I like simple, un-confusing financial planning tools.
Excel spreadsheets with thousands of tabs, pie graphs, and a million presentation options to display the one simple fact (yes, you DID spend $100 on coffee this month) – not my thing.
So I set up a basic excel spreadsheet (1 tab people, 1 tab) to estimate my income, debt repayment and spending for the year. Ive never set up a yearly budget before, it has always been month to month, so it was quite an interesting exercise to see total projections of income and spending. If you thought $100 on coffee was a lot, wait till you see the yearly total.
More about my obsession with coffee, and inability to STOP BUYING IT EVERY DAY, in another post.
Of course there are aspects of this budget which I expect to fluctuate with unexpected expenses etc. A nice bonus was the fact that I spent time setting it up – although simple, it was quite time consuming re data entry initially – before I was paid for the first time in my new role. I received $90 more a fortnight than I thought I would be paid, so that added a little buffer. I am paid fortnightly but in the interest of keeping things simple I have shown expenses / income in monthly amounts below.
Summary of my monthly expenses. Note, these are bases on the weekly amount x 4. Not a calendar month.
- Board – $280 ($70 per week) – I am extremely lucky to have such low board – staying with my parents until I pay this debt off – will talk more about lifestyle sacrifices in the name of debt reduction!! in another post.
- Transport – $360 ($90 per week) – I don’t drive, this is the cost for public transport. It can vary, usually less, but I budget $180 per week
- Storage – $183.00 ($45.75 per week) – I have all my personal effects (a small apartment full) in storage.
- Personal Loan minimum monthly repayment- $171.00 ($42.75 per week)
- Credit card #1 minimum monthly repayment – $50 approx ($12.50 per week) Credit card #1 is the first on my hit list so I will direct my debt repayment amount here initially.
- Credit card #2 minimum monthly repayment – $140 approx ($35.00 per week)
- Prepaid internet : $25.00 ($6.25 per week)
- Prepaid phone: $50.00 ($12.50 per week)
- Tithe: $80.00 ($20.00 per week)
- Loan insurance: $29.00 ($7.25)
- TOTAL MONTHLY FIXED EXPENSES: $1368.00
- TOTAL MONTHLY INCOME: $ 3190.00
DIFFERENCE (FOR DEBT REDUCTION AND SPENDING) :$1822.00 ($455.50 PER WEEK)
I will be paying off credit card #1 first, the credit card #2 and then finally my loan.I have actually made 2 payments already from credit card #1 (totaling $1340.00) which brought me to the total outstanding I listed in my first post.
My savings are non existent. I have read a lot of advice about emergency funds and getting one to 1000k before starting to pay off debt. I do see the benefit in that certainly, but I have been keen to start paying off debt ASAP. Whether or not that works (ie, no emergency fund) I will soon see.
Keen to hear from anyone else who is debt reducing without an emergency fund and how that is working out……