So Sick of Debt

OK, so back just before 2007 ended I published a list of financial goals for the year.

These underwent a lot of alterations in the early months of the year, but in late February I settled on these goals. They looked a bit shaky when it seemed more likely that we would leave our current home, but with things looking pretty good in that respect these days, this is the current list, and where we are with each (listed in order of priority):

Goal 1: Pay off car debt: Currently $6495 owed. If I can keep up our current repayment level, on track to pay this off on or about the 1st anniversary of this blog (early July)! That will make us consumer debt free!

Goal 2: Boost EF to $5000: Currently $1017 in situ, I expect to use tax/family payment rebates (about $2000) plus some of my child care rebate to add nearly $4000 in total. This is unlikely to be achieved till about mid-September.

Goal 3: Pay for our joint party: My 30th birthday snuck by in the past week or so (ha!), and my hubby has a similar big one coming up, so we are celebrating together. $1000 should cover some champagne for the toasts, plus food etc.  We are having the party in the backyard, so we are keeping costs down, but there are lots of guests, many from interstate (meaning it’s a big deal). To come up with the money, we will suspend car payments for 2 weeks (or 3 if necessary) just before the big event.

Goal 4: Contribute $500 to a relative’s birthday function: Thi is something we committed to a long time ago, and something we really want to do. My tutoring work at the university should pay for this outright without affecting our weekly budgets.

Goal 5: Fly south to see a friend’s baby: This is budgeted to cost $3000. Between the remainder of my child care rebate ($1500) and the money projected to be incoming from the sale of our health insurer ($2000 - see previous post), this might be covered without affecting weekly budgets.

Goal 6: Graduation expenses: Between the grad ball, gown hire, getting a dress to wear and general celebrations (plus I’m unlikely to do any casual work that week), I think this will cost at least $1000. I will budget for it from weekly surplus funds (all debt will be paid off by then).

Goal 7: Buy my next car outright. Though my husband’s car will be paid off, mine is in such a poor state that I think I am best off saving to buy a relatively recent Corolla, then keep it for as long as possible. In Australia, an ‘06 model might be obtainable for $15,000 (after all on-road costs). When I crunch the numbers, I end up about $9000 short on this goal (having met all previous goals). I could just extend this goal into 2009, but I feel that by then I’ll be working full-time, I’ll need a good car and our focus then really needs to be on a house deposit. So I am just going to leave this goal sitting here, and see what comes up over the year. Anything could happen to make this more achievable. Case in point: my previous post about the funds fom my health insurer!

As you can see, a lot of my goals are not based around getting into a better financial position - not in so many words, anyway. I think it’s important to use your budget to continue to live life a little. For me, this means paying strict attention to where the dollars go, in order to ensure they go where they are most needed and/or wanted.

Do you have any financial goals for the year?

Well, it won’t make a difference until October but I got some very good news when I heard a newscast today. It turns out that I can expect close to $1500 more in childcare rebates than I was expecting.

In Australia, some of our childcare costs are covered week to week by the government.  That is, the government pays the childcare centre some of the bill, depending on your income and whether or not you are studying/working or at home full time. Then our last government introduced a system where you receive 30 per cent of what you paid out through the year in out-of-pocket expenses.

In November, Australia voted in a new government and I hadn’t known that one of their plans was to raise that 30 per cent to 50%.

Let me show you how this works.

The weekly fee for the `toddler room’ at our daycare centre is $AU240. 

The government has assessed our income as a couple and pays the centre $65, dropping the fee for me to pay (each and every week) to $175. Yes, that’s a chunk of change, given we’re on 1.25 incomes but the government’s bit helps.

Now, assuming I paid $175 for 50 weeks of the year (the centre closes for 2 weeks at Christmas). Over the year I would pay 50 x $175 = $8750.

Under the old system I would get $2625 back after the financial year (30%). But now I could expect $4375 (50%)!!

Now in reality, that’s not quite what I can expect this year. Our financial (tax) year runs from July to June, and in the second half of last year we only paid $110 a week (fewer days/week). 

But my refund should be something like this:

25 x $110 = $2750 (first half-year)

25 x $175 = $4375 (second half-year)

Total out-of-pocket for year = $7125

50% rebate = $3562.50!!

I had previously only budgeted $2000. If you’re wondering why they don’t just pay it for us week to week, I think it is so that childcare centres don’t up the charges so parents end up paying the same amount anyway.

This is exciting because I have been wondering how we will reach our rather ambitious financial goals this year -this will certainly help and reminds me that you never know what’s around the corner!

All that said, until it is officially passed in the budget I won’t be expecting the money … I could be disappointed. The newscast said the government was planning to honour the election promise but you never know how these things can be altered in the Treasury.

I’ve been thinking about making a list of my financial goals for 2008 – it seemed like a pretty boring list that any regular reader could probably recite verbatim (yeah I know, I need to vary my themes a little).

1)      Save for a home deposit

2)      Pay off my car

Well, to do both of these in the coming year is a pretty big goal. We still owe nearly $12,000 on the car and we’ll need at least $15,000 for the home deposit. I usually make less than $15,000 a year (in a good year) so this is looking like a BIG challenge.

Added to that, we have a couple of other goals. I’m going to list these here, so that I’ve committed to them.

WHAT: Fund a joint party

COST: $2000

WHY: We both have significant birthdays this year and plan to celebrate.  We were initially planning to hire a hall and make a big event of this, but instead we have decided to do something at home. Since we have a huge garden (and we know a lot of smokers who would be outside all night anyway!) this is probably a better idea for us and will save a lot of the expense. I think this budget is way over what we will spend, but if I start high I can always reduce it down.

HOW: This is going to take about $100 a week in savings to achieve, starting from the New Year until almost mid-year. In a future post, I’ll explain my costs breakdown and ways I can save.

WHAT: Travel interstate to visit a friend and her baby in August/September

COST: At least $2000

WHY: I just found out a good friend of mine is pregnant and there is no way I will be able to avoid (or would want to avoid!) being there to see that baby in the months afterward. If we start planning now, we should be able to get there. She lives in a city I have never seen, so we would probably take some opportunities to see some of the sites. But they will be the iconic landmarks, not the expensive eateries or shops. And I think we’ll spend a good amount of time at her home visiting and helping with the new bub, so we should be able to put the brakes on our spending.

HOW: To do this in late September, we will need to save $100/week starting straight after the joint party is over.

 Basically, I have listed $31,000 worth of goals here (not even counting the accruing interest on the car loan), and this represents a HUGE chunk of our income. But planning is a big factor in this, and I think we can do almost all of it if we try. And if we don’t make it all the way, we will certainly go close (or closer than if we didn’t try at all).  One thing I’ve learnt since starting this blog is: if there’s one occasion I can rise to, it’s a big financial challenge!  Another thing is that I have promised to focus on how we can cut some of our expenses some more, as I think we have let this area down a bit. Just because I budget $200 for groceries doesn’t mean we have to spend it. I am going to look at my options in this regard too. Come to think of it, notice I keep saying that but never seem to actually do it! Must be a bit of a mental block for me, huh!