We have an unique opportunity this year. Because of my pay schedule I receive 26 checks a year. I base my budget on 2 checks a month just to make things easier for me. This also provides me with two paychecks each year that are not budgeted for. Last year both of these were used to fund vacations/trips. However this year, I am using my first check (which I received today) to reset the budget. What this mean is that as of today, each of the fund that I have established is starting at the level need to meet demands. For example I budget $45 a month to use of AAA and car insurance. At this point I have to pay our insurance in May or five months so I have researched and funded each category to the level to make our budget work. So basically if we just stick to the budget amount then we should not have any surprise in the year and should be able to finally become debt free except for our mortgage without living on beans and rice.
I have promised you real numbers and here you go along with my plan to accomplish and a little explanation as needed.
1. Pay off all debit , except for mortgage. I am going to list each of our debt the amount owed and the plan to attack.
a. JC Penny- 79.32– will be pay with clothing money in January.
b. Home Depot- $1807.45- This amount is all on an interest free plan. I did not pay any interest to Home Depot in 2014 and by sticking to the plan will not pay any this year either. $210 a month Payment.
c. American Express $9232- Again this currently is on a no interest plan which will expire in April. Currently the goal is to pay $12OO a month and all my tax return to get this amount down and gone.
d. Personal Loan (used to purchase van) $2704.88 The current scheduled payment is $217 a month with this scheduled to be paid off in December 2015.
2. Emergency Fund to $2000. I have actually included this as a line in our budget this year. I mostly likely will not be able to achieve the full $2000 without some extra work and saving but I am leaving as a goal so I have go be accountable at the end of the year. The current plan is also to address a long term septic issue once our EF reaches this amount. I am totally unsure what the actual cost will be but this should cover it. At the point, this repair becomes necessary it may wipe out the EF but at least we have a plan.
Several other changes are occurring this year with our budget as well.
- We are purchasing a new to us mini van which after it is completely purchased and new brakes applied will replace my car. I am unable to transport all three kids to school in a manner I consider safe with my current car. The plan includes selling my car as soon as this vehicle is in service, Overall we will likely see an increase in the cost of gas but that is the only additional cost I am budgeting for.
- I have officially started saving for Retirement. My company has a mandatory 2% retirement contribution which they match, In November, I elected to place an additional 2% in a ROTH IRA. The even better news is starting mid January the hospital will also match this additional 2% contribution.
- We have cancelled our membership to the local YMCA but instead of deducting this expense have replaced it with “pool” which will be used for our membership fee and swim team cost.
- Several categories including hair and piano are entire cash based so this will allow for more accurate use and spending of these funds.
- Matt is expecting an initial decrease in his projected salary but has already starting seeking out opportunities to increase not only his web design business but is also looking at establishing other routes for steady income.
I am excited to have chance for a true budget reset and hope to use this as a springboard board for both paying off debt and saving money in 2015!