Saturday, October 6, 2007

'07-'08 Budget To Pay Off $20K

I've been mulling this plan for a few weeks now, but I had put in my head that we should have the goal of taking care of our non-student loan & mortgage debts by the end of next year. I figure we'll need about $20K in cash to negotiate on the $30K (as well as my student loans will need to start being paid). Something I've learned the hard way is if you don't plan with plenty of detail how that is going to happen, it probably won't. With my current numbers, we are short by about $5K. Here's the big picture (click to view) and then I'll explain:

Natural Gas - We have a $400+ credit with them so that the winter bills won't be so high. They brought our budgeted amount from $145/month down to $77/month. I'm expecting after the winter, we'll be bumped back up to $100/month based on our yearly usage averaging that.

House Phone - DSL is $10/month for 6 months and bumps up to $20/month for 6 months. Best deal we could get last month.

Groceries - Higher at Thanksgiving/Christmas time with dinner parties at our home.

House Maint - This November we need to wrap up the insulation project by blowing in (ourselves) insulation under the kitchen and in the attic. In April we have to take down at least one big tree in our yard, if not all the big ones. I cut off as much as I could on my own, we'll need someone with a bucket truck to come and cut the rest down for us (I'll take care of it on the ground).

Clothing - Our baby will need another set of cloth diapers near the beginning of the year, which my wife is sewing to save $$$. Clothes everyone is good for a while (including her).

Med Expenses - At the start of the year, we will need to start paying for coverage for my wife and daughter (getting off of Medicaid). For our daughter, IL has a cheap program for kids, so we'll be doing that. My wife with her medical conditions though it will be $300/month for the $2.5K deductible plan with Illinois CHIP.

Vacation - We'll be doing a small camping trip during the summer as well as me serving on a missions trip.

Gifts - Christmas we budget $300 total, my birthday and my wife's is in September, our daughter is in May, $50 for each of us.

Other Income - Mystery shopping mainly.

Rental Income - That fluctuates, but I'm estimating we'll have 3 out of 4 rooms rented on average, that's where the $1K comes. November we should have a full house at $1300.

Options For $5K Shortfall:
  • Stop or reduce tithe, this for us is a last resort option.
  • Drop cell phone coverage. I know our bill is high (part of that covers someone else on our plan in case they don't pay). It's a complicated situation, hopefully we can act on it soon (that's what this table is all about).
  • Life insurance. Search for a cheaper quote than we have right now (the one we have is with my wife's previous employer and we went with it because it would be bad for her to be promoting something if she didn't carry that something herself).
  • Increase income. I haven't been looking much, but once I get a huge project I've been working on for my employer live, I'm considering using it to either find consulting projects on the side that provide more work than my on-call computer repair job or find a better paying full-time job. My current job gives me a lot of flexibility that I'm uncertain I could find with better pay.


Dedicated said...

Just my 2 cents - so don't make a decision by my words.

After my hubby had his back operated on, I couldn't get him good insurance. I tried to move his insurance to another carrier (BC & BS of IL) and they refered us to the IL Chip thing.

This had us torn, folks were saying that if he took that option, he would forever be called a "high risk" and we would never see the likes of lower insurances.

So, we opted against it and stayed with the same insurance. Although, his coverage was only major med it was cheaper then the states offering.

Fast forward and we are now both on a cheaper better plan. Mostly, because he went without incident for years and applications only ask for information on med history for the last 5 years or so.

Looking back, I am glad we worked it through another way.

I didn't want to steer you away from your plan, just open your eyes to the potential "high bill for life" if you concede to her being a high risk for insurance.

Good luck to you.

1 more thing, I believe that God does not like debt. He has told us in many places in the bible and never even once does he say "there's a good debt". Instead he very strongly advises against debt and the damage it creates.

Again, tithe is demanded of us all.

He is very much apart of your decisions. I believe he would want you to tend to the debt monster that you are a slave to and then come full throttle into the tithe.

Chad said...

Part comment and part question about the Tithe. I give financial advise to many people, and know it is a very important part of their budget, but must it be every month? Does it say in the bible that it must be paid within a specific window of time?

Reason being, I assume that with your current situation that many of your debts carry high interest rates. If you put your tithe money towards paying them off during the year, you would be in a better situation to pay a tithe at the end of the year. Although it would be a large payment, you will see a net gain while maintaining your tithe requirements.

If you are worried about your ability to come up with a large check at the end of the year, consider this. A $10,000 balance at 19%. If you pay the minimum + your $425 tithe each month towards the credit card, by the end of the year you will have repaid most of the balance and may have $2000-$3000 to go. Then, (good time to ask the CC company to reduce your rate), if you do not have enough money to pay the $6K tithe, just get a cash advance on the card.

You will save a lot of money on interest throughout the year and the church still gets your support.

If you feel your church is dependent upon your tithe each month (ie. small congregation), then this may be something to discuss with your church members. I am sure if you tell them your intentions, they will be happy to support you. You could find 11 others who are trying to payoff their debts faster, you all can arrange it to where each month someone is paying a large tithe.

I'm will admit that I do not attend church and therefore do not pay a tithe, so my viewpoint may seem irrational to you and I apologize if my suggestion offends you in any way.