This post is by staff writer Honey Smith.
For me, the end of the year is a time to take stock of where I’ve been. This not only helps me identify (and celebrate!) my accomplishments throughout the year, it helps me identify and prioritize new goals.
I’ve already met the short-term of my recently identified financial goals. I’m also happy to report that I’ve actually made significant progress on the medium-term goal as well. With those achievements in the bag, it’s time to think about my next goals, which will conveniently coincide with making resolutions for 2013. Before that can happen, though, I need to analyze what’s happened in 2012.
I have had some financial setbacks (my cat got really sick — fortunately he’s fine now). However, I have been trying to set the money aside I am saving each month after cancelling my whole life insurance and paying off my credit card. I have also been setting aside my side-gig income (GRS and my SEO work). I run all my side work through my LLC, and my business bank accounts aren’t linked to my Mint, so I hadn’t really paid much attention to what I’d saved up.
In other good financial news, our electric bill has been cut in half now that it’s cooler and we have been able to turn off our air conditioning and open our windows (though we’ll probably have to turn on the heat soon!). We had a premium holiday from our health insurance at work as they move into compliance with the Affordable Care Act. Finally, November was a three-paycheck month. Between all of these factors, I had actually accumulated quite a bit of a cushion.
Goals in action
First, I set aside some money for holiday gifts. Next, I decided to pay off a chunk of my small student loan in the interest of improving my cash flow, which turns out to be one of my main motivations for improving my finances.
My small student loan balance stood at $5,352.61, but was actually considered two different accounts: the portion I’d borrowed subsidized and the portion I’d borrowed unsubsidized. Using the Federal Direct interface, you can allocate extra payments toward a specific account. I targeted the Unsubsidized account, which was in the amount of $1,885.77, and paid it off in full.
This reduced my monthly payment from $77.52 to $47.56, improving my cash flow by about $30 per month. Additionally, by paying off the loan early and avoiding all that interest, I undid some of the $300 or so in principal increase that occurred when this loan got consolidated under the Federal Direct program. Huzzah!
I’ve also purchased my new cell phone and switched to a no-contract plan, reducing that monthly expense from $68 to $35. I prepaid the first month when I bought the phone and then set up auto-pay going forward, so I won’t get a bill until January.
End-of-year debts and assets update
My original reckoning post on debts and assets was posted in June, so it’s six months out of date. Here’s where things stand currently:
- Credit Card 1: $225 @ 7.9%. This is the card I paid off in full. I am using it to charge holiday gifts so there is currently a balance (I do want to keep the card active since it is my oldest card and has the highest limit). However, I already have the money set aside to pay it off so there will be no interest.
- Credit Card 2: $1,519.72 @ 9.9%. This is actually my husband’s balance transfer (at the time it was the best rate he could get), so I don’t pay it, but since his name’s not on the card and the transfer occurred prior to our marriage, I’ll count it here. He’s paid off $867 since June.
- Credit Card 3: Fluctuates @ 8.99%. This is my daily use card and is paid off in full every month.
- Student Loan 1: Federal Direct Loans, $94,524.92 @ 4.5%. I see that this balance has actually gone up $228.93 since June. I am on the extended graduated plan, so I’m paying only interest right now. Additionally, my account got migrated to another servicer (I had no say in this), which resulted in some charges. But seeing this number go up when I make payments every month is certainly incentive to make this a primary goal.
- Student Loan 2: Federal Direct Loans Special Consolidation, $3,249.73 @ 6.05%. This is a decrease of $2,102.88, which includes the account I paid off in full.
- Asset 1: Retirement, $14,469.94 in a 403(b). This is an increase of $2,229.53 since June.
- Asset 2: Emergency Fund, $4,500. No change.
As far as debts, then, I’ve gone from a whopping $104,470.98 in June to $99,519.37 today. That means I’ve paid off almost $5,000. Not bad for six months of work!
Updated regular expenses
To get an idea of how these debt payoffs have affected me on a monthly basis, I’m also providing an update to my regular expenses list. My starting budget is listed here. Note that the amount listed reflects only my share for things, even if they are a joint expense. Accordingly, the pet, grocery, Netflix, Internet, rent, satellite cable, renter’s insurance, and electricity categories should be doubled if you want to get an idea of our joint costs.
- Gas, auto: $45
- Pet expenses: $75 (as a result of my cat’s illness we had to start buying him special food, which costs more)
- Grocery/household: $300
- Cell phone: $35
- Massage membership: $65
- Netflix: $11 (we switched to a plan with two DVDs at a time instead of one)
- Internet: $32.50
- Withdrawal/cash: $40
- Life insurance/supplemental disability: $52.59
- Rent: $488
- Student loan 1: $353.80 (oddly, when my student loans migrated to a new servicer the monthly payment decreased)
- Student loan 2: $47.56
- Satellite TV: $37
- Renter’s insurance: $9
- Electricity: fluctuates throughout the year, in winter $50
- Total: $1,641.45
That means I’ve also reduced my monthly commitments by about $160 per month from the original $1,800 or so. And since I net about $2,000 per month, that means I now have about $358 of wiggle room now, excluding income from side gigs. Whoa!
What would you do?
Now that I know where I’ve been, I can start thinking about where I’m going. What do you think my next financial goal should be?
And, let’s take stock of what you’ve been up to! What have your successes and setbacks been in 2012?
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