Hi All!
So, reading MMM's collected works finally convinced me to get my first credit card. (I'm 26, recently moved back to the states and have no credit history in this country so it's a secured card through TD Bank.) Now, however, I find myself having nightmares that I've bought stuff on credit, forgotten, spent my paycheck and then been faced with a huge credit card bill and no way to pay it. I really, REALLY don't want this to every happen, and I think that proper precautions will likely stop the nightmares also (I may be exaggerating on the nightmare front, but it worries me, ok?)
The stats:
Income- $1500 (average over last 6 months. $8/hour plus tips. between 18 and 45 hours a week)
Expenses:
My boyfriend and I have an arrangement whereby he pays the bills, I pay him $500 a month and do the cleaning and cooking. Recently that's been slipping towards me paying for groceries and utilities (Yay! My name on a utility bill! Credit worthy-ness here I come!) and any expenditure of mine being wiped off my tab (more on this later)
Groceries: $300/month (the average is still dropping. It was running $600 a month or more while the boyfriend was doing it. Largely due to him ordering from Fresh Direct and me walking the 2 miles to BJ's)
Utilities: $150/month (tentative average. I'm also refusing to help put the A/C back in the window, so we're still working with a fan and a spray bottle of water)
Gym: $73 a month (don't shoot me. This should disappear in September when we move and I start bike commuting vs. walking <5mins to work)
Phone: $19. Has been $0 for the last 6 months, however, had to get one due to new business opportunity requiring a phone and Republic wireless.
Transport: $30/month. metro card and one train ride back and forth to see my parents.
The gym and phone bills are on the credit card. I don't intend to use it for anything else.
Net worth:
-8k(NZ dollars- 6.3kUSD) in student loans @ 6.8%. it costs me $40 every time I wire money overseas, so I'm doing this in two lump sum payments a year. (minimum payment $1000/year)
-3k Tab with boyfriend (this covered the deposit on our apartment, half my birth control, plane tickets to meet his family, etc. Unusual costs. it's shrinking. And any occasion where I spend more than $500 total on groceries and utilities in a month the difference is deducted from the balance on the tab. No interest, no rush, but all my extra funds go here. I know it's maybe not the smartest financial move, but I feel it's safer for our relationship NOT to owe each other money.(Not that Mr. "It's my 25th birthday and I just got a job paying 120k but lets move somewhere cheaper" is ever likely to need my money.)
cash: ~$800
total: roughly -$9k.
Budget:
$600 towards living expenses (detailed above)
$300 (or 20% income) to savings- this to be used as cushion, and potentially towards lump sum payment at the end of the year.
~$600 remainder to Tab. When that's gone this will be added to the student loan payment, and I may finally give myself a small amount of spending money.
Within the next 3 months I should (finally) get my qualification as an equine masseuse, which will up my earning power considerably. I'm also learning some software engineering/web dev stuff, and putting together a website for horse owners/professionals. My boyfriend's a software engineer, so he's my live in TA while I go through a bunch of stuff on coursera. The plan is to eventually rival his salary (130k/year) with my horse work while developing the website (or several) for passive income on the side. Once qualified, 3 or 4 horses a week will more than replace my current income. Huzzah! The need for a phone is related to this- I need to have a number for clients to get in touch, though for the moment they're getting free work while I finish my case studies.
...Having written that all down my fears of accidentally spending all my extra cash and being unable to pay my credit card bill are largely gone... Still, just this week I've spent an extra $250 on a new phone, and am planning to join city bike at a cost of $100 for a year membership. I've been known to walk 11-12 miles a day around Manhattan. (How do the NYPD not know where they keep their horses? Seriously? Wild goose chase of the year.) Access to a bike would reduce the time spent and enable me to do my weekly/twice weekly trip from the 33rd st Path station to the 52nd st stable and back down to the Google or Foursquare office much more efficiently. There's no place to keep a bicycle in my apartment currently.
Still, attempting to budget variable income, variable expenses, and the new found ability to spend money before I earn it has me feeling a little wobbly.
Any advice on how you've handled this, or ways to optimize my current spending would be welcomed! Also, CityBike- yes or no?
