Archive for September, 2007

Shifting the figures

There have been a few changes on the sidebar over there on the right this week.

The best one is the presence of two `PAID OFF’ labels, though I really felt I had to leave the garden labour portion visible as a reminder to myself of the work ahead this summer.

This leaves us with only the car loan to go, which is pretty exciting and I still don’t know if we will aim to pay that off quickly (within 6 months) or get back on track for home ownership instead. That decision wil stay on the backburner for a while as we just accumulate some funds again (today, I have a feeling we will aim to pay the loan down first but this tend to change on a daily basis!). This is the only downside of paying off that family debt -we depleted our home deposit funds to do it.

However, otherwise I feel pretty good at the moment.  I have a LOT of work to do for uni, and my `fun’ time is popping on line to check my fave PF blogs and write a post.

Next week I have a friend coming up from down south for 4 days, which I can see will cost a bit in dinners out etc. However, I am on a bit of a health kick at the moment so I won’t be spending up too much. And I have already let her know that I’d rather spend a fair bit of time catching up with her at home. I will need to leave her to her own devices a bit because of the study I am trying to get done, but luckily she already let me know she would like to do some exploring on her own anyway, so that’s great as it works out well for both of us.

On a final note, it’s not finance-related but I want to share anyway. I have started my obstetric rotation at the hospital and the reason I haven’t blogged in a few days is that I spent from 8am Tuesday till 4am Wednesday in the birth suite, most of the time with a lovely young couple having their first baby. I was lucky enough to be present for the birth of their beautiful daughter, a magical experience that I will always remember. On a sadder note, my rotation involves spending some time in the neonatal intensive care unit at our hospital, which involves caring for some of the tiniest premature babies. One of the bubs in there at the moment was born at 26 weeks gestation – in case you didn’t know, babies are usually born at 39-40 weeks. The 26-week old is smaller than a tub of butter and her skin is still translucent, so you can actually see many of the blood vessels and organs inside her. Sometimes I feel so lucky to do what I do – sharing the best and worst of times with people can be difficult and emotional, but it is ultimately very rewarding!


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Well, I made the decision

We received our final government payment this morning and though it was a little less than expected (by about $100) we now have enough for a full (baby step level 1) emergency fund of $1000.

Sine my post yesterday, I’ve decided to do my best to make the billpaying account stretch to pay for the car repairs to leave this fund intact. I can’t bear the thought of reducing it now. It feels great to have reached the next stage!

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The problem with emergency funds

OK, so this is my latest issue.

JW at Need to be Debt free recently blogged about his wife’s car breakdown. I couldn’t believe the number of people who gave him a hard time about not getting the car repaired earlier, as though keeping the family financially above water and working two jobs somehow wasn’t enough to be `fighting the good fight’ of debt reduction. It’s worth remembering sometimes that though everyone is sharing their situation in this kind of forum, the way you deal with your debt is, in the end, up to you ….

Anyway, I know we need to get some work done on both our cars eg new brake pads, replace a tyre etc. Traditionally I put money away in a billpaying account to cover this kind of stuff, but recently the outgoings from this account have been keeping the balance so low that I know there’s not enough to pay for the repairs we need. Here’s the thing. We do have some more money in our emergency fund.

However, I have resisted the urge to use that. I guess the reason is that if I use that money everytime I need car repairs I’ll be forever topping up the EF. When do car repairs actually become an emergency? I know it shouldn’t be when the engine overheats or the car gives up completely, but where’s the happy medium.

One way to deal with this would be to just use the money in the EF to get the repairs done and repay it once there’s enough in the billpay account. But I always hate mixing up funds like this. It makes everything so messy.

I guess it’s stupid to leave money in the EF when you need to use it but mentally, I still hate the idea of spending it, even before I get to my target.

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A stupid game that makes me feel good

Well I don’t know about you but sometimes I get sick of focusing on what I need to pay off, to whom and in what order … sometimes I like to look at things in a `glass half full’ kind of way.

Though it might seem crazy to some, I sometimes like to make a list of exactly how much money I’d need to find/make/win to to be debt free and comfortable, but not go too crazy. It’s kind of like playing `if I won lotto’ but retaining a sense of reality (eg I’m not looking for a $5m mansion and a luxury world-trip):

To be comfortable and have a little fun, I’d want/need:

– $6500 to pay off debt to family (the whole hog, in cash)

– $14,000 to pay off car debt

– $350,000 to buy a modest home outright

– $10,000 to furnish the house 

– about $15,000 to cover my final interest-free student debt once I finish uni

– $4000 for dental work

– $5000 to fix our clothing crisis

– $15,000 to go on our dream trip to Italy and France

That sounds pretty good, doesn’t it?

So, added up, we’d need about $420,000 to feel like the world was ours, to feel like I imagine a millionaire does. This kind of money would mean we’d still need to save up for our next car, put money away for our retirement and pay the bills as they fall due, but it would be an amazing head-start in life.

It’s not going to happen 🙂 but that doesn’t mean I can’t dream! And to be honest, it doesn’t seem like that much to shoot for (much easier to achieve than $5 million).

I know it’s stupid but I always feel good when I play this game so I thought I’d share it! Indulge me a little!

Have a great week everyone.

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A little reflection

Well I’ve recovered from my spend-up and am ready to tackle debt reduction again. It’s payday again today, and in updating my totals in the sidebar on the right, it got me thinking: We have come so far in just a few short months (both economically and personally).

I update my NetWorth at NetWorthIQ too, and I was amazed to see today that our net worth is more than $10,000 better than it was in June. We have received quite a few payouts in this time, which means over the next few months our debt reduction will slow down drastically, but this is still an amazing motivator. I showed the figure to my husband who was mightily impressed (though he was a little disappointed to see our life’s work reduced to a relatively small number!). I told him that things would only get better from here … and they will.

 Also, as a couple I feel we have found a new level of cooperation. I think this has brought us closer together. I always try to find a way for my husband to get what he wants (and for me to get what I want, for that matter!), and I appreciate that he doesn’t pressure me to find more room in the budget for extras. This has also made us really think about what we want to purchase, instead of buying on a whim. While I didn’t originally think of this process as being frugal as such, we have gotten rid of so much stuff we don’t use, and we aren’t accumulating stuff like we were before. Our home looks tidier and roomier somehow.  And we seem to enjoy simpler meals without a lot of expensive extras. Cutting out the junk in our grocery bill might even be helping our waistlines.

While I’m in a reflective mood, this seems to be a good time to thank my loyal following of readers. I have seen (on Sitemeter) that though many of you are from the US, there are others in Israel, Malaysia and Singapore, as well as the UK (plus other places). Though I don’t have a huge following by any means, it is great of you guys to come back visiting regularly. I really appreciate the support. It keeps me posting and keeps me motivated, that’s for sure!

PS: I thought I’d also clarify for US and other overseas readers: as you probably know, our summer in Australia is December to January, so the work we will be doing for my father-in-law – in lieu of part of our debt – will be worked off from October-November. Some of you may have thought it was further away than it actually is!

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Have I learnt my lesson?

OK, so we share the good and the bad stuff here, right?

I went shopping ….

… and I bought a few things ….

I’ll start by saying I only spent what we actually had available in `spare’ cash ie the remainder for the week’s salary (and the week is up). We had a little unexpected extra overtime … and I did initially intend to go shopping for clothes.

But here’s what I actually bought:

– A good work shirt $40 (about right, it’s linen)

– 2 sets of beads that both match the work shirt (not really essential) – $25

– some perfume (ckOne) – love it, love it, don’t really regret it – $40

– the really bad one … eyebrow wax and brow/lash tint … (i’m afraid to type it) … $43!!!!

In my defence, this last one was supposed to cost $16 but when I got in there and laid down, the beautician suggested I should get the tint done for ` a little extra’. I nearly died when I walked outside and she told me the price, but that’s what you get when you don’t ask up front. I was trying to pretend price doesn’t matter anymore. That was a wake-up call.

When I got home, I must admit I didn’t regret any of the purchases. I’ve been feeling a little lifeless and dull, and embarrassed about wearing the same work shirt every 3 days. I used to express myself wearing beads and earrings (nothing expensive) but now I go without. I feel like a boring version of me, staying home studying all the time, not expressing myself in anyway, not doing anything. Am I trying to `buy’ a more interesting life?

Of course,  I feel better about myself when I smell nice and look professional too, as most people do. But on balance, 3 of those 4 purchases weren’t really warranted … and I didn’t plan to go out and buy them.

So, in the wake of paying off our credit card, have I learnt my lesson?

For the most part, I still think so. I didn’t use the CC to make these purchases, and they came out of money we had in the bank.

Also, though some of these aren’t essentials, sometimes it is nice to remember you are a woman and that you do deserve something nice occasionally.

But I do think I will have to be very careful about my credit card behaviour for some time to come. Certainly, I intend to keep on leaving my CC at home … and perhaps ensuring I don’t get back in the habit of visiting the stores!

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Where to from here?

Further to yesterday’s post, we still haven’t made any decisions, though to be truthful I am angling towards paying off the remainder of the family debt. This has been further backed by an update to our budget (I do this every few months to see if what I have projected we should spend is actually accurate).

I have looked back over the past few months and noted that we have overspent on petrol and groceries most weeks over the past 3 months. This is mostly because we buy a lot of fresh fruit and vegies, and the drought down south has added a lot to the cost of these. This is non-negotiable to me though, because it is the healthiest part of our diet.

As for petrol, it has gone up and down but generally the price is huge compared to six months ago. So I need to allocate a little more to these. Added to this, there has been a small price rise at my son’s childcare centre, which will add about $10 all up to the weekly bill.

When I rework the figures, adding up food, petrol, childcare, home saving, bill paying account (a set figure each week to cover yearly or irregular bills), a car payment and family debt repayment, there is $50 left for the week.

It makes me wonder how we were putting away $110 a week on the credit card bill, and shows me I can’t afford to amass another CC debt!

The variables here are the car repayments and home saving. We are trying to pay double the minimum car repayment now because our loan term is over 7 years, which is way too long. Also, I was putting $300 a week towards home saving because that is the minimum we could expect to pay in rent for a modest home, so it doesn’t seem right to save less than this.

If I can get rid of the family debt, we will have $150 a week for general expenses, fun, clothing, charity etc. I actually expect we wouldn’t spend that much, so I was thinking that I could `sweep’ the general account on the night before payday each week so that whatever is left goes on debt repayment to speed that process up.

As for the next step – whether to keep putting the home savings money away, or use it to pay off the final debt (car) more quickly, we still haven’t decided. I guess we’ll see how things go in the next few weeks.

On a final note, I expect one more government payout this month. I am hoping this will boost the emergency fund up to $1000. It is an election year and the government here has decided to use its massive surplus to return 30% of each family’s out-of-pocket childcare expenses. Since we spend at least $100 a week on childcare, we should get a reasonable amount of money back. 

Don’t worry, I recognise how fortunate we have been over these past few months and hope to keep us on the right track so that the good luck we have had does not go to waste!

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