Living Paycheck to Paycheck

End of the third week! 

Income (from beginning of May):

Paycheck: $1204.98
VA State Tax Refund: $165
Revolution Money Exchange Pay-Out: $35
Federal Tax Refund: $1529
Money Paid Back to Me: $100

Total: 3033.98

Expenses (for this week):

Gas: (Three trips):  $147.75
Tolls: $35
Groceries: $84.17
Internet: $44.99
Gas Bill: $38.84
Target Bill Payment: $105.47 (Since this was for last month, this includes stuff from my party, my mom’s birthday, a couple general expenses).
Charity Donation: $30

How does this look for my Bare Bones Budget Categories?

Category 1:  Rent/Utilities/Phone/Internet/Food — $275.43 / 1,345
Category 2:  Savings — $1010.61 / 250
Category 3:  Loans — $262.72 / 262.72
Category 4:  Gas/Tolls/Car Insurance/Car Maintenance — $330.89 / 480
Category 5:  Entertainment/Gifts/Clothing/Donations/Miscellaneous — $135.47/ 70

NET EFFECT: $2015.12 / 3033.98 OR $1015.12 / 1204.98 if you look at what I actually earned for the month so far and take away the $1000 I put into my Money Market account from my tax refund.

Coming soon: another paycheck and a big ol’ rent payment.

My take-home pay each month is $2,409.97.  Knowing that I have not been living within my means, I decided to make a “Bare Bones Budget”.  What always screws me up when keeping a budget is budgeting per expense, instead of grouping things together.  Each month when I pay my rent, I have to pay mandatory fees and my water bill together with it.  So that always varies between $1032-37.  I could choose a number within that range, but why not add my other utilities in?  And if I’m adding necessary utilities, why don’t I add in the unnecessary ones like cell phone and internet?

So I’ve broken my budget into a few categories:

Category 1:  Rent/Utilities/Phone/Internet/Food — $1345
Category 2:  Savings — $250
Category 3:  Loans — $262.72
Category 4:  Gas/Tolls/Car Insurance/Car Maintenance — $480
Category 5:  Entertainment/Gifts/Clothing/Donations/Miscellaneous — $70

The only problem with a bare bones budget is that it doesn’t leave room for surprises (unless you count Category 5’s “miscellaneous” option.  Already this month I paid my county car tax for $64.39…technically, that could go in either Category 4 or 5…or 2, “Savings”.  With my $250/month, I want to put $200 into the savings for paying my car loan, $25 into an “Emergency Fund” which I don’t really have yet, and another $25 into a Gift Fund.  It seems like every month, I have another gift to buy, and sometimes more than one.  In July, I have two weddings and my grandmother’s birthday.  I want to start putting money aside specifically for that.

To do that, I’m going to start splitting up my bank accounts.  I have two checking accounts, two savings accounts, and one Money Market account.  The Money Market has the most money in it and is the savings for paying off my car.  My most often used checking account will stay the same pretty much; it’ll be used for Categories 1, 3, and 4.  One savings account will be the Emergency fund, one will be the Gift fund, and the lesser used checking account will just hold whatever money is leftover at the end.

If this is too hard, I may I have to fiddle with the numbers as I go.  For example, $250 is more than 10% of my take home income, and I already have 3% of my salary before taxes going into a 401K (with 50% match), so it might be best to put more into travel as this summer approaches and gas gets higher.

In other news, this weekend my boyfriend went grocery shopping for Saturday night’s dinner so that he could cook for me.  I told him that I didn’t want him to buy food so that I could stick to the pantry diet, but apparently he disapproves and didn’t want to stick to it himself.  So he bought me a package of lunch meat and bread for this week’s lunch while he was there.  I’m so used to not having that kind of food that I cooked lunch and came to work before remembering.  That’s the best part of this diet-that’s-not-really-a-diet:  I’m finally learning how quick cooking can really be.  This gives me hope that in the future, when I’m a parent, my children won’t starve to death.

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.