*The following is part 4 of a year-long series. If you want to start from the beginning, learn about who Lindsay is, and check out how much debt she started with… check out PART 1.*
Well, friends, remember that time I was going to try and pay off over $1000 this month?
That didn’t even happen a little bit.
May ended up being a crazy busy month – it flew by before I realized it had even started. Along with it being busy work wise, I’ve found myself a bit, well… distracted as of late. So I didn’t budget. And then the month ended. And then I found out I only had $490 to pay towards my debt… so that’s where I’m at. UGH!
The amazing thing about failures is that they have the ability to become amazing learning experiences. The biggest thing I learned from last month, is that I seriously… SERIOUSLY! need to use a budget.
I’ve been using YNAB (à la Chris) for about 8 months or so now, and I use it fairly consistently. To be honest, I thought it was a good thing to have, but I didn’t really understand why it was important. (I’m on top of my finances because I use budgeting software! Look at me! Gold star!)
I basically never stick to my budget. I constantly adjust and move amounts and overspend – it’s pretty much always in flux. So if I was adjusting it all the time, it really didn’t matter that much, right?
Why a budget can actually be pretty useful…
What I failed to realize is that by making a budget based on money that I actually have – even if my projected amounts end up hundreds of dollars away from where they started – allows me to make informed decisions about how I want to spend my money.
So let’s say I want to go out for dinner, but I’ve maxed out my restaurant budget. I then can make a choice – maybe I want to take money out of my grocery fund. Maybe I’ll look and see that the only category I can take from is rent, and realize that dinner out ain’t happening. Whatever I decided, I’m choosing.
Living without my budget last month was me just taking shot in the dark after shot in the dark. Who knows where I would have ended up? With my budget, I’m making active decisions, even if they might not be the best for me.
Another mistake I made is that I stepped away from my instincts and made a large-ish mid-month payment on my credit card instead of my credit line. After some feedback I received on my LAST POST, I thought I might try to pay down a little bit on the card this month to lower the interest I owe.
When my budget went out the door and bills were charged to my credit card, I definitely didn’t pay them back with money from my chequing. They just sat on my card. So my credit card balance is the same as it was last month, even though I had intended on making a payment.
This month I’m taking a strong stance on sticking to a budget, and trusting my instincts! Budget ahoy!
Anti deprivation vs sticking to a budget
I’ve definitely talked about how I’m anti-deprivation because I don’t think it’s a sustainable model; HOWEVER, for this month only (since I’ve done a pretty dismal job of paying off debt) I need to add a sprinkle of deprivation into my regular budgeting. I have a contract coming up next month which I’m so, so excited about, but it’s going to pay me less than I would make doing my regular Toronto thing, so I really need to take action.
At my job I receive gratuities, so I will be budgeting everything except my monthly bills (i.e. rent, phone, internet) from my cash income. All other income is going directly to debt. Please note that I am not limiting myself to what I can use that money for – I’m just limiting the amount I allow myself. Hopefully, this will get me back on track for when I start my contract next month.
Until then, my friends, wish me luck!
So, how did I do?
As mentioned, this month I paid off $490 of debt, which puts me at a total of -$10,352.79. I’m REALLY excited to get below the $10,000 mark! In total I’ve paid off $2020.16 so far, which is around 16% of my total debt.