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The Debt Breakup – My 2014 financial plan

I am back to blogging.

Back with a financial plan for 2014. Back with more enthusiasm. Feeling awesome about reaching my goals.

My Biggest Debt Mistake of 2013

I set myself an unrealistic goal to be debt free by the end of 2013. That was my biggest mistake.

When I arrived back from travelling at the end of 2012, I was so overwhelmed by the amount of debt I was in, I felt like I must attack this debt with everything I had. Which is a good attitude in theory, but this mindset lead me to setting up an unrealistic plan and budget to knock out almost 15k in just 8 months. For some, this may very well be possible. For me it wasn’t. And without a flexible budget, when life gets in the way as – surprise, surprise – it does, I felt frustrated and un-motivated by the end of the year when I knew my goal was not possible.

Armed with this ‘be practical about stuff’ revelation, I have started 2014 with a different mindset and a more realistic financial plan – that actually (I hope!) covers everything.

And, this may come as a surprise, it is not necessarily to be debt free by the end of 2014.

The Debt Breakup plan for 2014:

  • Pay off $4000.00* of my remaining debt – currently at $5925.05
  • Save $10,500 for travelling at the end of 2014

Travel is the true motivator, the real reason behind wanting to rid myself of this debt. After I travelled in South America in 2012, I returned home with an even bigger passion to travel than I had before – but also with an epic amount of debt. While I was travelling, I still had to account for monthly repayments etc and it sucked up funds I could have used to go further and longer in my trip.

Ok, so yes, the above plan means I still will travel with SOME debt. However, not 14+k worth and what the  * means is I actually hope to pay off more than this.

By channelling any extra funds (tax return, payrise etc) into the debt, I hope to knock out more. But $4k is what I can comfortably pay and account for – therefore any extra is a bonus.

The most important thing is, I am comfortable with the above plan. And I am looking forward to blogging about my journey again, with renewed enthusiasm.

I will continue to update on my weekly expenses and each fortnight – on payday – I will post the budget for the coming fortnight. Which will pretty much remain similar or the same as the following:

My regular fortnightly budget

  • Rent: $295.00 – I split the rent with my boyfriend
  • Travel: $45.00 – Bus fare to and from work. Most days I am lucky enough to get a ride to work with my boyfriend so it is mostly just the journey home I pay for.
  • Phone: $15.00 – I have a prepaid phone and $30 recharge voucher lasts me the month – for calls and texts, mostly the data runs out before 30 days.
  • Internet: $15.00 – On an internet plan for $30.00 per month (not prepaid)
  • Electricity: $20.00 – We are yet to receive our first electricity bill, which we will split evenly, so at the moment I am putting $40 per month away for this but will adjust accordingly when the first bill arrives.
  • Gym: $23.90 – I spent a lot of time deliberating whether or not to keep my membership, and instead just work out at home with some basic equipment and running. However, the gym recently started offering classes at no additional cost to the membership, which is awesome,  and  I decided to keep my membership.
  • Groceries: $250.00 – Grocery costs I also split with my boyfriend and have been tracking the expenses on our grocery spending. Although it does sometimes vary, $250 is a good amount to put aside each fortnight.
  • Tithe / donation: $20.00 – I donate $40 a month to a children’s home in India run by a Christian pastor and his wife. The home assists young Indian girls create a life outside child prostitution which is rampant in that part of India. I was very moved by the pastor and his wife when they spoke at a church sermon here in Australia last year and decided to allocate my donation to the home. It is my plan to increase this amount slowly.
  • Loan repayment: $160.00 – My set monthly repayment is $173.00 so I have allocated another $73.50 per fortnight towards the loan.
  • Buffer: $50.00 – For the first time, I have allocated a ‘buffer’ amount into my budget. It isn’t too large but it is better than nothing!
  • Spending: $230.00 – Most weeks will leave me with $115.00 as spending / entertainment money.

So, where does that mean I will be saving each month? And what about other expenses?

As of 5th March, I will be saving $490.00 per fortnight. Up until then, the amount allocated for savings is smaller and varied, I will outline these in my fortnightly budgets.

At the start of this year I had a few expenses / additional things to save for. I am taking a week trip to New Zealand in February– YAY! – so I need to put spending money aside for that. I also have an interstate wedding (Mach) and interstate hen’s celebration (January).

These are the only interstate trips I am planning this year – last year flight costs etc burnt a big hole in my repayment plan. The trip to New Zealand will be my only holiday this year.

So, I built these additional things into my budget for the first 2 ½ months of the year – which is why  savings amounts are smaller until March.

So, let’s DO this!!

 

A note to say thanks to Eva @  Girl Counting Pennies – who has a fantastic blog and reading her Goals for 2014 really helped me get back on track  🙂 

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Week 29 – Expense and Debt Update

A bit late with my weekly update, but here are the stats for Week 29.

While nothing much as changed on the debt front, I did stick to my goal of only buying 1 coffee and shopping at ALDI for my weekly shop. I also managed to not spend money on alcohol…but my boyfriend very kindly spotted me some beers last night 😉

Spend summary

Monday: $3.00 water, $15.00 on travel card

Tuesday: $0.00

Wednesday: $150.00 on travel card, $140 board

Thursday: $40.50 gifts

Friday: $23.00 gym

Saturday: $70.00 dentist, $4.50 coffee, $30 phone recharge card, $35.00 donation

Sunday: $27.30 dinner

Total spend: $538.30

Debt update

Credit card #1 – $0.00

Credit card #2 – $0.00

Personal loan: $6708.64

Total debt remaining: $6708.64

Total starting debt: $14,744.12

Debt reduced by Week 29: $8,035.48

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Wearing the same clothes. Over and over and OVER again.

I am so freakin bored with my wardrobe.

Clothes are pretty much the first on the hit list of things to go when the budget gets serious. I have had 2 skirts, 5 tops and 2 dresses on high rotation for the last 10 months as my work wardrobe.

Most items are black / dark and simple. Coming into the new season (summer) fashion, all these delightful light, bright and fabulous numbers are calling to me from shop windows.

Must.Not.Buy

Yes, yes, I know – first world problems. But, this blog is about my journey to debt freedom, and that includes leaving no whinge or frustration unsaid.

So, now I have that off my chest, the plan from 14th Oct – 14th Nov is to eliminate the items that burn a hole in my pocket.

After tracking my expenses for months, I can identify where a large portion of my $$ goes:

  • Coffee – yep, no surprises there!
  • Alcohol – seriously, in Australia drinking in bars / restaurants is SO expensive
  • Groceries – now I am not going to eliminate groceries altogether obviously! But I need to be smarter about where I purchase groceries and what I buy

So, my approach is this. Purchase only 1 coffee a week. Purchase NO alcohol. Shop at ALDI rather than Coles for my weekly work lunch groceries. I rarely ever buy my lunch at work, instead I do a shop every Monday morning for what I need for the week. But sometimes that shop can still cost me quite a bit. I tend to buy ‘brand name’ groceries and I do love the organic health food aisle 😉 But over the next month I just need to make simple purchases, not sacrificing healthy eating, but just getting down to necessity only.

So this was the 1st week and I have kept on track so far.

If I am going to blow this debt out of the water by the end of the year, it is crunch time. I have felt on a really tight leash lately and it has been doing my head in a bit, but I’m pulling out all stops to go into 2014 debt  free.

‘Perseverance is is the hard work you do after you get tired of doing the hard work you already did’  – Newt Gingrich

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Week 28 – Spend and Expense update

So, I missed Week 27 update as I record all my expenses in my phone.

And my phone died for a few days, when it came to, some of my notes / contacts were no longer!

So here are my Week 28 stats – no real change to debt. But I have a plan for the next 4 weeks and will give an update on that in my next post:

Spend summary

Monday: $7.00 coffee

Tuesday: $7.10 groceries, $ 4.90 takeaway juice, $110 gifts

Wednesday: $20.50 test for drivers licence

Thursday: $28 taxi, $100 dinner (it was a birthday dinner) , $40 gift

Friday: $7.95 gift, $20.50 licence test, $145 drivers licence fee, $80 drinks

Saturday: $4.00 coffee, $20 on travel card

Sunday: $5.00 raffle ticket, $4.00 bag, $20.80 groceries

Total spend: $624.75. 

Debt update

Credit card #1 – $0.00

Credit card #2 – $0.00

Personal loan: $6708.64

Total debt remaining: $6708.64

Total starting debt: $14,744.12

Debt reduced by Week 28: $8,035.48

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Week 23 – Debt & Expense Update (credit card #2 under $1000!)

Woo hoo!

Credit card #2 is under $1000! Only JUST. But I’m taking it as a win! When I started this blog that card was maxed at $5k.

This week I did have a HUGE expense – I paid to have my household items currently stored interstate to be delivered to my parents home. It cost $1870 for the delivery and $140 for the remaining storage for September. While this was a big outlay, it means I will no longer be paying $180 per month like I have for the past almost 2 years.

Now my committed expenses are as follows:

$280  per month – rent

$360 per month – travel

$178 per month –  loan

$25 per month –  internet

$30 per month – phone

$44 per month – gym

$29 per month – loan insurance

 

My expenses this week looked like this:

Monday: $25.00 groceries, $3.90 coffee

Tuesday: $3.10 personal care, $100 concert ticket, $40.00 put on travel card

Wednesday: $8.95 earrings, $3.95 snack, $4.00 groceries

Thursday: $12.00 personal care, $18.00 drinks, $100 put on travel card, $23.90 gym fees, $2010.00 storage and removal fee

Friday: $3.90 coffee

Saturday: $30 drinks, $40 sports nutrition bars, $22 dinner

Sunday – $12.00 second hand book, $8.00 coffee

Total spend for Week 23: $2, 468.70

Debt summary

Credit card #1 – $0.00

Credit card #2 – $932.00

Personal loan: $6893.69

Total debt remaining: $7825.69

Total starting debt: $14,744.12

Debt reduced by week 23: $6,918.43

 

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Week 21- Debt stats update

Happy Sunday guys!

Here are my debt stats for the week:

Spending summary

Monday: $4.20 coffee, $45 groceries, $50 groceries,

Tuesday: $8.90 coffee, $11.70 groceries + haircare,

Wednesday: $4.90 coffee, $4.95 breakfast, $97.00 flowers for a gift, $23.90 gym fees, $29.00 loan insurance, $80 travel, $140 board

Thursday: $8.00 postage + packaging,

 Friday: $5.00 coffee, $12.95 postage, $20 groceries, $25 bottle of wine, $22.00 drinks

Saturday: $7.00 coffees, $30.00 dinner and drinks

Sunday :$20 groceries, $6.00 groceries, $7.00 coffees

Total $662.50

Debt summary

Credit card #1 – $0.00

Credit card #2 – $1344.88

Personal loan: $6893.69

Total debt remaining: $8,238.57

Total starting debt: $14,744.12

Debt reduced by week 21: $6,505.55

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Week 20 – Debt stats update

Hey peeps

Here are my stats for Week 20. Drew cash and charged purchased to my credit card (which I was expecting to have to do) so therefore larger debt than last week. I did spend a lot this week , and it also wasn’t pay week.

Next week I really want to have a seriously low spend week. The travel to and from work from where I am living at my folks place is seriously doing my head in. Last week I was really shitty and tired and over it. The quicker I can pay this debt off, the sooner I can move closer to the city and regain 4 hours of my life everyday!

Also, I’ve joined a gym in the last few weeks – I went for a budget type gym (no classes) for $22.00 a fortnight, which isn’t bad. I’m going 3 times a week so that is roughly $3.60 per visit.  I was very careful to select a gym with an option of no contracts. I can cancel my direct debit with only 48 hours notice, which is great.

Spending summary

Monday: coffee – $3.90, groceries for lunch during the week – $63.00

Tuesday :  $4.90 magazine, $7.50 magazine, $10.00 medication

Wednesday : $6.10 breakfast, $15.00 homewares, $50.00 present for Dad’s birthday, $20.00 drinks

Thursday: $10.00 travel, $3.90 coffee, $70 registration fee for ultra marathon, $80 added to travel card

Friday:  $4.90 coffee, $11.40 lunch, $10.00 bottle of wine, $20.00 medications

Saturday : $8.90 coffee, $2.50 stationery purchase, $20 dinner /wine, $40 added to travel card  travel

Sunday : $6.50 lunch, $4.50 coffee

Total $468.500 + $40 cash I drew from credit card not spent

Debt summary

Credit card #1 – $0.00

Credit card #2 – $1940.00

Personal loan: $6977.83

Total debt: $8917.83

Total starting debt: $14,744.12

Debt reduced by week 20: $5,826.29

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Week 18 – Run your own Debt Race

I am running my own debt race. The last few months I have realised that the pace that I set can change from time to time, but as long as I am moving forward, I will cross the finish line. It may be later than I planned, but I will finish regardless.

In an earlier post, I compared paying off significant debt to running a marathon. I actually ran my first marathon at the start of June, and let me tell you, now I know what it feels like to run a marathon, the analogy could not be more true!

Where have I been these last few months? Ive been here, plugging away at debt, but Ive relaxed my grip on the expectations I placed on myself to meet my targets every week, and every month. If I didn’t relax, I would have given up all together.

I came out at the start of this debt breakup totally focused on clearing this debt in 8 months. I stood at the starting line of the marathon, believing I could finish by 4 hours and 40 mins. I had this time set in my head, just like I had an 8 month deadline to be debt free.

And they both started so well. But like many marathon rookies – EVEN THOUGH I KNEW THIS – I ran to fast at the start. I was excited to be there, all that training, and I just wanted to run.

When I paid my first debt repayment in February, I was champing at the bit to get this thing rolling, budgeting my way to what appears now, to be a fairly unrealistic timeframe.

And don’t we always start with a bang on any new endeavour. But where does the hard work come in? Not at the start when it’s all new and fresh and ‘Yeh baby, I can DO this!!” *high fives self*

The hard part comes in when you are in the thick of it, on the longest stretch, where it just seems there is no fcking end in sight. During the marathon, that was the 26km – 35km stretch. I’d lost sight of the 4 hour 30 min pacer – he smashed past me about 22kms. I knew then, that I wasn’t going to finish in the time I wanted. Although I felt no different physically, mentally, that realisation almost shut me down. I wanted to give up. I just told myself to let it go – run your own race.  I slowed down at that point, if I didn’t, I would have burnt out at the pace I was running and wouldn’t have been able to finish. Mid race, I adjusted my mental expectations, set a new pace and kept going.

Run your own race.

I am at that same stage with debt. I’m deep into the second card repayments – and it’s once step forward, 2 steps back. I wasn’t where I had planned to be at this stage and it was doing my head in.I wanted to give up and say fck it, everyone is in debt – why bother? Then head to the nearest mall and drop 1k on a new wardrobe 😉

But instead, I have just adjusted my expectations of myself and what I can afford to pay off, and what I do want to spend my money on. I don’t want to miss out on living my life. I don’t want to not buy a coffee everyday – yes peoples, you will hear no more griping about coffee on this blog. Ive come to peace with the fact that coffee is my little burst of morning happiness, and for $3.90 a day – I’m buying that happiness 😉

I finished the marathon in 4 hours 56mins. Longer than I expected. But I FINISHED.

I will break up with all my debt. It will take longer than I thought. But I will FINISH.

Don’t give up. Change your pace if you need to. And keep moving forward.

So peeps, here is my debt summary at 18 weeks:

Credit card #1: 0.00

Credit cards #2: $2140.00

Personal loan: $6977.00

Total debt: $9117.00

Total starting debt: $14,744.12

Debt reduced by week 18: $5627.12

Ps – I cracked the under $10,000 mark and didn’t even realise until I did the sums just now!

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Week 12 – Expense and Debt Update

This week, I set myself a $15.00 limit on coffees. Pleased to say that I did stick within that limit – exactly $15 – and it reduced the inner angst of coffee purchasing! (I found a cafe  that does ‘happy hour’ coffee for $2.50 between 10 -11am )

Here are my week 12 stats:

Total Income 

  •  $0.00 (this was not my pay week)

Spending / Expenses:

(Amounts in italics are included in my regular monthly expense budget as listed in this previous post)

  • Monday: $8.20 card and postage
  • Tuesday: $15.00 vitamins, $38.85  facewash, $4.30 coffee, $6.95 moisturiser, $2.00 chocolate, $30.00 phone recharge credit
  •  Wednesday: $3.30 coffee, $29.00 loan insurance
  • Thursday: $2.50 coffee, $8.95 takeaway dinner
  • Friday:  $50.00 travel, $4.90 coffee, $4.20 celebrity magazine (these mags are SUCH a waste of money. I really need to stop!)
  • Saturday: $20.50 breakfast for me and mum, $31.57 face cream, shampoo and conditioner
  • Sunday: $178.00 loan repayment

Total Expenses / spend: $438.22

Week 12 Summary

Income $0.00 + bank balance $640.75  – expenses $438.22

$202.53   in bank account

Week 12 debt status

Credit card #1 – $0.00!!!! (Goal to pay off in total by 2nd May 2013COMPLETED ON TIME!!!!!!!!!!)

Credit card #2 – $4318.05   (Goal to pay off in total by 8th August 2013)

Personal loan – $7,145.80  (Goal to pay off in total by 31st October 2013)

Total Debt : $11,463.85

Initial Debt: $14, 744.12

Debt reduced by week 12:  $ 3280.27

86 days has past since I started my Debt Smashing Mission – on average, I’m paying off $38.14 of debt per day. That doesn’t really seem like much, considering I earn $159.50 per day? It certainly FEELS like Im paying more than that for all the effort ha. Interesting…

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Letter to my future Debt Free self

Sometimes this debt repaying thing is so hard and so boring. But I know it will be so worth it. I caught myself in a moment of ‘woe is me’ earlier this week which lead me to fervently tell myself I AM NEVER GOING TO GET MYSELF INTO DEBT AGAIN. 

Ah, but the best laid plans. The biggest promises. The ‘in the moment, hand on heart swearing black and blue’ oaths, sworn in times of frustration/ anger/ inability to buy new shoes.

Sometimes, down the track, when you are out of the black (or red) hole – all those feelings have faded. And temptation may find itself knocking on your 0.00 credit card balance door.

So, I have decided to write future self a letter. Should that temptation come knocking. A letter written in the moment of the debt nightmare (NOW!)

Dear Future Debt Free Self,

So you want to take a trip huh? You’ve saved hard. But your still a few thousand short of making it a fabulous trip. And you are impatient. You want to go NOW. Your thinking about a loan huh….yes, yes, you are. Ive seen that look before. That’s how we got in that debt debacle a few years back – helloooooo, remember?!! 

Remember  how embarrassed you were to tell anyone how much debt you were in? Remember worrying all those night about that increasing card debt. It kept you awake at night. It stressed you out. It made you feel like you were a big fat financial loser. Like you would never get ahead. Worried if something happened, and you were out of work with no ability to pay. Remember when you WERE out of work. Then remember PAYING OFF that debt. That was HARD WORK right. It was boring and tedious. You never wanted to be there again. You swore to me (to you) that you would never buy something you couldn’t afford. It’s not worth it. SAVE that extra 2 thousand. Make some sacrifices now, so you never have to make those annoying Debt Be Gone sacrifices AGAIN. Sacrificing for savings is sooooo much more awesome than sacrificing for debt. Then kick back on your holiday – knowing you earned it. You didn’t charge it.

Regards

In Debt Self of 2013

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