Author Topic: Not Much Left to Cut - Advice Requested.  (Read 9151 times)

Deimyts

  • 5 O'Clock Shadow
  • *
  • Posts: 56
Not Much Left to Cut - Advice Requested.
« on: April 19, 2013, 10:17:45 PM »
So, I just wrote this email to MMM as a proposal for a case study - I saw the invitation to post to the forums, and it sounded like a great idea. I've been working on cutting costs for a while, through what I've learned reading MMM and other personal finance blogs, but there's not much further I can go, and I'm getting impatient with my progress.

Here's the skinny:

income:

2,089.69 /monthly or 25,076.22
That's an average number, but I'm paid biweekly, so it's really more like 1928.94 per month, with two extra paychecks over the course of a year.

This also excludes the tax refund that I have so far gotten every year, because I generally pretend that it doesn't exist and use it on loan payments.

Expenses:

Student Loan Payments: $823.17

Rent: 850/mo Includes water, and is in an income-restricted complex, so the price is fixed until we leave.

Electricity: $80/month (varies)

Internet: $25.00 / month

Phones: 62.99/ month for two phones.

Groceries and other spending: 100 - 200/month

Student loan details:

I currently hold a little less than $75,000 in student loans.
The highest rate is 9.5 variable, the lowest is 3.0 fixed.
Yes, I'm stupid. Currently, I'm adjusting my payments on the lower interest loans using programs like Income Based Repayment, in order to divert as much money as possible to the 9.5% loan. Right now the required payment is about $250/month, and we're paying $300. The Income Based Repayment I just mentioned should allow me to add another $150 or so to that amount, and I believe that I can take it even further, and divert another $75-$150 to the high-interest loan.

For the present, my wife and I live on only my income: She's a nonresident alien, and we have to finish her paperwork before she is legally allowed to get a job. We're hoping she'll get her employment authorization in the next month or two, but the time frame on these things varies wildly. For context, I'm 23 and she's 24.

We don't have a car, and use bike and public transit to get around. We have transit passes left over from our (recent) school days, which if we didn't use, we wouldn't be able to go anywhere.

The obvious things I can cut out is the cell phone bill. (I didn't know about those $10/month plans until I came here) Even then, though I intend to do it, it only saves $43 per month.

And...that's about it. We do have a bad habit of going to restaurants and bars more than we ought (that is, ever!), but we're actively trying to curb it, and when I realize we have extra money to do these things, I usually add it to loan payments as an automatic withdrawal so it's not tempting me anymore. However, I'm getting past the point where we can do that without running out of money for groceries.

I earn some extra income by doing freelance graphic design and illustration on the side, but it's not enough to make much difference yet.

So, what it boils down to is that we need to earn more money. She'll be able to get a job soon, and that will help, but there's no telling when that will happen. In addition, I despise my job (I was recently told that it's impossible for me to get more than a tiny raise regardless of merit, no matter what I do) so I want to leave, but the problem is that it takes me an 1.5 hours to commute each way (by train, bus and bike) every weekday, so I don't have a lot of free time to go job hunting, and I can't quit abruptly, even though I'd like to, because there's nothing to fall back on. Right now I'm trying to work out a deal where I can work 10 hour days for 4 days a week, to save 3-5 hours of commute time and give me an extra day per week to work on job hunting and personal creative projects, but I'm pessimistic about this being approved, just because it's unconventional and that makes my bosses uncomfortable. Even if I do find a new job, it's unlikely it will pay much more. I could see earning up to 45k/year if I'm lucky, more likely 30-35k, similar to what I earn now.

Another obstacle, albeit a bit of the complainypants variety, is that this job is depressing and mentally draining, even if I had more time, every day I go it sucks out a little more of my soul, and it's hard to fight that kind of mental malaise, though I certainly do fight it.

So, what now? Is there anything else I can cut? What's the best way to increase my income?

Nudelkopf

  • Pencil Stache
  • ****
  • Posts: 899
  • Age: 28
  • Location: Australia
Re: Not Much Left to Cut - Advice Requested.
« Reply #1 on: April 20, 2013, 12:41:41 AM »
...the problem is that it takes me an 1.5 hours to commute each way (by train, bus and bike) every weekday, so I don't have a lot of free time to go job hunting.
First of all, holy crap batman!! Second, can your wife help out with the job hunt? Filling in paper work, etc? Can she work cash-in-hand? What does she do if she doesn't work? Can she be doing anything right now (while she can't officially work) that will lead to a better income later on down the track?
« Last Edit: April 20, 2013, 12:43:20 AM by Nudelkopf »

tongzhi

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Not Much Left to Cut - Advice Requested.
« Reply #2 on: April 24, 2013, 01:41:36 AM »
What did you study in school? I don't know what you're doing for work, but you need to make more money. $75k in student loans for a job that pays $25k? Eeek! If you're working 40 hours a week, 25k a year equates to barely better than minimum wage. Honestly, you could do as well working at Starbucks or a meat packing plant. At this point, getting a better job should be #1 priority, above anything else like cutting your cell phone bill, which is mainly window dressing.

I don't get why looking for a new job is so tough or impossible, since most of the time spent applying to jobs can be done on evenings/weekends or even during downtime from work if that's a possibility (which in many jobs it is). It's only when you're doing interviews that things cut into work time, and by then, hopefully you're within a stone's throw of a new job.

Looking for work sucks, especially when your job is draining and you hate it. Nonetheless many people in the same situation have found new jobs. It happens all the time, and it starts when you decide you're willing to do what it takes, even it means cutting into downtime.

racherinh

  • 5 O'Clock Shadow
  • *
  • Posts: 28
Re: Not Much Left to Cut - Advice Requested.
« Reply #3 on: April 24, 2013, 03:01:02 AM »
It might be worthwhile to get a little netbook, and a portable wifi internet thing to use on your commute - these are often pre-paid. Then you have several hours a day to work on job search/ materials writing. You could also use the time for on-line classes (university, Treehouse, etc) to fill in any missing qualifications for jobs that would suit you more and pay you better.

I can attest that a non-working spouse can often be extremely helpful in a job hunt. I have been unable to work the past 2 years due to being a non-resident alien, and I helped out a lot with cover letters, searching, etc. I've actually seen statistics that people with stay at home spouses make a higher income partly because the non working spouse can do so much of that grunt work.

I know in the US the average time to find a new job is in the 6-9 month range, so if you plan to make a few changes, even taking a little extra money from the loans for extra internet for a 6 months, it could really pay off. Even if you went from making 25k to 32k, that would be huge for your loan debt, and when your wife gets a job then you might have the ability to live off of her income while you look seriously for your dream job.

Good luck!

mm1970

  • Walrus Stache
  • *******
  • Posts: 6955
Re: Not Much Left to Cut - Advice Requested.
« Reply #4 on: April 24, 2013, 09:12:07 PM »

I can attest that a non-working spouse can often be extremely helpful in a job hunt. I have been unable to work the past 2 years due to being a non-resident alien, and I helped out a lot with cover letters, searching, etc. I've actually seen statistics that people with stay at home spouses make a higher income partly because the non working spouse can do so much of that grunt work.


Heck I spent some time doing research that helped my hubby get a bigger raise.  He went into his review prepared with "this is the going rate".

Deimyts

  • 5 O'Clock Shadow
  • *
  • Posts: 56
Re: Not Much Left to Cut - Advice Requested.
« Reply #5 on: July 16, 2013, 02:12:11 AM »
Hi all. Thank you for your kind responses.

It's the original poster again. I disappeared for a while, on account of some major, initially depressing changes. In April, I got laid off from my job, which, admittedly, sucked. So it wasn't all bad, because at least I wasn't wasting my life exhausting myself for a job I hated anymore. Soon afterward, before I could even receive any unemployment checks, a new, contract-based job fell into my lap. The new job, which is still going strong, pays more than twice as much as the last one, although the amount fluctuates from week to week since the hours aren't steady. In addition, I've had the time to  launch a webcomic, which has been a dream of mine since high school. This isn't currently producing any income, although I have recently applied to adsense and am waiting to hear back - I may need more content before I can place ads on the site.
However, the comic is primarily for personal satisfaction and to share my vision with the world - although I'd love to make money on it, that's not the end goal, or even a primary concern. 

In the meantime, the new job has created some issues - the sudden influx of higher income combined with the uncertainty of how much I will bring in each week and how to deal with self-employment taxes has led to some very anti-mustachian habits. With my old job, although the check was small, I knew exactly how much it would be, and could easily and automatically allocate it towards the necessary expenses, while simultaneously knowing when I had extra to throw in savings or pay down loans.

Now, although I have more than before, it's harder to keep track of, and to know where the chips will fall when it comes time to pay the bills. And so we fritter it frivolously away on smaller things, instead of rebuilding our emergency fund or paying down the student loans, or even replacing my old computer (used for work), which was put out of commission almost as soon as we started this job by an errant glass of water.

This, combined with the looming spectre of what will happen when this contract is over (an uncertain period of time), has led to a bit of stress, but overall, I'm pleased. This type of work gives me much greater command over my time, pays better, and is far more fulfilling. But I'm new to the self-employment game, and unsure of where to go next. I'm no longer in despair, as I was a few months ago when I started this thread, but there are many unanswered questions.

Where do I go from here? Do I continue searching for freelance and contract work, or focus on finding a steady job? How can we rein in our spending habits and forge for ourselves a more mustachian life? How much should we build back up our depleted emergency fund before student loans again become the priority?

Again, thank you all.

cerberusss

  • Stubble
  • **
  • Posts: 170
  • Age: 42
  • Location: Netherlands
Re: Not Much Left to Cut - Advice Requested.
« Reply #6 on: July 16, 2013, 02:25:52 AM »
A few ideas...

First, start controlling groceries and stop eating out as follows.
- Create a shared account for groceries, and transfer the average monthly necessary amount into it, every 1st of the month
- Start making menus on Sunday, for each day of the week, and do groceries only once per week based on this menu. This will help stopping eating out.

I'd also create a separate business account where your payments come in. Each 1st of the month, transfer the groceries money to the shared account. Also set a budget for play money, i.e. $300 or whatever you deem appropriate, and transfer it from the business into your personal account.

The business account should grow until you have a minimum amount there of three months of living expenses.

Personally, I'd continue looking for a steady job. That's because your girlfriend doesn't have a job. It's given me great security that one of us had a steady monthly pay check.

Deimyts

  • 5 O'Clock Shadow
  • *
  • Posts: 56
Re: Not Much Left to Cut - Advice Requested.
« Reply #7 on: July 16, 2013, 02:41:53 AM »
Thanks Cerberusss, that's really good advice.

We had a similar system set up to work with paychecks from the previous job, it just fell apart when everything changed. So the upshot is that we already have a checking account structure in place that we can adapt to your strategy. I also really like the menu idea. My wife and I both like to cook, and I think this would help us a lot, if we can manage to stick to it. Our routine is so constantly in flux, we've struggled a lot with maintaining habits like that. Is there anything that's helped you build up the weekly menu & daily cooking habit?

 And I tend to agree with you about the job. I enjoy what I'm doing now so much it's hard to convince myself of the reality of its ending. Writing these posts is in part a way to kick myself awake and help me to get off my ass and search for more work.

cerberusss

  • Stubble
  • **
  • Posts: 170
  • Age: 42
  • Location: Netherlands
Re: Not Much Left to Cut - Advice Requested.
« Reply #8 on: July 16, 2013, 05:24:46 AM »
We used to spend a lot on take-away dinners or microwave meals. What fixed it for us, was to take the decision-making out of the process. My GF cooks mo/tu/th/fr, and I cook the weekends and Wednesday. I also make the menu and do the groceries on Sunday.

Since the whole food thing is clear from the start of the week, it's too easy to just cook -- it involves less communication and decisions :-)

Micheal

  • Stubble
  • **
  • Posts: 103
Re: Not Much Left to Cut - Advice Requested.
« Reply #9 on: July 16, 2013, 05:44:04 AM »
Your food budget is one place to cut down, shop around as much as possible, do the coupon thing and plan meals in advance at least a week with the coupons and sales in mind, this will help lower your food budget.  I would also look for a cheaper place to live closer to work.  When her papers come through it will be easier to find a job if you are closer.  And one adage I always tell my friends "It is always easier to find a job if you have a job."  Employers are more likely to hire you if you show you are employable.  Even if the job is draining and sucks major donkey dick, hang in there and keep filling out applications and looking for other contracts.  Most employers use online apps these days so apply during your off hours, and check out craigs list, elance.com, ect.  For freelance gigs to fill your time until then.

NCoffey

  • 5 O'Clock Shadow
  • *
  • Posts: 24
Re: Not Much Left to Cut - Advice Requested.
« Reply #10 on: July 16, 2013, 06:31:18 AM »
I don't know where you live but $850.00 a month in rent seems really high for 2 people. Can you give any more information on that?

EK

  • Pencil Stache
  • ****
  • Posts: 733
  • Age: 32
  • Location: Fredericksburg, VA
    • Happily Enough
Re: Not Much Left to Cut - Advice Requested.
« Reply #11 on: July 16, 2013, 06:52:32 AM »
Awesome that you're making more money now.  Obviously you already know that you've got to get the lifestyle creep under control now that you're making more.

My husband is partially self employed, and we have irregular income.  I agree its really hard to figure out exactly what to do with your money when you don't know exactly how much money is coming in.  The biggest thing that helped get us on track was using YNAB to create a budget.  YNAB forces you to build up what they call a "buffer" that forces you to budget for the current month based on your income for last month.  This is an enormous help in keeping on top of things when you don't know how much you're making in a given month.  YNAB also has a good system for "rainy day" funds, like replacing a computer.  You can allocate a certain amount of money for those items each month, and that money is then removed from the money that shows as available to budget/ spend.  So it makes keeping track of those things much easier than trying to remember which money has been earmarked for what future expense.

Simple Abundant Living

  • Pencil Stache
  • ****
  • Posts: 580
    • Simple Abundant Living
Re: Not Much Left to Cut - Advice Requested.
« Reply #12 on: July 16, 2013, 07:17:08 AM »
A few ideas...

First, start controlling groceries and stop eating out as follows.
- Create a shared account for groceries, and transfer the average monthly necessary amount into it, every 1st of the month
- Start making menus on Sunday, for each day of the week, and do groceries only once per week based on this menu. This will help stopping eating out.


Meal planning is the way to go if you want to avoid eating out. I hate choosing the meal, so we've come up with some guidelines we can follow if we can't think of anything we really want.

Sunday is a bigger family meal.
Monday- leftovers from Sunday or meatless Monday
Tuesday-taco Tuesday. Can be tacos, salads, any kind of meat or beans, but usually Mexican food
Wednesday- waffle Wednesday(some kind of breakfast for dinner)
Thursday- thoup thursday(it's a word that means thick soup)- any kind of soup/chili
Friday- pizza Friday- we make our own
Saturday- whatever depending on plans

I also highly suggest a crock pot. Throw in ingredients in the morning on low, and dinners ready when you come home. 

Rebecca Stapler

  • Pencil Stache
  • ****
  • Posts: 907
    • Stapler Confessions
Re: Not Much Left to Cut - Advice Requested.
« Reply #13 on: July 16, 2013, 07:24:25 AM »
I don't know where you live but $850.00 a month in rent seems really high for 2 people. Can you give any more information on that?

That's funny, because I was thinking just the opposite. Everywhere I've lived in the past decade requires $1k/mo for a studio.

With an unsteady income stream, I would calculate how much you know is going towards fixed bills and set that amount aside before using your income for any "extras" like going out to eat. When you've passed that threshold, and you find yourself wanting to go out, make a payment to your SL and suggest cereal for dinner ;)  I kid, but that is somewhat what has happened with us. We used to allocate some $$ each month for going out to eat, but now when I look at that $$ and compare it to getting some peace of mind by getting out from under our SLs, I usually find something creative to make with the food in our fridge.

You should also have a good emergency fund at this point, because your job is so unsteady.

As for saving $$, the fact that your GF doesn't work should help you cut your spending because she can do the cooking, meal-planning, and couponing. If she is inclined to get good deals, I highly recommend she learn to "extreme coupon" (and unfortunate name, but an incredibly useful skill). I learned on www.hotcouponworld.com -- they have a "Couponing 101" series of posts -- and Stephanie Nelsons The CouponMom's Guide to Cutting your Grocery Bill in Half. Also, there's a good post summarizing the techniques here: http://makinglemonadeblog.com/5-ways-to-save-money-on-groceries/

ChicagoGirl

  • 5 O'Clock Shadow
  • *
  • Posts: 84
Re: Not Much Left to Cut - Advice Requested.
« Reply #14 on: July 16, 2013, 09:55:20 AM »
Since you are new to self-employment I would suggest giving yourself a crash course in self-employment taxes and come up with a plan ASAP of how you will save for taxes.  I would go to the IRS.gov website for more info and get some books from the library on self-employment.  If you are making enough you should be paying quarterly installments. You do NOT want a surprise at tax filing time and then not have enough money to pay them, the IRS is not forgiving in that respect. Also, learn about what kinds of items you can write-off and make sure you are saving those receipts. 

Since your wife is not working quite yet, maybe she could do the research for you on self-employment tax while you continue working.  Then she could educate you on her findings etc. 

A word of advice from a fellow self-employed person...put money in your tax fund right away, do not treat your checks like mini-windfalls.  I am worried you are in the mindset that you are making a lot more money at this self-employment job, but actually you are paid more money as a freelancer because the company (I am assuming) is NOT providing you with extras: health insurance, 401K, vacation/sick days or paying your taxes.  You have to use the extra money to replace those important expenses. 

Good Luck! :)

superheropunk

  • 5 O'Clock Shadow
  • *
  • Posts: 56
  • former credit addict
Re: Not Much Left to Cut - Advice Requested.
« Reply #15 on: July 16, 2013, 01:25:12 PM »
Looks like you already identified what is eating up the budget... Student Loans...

Everything else looks reasonable. Understand the commute because I have a long commute as well. Public transportation seems to add to it...

My advice, would be look to maximizing your income and knock out that Student Loan which you already seem to know and others have pointed out.

Rural

  • Magnum Stache
  • ******
  • Posts: 4849
Re: Not Much Left to Cut - Advice Requested.
« Reply #16 on: July 16, 2013, 03:46:27 PM »
Take 30% of every check you get from this moment on and put it in a separate account for taxes. Every time. Before you touch it. You will have to pay both income tax and your portion and the employer portion of Social Security tax on everything you've made as a freelancer this year, and you've not yet put any aside for this.

worms

  • Bristles
  • ***
  • Posts: 373
Re: Not Much Left to Cut - Advice Requested.
« Reply #17 on: July 16, 2013, 10:13:04 PM »
Take 30% of every check you get from this moment on and put it in a separate account for taxes. Every time. Before you touch it. You will have to pay both income tax and your portion and the employer portion of Social Security tax on everything you've made as a freelancer this year, and you've not yet put any aside for this.

Absolutely!

Then, if you plan on freelancing long term, you need to find a way of mentally or physically annualising the income.  It is difficult to get into if you don't have an emergency fund to start you off, but you want to get to the stage where each payment you get has the tax removed then the remainder divided by 12 and applied to the following 12 months.  In time this builds to a moving-average income and removes the peaks and troughs.  It might not work for you, but helped me when I was free-lancing.

Deimyts

  • 5 O'Clock Shadow
  • *
  • Posts: 56
Re: Not Much Left to Cut - Advice Requested.
« Reply #18 on: July 16, 2013, 11:22:35 PM »
NCoffey:

The apartment's a bit of an odd situation. There are cheaper places available elsewhere in the wider area, but we live in a fairly sprawled out city, where public transportation exists, but isn't very good. Since we don't have a car, we elected to pay more to live near the city center, because it's far more bike-friendly, and closer to the public transportation hub for our city. Furthermore, these apartments are income-restricted housing, so we're given a near guarantee that our rate won't go up. In fact, when we renew at the end of this year, it is slated to drop $13. Living here reduced the commute to my previous job by about 45 minutes each way, and leaves a wider area open to us to search for new jobs.

Rural & Worms: I hear you on the 30%. We have enough in the bank right now to cover that 30% from the paychecks since I started this contract job without hurting, and I've just transfered it from checking to savings, to keep it out of the way. Will do the same for all future paychecks.

Here's a question: Based on previous over-payment, I have the ability to significantly reduce the amount of money I'm paying on my student loans, at least temporarily. It's a lose in the long run, since they'll be accruing more interest than they would otherwise, but for short term, I've been considering stopping or reducing whatever payments that I can in order to rebuild the emergency fund at a faster pace. (Originally, I had a bit saved from before the loan repayments started - most of that disappeared after I lost my job.) I haven't yet pulled the trigger on it, because I can't decide if the short-term security is worth the long-term hit. My gut says yes, but I'm curious what you all think.

worms

  • Bristles
  • ***
  • Posts: 373
Re: Not Much Left to Cut - Advice Requested.
« Reply #19 on: July 16, 2013, 11:44:02 PM »
Glad to hear you have the tax covered!

The loan over payment is a difficult one.  A few years back I was in a similar situation with mortgage overpayments.  I was really tempted to stop overpaying (and in retrospect it might have made sense to) but I held firm.  I am glad I did because we weathered the pressure and I wouldn't necessarily have had the willpower not to simply increase the expenditure by the sum saved in payments.

I guess in part it depends on how quickly you can stop the payments to release the additional cash if you need it and whether you can plug any short-term crises with other drawings or credit.

Deimyts

  • 5 O'Clock Shadow
  • *
  • Posts: 56
Re: Not Much Left to Cut - Advice Requested.
« Reply #20 on: July 17, 2013, 03:57:13 AM »
Thanks! If it weren't for yours and Rural's comments, Worms, I don't think I'd have transferred that money as soon.

The loan payments are monthly. I think we can handle the willpower question by setting up an automated transfer each month to our savings account to replace the loan payment. Since the savings account is with a different bank, it takes the money out of sight and mind unless we need it.

There are no other lines of credit to draw on in case of emergency, nor would I want to. The best thing about these student loans is that they've made me very, very wary of debt of any kind. Furthermore, our current job situation is itself a looming emergency. I hope it won't come to it, but in the event that this contract ends before either myself or my wife have found a job (or in her case, become eligible for employment), we'll need our savings to supplement any unemployment payments and carry us through until one of us can start drawing income again.

We're both planning to step up the job search efforts, to prepare for this, but it still might happen.

Rural

  • Magnum Stache
  • ******
  • Posts: 4849
Re: Not Much Left to Cut - Advice Requested.
« Reply #21 on: July 17, 2013, 05:24:34 AM »
So glad to hear you have the money for the taxes!

Does it have to be all or nothing with the student loans? How much was that overpayment?

Deimyts

  • 5 O'Clock Shadow
  • *
  • Posts: 56
Re: Not Much Left to Cut - Advice Requested.
« Reply #22 on: July 17, 2013, 06:02:20 AM »
Does it have to be all or nothing with the student loans? How much was that overpayment?

It won't be all or nothing - my parents are being incredibly generous and helping add payments to the highest-interest loan (9.5%), in addition to what i've been paying. The minimum monthly payment was somewhere around $250, and with their payments added to mine, we hit $515 each month, plus any extra that I had lying around to throw at it.

The end result is that even if I stop paying, there will still be some money going towards it from my parents; enough to keep the interest down, but not to decrease the balance by much. My automatic payment triggers an interest rate reduction of .25%, so if I stop my autopayment, the rate will jump back up to 9.75%.

As for how much we've overpaid, according to the bank's calculations, we don't need to make another payment until late 2014, which would get me back on the original 10-year repayment plan, complete with mountains of interest, instead of the...*ahem*...accelerated plan that I've been following.

Rebecca Stapler

  • Pencil Stache
  • ****
  • Posts: 907
    • Stapler Confessions
Re: Not Much Left to Cut - Advice Requested.
« Reply #23 on: July 17, 2013, 07:06:34 AM »

Here's a question: Based on previous over-payment, I have the ability to significantly reduce the amount of money I'm paying on my student loans, at least temporarily. It's a lose in the long run, since they'll be accruing more interest than they would otherwise, but for short term, I've been considering stopping or reducing whatever payments that I can in order to rebuild the emergency fund at a faster pace. (Originally, I had a bit saved from before the loan repayments started - most of that disappeared after I lost my job.) I haven't yet pulled the trigger on it, because I can't decide if the short-term security is worth the long-term hit. My gut says yes, but I'm curious what you all think.

I would not stop paying down your SLs because you've been overpaying, just to build up your E Fund, and here's why: You can stop those payments at any time. If an emergency comes up, stop your payments at that point. Consider what kinds of emergencies you can foresee, and most of them you can probably see coming -- you will know ahead of time whether you're losing your job (or get a check after you stop working), you have a big bill that isn't due for a few weeks, etc. If you stay on top of your finances, you can probably anticipate those emergencies before the bill comes due. When it happens, then stop the payments.

Iron Mike Sharpe

  • Bristles
  • ***
  • Posts: 397
Re: Not Much Left to Cut - Advice Requested.
« Reply #24 on: July 17, 2013, 07:35:57 AM »
I would second the YNAB recommendation.  Especially since you are a freelancer.  They have excellent resources to help people budget who have irregular incomes.

You definitely need to come up with a good system to manage your pay.

Rural

  • Magnum Stache
  • ******
  • Posts: 4849
Re: Not Much Left to Cut - Advice Requested.
« Reply #25 on: July 17, 2013, 07:37:10 AM »
I think I'd have a slightly different take on it. I'd drop the automatic payment down to ten dollars or so just for three to four months in order to get $750-$1000 on hand, and I'd keep that separate from regular money. That would cover a couple of unfortunate events in a single month (say a car wreck that requires a copay at a urgent care place and a short term rental car to get to work while you wait on the insurance company. Or a hot water heater, etc. If you take public transit to work and rent, this could be lower, but a little slack in the system is good.) Then I'd up the automatic payment back to the regular amount.

Gerard

  • Handlebar Stache
  • *****
  • Posts: 1400
  • Location: eastern canada
Re: Not Much Left to Cut - Advice Requested.
« Reply #26 on: July 17, 2013, 08:59:55 AM »
I got a little confused at some point. You had a job you hated paying 2000-something a month, and had expenses to match, then you got a better job paying about twice that... doesn't that give you enough money to build up an emergency fund very quickly? Plus, haven't you gotten rid of your time-sucking commute, so that you now have more time to take on additional work or look for another job? And aren't you soon to have a work-legal wife, so that losing your current job will be less financially disastrous?
I would keep paying down the high interest student loan fairly quickly, pick up extra work, and start applying for low-interest credit cards to draw on as an emergency fund if needed. Better you pay 0%  on a card now and (say) 6% if there's an emergency, than paying 9.5% on your SL balance  no matter what.

Deimyts

  • 5 O'Clock Shadow
  • *
  • Posts: 56
Re: Not Much Left to Cut - Advice Requested.
« Reply #27 on: August 08, 2013, 08:58:10 AM »
@Gerard: The main challenge is that the new job pays about twice as much by the hour, but the hours each week are inconsistent, so it ends up not always being as much more as it seems.

As far as the rest - you're right that it ought to be easy. But it's turning out to be very difficult - I had everything set up to save/pay off loans automatically, and now, with income being unreliable, the automatic option doesn't work as well - If I can't be sure I'm getting a certain amount, then I can't have it routinely transfer out.

Basically, you're right, but it's hard, and that dressing down is a good kick in the right direction. So thanks.