Monthly Challenge - July

End of July! I have reached and surpassed my second Monthly Challenge goal of $150.

Here's the summary:

$50.00 - Rent Reduction
$69.01 - Amazon Sales (-S&H)
$18.92 – Pay Per Post
$23.30 - Online Surveys
$120.00 – Research Participation
$35.00 – Craigslist Sales
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$304.13 (Goal + $154.13)
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Since I found a new tenant for the other apartment in the house I live in, my landlady has given me $200 off my rent next month. Since this already surpasses my $150 challenge, I shall raise my August challenge to $400. I hope I reach it! This money will go towards paying for Fall semester miscellaneous fees at my university.

The Difference Financial Awareness Makes

Last year at this time (mid-summer), I was completely broke, and had already run up an additional $1000 in credit card bills. This year, I have $2200 to spend in my checking account. Why such a dramatic difference? This has happened purely because I am more aware of my own financial situation now, and have been taking steps to prevent sinking to rock bottom like I did last year. Let me tell you why I was broke last year….

I am graduate student on a 9-month contract. Summer funding, usually in the form of teaching or research assistantships is extremely difficult to come by in my department, and even when it does, is terribly meager. Summer work even outside the department is extremely difficult to come by. There are a few reasons for this: I live in a college town, which reduces in size in the summer to about one-fourth its original population. This creates a dearth of employment opportunities. But also, because most of the people who do stay in town are usually looking for employment, including the high-school students and summer partiers looking to fund their weekend booze, there is increased demand for employment. The result of this depressing trend is that any job that I do land is usually not worth the money. This summer more than ever, I need to be aware of how I spend my time since I take my massive Ph.D. qualifying exams in mid-August and need to schedule intensive studying for as much time as I can. Last year, although I did land a summer research assistantship, it paid only $1300 after taxes for the whole summer. That is how I came to be broke, and running up credit card debt. This had been my story the past few years as well, but I was engaged at that time, and my fiancé who earned many times as much as I did usually covered my summer expenditure.

However, this has not been the case this summer. Let’s take a look:

What has not changed?
• Summer employment opportunities still remain pitiably low.
• I still don’t have any savings (greater than $100).

What has added on to the financial burden this year?
• I have an additional monthly payment of $210 for a newer car.
• In March I took a two-week long break from work and went on a long road trip that cost me almost $2000, which I could have used for summer money. However, I am glad I took this trip since it provided me with some much needed travel and relaxation, and has been pivotal in keeping me sane. It also was a period of self-exploration that turned out to be priceless.

What changed? Well, for one, over this past year, I have become very aware of my finances. This affected all the following points:
• I moved to a much smaller, much crappier (but still inhabitable) basement studio apartment in a dilapidated old house to save money – the savings are not much, but are just short of my monthly car loan installments, so I don’t place any additional strain on my wallet.
• I have stopped raking up additional credit card debt, and consequently my monthly payments are lower.
• I was as frugal as comfortably possible during the non-summer months and paid off a few credit cards with smaller balances.
• I transferred balances to low APR% credit cards to avoid finance charges.
• I negotiated with my landlady to do maintenance work around the house in lieu of $50 off monthly.
• I use public transport as much as possible to save on gas.
• I cook more at home to save on food expenses.
• I use more coupons and shop for deals (this doesn’t happen a great deal, but has definitely saved me about $10 over the past two months).
• I gave up my Netflix subscription, and began using the public library (always free), and Redbox (almost always free – see promo codes in the right-sidebar of this blog), saving me about $15/month ($17 Netflix subscription – Approx $2 for Redbox when I run out of promo codes).
• I began this blog (late in the year, but I had been journaling off and on before I began blogging) to keep me motivated and accountable.
• I made a budget each month, and tried to stick to it. I almost never succeeded, but the budgets saved me from going too over the top and definitely saved me a few hundred dollars.
• I made a separate summer budget knowing that my income each summer month would be different, so I ended up not spending everything in my checking account by the end of the month. The money I now have in my checking account has to be carefully used over the next three months when my monthly income will be much smaller than it has been these past two months.
• I have become more comfortable asking for discounts and jobs, and have been greatly amazed at how often I seem to get what I ask for when I do ask.
• I negotiated with my department, and competed with a lot of other students for a higher paying summer assistantship (approx. $1850 over the summer).
• Additional Income: I lobbied (read begged) for, and got additional summer funding with a different department (approx. $1200 over the summer).
• Additional Income: I sold books I no longer need on Amazon.
• Additional Income: I sold a few household objects off on Craigslist.
• Additional Income: I joined and completed online surveys for cash.
• Additional Income: I pet-sat for a nominal fee.

Isn't it wonderful what being financially aware and responsible can do? I don't think I am ever going back to the old me!

Monthly Challenge

Over the past few months I have been an avid reader of several personal finance blogs. People are so creative when trying to reduce debt and increase net worth. I think I shall adopt several of these ideas in my debt-reduction journey as well. The first idea I shall adopt is a monthly challenge that I found on MevsDebt's Blog. This is how it works. I challenge myself to find an additional sum of money to pay towards my debt each month. I’ll set a goal of $100. And I track my progress towards that $100 as I get money. Each month I review what happens so my readers can see how I got there. Amanda at MevsDebt also offers to text-link a webpage on her progress sheet for a month for $2.00. I shall do the same once I update my PayPal account which I have not accessed in several years.

Welcome

Hello Dear Reader,

This past New Year, I resolved to reduce my debt. I have a stupendous amount (or what seems like a lot) of credit card, and car loan debt. I was not at that point sure what to resolve to. It was a vague "I-want-to-reduce-my-debt" at the time. But this is what I wanted at the time:

* Be credit-card debt free ($16,728.19)
* Pay off my car loan ($10,095.17)
* Have a $1,500 emergency savings fund ($0 currently)

Now don’t get me wrong, I have other goals too, related to retirement, investing, travel funds and property-buying. However, being a graduate student with limited financial resources, I limit myself to these goals for now. I will eventually expand.

My goal is to have all this under control in three years time. This is a lofty goal given that I am a graduate student who is a full-time student, and works 20 hrs a week on a 9-month work-contract. After tax is withheld, I get a measly $1,219.89 per month. This money goes into payment of rent, car, credit-card minimum payments (I can't afford more, but hope to change this), groceries, gas, phone, and other stuff. I would gladly work more if I could, but can't for reasons that can't be overcome, and that limits my income.

Not having a detailed plan at the time, this is the progress I made in 4 months –

* Credit-Card Debt : $15,886.50 (- $841.69)
* Car Loan : $9,283.87 (- $811.30)
* Emergency Savings : $105.00 (+ $105.00)

How did I achieve this? The answer is – I am not sure! However, a few things that I changed since 01/01/2008 are:

* I kept track of every single cent I spent
* I eat out less often now
* I cancelled my Netflix subscription
* I downgraded my cell-phone plan
* I did not charge anything new to my credit cards

Then, around early April, I began seriously investigating debt management. I read several PF blogs, met with a financial counselor, asked my parents to lend me some money and paid off three smaller credit card balances. I also created a very elaborate spreadsheet that helps me budget, track expenditure, bill payments, debt repayments and the progress made. Then I decided to start a blog myself and be accountable. This blog is my attempt at managing my personal finances and being debt-free eventually. Since I will be a student for two-and-a-half more years, progress will be slow and painful. I imagine that cataloging my own expenditure and income in such a public way would also be painful. But I think I would like to feel the pain. It might make success that much more sweet!

Here is a chart of what I have accomplished money-wise so far:

* Please note that the chart tracks my progress starting 04/01/2008

It is terribly painful to see myself make such infinitesimal changes each month. At times I think I ought to give up until I get a job and worry about all this then. But since just making the minimum payments on my credit cards wipes out most of my money, managing my finances is very important. The greatest virtue I must own now is patience.

Amat victoria curam!