A quiet week

I can’t believe I haven’t posted for so long! I apologise, I went back to my studies this week  so I have been focused on getting in a good start. I have also engineered some financial decisions this week that I have needed to get right (in my head) before I can post about them. And I have been mulling over the situation with my car, which needs $3500 spent on it to fix the paintwork (this would leave it valued still at only about $4000). I think all of this is why I haven’t said much lately.

My original goals for the year 2008 were:

1) Pay off car (our other one) – currently owe $10,750.

2) Pay for our joint birthday party – $2000 budgeted

3) Travel to see a friend in September – $2000 budgeted

4) Save for an investment/house deposit – $15,000.

Now a few things have changed since I set this goal. One is that we committed to save $100/month for my son’s investment. Another is that we decided to fund a voluntary $1000 to my pension plan in order to be eligible for $1500 extra paid in by the government. Finally, I now know about the paintwork repairs needed on the smaller car, which I only found out about in the past couple of weeks. I was planning to keep this car for another 2-3 years, saving in the meanwhile to spend about $8-9ooo for another one.    But I won’t be able to drive this current car around like this for 3 years, so I need to either pay to have it fixed or save for another car more quickly.

The other thing that has changed is that I am now resolute: I am no longer willing to sacrifice haircare and clothes for debt reduction. I’m not suddenly going to go and get pedicures and buy expensive stuff, but I think I got into certain habits because I always thought that if I went `all out’ paying off debt for a short time, I’d be rid of my debt and I could `restock the closet’ once that was fixed. Likewise with my hair, I’ve never been a really regular salon-goer but I used to make sure my hair looked good at least most of the time.

Now I have realised that actually, my whole lifestyle has changed for good. It’s not just a short-term debt reduction effort. Once I have paid off the car, I will be focusing my funds on investment or a house deposit. I’ll  also want to build a bigger emergency fund. In other words, I need to make room in the budget for the stuff I need or want now because my plan is a long-term one.

In the short-term, this means I have started allotting $100/week for `personal care’. That might sound like a lot, but both my and my husband’s closets are bare and we really need to spend some funds slowly building them back up.  Once we don’t need so much anymore, this figure will come down.

So the question is: what is the implication of spending more on `personal care’ for my 2008 budget? Well, less money going on car repayments, despite the fact I have at least $3500 extra to find! Not a winning combination!

I am slowly working this all out and will post tomorrow about how I plan to `have it all’!

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