$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?!?

Promotion! Aka: Back to the Books!

If you're seeing this on your eye chart, there may
be something wrong with your eyes, or
you have an awesome optometrist!!

Oh boy. Let me start by saying that my budgeting skills have been on the decline lately. Summer has snuck in leaving me eating takeout (especially pizza), neglecting my yoga practice, drinking more ($80 bill at the pub the other night) and all around not planning for any of my expenses. For example, today I had an optometrist appointment which cost me $80 and I also had to order new contact lenses. They aren’t too expensive ($80 for a one year supply), but now I’ve left my self shortchanged for the essentials like rent! So silly. Now, I have a dentist appointment next week and I’m looking at another $120 for a teeth cleaning that will come out of my pocket. However, I finally have insurance! My benefits package kicked in this week which means I am going to get reimbursed for most of my costs so I guess you could say I planned it a little bit, but since we have a postage strike, my benefits package has not arrived (not to mention all the stolen contents of my wallet) and I’m left footing the bills in the interim. Yeah yeah Complainy Complainerson, what’s your freaking point? I'm getting to it! I promise this isn’t going to be one of those negative blogs again. All my $hitty preparation has left me thinking that it’s time to revisit my budget analysis worksheet and redo the math so that I am not completely screwing myself over when it comes to my day to day spending. But, there is one more variable that I am going to have to include in my new analysis…

Whoo! More money! Less Problems???

This blog post is coming to you later than usual this week because I wanted to write about some news that will affect my financial future greatly but it couldn’t be shared until now. Last week I was offered a promotion and I accepted it! I wasn’t even looking for a new job, this one just seems to have sniffed past all the bull$hit and found the wonderful rose in the garden which is moi! At my new job I will be receiving more money (whoo!) and I’ll be able to pay off my debt while being able to give myself a little spending boost as well. I’ve been learning to live on less for so long that I never even imagined that I would end up making more money to put toward my debt. Now I’m going to be getting almost a 10% increase in my salary – and it can only go up from there. My apologies for my outpouring of happiness during a time when finding work is proving to be more and more challenging for people, but I really did not expect something so wonderful to happen after losing my wallet and having my cards stolen. I suppose my optimism has been rejuvenated. Admittedly, I was already planning a ‘good news’ blog for this week since some of my past entries seem a little blasé.

Now this job is not going to be without its challenges. I have been getting rather comfortable with my routine of coming home at lunchtime and making myself something to eat, but I think I may have to start making my own lunches and bringing them to work which is something I despise doing. Why are most leftovers so nasty? This new position will definitely be more demanding on me and when I get stressed, I do the stupid things like eat take out. This week for example I’m doing the work of 4 people and I think I have eaten every single one of my meals as takeout because I don’t have any time to go home and make something! The worst part of all of this is that I’m not even enjoying the food that I am buying. Even that General Tao chicken I ranted and raved about early on in my blog has left me feeling not satisfied and it just tastes a lot like guilt.

Anyway, back to the budget. Lately, I’ve noticed that my paychecks were averaging out lower than when I first started my analysis and that my expenses have actually gone down since I started my Fight For Financial Freedom (see what I did there), however due to unexpected variables my average monthly salary is about $400 more than I was making last year (this doesn’t include that $hit month I had in January where my income was $0). While this may make no sense to anyone, The key to my increase has been that for the first time in seven years, my income is consistent so I had one month where I received 3 paychecks! What a spoiled bit¢h I am! Ok I should also point out that all my checks from January were delayed, but I remember putting a lot of that money back into savings.

Mmmmmm Number Crunching!

This is where I get all nerdy and start crunching numbers like I did back when I started the budget, so for those of you who don’t give a $hit about how I do my budget and only read my blog for the sheer pleasure of hearing my sexy blog voice, you may want to skip this part, but I assure you, humour will be coming to the party. My debt repayment is actually right on par with where it should be based on my old budget, the problem is that now I make more money that I did back when I first did so I really want to kick my debt when it’s down and show it what’s what. I did a comparison of my figures from October, 2010.

Here is what I was spending pre budget:

• Savings: 0%
• Debt: 25%
• Transportation: 1%
• Life: 87%
• Housing: 25%

Yes, that adds up to more than 100%, remember, I was financially handicapped so I overspent by 38% each month.

What I have been spending post budget:

• Savings: 10%
• Debt: 50%
• Transportation: 1%
• Life: 19%
• Housing: 20%

Not too shabby, but not too fun either.  

What I plan to start spending as of July:

• Savings: 15%
• Debt: 45%
• Transportation: 1%
• Life: 20.5%
• Housing: 18.5%

You may be asking, if my debt repayment strategy isn’t broken, then why mess with a good thing? Well the answer is pretty simple to me. I have been pushing myself so hard lately and I hit that seven month itch. If I were dating this budget plan, it would have probably dumped it’s cheap a$$ by now. This will still keep me right on track to paying off my debt in less than three years, but I will still be getting to enjoy some of the fun things with my cash when I’m young. There’s no reason for me to bend over and take it from my budget since I don’t have any major responsibilities like kids, a mortgage, medical problems, and so on. The key to this budget is to make me as aggressive with my savings as I am with my debt repayment. Now that I am going to be making more money, all these amounts will increase and I’ll get to enjoy a better quality of life. Yes, one and half percent added to my life spending might not seem like much, but having just a couple more bucks to enjoy a night out at a concert or buy a couple bottles of wine can make a huge difference in the life of a privileged Westerner who has deprived himself of minor bits of joy over the past few months. And hey, if this doesn’t work, then I can always come back and revisit my budget plan later. 

Yay Promotion!!! 

Going Anal over my Analysis

This is the part where most people lose their $hit. Doing a spending analysis can feel a lot passing a gall stone or giving birth; neither of which I have done - THANK GOD. Others could liken probing through your finances to actually getting probed. After all, you can’t spell analysis without anal. Now, all jokes aside, doing the analysis wasn’t all that bad. It was kind of exciting to see how I was spending all my hard earned moolah. When following the Tao of Gail she asks you to look back through all your finances for the past 6 months. Yes, that is about 180 days worth of spending. Gail thinks that looking back anything more than six months is excessive.  I just think you’re flaunting it in my face so quit showing off!

Debit and Credit cards are made from the Devil's feces.

I’m certain that most people who have dug themselves into nearly $40,000 of debt (like me) are also big fans of plastic. I’m not talking nose jobs here; I’m talking credit and debit cards. My debit card was actually attached to the pleasure centre of my brain so that every time I used it I felt like I won the lottery. Oooh! I entered the magic code and money came out! Hooray! Anyway, where was I? Oh yes, debit and credit cards. Ok, so if you’re like me, you use these things every single day and therefore have a great record of where you spent all your money. Here’s what you need to do; print all of your bank and credit statements (yes you have to open them now) for the past 6 months and split everything up into categories so that you literally see where you spend. Gail Vaz-Oxlade’s amazing book Debt Free Forever provides a plethora of categories to divide everything into. The categories you use are going to depend on your “lifestyle.” For example, I don’t have children (unless you count goldfish as children) so I was able to leave all that kids stuff out. The categories I used were:

Rent; Electricity; Furniture and Home Décor; Public Transportation; Taxis; Doctor’s Fees, Dentist, Optometrist, Prescription, and other Medical Costs; Cell Phone; Groceries/Personal Care; Restaurant; Convenience/Corner Store; Clothes; Hair/Tanning/Spa Services; Entertainment; Sports; Reading; Music; Booze; Electronics Store; Drugstore; Pet; Family/Gifts; Vacation; Charity; Bank Fees; Debt Repayment; Interest Costs; Cash Withdrawal; and Other

Depend Undergarments will be your best friend during your Analysis

If you’re reading all this and going OMFG, that’s a bit excessive, consider that I only used about 1/3 of all the available categories that Gail provided. Wowsa. I used Microsoft Excel and made a spreadsheet to add up all my expenses. I also printed all my statements off the internet (yes you can do that so no excuses about lost statements) and crossed things off as I entered them. For entries into savings, you don’t count them at this point. It’s just thought of as moving money around, not “spending.” A few hours or days later, you will have a lovely spreadsheet full of all your expenditures. I used colours in my spreadsheet to make it look more pretty and jazzy because finances are more boring than 4-year-olds playing hockey. Alright, so you have all your totals for each category added up. Now take those amounts and divide them by 6 (for 6 months) and be shocked! That’s how much you’re spending on everything each month. Yep, every month! Now, put on some Depends and take that number and multiply it by 12. Good thing you were wearing Depends, because you probably $hit your pants. 

You’re probably curious to know where I was spending my money, which is why you read this in the first place. Yes I know you’re all talking to your friends and saying “Oh-Em-Gee, this one guy on the Internet has $40,000 of debt and telling people about it openly!” And then you say something like: “We should subscribe to his blog and tell all our friends to subscribe too.” Ok, so here’s where my money fell each month. Some cases, not so bad, if anything, impressive, other cases, well...

• Rent: $690.61 (Usually lower than this, but had to split 2 ways instead of 3 one month)
• Electricity: $14.15
• Furniture and Home Décor: $9.31
• Public Transportation: $2.64
• Taxis: $15.00
• Doctor, etc: $14.75
• Cell Phone: $93.07 (Yikes!)
• Internet: $15.74
• Groceries/Personal Care: $228.45
• Restaurant: $406.81 (So not worth it!)
• Convenience Store: $10.70
• Clothes: $157.40
• Hair/Tanning/Spa: $15.43
• Entertainment: $119.32
• Sports: $127.63
• Reading: $10.32
• Music: $29.49
• Booze: $175.93 (good thing I quit)
• Electronics Store: $13.35
• Drugstore: $54.16 (on what?)
• Pet: $3.76 (not laughing at goldfish so much now are you?!)
• Family/Gifts: $31.80
• Vacation: $117.33
• Charity: $20.83
• Bank Fees: $19.12
• Debt Repayment: $718.80 (So depressing)
• Interest Costs: $314.06 (So angry!!)
• Cash Withdrawal: $555.00 (No idea where I spent this)
• Other: $38.34

Every month I was spending and average of $3,985.83! That number is very sobering. This is why the analysis is so important. $314.06 on interest wasn’t even registering in my brain. When I had finished adding it all up I was terrified, mad, and a little blue. But that wasn’t even the worst part. You add up what you actually take home in pay AFTER taxes and get some fresh Depends. My actual monthly average was $2,912.88.  You know what that means?!? I’m over spending EVERY month $1,072.95!! Now, deep breath, every YEAR I overspend by $12,875.44! That, my friends, is how I got into debt.

It’s that simple. When you spend small amounts here and there you don’t think that $8.00 on lunch is that big a deal, or $20 on prophylactics is excessive, but really, it all adds up to one giant flustercuck of a mess. Wow, that was exhausting. It is such a good thing to sit down and really see where you sit with your spending. I challenge you all to do this exercise yourselves and get the same wake up call that I so desperately needed. Next post, cutting out the crap.

Xxxo

John

My New Roommate, Gail

Somewhere between spending money on the gym, the spa, concerts, booze, restaurants, music, and all that other crap, I would tune into one of my favourite reality shows: Til Debt Do Us Part. For those of you not familiar with the show, the premise is based on the fact that one of the most popular reasons for divorce is money. I don’t know about you, but I remember money definitely being the source of more than one argument around my home growing up, and I even see a pattern emerging in my current relationship from time to time. Each episode follows a couple who carries a $hitload of debt and usually has no plan to get out of it, and no savings to speak of. 

Gail Vaz-Oxlade will change your life!

Enter: Gail Vaz-Oxlade, Canada’s Financial Guru - and my hero. Gail uses a lot of tough love and shows people how they are spending their money, how much debt they are carrying, and where they are going to be financially in 30 years. The results are always astounding. Some people had the potential to be $750,000 or more in debt in some episodes!

Now picture me lying on the couch eating a box of Triscuits (with cheese of course) and thinking, man these people are stupid! And how can you eff up your finances so terribly? I thought I was in such good shape because I never did a rent-to-own system, and I only bought things I really needed – or was I? I started to do a “budget” back in April. Basically all I was doing was keeping a list of what I had paid that month to ensure that I had covered all my expenses. I calculated that I had only $1,500 of expenses every month. That figure included everything – Rent, Cell Phone, Power, Gym Membership, etc. That left me with lots of money to spend on whatever the hell else I wanted. I was paying more than the minimum payment on my debt, so I was doing fine - right? After 5 months of this and seeing my credit card continuing to climb higher (maybe I should have stopped using it for starters) I had a mini freak-out.

What was I to do? Who could I turn to? I don’t know anyone who actually wants to talk about how much debt they have. It’s so funny how we can boast about all our ‘stuff’ but the reality is that in comparison to my debt, I really don’t own anything I have. I wouldn’t even come close to $40,000 if I added the value of what I own. And then it dawned on me; Gail must have a book to help me out of the money manure pile - and she did!  I picked up her book – Debt Free Forever. The title alone promised me everything that I was looking for. Debt-free AND forever; how great is that? So headed down to my local Chapters (because it’s cheapest there) and picked up my new bible. It’s a bit embarrassing to shop in the “self-help” category and lucky for me it wasn’t there! I grabbed my book from the business section and headed down to the cashier. “This is my last frivolous purchase” I said in my mind.  When I handed the book to chubby cashier, hair adorned with the loveliest scrunchy you’ve ever seen, she looked at me and said, “this book is amazing.” She didn’t have to tell me, once you go Gail, you never go back.

With Gail in hand, I was ready to get cracking on my new debt-free life. However, I wasn’t quite prepared for what I was getting myself into. Gail makes you work your a$$ off! My first experience was the adding up my debt process. I had always thought that I was sitting around the $30,000 mark when I finished school, but it wasn’t until I sat down and actually added it all up that I realized I was actually $37,193.12 in debt!! This was an especially harsh realization since I had quit drinking a day or two beforehand (for medical reasons, not by choice) and I didn’t smoke or even drink caffeine for that matter, and I really needed a fix of something after that! I went downstairs to my roommates proclaiming my shock and horror and told them Gail was officially moving in because clearly my budgeting approach was total weenuk (cree for dirty balls).

Now, don’t start thinking, oh, you’re doing the self help book thing? That’s lame, I’m not actually going to learn anything from you that I couldn’t just learn in her AMAZING book. But you’re wrong! Everyone struggles through their debt differently. My stories will help to inspire you, I promise. Up next, my spending analysis - get ready for more OMFG moments.

John