Day 28 | $31,450 paid | $59,267 till freedom
The dust from my financial activities in fiscal September (Aug 26 – Sep 25) has settled. After month of 1 of my challenge, here’s where I stand:
- Starting Cash: $31,116
- Starting Student Debt: $90,717
- Income: $7,339
- Expenses (including regular loan payments): $4,115
- Debt Paid Down (excluding interest): $31,450
- Ending Debt: $59,267
- Ending Cash: $3,500
- Total Assets: $62,192
- Total Liabilities: $59,267
- Net Worth: $2,925
Predicted student debt at end of June 2012 (i.e., delta to goal): $5,453
Looking at just the $90,717 and excluding any interest that accumulated on it over the month, I put $31,450 towards that figure and brought it down to $59,267. I’m going to go ahead and file that one under “Quick Wins,” and I don’t think that file will ever be re-opened during the next nine months. I was able to pay off one third of my student debt primarily by getting rid of my savings and realizing heavy losses and liquidating $14k in stocks and $12k in an IRA. With only $3,500 in cash now, my Screw You Fund is good for about a month before I have to go hit the street corner if I get fired. That quick win comes at the cost of my sense of security, and at the cost of realizing $3k in losses since I had invested $17k in stocks in October 2008, just before the Great Recession struck.
Assessment of Cost and Revenue Initiatives
I want to take a moment to assess–in terms of wins and losses–how I’m tracking to my cust-cutting and revenue-increasing initiatives that I laid out in Brass Tacks.
- Debt Snowball – LOSS – I was banking on an $186 extra/mo beginning in September, but this won’t actually kick in until next month. On the plus side, I’ll be adding another $53 to the snowball because I was able to pay off a $4,460 loan with the $30,840. So the $30,840 went to the $24,666 loan at $186 month and to the $4,460 loan at $53/month, and the balance will go to my federal loans. My debt snowball is now $239 starting in October.
- Entertainment - LOSS – I budgeted $50/mo and had been trending at $1,400/mo in entertainment at a time when I was budgeted for $850/mo prior to NMHD. For September, I came in at $501, primarily due to some heavy spending activities prior to starting my NMHD mission, but after the September fiscal month had already started in August. While on the NMHD budget, I spent a little over $100. While I’m chalking this up as a loss, it’s a heck of a lot better than $1,400/mo, and I should be able to get closer to $50/mo going forward.
- Stop 401k – LOSS - I was banking on an extra $550/mo, but only got $287 this month because I wasn’t able to turn off my contribution quickly enough. I should see the full $550 next month and beyond.
- Groceries – WIN – I tried to trim my budget from $330/mo to $280, and $280 is exactly where I landed for September. I didn’t actually change my shopping behavior to make this happen, so it was probably just a function of not buying any non-regular items like razor blade cartridges or contact lens solution that tend to inflate the grocery bill.
- Car Fuel – WIN – I budgeted $160/mo, had been trending at $225 prior to NMHD, and somehow, magically, came in at $100 for September. That being said, I have three vehicles with fuel gauges all at E, so I’m about to spend $60 + 45 + $12 on fuel for the Murano, S2000, and bike to start October, leaving only $43 in my fuel allowance to last the rest of October. I’m in a tough spot.
- Electricity – LOSS – I budgeted $68/mo, and I came in at $124. The $68 is an annualized number, though, since I don’t run my AC or furnace during certain days or even weeks due to the mild wealther that sometimes occurs in Austin, and I can get my electricity bill down to as low as $40.
- Lunch at Work – LOSS – I budgeted for $55/mo upside, hoping to cut out out my one weekly lunch out. I spent $36 in September. Oops.
- Dry Cleaning – WIN – I budgeted $20/mo and had been trending at $40. I came in at $22. I had no shirts to clean since the weather is hot enough to justify waring polos to work, so I spent only $20 on dry cleaning and was still able to avoid the drudgery of ironing. Score.
- Automotive – WIN – I’ve budgeted $200 for a couple of oil changes and miscellaneous things, and I spent $19 on a liter of synthetic oil, windshield washer fluid, and Armor All.
- Medical – WIN – I’ve budgeted $10 for the next ten months to spend on a co-pay for my physical, which I haven’t gotten yet.
- Clothing – WIN – I’ve budgeted $0 for clothes and didn’t buy any in September.
- House Maintenance and Repairs – WIN – I budgeted $100 for three exeterminator appointments during the next ten months. The exterminator was at the house on Saturday, but the check hasn’t been cashed yet, so that charge will fall in October.
I did spend $64 on non-categorized items such as an update to my anti-virus software (I accidentally enrolled in the automatic update, which was my mistake), faxes, casters for my office chair, copies of the house key, and other miscellaneous items.
- RSUs – June timeframe; no comment
- Raise – Budgeted a 10% rase for an extra $500/mo net of tax beginning in October. I got the new job/promotion, now I just need to transition into it, so the raise might not hit my paycheck until the middle or end of October.
- Tax return – April timeframe; no comment
- Bonus – May timeframe; no comment
- Pedi-cab job – LOSS - in the Brass Tacks post, I budgeted $490/month, but I actually lost $136 in September through the purchase and return of the bike, as well as the licensing bureaucracy costs.
- Landscaping Biz – LOSS - I spent $50 on the site. The first $25 was wasted on reserving a domain name that ended up not making sense for the business, so we had to reserve a second domain name for another $25. That being said, I have n’t budgeted any income from this venture–or any additional jobs, for that matter-so anything going forward will be complete upside to bridge the $5,453 delta.
- Roommate – WIN – I estimated $650/mo with one roommate, but that was a bit unrealistic compared to the market, which I hadn’t analyzed prior to making that estimate. Now I have two roommates and I’ll be getting $450 + $400 from roommates 1 and 2. This month I got their first and last month’s rent plus $150 security deposit from each, and I banked it all.
- Entertainment @ $50/month
I’m flying out to Ann Arbor, MI for a crew team reunion from 9/29 to 10/2. I’m extremely excited for the trip, and I’ll be crashing at my friend’s house and going to house parties during the nights, so that’s all free. I do anticipate a lot of lunches and dinners out with friends, so I’ll have to keep an eye on spending.
I’m flying out to Detroit, MI on October 21st for my cousin’s wedding. I’ll be staying at my parents’ house, so lodging will be free. It would be nice to see if I can keep that weekend’s entertainment down to $0. Of course, I’ll want to reconnect with old friends when I’m in town, so that might be difficult.
All flights were purchased months ago, so the plane tickets won’t hit my income statement, but any expenses I incur during the trips will.
- Electricity @ $68/month
With more 95+ degree days in Austin forecasted for October, it’ll be hard to bring down my $100+ electricity bill–especially now that I have two roommates.
- Fuel @ $160/month
For reasons already mentioned above, I’m not in a good position to stay within budget.
I don’t think the roommates are going anywhere, and I haven’t built into my budget any incremental revenue from any additional jobs, so there are no risks there.
The only risk is that my new salary might push out a couple of weeks.
All in all, a heck of a month. I chopped off $30k from my loan obligation, and instead of spending $1,057/mo on student loans, my new monthly obligation will be $818, a drop of $239. It was a tough and emotional first month, but I think I’m getting into the groove of being frugal and working hard to generate extra revenue, and I’ll continue to chip away at the debt. The full ten-month outlook is below. Note that you’ll probably have to click on the image below twice–once to open, a second time to zoom in.