$10,000 Paid off in Less than 10 Months!!

$10,000 used to be a big deal!

Can you believe it?! It’s not even been 10 months and I already have paid off more than $10,000 of my debt! What a great feeling to know that I am doing this process right. I just imagine all the wonderful things that I could do with $10,000 and I want to kick myself for not doing something about all my debt sooner! $10,000 would put me so much closer to having a nice down payment on a condo, I would have a new computer, and I could take a trip to just about anywhere in the world for $10,000. Imagine how I’ll be feeling when I have $37,810.51 (I have this number memorized) paid off! Just imagine what I could do with that kind of money. That dream is closer and closer to coming true and does it ever keep me inspired to push on with this process, only $27,694.78 to go!

I’m also happy to report that I have been staying on track with my New Year’s resolution to write a blog entry each week and the response has been overwhelming! I now have over 5000 hits on my little blog and from what I’ve heard this is a pretty big deal for someone who doesn’t advertise anywhere. Soon enough Gail will admit that she’s an avid reader and we will finally get a chance to meet and she’ll bring me along on all 3 of her shows as her sassy sidekick! Oh I can dream…

Now, sometimes I get some stupid and some smart comments, on my blog and I never realize it until many weeks later. The latter is the case of a comment from my friend Andy who is currently travelling the world like a madman and still having time to write about it! He writes: “Hey John! I love that you're only spending 1% of your income on transportation. If only we could convince the rest of the world! I'm confused about your new spending breakdown and how it affects your every day spending. You say you went from 19% to 21.5% for 'life', but from 20% to 18% for rent. This tells me that you already factored in the raise. Can you put the breakdown in dollars again? If only just the every day stuff? Like, what is the breakdown for food and clothes and entertainment. That was my biggest interest before (mostly because I thought it wasn't sustainable, and when you did it, I was inspired!) How much are you cheating by adding money to 'life'? :P xoxo Andy”

Now let’s keep in mind that Andy is travelling the world and has been able to budget to spend $1 a day to stay in a beach resort so we’re kind of in different budgeting situations, so the fact that he still reads my blog at all is a feat in itself, but nevertheless, what a marvelous comment Mr. Andy. His comment gave me an idea about what to write this blog post on, and believe me, some days I am stretching for ideas as I am sure you can tell from some of my past more questionable entries.  

First of all, I haven’t readjusted my budget to reflect my future income, I’ve simply reworked it because I noticed that my average income has become stable now that I am a permanent employee and I’m not doing contract work anymore. For instance, before I was averaging about $150 less per check than I am currently bringing in. Yes that’s right, I’m bringing home more bacon, or tofu bacon for you veggies out there. In a week from now, I’ll be bringing home even more moolah! Talk about sweet! The only downside is that I’ll need to rework the budget again. So there’s that Andy, it’s not a projected budget, it’s just a reworking of what I am currently bringing in and spending.

Gail would be putting on the celebratory tiara!

Now the second thing that’s changed is how much my rent is. There was a month when I started doing my new budget that I was paying an inflated rent of $825 instead of my usual $556 which skewed the average amount I was paying for rent rather considerably. I was short a roommate that month so instead of splitting the money 3 ways, I was splitting it 2 ways. Therefore my percentage of my income going to rent was much higher and I was uncertain how much my rent would work out to be so I kept it budgeted rather high. But now, in comparison with the money I am bringing in, I found that my rent only works out to 18.5% of my budget since these days I bring in about $3,000 a month ($4,500 on the triple check months like the one coming up in August – whoo!). This figure is well below Gail’s recommended spending on housing so I’m pretty happy about that!

Now to be fair, I should be factoring my hydro bill into my rent, but I don’t. Hydro is really cheap here since we’re all pretty good about not leaving lights on or running a lot of electricity on the non-peak time so each of us only pays about $10 per month each for hydro. I could also add in another $21.75 a month for my internet bill (yes that’s for each of us, we use a lot of internet) and then there’s my phone bill from Rogers who likes to bend me over and have it’s way with me for $90 each month – really Rogers, how do you sleep at night? Anyway, enough talking about all the figures, why don’t I just break it down for you here:

Income: $3,000

Breakdown:

Savings: 15% = $450

Debt: 45% = $1,350

Transportation: 1% = $30

Life: 20.5% = $615

Housing: 18.5% = $555

I always squish my Transportation and Life costs together because it just makes more sense to me. So my life expenses now become $645 or about $21 per day for life. Now, that doesn’t mean that I am out spending that money on eating out at restaurants or betting on the strippers, but I could if I wanted to budget for it. Now taking that $645 that I have each month to live on, I take out my regular expenses ($21.75 for internet, $90 for phone, $10 for hydro) and I am left with $523.25. Now, I take that and divide it by the weeks in the month and I am left with about $130 for the rest of my life. That’s broken down like this:

Life: $130.00

Life Weekly Breakdown:

Groceries and Personal Care: $70

Clothing and Gifts: $10 (almost never use this)

Transportation: $10 (almost never use this)

Entertainment: $40

Want to save money on transpo?
Get a bike like Jake here, AND stay in shape!

Now, I bring in a little more than $3,000 per month and so everything just seems to balance out. I found that because I was working out more that I needed to eat more food since I was burning off so much energy, so it only made sense to me that I spend more money there. If I end up with leftover money, I spend it on the things I want to spend it on or simply just move the money to my debt or to my savings account. It always seems to work out just fine every month and it’s clearly better than the clusterfudge that my spending was when I started this process. Keep in mind that I was spending about $100 a week before on life so having $130 is making a world of difference. Nowadays I really want to just get this debt destroyed so that I can start spending my money on the things I want again. I can’t wait for that day! Good luck to you all on the debt destruction journeys you are all on! Imagine, if you only have $10,000 of debt, you could get rid of it all in less than a year! How cool is that?!?