Credit Card Pay Off Plan

Here go...round three?

(ding - ding - ding)

We currently owe just over $4,500 on our credit card..again.  Below are the months for the rest of the year and the debt pay offs that we're committed to each month.  Regular months, with four pays, will see $225 payment.  Months with five pays will see a payment of just under $800 and March sees the largest payment because on top of being a five pay month - we also received a payment from our shares at my work.

What's different this time?  If you missed it, go back a couple of days and check out The New Plan.  The biggest differentiating factor this time is that we actually won't be using the cards at the same time.

I'm not sure if I'll be able to continue to do my month spend tracking - but i'll give it a try using the debt card/tracking receipts a bit better.

Emergency Fund Goal

It's been white a while since we've looked at our emergency fund goal to ensure it realistically fits our current lifestyle.  Our worse case scenario for us financially would be a job loss - given that my income is a bit higher then Jordan's - in figuring out how much we need in our fund, we'll assume that I lose my job.  I've done some reading online and come up with a reasonable employment insurance income (less taxes) so we wouldn't be on one salary necessarily.  The analysis below, also assumes no credit card debt (which we won't have for much longer if you saw yesterday's post).

• Jordan isn't sure he wants to continue having allowances as it is - so that's the first thing to go in our 'emergency budget'. 
• The next to go are our joint house and joint gifts account - these are two of our variable spending accounts - intended for larger purchases.
• Following that is a reduction in our variable 'day to day' spending account from $1,200 to $1,000 which would cover gas, groceries and about $150 of 'other'.  Our gas wouldn't go down much because we carpool as it is
• The next to be cut is our emergency fund - if we are withdrawing from it - there doesn't seem like much point to be contributing to it.
• The next step is hard...I hate touching RRSP contributions...even in an exercise like this - but it's got to be done.  RRSP contributions are reduced from $200 to $150.

Wow!  I'm pretty surprised - but it looks like we could handle this scenario and still be okay.  We wouldn't be having much fun, but we'd be okay.

I think that it's important for us to remember that while we could handle a job loss as long as I had EI benefits - there are often delays in securing said benefits.  There may also be an instance where we wouldn't qualify for them.  

There may also be a time where neither of us loses a job - but we need to take some time off.  We both have benefits - but again - there may be a time where we have exhausted our benefits and still need to be away from work for a period of time to support our family in one way or another.

I've always been comfortable with $1,000 buffer - I know, I know - it's not three months or six months expenses, but it's always worked in the past.  Now that we have a mortgage payment, I'm not so comfortable with that line of thinking.  I think that a one month buffer would be $1,500 (based on assumed EI earnings).  

I would like to see us end up with say, $5,000 in our emergency fund - perhaps held in a TSFA or some such thing - but for now, $1,500 feels like a good number to reach for.  Once we're there - I think we will probably increase the goal in increments of the same.

How did you come up with your number?

The New Plan

On the drive home from work tonight, Jordan and I had a frank and honest conversation about money.  We chatted about where we've been, where we are and where we want to be.  It stemmed in part by two separate events -  

...we are both on the cusp of raises again and are expecting a significant change.  I wanted to have a look and make sure our budget actually reflects what we do - not what we want to do or think we ought to do.  While I like to project and think into the future, Jordan likes to wait until we have actual numbers - the facts. Jordan wants us to stick to our spending plan - and not just increase the budget because we can't seem to get a hold of ourselves.  We've never been able to construct a system that would prevent us from using plastic.

then...a couple of days ago Jordan and mentioned wanting a pressure washer so that come spring we could clean the outside of the house easily.  I had suggested borrowing my mom's (a three hour drive away) - and you can image where the conversation went from there.  To sum it up - he is tired of me bringing up the credit card (yes, we have a balance again) every time he mentions wanting something.  What I hear (which is not what he's actually saying) is that he wants to go out and buy something right now when he's really just making a statement of preference.

So - we had a conversation about that.

We both acknowledged that the place we're in now - is not the place we want to be financially.  We looked at what we've tried - cash and credit - neither worked for us.  Cash slips out of the fingers too quickly and credit...well it gets swiped to quickly.  The thing that Jordan did like about cash was that ones it's gone - it's gone.  That's it.

So Jordan suggested that we explore using our debit card - though he knew that last time we did this I was frequently upset/agitated when trying to keep track of things.  We chatted about why that was - we have so many ins and outs in our main account...every single bill we have is automated (except for the credit card) - and using the debit freaks me out!  What if spend money that is allocated for a bill.  What if something bounces?  No way!

I'm not sure who's idea it was, and it really doesn't matter, but we've come up with a new plan...a better plan.  Once that we came up with together and we think it will work!

The New Plan

• Stop Using Credit Cards - cut them up if we have too.
• Maintain chequing account for all bills - with no debit card access
• Open new chequing account for day to day spending

We will deposit money into the new account, much like we do for our savings accounts on a regular basis that corresponds with our pay schedule.   We will both have debit access and will use this account for groceries, gas, entertainment ect.  Here's the beauty of it - if we run out, we run out and it's okay - because nothing that is automated will be tied to it - nothing will bounce.

The credit card debt will stop increasing.  It will go down.  It has to.

Tax Refund

In the past, Jordan and I have typically either used our tax returns for short term gain (laptop) or credit card debt.  This year, I'm please to share with you that we have deposited the $2,475 into our house fund - we're currently saving up to build our fence and deck in the summer.  This deposit brings us up to nearly $3,500!

February Spending Report

It's that time of the month again...below is our monthly spend report for February.  I've chosen to start including a percentage of total spending for interest.

Our gas budget continues to trend high; however this month our grocery bill seems to have settled a bit.  We ate out a tad more and drank a tad more - but still within fairly reasonable limits.

Education had a bit of a bump because I had to pay my professional membership dues.

February was our lowest spend month since September - so I'm really pleased with that.  I feel like we're making some good progress to be careful with how quickly we whip out the credit card to pay for our day to day expenses.

Compared to this time last year, we're miles ahead...check it out:

In Support of BC Teachers

I don't live in British Columbia any more, but the majority of my family does and so I follow along with the news there.  There is some pretty heavy stuff going on with the BC Government and their collective agreement negotiations (or lack there of) with the BC Teachers.

I wanted to share with you all what's been going on in the news (if you aren't already following along yourselves) but then I came across an article that said it better then I think I ever could.  I would really like to encourage you to read this - especially if your from Canada.

Teaching In BC, by Cheryl Angst

Here are some more details on what Bill 22 will do exactly:

This You Tube Video called Support BC Teachers explains what's going on from a student's perspective.

and, for some humor but still very much gets the point across (about the value of our teachers) I encourage you to watch this:

http://www.youtube.com/watch?v=fuBmSbiVXo0&sns=fb

...and if you decide you would like to make a difference.  Please consider contacting your MLA (if your from BC), signing this petition (Kill Bill 22), or blogging, tweeting or Facebooking about this issue.