The Bill Account

One of my biggest problems, like I mentioned in a previous post, is that I have a habit of spending on things I don't need. When we have extra money we tend to forget that the money is already spent, and go 'Ooh, look...we have 100 dollars! Let's go _____.' Fill the blank with dinner, craft projects, etc. You would think that after doing this over and over again we would realize that we're doing it wrong, but we don't. 

My husband thought of a plan though to stop this from happening. We decided to open up a joint account that we would transfer our money for bills to, and only touch it for bills. If this happens we would not have any issues with going over or being under. This sounds like a brilliant idea!

So now, once the money in our personal bank accounts is gone, it's gone. We won't have to worry about accidently spending the electric bill money on dinner, or worrying if the credit card payment is going to bounce. Since it will only have bill transactions it will also be easier to see if everything went through since the balance should be zero once all the bills go through.

We were also discussing that we're going to transfer partial bills to the account. For example, we get paid bi-weekly, so lets say rent is $1000, and we each get paid every other week.

Pay Days

September 14th (mine)

September 14th (his)

September 28th (mine)

September 28th (his)

So that's 4 pay checks between now and rent, so $1000 / 4 = $250. So it will look like this in the bill account:

September 14th (mine) +$250 / $250

September 14th (his) +$250 / $500

September 28th (mine) +$250 / $750

September 28th (his) +$250 / $100

October 1st (rent due) - $1000 / $0

We'd do this for all the bills though, so it would look like this:

September 14th (mine) +$250 / $250 rent | +$75 / $75 phone | + $40 / $40 electric

September 14th (his) +$250 / $500 rent | +$75 / $150 phone | + $40 + $80 electric

September 16th (phone due - $150) - $150 / $0 phone

September 28th (mine) +$250 / $750 rent | +$40 / $120 electric

September 28th (his) +$250 / $1000 rent | +$40 / $160 electric

October 1st (rent due - $100) - $1000 /$0 rent

October 5th (electric due - $160) - $160 / $0 electric

Otherwise what we usually do is:

September 14th (his & mine) - Oh look, only the phone is due! - $150

September 28th (his & mine) - Crap! We need $1000 for the rent AND $160 for the electric...we're broke!

Yeah. It's not fun.

Paying Off Debt Will Take Forever?! Or will it?

I love to plan. I always have, always will. My biggest problem though is following through with the plan once I made it.

I went back to Excel and made a spread sheet to figure out my debt, and how much I can put towards the payment. I came up with this set up:

In column A is the month. Each black outlined box is one month. On the top in row 1 are the credit card names, or type of payments. In row 2 will be your annual interest rate (APR).  Card 1 has an APR of 25%.

Balance: The balance will automatically update each month based on your previous month's payment and interest rate.
Payment: This is manually typed in by the user
Interest: The interest will automatically update based on what the current months balance is.

The Break Down per Month

Let's say the following is your minimum payments:
Card 1: $50.00
Card 2: $50.00
Card 3: $100.00
Car Payment: $150.00
Mortgage: $500.00
Total: $850.00

The first step is to put in the minimum payment amount for the current month, so we're currently looking at the month of September. Insert the minimum amounts in row 4 for September:

As you see based off the minimum payments inserted the month of October updated. 

Card 1: Balance of $250 - $50 payment + $3.52 APR =  $203.52 new balance for October.

Okay, here's where you start paying things off. Let's say you're able to spend an additional $250.00 a month in order to help get yourself out of debt. Add that to which ever payment you wish to pay off first, and what I'm doing is highlighting it in a color. So...let's add $200 of that to Card 1, and pay that off, leaving us with $50 more to spend, and we'll put that towards Card 2, raising that payment from $50 to $100. It will look like this:

Now, as you can see, there was a payment of $250 for Card 1, and a payment of $100 for Card 2. The only thing I have figured out yet is how to get rid of the interest rate once it's paid off without deleting it. For now, just delete the interest information once you have paid off the card, because you wouldn't owe that $3.52 anymore, if you paid it off.

Just repeat this process until you determine how much to pay/how long it's going to take you to pay it off. Based off my calculations if we pay $500 more a month we can get out of debt in 13 months. Here's to hoping!

Where is it all Going?

(I am including numbers here purely for mathematically reasons. Please do not comment about how much or little I make, or make any rude commentary about what my spending habits are. This blog is to help me, and hopefully inspire someone else to make the change as well to better themselves.)

Alright. So I went to my handy dandy Excel and got myself to work.

First I broke everything up into two categories: requirement and debt.

• Requirements: rent, water, electricity, car insurance, internet (taking classes online), phones, groceries and gas.

• Debt: credit cards (excluding student loans since I'm still in college.)

Our monthly requirements rounded up to about $1500 a month...which based off my math you can BARELY do with a minimum wage job at $8 dollars an hour, full time. I don't have a problem with this math, it makes sense...and this is including a faster speed internet (for gaming and school pleasure) and phone with data connections. I can live with this information

Then I started calculating our...erm...my debts. I calculated total debt (excluding student loans), and minimum monthly payments. Our minimum payments came out to a total of $550 a month!

Alright, so that's totaling up now to a minimum forking out of $2050 a month, and like I said on the previous blog we make more than the median amount...so let's assume we calculate based of the $45k a year,  or $3750 a month, that still leaves $1700 dollars a month unaccounted for. I'll subtract $200 from that because I have a 401k and health insurance (lots of pre-existing conditions), so that's $1500 a month that just...disappears.  

Now, logic tells me that it doesn't just disappear. I know that it doesn't. Where does it go? It goes to eating out because we're too lazy too cook. It goes to the hundreds of thousands of dollars I've put towards crafting projects that I get bored of a quarter of the way in and never finish, it goes to $50 - $60 video games that my husband beats in a week, or that I get bored of after a few times playing, it goes to  the violin I bought my husband for his birthday that he doesn't play, or the brand new tablet that I just had to buy because there was a sale. Need I go on? 

I know what the problem IS. I just need to actually do something about it to fix it. The first step is to pay off that debt, and start a savings fund.

Now...off to plan that one! 

The Magical Disappearing Act of Money!

I was browsing on Pinterest.com and came across this series on The Peaceful Mom's blog 'Living on Less than $28,000 A Year'. I read every post in the series and was inspired.  

I decided to do a little research of my own.  

I live in Florida with my husband, and no kids. Based on the U.S. Department of Commerce State Median Income Florida, as of 2010, was at a median income level of $45k a year for a  household of two. Before taxes, with my husband's new job, we make more than that median average. (I'm getting to the point I promise!) I read The Peaceful Mom's blog and was shocked to see that she was living off over 10k less a year for a family of six and could not for the life of me figure out how.

I obviously am doing something wrong. Am I spending too much? Am I eating out too much? Is my debt too high? What am I doing wrong? Where is my money going?!

Well, I plan things...so off to Excel where I can figure this out. I'll come back with an update on where all my money is going! Wish me luck!

Let the Games Begin

They say that money is the root to all evil, but I don't think that's true. Money isn't the root to all evil, people having money and having access to buy things is the root to all evil. That sounds backwards, but think of it this way. There are people who have money, that aren't evil. That manage their finances, who donate to the poor and needy, who are able to happily live without letting money get in the way. Then there are people who have money or do things to get money that are evil. See, it's not the money that's evil it's the people and what they do with the money.

I don't think I'm evil, but I think I'm very irresponsible when it comes to money. I think I have a poor track record for will power and focusing on what's important. I think that I've let money get in the way of true happiness, and let it take over my life. I think it's time to change that, but I thought that in the past. What makes this time any different, I wonder. I don't know. Nothing? Everything? Something in between?

There's a point some where in this rant. The point is, I'm going to try to get on track of things. Try to change my life around for the better, get out of debt, save up an emergency fund, focus on life and what it has to offer me instead of debt and if I'm going to be able to pay my bills next month. I want to be able to say I'm out of debt, unlike 80% of Americans. I'm going to use this blog as a tracking method for all my neurotic ways, how I get out of debt, how I do things the way I do. It'll help my OCD with keeping everything in one place. I may also just post random arts and crafts things because it's what I do. It'll just be a blog for anything I want it to be a blog for.

Let the games begin.