will not be sufficient and the latter because the spending primarily consists of EF-building & debt repayment. I anticipate an income of ~$90 from my job at the end of the month, & ~$100 from baby-sitting for bf’s nieces. This leaves me with ~$525 to pay (of $715). I am not sure what the stipend for my new job looks like; we have training relatively soon that will tell me. If it is not sufficient, to the plasma/consignment shop I go! Because I’m a little worried about being able to afford it,  I have my budget items ranked by importance :) I know this isn’t how a budget traditionally functions; however, although all of these items are important, not all of them are urgent, and I have to keep that in mind.

  1. $195 – GRE Testing Fees – Taking this in January; honestly, it will probably get put in the credit card & then this money will get added to my credit card payment. This also includes my fee to apply for graduate school (in my mind the 2 fees are so tied together they’re one).
  2. $150 – Credit Card Payments – To lower my carrying balance to $1000. Goal is to have it to zero by May ’12. APR is 0% right now, so all should be good :)
  3. $150 – Savings Deposit – Part of my goal to bring EF up to $2000 by the end of ’12
  4. $60 – Food & Dining – Way lower because I have a meal plan this semester!
  5. $140 – Student Loan Interest – This is ~14% of the interest I currently owe + how much interest is accrued per month (so that it doesn’t accrue half of what I pay again).
  6. $20 – Hobbies – This is to pay for a deal at Yoga Bliss that aligns with one of my 10 New Year Resolutions; it’s a 10 sessions for $20 within 30 days. I am not sure what the timeline of the deal is (by when it should be purchased), so this could potentially be pushed back to February or even March (or never & I could just pay the cost up front later, but I’d rather not).
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New Job & Less Loans

This post could be more accurately titled: “How I got lucky and was offered a job that offers free housing (because I am suddenly ineligible for the loans I was using to pay for it,” or, “How $3750 of my student loan debt disappeared in a day.”

Some back story. Beware, this story is full of dumb mistakes and wasteful spending. Read at your own risk.

Warning - Warning - Warning

I was admitted to the institution I am currently attending with a full scholarship and then some (raking in $1500+ a semester in extra cash after housing & tuition & fees are paid off). I ended up squandering that money on Chinese food, digital cameras, a computer, and feeding myself and a lazy boyfriend at fancy restaurants – plus expensive gifts (leather jacket, anyone?). I felt rich and careless…and acted as such. At the end of the day I have nothing to show for this time period. The computer is horrible (I had to replace it), the digital camera just broke, and the majority of it was just squandered away. The summer after my sophomore year I worked and brought in a few thousand dollars…which was spent on Rockband and food (squandering). Next year, same as freshman year. That spring I lost my scholarships and had to take out my first loan. This was June of 2009.

Remarkably (and luckily I might add), I was given a scholarship from my mother’s workplace and continued to receive another that covered my tuition. I could have made it without loans. Alas. Instead of getting and keeping a job, I lived off of loans. Infinite money. Thousands of dollars. This continued until my senior year, when I got my current campus job (which I have been at for 1 year – record for me woot woot!!!). Horror suddenly gripped me as I decided to take a fifth year and go to an internship in Canada. I was suddenly taking out loans to pay for my passport, to pay for my plane ticket, and then, how was I going to pay for next year?!

Loans. And a bit of what I made this summer. I started this blog in July 2011, when I was still in Canada. I had been reading a few personal finance blogs and was about fed up (and completely ashamed) of my bad habits.

So here I am, in my fifth and final year as an undergraduate. I took out $7000 in loans for this year, $3750 a semester. This pays for all of my residential housing (I live on campus as a stipulation of a leadership position I hold), and I still hold one scholarship that pays for my tuition. The rest I cover from my aforementioned job. I was anticipating nearly $17,000 in student loans by the time I graduate (much of that unneeded, but you learn I guess).

Not to further overuse this image, but truth.

Then, new job offer! I was offered a job last Friday as a resident assistant, a job I had applied for in March…one of the perks of this job is that it pays for your housing!!! Woot! I now didn’t need my loans for the spring semester ($3750). I planned to cancel them. Planned a dance. Party. Celebration. But. Apparently I was not the only one to reach this conclusion, although the federal government reached it by other means.

I am apparently not making satisfactory academic progress. Not that I’m graduating in May mind you. Really, what it boils down to is that one of their requirements is you complete your degree within 133% of the credit hours of your degree, a cap of about 160 hours. As of last semester, I hit 164, for a lot of reasons. Mainly because I switched majors, went to summer school for 3 summers (taking many hours), and took the max nearly every semester. So, even if I wanted to keep my loans, I wouldn’t be allowed to. No looking back now.

I just think, of how lucky I am, because I’m not sure what I would have done without that new job. Tis the seasons indeed. This drop in my debt has made my goal of paying of my student loans by the time I graduate from graduate school (May 2014) a complete reality. Although this has really been a blessing in disguise (as much as it would have been a horror story otherwise), I’m really thankful for all of you out there that are helping me budget along. I’m a completely different spender (in that I know there’s no magic “free” money) now, and although I look back with shame, I learned a lot.

So for those of you making those bad choices, stop! And for those of you rectifying your decisions, congratulations and hats off to you!

-L.

 

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Does it Pay to Discover?

So this is my very brief evaluation of the first month of owning my very first credit card, a Discover More card. I should start by saying I haven’t had one thus far because I was very afraid of them. Very. Afraid. I feel that we are told from a very young age that credit cards are bad and are shown people whose lives have been defined by these choices, people who therefore must be ‘miserable’ and have ‘ruined’ their lives. So when I initially brought this up with my parents in October, I was very surprised at how supportive they were of the idea.

Why a credit card? Well, essentially, I kept having anticipated & unanticipated expenses that were very large. I could pay for them, but this resulted in weeks of not having any money as a result. There was one semester where I ate tuna sandwiches every day for a month because it was either textbooks or food. Like, lived on a loaf of bread, 3 cans of tuna, and a pickle. I was tired of it. I’m sure there are ways I could have either earned more money or spent less, but not in a way that was efficient or healthy. I know people do this, but it’s not something I wanted to continue to do if I could control it.

I initially tried applying for a credit card through my bank because that seemed easiest…maybe an education card? Well, that didn’t pan out exactly as I had hoped. Because I have no previous real credit, I would need my parents to cosign. I am 23 years old and am too proud to ask, but also, if it’s one I will keep for a long time, I do not want my parents to be responsible for it as well. So, a friend referred me to Discover, where she didn’t need a cosigner. Sounded great to me! While initially hoping for an education card, I was approved (through a really easy application that only required proof of enrollment & proof of address) for a Discover More card, which is essentially a “rewards” card.

I got to pick the design, a very superficial plus :) & received a 0% APR until next August (and then it goes up to ten million, or 17% ish). Another plus is their reminder system, where it can text or email you: “Hey,you’re over X amount” (in case you weren’t keeping track), or if your statement is sent out, or if you only have a balance of Y left.

In that this is not actually my card

"My" Card's Design

Pic. Source

 I guess at this point, I have only had 2 real complaints:

  1. The Rewards System
    I was really excited when I heard about this. Any time I use my card to buy X, I get cashback??? Cool!!! Except, not. Many of the purchases need to be made by going through their website … which I figured out when I purchased my plane tickets and expected $25 cashback and instead had a flag that said “FYI If you do this through Discover, you’ll get cashback!” And with November being one of the “Restaurants & Shopping” cashback months, I expected some from that, but there isn’t any. It seems to just be a little misleading with what does & doesn’t qualify, and how it actually works.
  2. The Payment Due Date
    This is not visible at all. I would think that this would be what they wanted me to know the most! I checked under statement, “Statement will be sent Nov. 26.” Checked Nov. 26 “Statement will be sent Dec. 26.” I searched the site, searched Google, and could not get a lick of information. Finally, I ended up calling to find out that my first payment is due January 21st. Although I have text & email reminders for when the statement goes out, I was still terrified that I had somehow missed it and would have a late payment and ruin my credit etc etc etc. Plus, how was I to infer that it would be due in 2 months? It didn’t really make sense to me.

So, does it “pay” to Discover? I don’t regret getting the card. It has helped me in a bind (when I had to pay a fee to reschedule a flight) & to make larger purchases that would have immediately drained my bank account; however, in the sense of cashback rewards…it pays to Discover…when you’ve read the fine print.

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Net Worth – October 2011

I haven’t revisited my Net Worth since my previous post July 21st. I used the same site as last time, Net Worth IQ that calculates your net worth for you and compare it to others in your income bracket, your age bracket, and all of those other brackets. My net worth in July was -$10,147…so how does October compare? 

October 2011 Net WorthThe answer to that is…badly…sort of. My net worth for October 2011 is -$12,148…which is a $2,001 decrease. This is entirely due both to not rebuilding my cash reserves by spending rampantly in September as well as spending the cash I had in July on tuition in August…so it did decrease, but the money I spent on tuition was worth it :) (I am a big fan of finishing degrees!). The comparison in that chart there is not kind to me; however, if I achieve my eventual goal of paying of my student loans by the time I graduate graduate school, I will be in pretty good shape financially. So, if you’re in the red right now, don’t beat yourself up! Making lasting changes takes time, and it is a lot of work to undo mistakes that were made (like spending all of your scholarship money on Chinese food and electronics -cough-cough-). 

-L.

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Net Worth

Argh! There’s this really great site called Net Worth IQ that will calculate your (you guessed it) net worth for you and compare it to others in your income bracket, your age bracket, and all of those other brackets. If you don’t want to do it that way, it’s actually pretty simple to calculate your own net worth (but if you’re like me, the numbers are going to be pretty painful).

So, the how to’s of calculating your own net worth (which you should never confuse with your self worth – which is always in the black!!!)

Ingredients: Financial Statements, guestimates of your assets (if you own a car, house, etc) and BE REALISTIC!!!

  1. List out your biggest assets. These are things like a house, big things. To be realistic, if you’re a college student like me, your asset is going to be a car at most (and even then, you’re hopefully lucky enough to own a used car or be near paying off another!). And be honest with assessing the worth of your -erm- assets.
  2. Now, get your bank statements together (checking, savings, cash, etc). The previously mentioned are probably what you’ve got, but for those who are more ambitious, this includes retirement accounts, investments, etc.
  3. Here’s the miscellaneous section. This is stuff that you own that is worth a considerable amount of money. That ipad 2 you just bought? Totally gets listed here! Generally, if you would sell an item for hundreds of dollars, this gets listed in your assets.
  4. Now add ‘em up!!! These are your total assets! Look at that number, and savor it. Savor it. Savor it. 
  5. Now comes the icky part. Liabilities. Ew. Gross. Ick. But, it totally exists. So, look at your basic loans first. Loans for a new car you had to have, a down payment on something, etc. List ‘em out. I personally don’t have a general loan, but I’ve got some icky loans in the next category.
  6. Now, list your personal loans. These are things like credit cards and student loans. Student loans: the bane of my existence. Yeah, I may not have to pay them back immediately, (go deferment go!), but they’re totally leering at me from afar.
  7. Add ‘em up. That’s your … liability. Look at that number and be sad. Just kidding, but seriously, prepare, you will be a little sad.
  8. Final step: subtract your liabilities from your assets, and you’ll get your net worth! If it’s a bit in the red, that’s fine.  Remember that it’s NOT your self-worth.
  9. Repeat however often you want! I am hoping to do it once a month to see how I’m progressing.

Now I’m going to go out on a limb here (and hope I don’t get judged) and post my comparison charts given by Net Worth IQ. Yeah…not as bad as it could be, but I’m still pretty far off people my age (under 25). My current net worth is – $10,147 (or it will be once I take out my student loans for this year and get my final internship payment). So, like I said, if you’re a bit in the negative, red should I say, don’t feel bad. It’s net worth, not self-worth, so keep on keeping on!!!

-L.