Living Paycheck to Paycheck

Yesterday I began freaking out because I thought that I was going to be short enough money for rent and things (if I didn’t close out my money market account and use that cash).  I didn’t know how I could have made such a mistake.  From what I could tell, I thought that the $1000 I’d just contributed to an IRA had already been taken out of my checking account, but it hadn’t.  So I was quite surprised to see just how short I was.  I was incredulous that I had allowed this to happen.

Fast forward to this morning when I logged in to Bank of America only to find more than twice the amount of money in my checking than it had had yesterday.  I saw that I’d made a similar mistake from before.

Both times I forgot about the lag on money transfers between accounts from different banks.  I transferred money from my credit union account to Bank of America and the money was taken out almost right away, so my portfolio showed the new balance for the credit union, but did not show anything pending for Bank of America.  So I forgot about the money or subconciously assumed that it had already transferred over.  Even after I’d already made the mistake about Vanguard, it never occurred to me to look around and see if I made any similar mistakes.  This could have saved me a lot of stress and time.  It also almost made me impulsively close my money market account.

I find myself to be ridiculously impulsive.  It probably stems from my ridiculous laziness; it would take so much time to make a thought-out decision that it’s easier to decide something quickly and go for it.  Sometimes this leads to regret, but mostly it works for me.  It’s also something that my boyfriend likes about me; if a decision needs to be made quickly, I can make it.  The problem is that there are some decisions that don’t need to be made so impulsively.  Like closing the money market, for instance;  I was all set to close it today only to find that it’s unnecessary.  I would have done something foolish for the sake of getting it done as quickly as possible.

So now I find that I am close to fine for the next month or so until I get a few more paychecks.  And that tax refund and tax rebate.  Once I get those, I can really start building my savings.

When I bought my 1999 Toyota 4Runner in 2006, the best interest rate I could have gotten with my credit score was 9%.  I didn’t have BAD credit, I just hadn’t had enough for a long enough time.  At the time, I didn’t realize that getting a car loan would have actually helped my credit score by having different types of credit; that’s why I took a loan from my parents at a great deal.

I borrowed $5000 at no interest to be paid in full November 2008, and $5500 at 7% interest for three years, to be completed in November 2009.  My monthly payment became $169.82, not including the $200/month or so that I *should* have been putting aside each month, specifically for the $5000 balloon payment.

I was putting money aside; in fact, I saved a LOT during that ten months as a teacher.  But when I was out of work for essentially six months, my savings dried up quickly.  I now don’t have enough for that November balloon payment and I have to work to get to that point.

I decided to refinance my loan with my lender, Dad.  Yesterday, we worked out a new schedule and a new interest rate.  I had 18 more payments left, so I increased it to 30, with a 31st balloon payment of $500.  The interest rate changed to 6%, which leaves me with a monthly payment of $88.71.  I already have over $3400 in my Vanguard Money Market account, with $200 automatically going in each month.  By November, I will have over $5000 ready to go if I also put in the $81.11 I’m saving each month.

The only problem with my Money Market account is that I have to keep at least $3000 in it, which I will be unable to do at that time.  When I get to November, I will close the account (sadly) and move my money into a high yield savings account like the ING Direct one everyone’s been talking about, until I have that $3000 again.  Since I’ll still be saving $281.11/month, hopefully it’ll take under a year.  Also, hopefully by that time I’ll already have received a raise that beats the rise in my cost of living, so that I’ll be able to save even more.