Debt $ense

With all my scrimping here and saving there, I’m going to be putting aside close to half my take-home pay each month by the time I pay off my debt. While there are a couple things I’m cutting that will go back in once I’m paid off (internet!), I’ve been starting to think more about what I’ll do with the bulk of it.

I was skimming Suze Orman’s “The Courage to be Rich” book at the library today, and I liked the part where she talks about redirecting your money, rather than letting it flow back into the pool. That’s what I want to do, is redirect my money so I can have the life I want.

For me, that means upping my 401(k) contribution and starting an IRA so I don’t have to worry about retirement. It means socking away a huge chunk of that money into a new(er) car fund. It means beginning to save for a house. And, most importantly, it means putting aside $25 a week to fund a nice vacation every year or two.

I have a friend who likes to travel to Europe, and last weekend we were brainstorming vacation spots. I want to take the cross-country train trip. She wants to go to Russia (once she’s spent enough time on her Russian lessons to be able to speak the language). We both like the idea of Romania. I want to see Ireland; she has no interest. She just got back from Amsterdam, which isn’t high on my list. We also talked about trying a cruise.

I had a similar discussion with my sweetie, though we didn’t have quite as much agreement. (He loves beaches; I sunburn easily. I want to travel outside the country; he thinks that’s too much hassle in this day and age.) But he does have a few favorites that are on my list (Hawaii, Vegas), and there were several places we both agreed were not even in the picture.

In the long-term, nuts and bolts, “how will I pay for retirement” future, that $1,200 a year would go toward something more practical. But what’s the use of having money if you don’t enjoy it? (in moderation, of course)

When I look at the tiny amount of cash in my wallet, and notice how often it’s gone less than a week into the two-week period between paychecks, it can get discouraging. But then I think about watching the Rocky Mountains out the train window and seeing Eastern Europe up close and personal. The sooner the debt’s gone, the sooner I can start living that kind of life. Suddenly the wallet doesn’t seem quite so flat any more.

What dream keeps you going when the debt payments seem to suck up all your money?

My electric bill just came, and it was less than $20! I had $45 budgeted for this month. So that’s $25 I can add to my “extra” CC payment this month. That brings my total so far to $72. And the month’s not over yet.

For those gasping in shock over my bill, it was actually $32, a little less than last month, but I had paid the $45 I had budgeted last month because I figured it would help offset the higher summer costs from running AC and/or fans. I’m not doing that this month because the dental work has me skating so close to the edge. If all goes well, I can put it toward my CC. If not, I’ve got a little cushion that might keep me from turning to my CC.

But I did notice my usage was down about 15 to 20 percent from May of last year, so I suspect unplugging the TV/VCR/DVD power strip helped. Now to do the same with most my desktop computer and monitor… Maybe I can keep the summer electric bills at the $45 I have budgeted without parboiling in the process.

It’s amazing what a difference a little money can make over time. I was looking back at my earlier post when I said my original payoff date was late June 2007 and realized that wasn’t right. So I added a new sheet in Excel and actually redid my old plan. The actual date was the end of August 2007.

Upping my payment by $15 a week - $60 a month - brings it to the end of May, saving me three months. That’s where I am now.

Using my model plan, where I add in savings from a few other lifestyle changes, plus a guesstimate on my annual raise, plus some lump sum payments I think I can get through various means (selling stuff, a second job, etc.), the payoff date moves to Dec. 28 of this year, about nine months earlier.

Now that’s a powerful incentive!

It’s not going to be easy to hit those goals to end the calendar year with no credit card debt, but wouldn’t that be a nice way to ring in the New Year.

How am I doing it? Well, in my model plan, the weekly payments are actually up $65 from my original plan, plus I’m trying to find about $150 a month extra. The $65 is coming from cutting internet ($15) plus increasing my withholding rather than waiting for a refund in February. I won’t know for two weeks how withholding affects my paycheck, but I’m guessing anywhere from $30 to $60 based on some playing with the IRS calculator. Also, my annual raise in July should let me add $15 to $20 a week. None of those are big sums (well, OK, the withholding could be), but added together, they really make a difference when applied week in and week out. $65 times 28 or 29 weeks is more than $1,800.

It’s powerful psychologically because when I see what a couple of dollars here and there can do, I’m motivated to keep spending low so I can add more dollars to kill that darn debt even quicker.

Who wants to spend $20 on a pizza when there’s “free” food in the freezer at home - and the $20 will help me save the extra money I need this month to hit that New Year’s Eve goal? In two years when I’m traveling cross-country with a friend on my birthday vacation, will I even remember the pizza? Not likely. Why grab a snack from the vending machine for 60 cents when I can buy a bag of regular (not baby) carrots at Kroger for 89 cents and munch on them all week? (Yes, I’m weird. I actually like snacking on raw veggies over chips.) And who wants to spend $5 on a bottle of shampoo when Suave works just as well for 89 cents?

You get the idea. Find the small stuff and think about whether you’ll notice the difference when you’re debt-free. Most of the time, you’ll go for the less expensive version and use the difference to attack that debt.

As for me, I’ll have a better idea of how close I’ll come when I get my next paycheck in two weeks with the withholding adjusted. Then I can figure out what else I need to do.

I finally figured out why my links won’t show up - they need to be placed in a category - but when I categorize them and save changes, they don’t save. Grrr. I’ve got a request in for help, so I hope to have this resolved soon. Stay tuned…

I talked with a co-worker last night whose husband is just finishing his graduate degree at our local college, and she agreed with Aleta that editing and proofing papers would be a great way to make extra money. We talked a bit about rates, so I have those figured out.

My other concern is figuring out how to handle payment, given my goofy schedule. I think I’m going to have two options - pay upfront, or set up an “account” with a balance, which they can replenish as needed. I can include an account statement with each paper so they know where they stand. Since so many things on college campuses are set up this way, I think it might be appealing to students because once they have an account, they can just e-mail me papers, rather than arranging to meet with me in person. That would be easier for both of us. And those who choose to pay as they go will still be paying before I do the work, so I don’t have to worry about not getting paid.

Now I just need to design a good flyer to put up around campus. That’s on my weekend to-do list.

I found a surprising amount of clothes in good enough condition to bring to the consignment store. If I can average $5 a piece for them (there are three nice blazers in the mix, one with the tags still on, plus a good winter coat), that’s at least $100. I’ve never been in this store, but the reviews online say it’s got good stuff, worth the prices that are higher than the other consignment stores in town. I’m hoping that means I’ll get a decent amount of money for the stuff. Now all I have to do is iron it and stop by the store tomorrow while I’m up that way. I’ll update once I get back.