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November 27, 2014 / Jett

Off-Topic: The Long Road to Financial Recovery (Part 2 of 2)

In the first part of this series, I talked about my recent financial struggles and my plan to fix things. Now that a full month has passed with these initiatives in place, I can take some time to review how successful it actually was.

The Good

My spending is way down to the tune of 33% when compared to July, August or September. Sure, those numbers are inflated somewhat by my recent trip to Florida, Fan Expo and other major life circumstances, but it’s also proof of my cost-cutting initiatives working to a certain extent. It may suck to not be able to buy stuff on a whim like before, but if I want to keep my head above the water, I have to focus on the bigger picture with initiatives like this until I’m in a comfortable position again. On top of spending being down, I also managed to put away a few hundred dollars into savings and still had $173 left over. It’s tough to see that money get locked up when I could use it today, but I know that it’ll pay off in the long run.

Needs Improvement

Since I started this exercise, I struggled greatly to prepare a budget that was less than my monthly income. Clearly, this is a problem that will eventually lead to disaster if I don’t take steps to fix things. Even after cutting almost every non-essential item from my budget, I still couldn’t propose a number that wasn’t hundreds of dollars more than what I make. By the end of it, I managed to get through the month with spending that was a bit under my monthly income and a few hundred dollars lower than what I budgeted, which is great.

Unfortunately, my spending is projected to be considerably higher over the next few months. I’m due for car maintenance and the installation of my winter tires this month. My boots, which are beyond repair, need to be replaced. Also, we’re rapidly heading towards Christmas, which means Christmas gift shopping. Any way I slice it, the gains I made will only partially absorb the hits I’m going to take in the next two months. Having something to absorb the hits I guess is better than nothing at all.

Another one of the insights I gathered during my review process was that I spend too much money on food, as I often eat at fast food restaurants for lunch and purchase snacks at my local convenience store. Some of my cost savings initiatives included bringing leftovers or frozen dinners for lunch when I could, as well as buying snacks in bulk at the grocery store rather than buying them as needed. I see how my spending has gone down in this regard, though there are still a lot of opportunities to save money here. In particular, making my own lunch or going with cheaper lunch options when I have to buy it should help me go a long way towards hitting my future food targets.

Also alarming to me is the amount of money I’m spending on credit card fees. Between interest and other charges, an alarming amount of money is going towards covering these costs. It’s going to take some time before I can pay these off in full, though I have come up with a plan to shuffle around my debt in ways that minimizes the amount of interest I accrue on a monthly basis. This is a short-term fix, though with a diligent payment schedule, I’ll hopefully get it down to a manageable level over time.

The Verdict

It’s easy for me to get fixated on how much larger the “Needs Improvement” section is over the “The Good”. In reality, this is a decent start. I’ve acknowledged the problem and my steps towards fixing them are slowly starting to pay off. Having the budgeting app in place is a huge help, as it lets me see exactly where my money is going, which in turn allows me to adjust my spending. If anything, this exercise has been a humbling reminder that money doesn’t grow on trees. I may have been able to sustain reckless spending in the past, though now is clearly not that time.


One Comment

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  1. Tim M / Dec 16 2014 4:36 PM

    I encourage you to give your credit card companies a call and see what they can do about lowering your interest rates permanently.You’d be surprised what they will do if you tell them you have no choice but to move them to a lower interest card if they can’t help you out.

    Keep putting a little money into that emergency account as often as you can, even considering that you are trying to pay down high interest rate credit cards. Having that emergency fund will reduce and eventually eliminate any need you might have to turn to more credit card debt to handle future emergencies.

    Good luck, you are making hard choices and taking fantastic steps in the right direction.

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