Monthly Archives: March 2012

17 and Counting

I have gotten 17 calls from my bank in as many days.

It hasn’t been a consistent one call a day either. At first it was one call every two or three days.

Yesterday I got five.

Do you think this may have something to do with the fact that I switched my bank account to a lower fee option recently? Maybe it has something to do with the fact that I only paid them $1.69 in fees this month? Nah, that couldn’t be it….

If there is something important they need to tell me, they leave me a message. These calls don’t leave messages. I finally picked up the phone on Monday and talked to a very sweet girl who wanted to know if I was happy with my banking and if there was anything I wanted to do or change with my accounts. A courtesy call if you will. I told her that I was satisfied with my banking at the moment, but that since I switched to a lower fee account I’ve been getting inundated with calls from the bank. She very quickly apologized and I asked if she could take me off their calling list for anything other than emergencies. She said we she would, and we ended our brief conversation.

I know it takes a while for calling lists to get updated, but I’ve received another seven calls since then. Seriously now…

I’ve never been at the receiving end of a collections call, but I’m looking at the list of calls from my bank and I’m beginning to wonder if this is how it feels to have a collections agent after you, minus the money stress.

Maybe they’re not happy because I’m paying off my debt too fast ;) The amount of money I pay them monthly in fees and interest has dropped from around $100 a month to less than $30 this past month. I expect I’ll be somewhere around $10 next month.

Yeah, they’re probably not too happy about that.

We’ll see how they feel about it when I start buying their stock and they pay me back my interest and fees in dividends. It’s coming.

Soon.

Recommended Reading: It’s Okay to Be Poor in Your 20’s, but You Better Start Getting Your Sh** Together Girl!

Me Money

One of the things I’m worried about moving forward is that I’ll relapse into my old shopping habits and take on more debt. This is something I obviously don’t want to do, but I don’t want to go through my life feeling deprived, or bouncing back and forth between spending and saving binges. I want to regain my sense of balance, which means I have to learn how to be okay with spending money again.

I mentioned yesterday something called “Me Money”. Basically “Me Money” is a set amount of money that I’m allowed to spend every day on whatever I please. This could be Starbucks, clothing, craft supplies, makeup, iTunes, haircuts, tailoring, surprising The Boy, house decorations, whatever. Basically it takes my eating out, personal care, and “other” categories and wraps them all up into one neat little package.

When I was calculating my savings goals I knew I had to take into account that life happens, and I needed to have money for wants as well as for savings. I mulled it over for a bit, and asked myself what I felt would be a reasonable amount of, for lack of a better term, daily pocket money would be. The first number that popped out at me was $20, which I automatically assumed was way too high. After punching some numbers though, considering how many budget categories were being lumped together, $20 actually seemed to be bang on the money. I’ve neglected a lot of things that weren’t “must do” items this past year that need looking after (I have an embarrassingly high number of burned out light bulbs at home), and the “Me Money” will help look after that.

The nice thing about a $20 daily allowance is that it’s a nice round even number. Bank machines give out 20’s. I don’t have to go to a teller every week and ask for fives and toonies to do it. I just pop twenty in my wallet and go. If I don’t spend all of my “Me Money” in a particular week, it’ll get stashed to save up for something larger. I have every intention of getting myself a new winter coat and some nice boots this year, so I’ll have to stash diligently this summer.

If my coworkers decide they want to go for lunch, that’ll just come out of that day’s money rather than having to build it into my budget two weeks in advance. My eating out with friends seems to come in fits and spurts, so hopefully this will help accommodate that. The nice thing I think I’ll find doing this is that my budget will be more flexible. This is what my weeks could look like:

1 Day of “Me Money” buys light bulbs
2 Days of “Me Money” buys a pair of pants on sale
1 Day of “Me Money” has the pants hemmed
1 Day of “Me Money” goes towards yoga with a friend
2 Days of “Me Money” goes towards specialty artisan cheeses and GF baking at local shops

1 Day of “Me Money” is split between topping up my Starbucks card and iTunes
3 Days of “Me Money” pays for a haircut
1 Day of “Me Money” buys a Groupon to take the boy out for lunch
2 Days of “Me Money” gets stashed away for future purposes

Or any other conceivable arrangement of things in the wants category.

When you add it up, $20 a day is $280 every pay period. It’s a lot more than I’ve budgeted for my wants in recent months. It’s just over 10% of my gross income, which really isn’t that far out of line when you consider my all of my various savings accounts amount to approximately 20% of my gross income.

I can’t claim I came up with this idea on my own. The first time I heard about the concept was a few years ago when I read about a lady named Alice Wood. She was an attorney who was left with brain damage after a faulty airline mask starved her of oxygen. She went from being financially prudent to deep in debt because she couldn’t remember spending the money. One of the things she did to help regain control was calculate how much money she needed to spend from day to day, and then allocated herself this amount. This way she knew how much money she had available each day, and she didn’t have to remember what she spent earlier in the week in order to keep herself on track.

Such a surprisingly simple idea, yet so powerful.

Do you give yourself a daily, weekly, pay period or monthly allowance? How much do you allow yourself?

Recommended Reading: Groceries; My Biggest Splurge And How I’m Dealing.

When All Else Fails – Go OCD

Some days I just need to crunch numbers, you know that?

I’m usually pretty good at welcoming change. If I’m nervous about an aspect of the change, I research it. I’m fairly analytical. My mom calls it anally retentive, but we agree to disagree on that one.

To calm my nerves about the upcoming shift in my finances, I figured it would be a good idea to set myself a series of mini goals. Afterwards I decided to figure out if they were even remotely attainable in the short term. It did a good job of soothing me, and I ended up coming up with 5 short term savings goals:

(listed by priority)

1) Save $1000 in an emergency fund.

Also known as my “The-economy-just-went-to-crap-where-did-my-job-go?” fund. I’ll be keeping this as cash for now so that it’s accessible in case of emergency. The $1000 is just a starter balance, as I intend to continue saving money in here. I’ll probably cap it at a maximum of $10,000 – If I have more than that in savings I’ll move it into an investment account. That gives me about 4 months of living expenses in cash.

2) Save $1000 in an investment account.

I prematurely tried to open a low cost investment account last year only to find out that the minimum starting balance was $1000.  So, I need to save $1000. This is also just a starter balance, as I intend to add to it over time. I have no intentions of limiting the balance on this account. Why is the priority on this higher than others in the list? Frankly, I want to be wealthier than I am right now. Full stop.

3) Save $500 in a travel savings fund.

I’m already going to Vancouver Island for a wedding this summer, and it sounds like some of The Boy’s friends want to do a Shuswap boat trip this summer as well. I’ll be needing this money sooner rather than later, so I’d like to put $500 towards this account fairly quickly. I’ll be capping this account balance at $5,000. I figure If I have more than that saved in there I haven’t been getting out much and I’m obviously in need of a vacation.

4) Save $500 in a home savings fund.

These will also be getting used quite quickly, as I’ll need to pick up supplies for blowing insulation into my attic this summer, as well as finishing my stairs. In the longer term this account will be used to look after larger expenses like replacing a furnace or roof shingles. I’ll be limiting this account to $10,000 as well.

5) Save $500 in a car savings fund.

Let’s face it, my little beater isn’t going to last forever. It would be really nice if it did, but it probably won’t. I don’t know that it will last this long, but I’m going to cap this account at $15,000.

My short term savings goals come to $3,500. Not bad, but how realistic is it in the short term? I figured I should actually figure how how much money I was going to be setting aside each pay period, so I’d know whether or not I’d be able to save the money by the point that I needed them by.

Emergency fund – $100/payday
Investment account – $100/payday
Travel fund – $100/payday
Housework fund – $100/payday
Car fund – $100/payday
Christmas fund – $50/payday

After setting $300, $400, $500 aside for debt repayment each pay period, looking at $100 savings lines feels pitiful in comparison. I had to remind myself that I wasn’t saving $100, I was saving multiples of $100. $550 per pay period to be exact.

But doesn’t putting equal amounts into different accounts every pay period defeat the purpose of prioritizing the savings goals? Not really. If this was all I was doing I’d reach my goals 3-5 long before I finished 1 & 2. In addition to the budgeted savings amounts, I’m also going to be employing sloughing again. At the end of every pay period, whatever is left over in my account will get sloughed onto the savings account with the highest priority that hasn’t met its minimum yet. I may find that by the time I get to number 3, 4 and 5 that the minimums will have already been met with the regular pay period contributions, so this likely won’t affect them.

After all of the account minimums have been met, the end of the pay period slush money will go into my RRSP to pay back my HBP. Once my annual $1000 HBP repayment has been met, the remaining slush money will go onto my mortgage.

Slush money snow flakes are wonderful things.

Can I even do this on my income?

As it turns out, yes, I can. I took my two most recent budgets and stripped them down to the essentials: mortgage, RPP contributions, insurance, utilities, food in, fuel, that sort of thing. I also included my cell phone and internet. Everything else however was gone. I totalled this up, added the $550 worth of savings, and tacked on $280 of something I’m calling “Me Money”.  My “Me Money” description turned into a post of its own, so I’ll be elaborating on the concept in tomorrow’s post.

Add it all up and I get totals I can work with in both the fat and lean weeks. I’m tickled pink about this. With these amounts going into savings every pay period, I’m saving around 20% of my gross income. I didn’t plan it that way, it’s just how the numbers panned out.

What do you guys think? Would you rejig the numbers personally, or would you keep them as is?

Recommended Reading: Destroying Our Mortgage Debt.

Mountain Top or Valley Trough?

I’m fighting with writer’s block at the moment.

Well, not exactly writer’s block. More like writer’s apathy.

Despite the leaps and bounds that I’ve made over the last couple months, I just can’t bring myself to care. I do care, obviously, but it’s some seriously apathetic caring.

Apathetic caring…

Is that even possible?

Apparently it is.

I considered pulling the plug on my blog a little while ago so I could put the focus back on my off-line life. Spend more time doing stuff rather than using a chunk of that time to write about it.

It would somewhat defeat the purpose of this blog though. The blog is called Digging Out and Up. If I wanted to call it quits when I finished paying off my debt I would have just called it Digging Out. But I didn’t. I included the Up.

And damn it, that’s where I’m going to go.

So what’s wrong with me?

It took me a couple weeks and reading several blog posts about the subject before it dawned on me last night. I’ve plateaued.

There’s nothing wrong with plateauing in and of itself; it just means you’re in between shifts. Which way those shifts will go… no one really knows for certain until it actually happens. We can certainly encourage it to go in whatever direction we want it to go though.

I want my shift to go up.

I’m approaching a point in my finances that I haven’t seen in a really long time. The last time I was completely consumer debt free was the beginning of my last year of University. That’ll be 5 years ago this year. Since then, I’ve always owed money for something. Student living expenses. Travel. Car. Renovation supplies. Far more Starbucks and clothes than I care to admit. As excited as I am, I’m also scared. I’m scared I’ll trip up. I’m scared my car will break down and I’ll be right back where I started. I’m scared I’ll fall back into old habits.

I’m afraid of failure.

There’s nothing to say that it couldn’t happen now while I’m still in debt, but I’m not focused on now. I’m focused on the moment my debt is paid off. I’m focused on when I can save. I’m focused on when I can spend.

I’m actually conflicted about the last one. I want to spend. I am a spender. But I’m also a spender who will likely feel buyers remorse on every item I buy this year because I’ve been telling myself for so long that spending is bad. Wanting is bad. How could I even think about buying a new pair of jeans when I have a pair at home that I could mend again? My fleece isn’t completely threadbare, what do I need a new one for? How could I be interested in fashion, it’s such a shallow subject… *sigh*

I don’t want to live in the past, but I’m almost scared of my future. So I sit on my plateau, struggling to write about it and get it out. I find writing therapeutic, but I’m resisting the therapy right now.

It takes the fun out of paying off debt, I can tell you that much.

Please bare with me, this is a surprisingly confusing time. It reminds me a little of a phenomenon called reverse culture shock. It’s a concept I was introduced to as an exchange student many years ago. Most people expect a certain degree of culture shock moving to another country. The food is different, the scenery is different, the language is different, the culture is different, the mannerisms are different… everything just feels wrong. It’s hard to take it all in, but gradually you get used to it. You expected it to happen, so you get over the shock of it over time. What you don’t expect is experiencing culture shock on your return home. You spent the majority of your life at home. You learned how your life should be at home. Expectations were understood and interaction was effortless, you don’t have to think about it. Only now you do. You’ve been immersed in another culture for so long that going back to something familiar feels foreign. It’s frustrating. You fight it. You expect culture shock going abroad, but not coming home. Some people find it more difficult to reintegrate themselves back into their old lives than it was to carve out a new one.

I’ve been immersed in the culture of debt for almost 5 years.

Now I have to figure out how to reintegrate my life again. Enter plateau.

Recommended Reading: What I did with my income tax refund.

A Morning of Putting Out Fires

One of my e-mail accounts got hacked today. Yay!

*ugh*

There’s something to be said for personal online security.

There’s also something to be said for keeping up on weeding out your e-mail contacts. I received a text from my sister letting my know my account had been hacked, and logged in to find over 100 delivery failure notifications. I had e-mail addresses that were over a decade old in my contacts list. I tried to send out a mass e-mail saying not to open the spam e-mails, but I couldn’t because there were too many people and my account provider wouldn’t allow me to send it to that many people in one day.

So I spent about an hour going through and deleting old contacts. I really need to do that more often.

I also need to update my passwords more often.

My banks e-mail the account that got hacked, so I’m a little concerned about that.

You’ll have to excuse the short post today, I’m going to try and prevent fires before they become problems. How much would it suck having my credit card get hacked just as I finish paying off my debt?

No thank you!

Recommended Reading: Everything has its limitations: Maximize the gap between your earning and your spending!