My Debt Goals: no moving the goal posts please!

Reading through more and more PF blogs I’m starting to see something frequently which they have that I don’t – Goals. I think set goals are an essential part of seeing improvements and changes. You can’t blindly work your way to being better without knowing where you want to go, right?
So… what should my goals be? Do I need to have short term goals or just long term/annual goals?
Ultimately my goals are to pay off our debts, but that will take more than 12 months. Especially with the wedding in November!

So, after a bit of thought, my goals are:

2009: Pay for my wedding and accrue no debt. Based on my wedding budget, I will nominate $29,310 as my wedding savings goal. I will be doing this via credit cards, as I mentioned in an earlier post, but I will be closely tracking to make sure that I make repayments PLUS pay the wedding savings onto there. I will only spend on wedding related items. I will NOT carry a credit card with me unless I am going to pay for a wedding item! I will track this goal upwards regardless of what I spend on the wedding.

2009: Get our debt under $290,000 by the end of the year. This means paying off $10,000 in debt and also paying for the wedding as per above goal. (Note, our home loan interest will mean that only $5000 of the $24,700 worth of repayments will actually go towards debt reduction. The other $5000 will be off credit card debts and my car.)

2009: Start an emergency fund, and have it at $1000 by the end of the year.

2010: Go to Europe without having to borrow money or accrue additional debt. This means saving approx $20k between November 2009 and August 2010, as we want to do to Europe in September. This means the same saving that we’re in now for the wedding as it’s about the same amount of money in the same amount of time.

2010: Pay off my car in full by end of year

2010: Pay off another $5000 off credit card debt.

Okay, I have 3 shortish term goals (i.e. this year) and 3 longish term goals (i.e end of next year). I reserve the right to review these goals at any time lol but I don’t think I will. I like the idea of being debt free, and it is in the back of my mind constantly… how good would that feel!

P.S And my non-PF goal is to go down a pants size. I’m currently at 71.2 kg and wearing size 14 pants. I found a couple of kg over Christmas and haven’t been very good at losing them again. This goal couldn’t be a number i.e. 5kgs because now that I’ve taken up Personal Training I suspect I may gain some muscle…. That’s the plan, anyway!!!

No Spend Days

So I’ve been reading on other peoples PF blogs about these things called a “No Spend Day” (NSD). Pretty straight forward, you just plan days which you won’t spend any money.

I’ve been making a half-assed attempt at these, and have realised how easy they are to muck up. Like I'll buy a $1.40 can of diet coke with the lunch I packed… whoops spent money. I'll get to the gym and have forgotten (AGAIN) a water bottle… whoops spent money. I'll plan a NSD and realise I’ve planned to go grocery shopping and know if I don’t do it that night, I'll end up buying lunches… so I go and there goes my NSD.

So I’m going to start doing them properly by laying out the ground rules and putting some planning into place.

1) Grocery shopping and petrol purchases ARE included as purchases.
2) Direct debits are NOT included as purchases (for obvious reasons)
3) Bill paying IS included as spending, so must organise to pay bills in advance if due date falls on a planned No Spend Day
4) There is no reason why I can’t have 3 NSDs a week.

That last one is my logic talking but I’m not sure if it will work.

Generally, I have lunch with BF once a week. We have a budget of $20 for both of us, and it’s normally spent on Fridays. We are typically so busy during the week that this is important to us, and as of yet, I haven’t seen any reason to stop doing this since we’ve basically given up all take away and eating out during the week. (We used to eat take out for lunch or dinner several times a week!) So that rules out Friday as a NSD – which suits us because we often catch up with friends on Fridays, or have to buy additional groceries for the weekend once we’ve planned what we’re going to do, so that would rule our a NSD too.

So my commitment is to bring lunch the other 4 days a week. And I will stop buying diet coke from the vending machine. If I think I NEED a diet coke at work I will fit cans from the supermarket into our grocery budget and BRING THEM with me. Simple… in theory hehe

I will commit to doing grocery shopping and petrol purchases on the same day. I’m thinking this is going to be on Tuesday, while petrol is still cheap, and is also my rest day from the gym so I have the time. The only problem with this is I have to make sure I buy enough stuff on Tuesday (or on Friday!) so that we have lunches on Monday and Tuesday. If I can do this, then technically I can still manage 3 NSDs during the week. Monday, Wednesday and Thursday.

How about the weekends? I really need to be realistic, and for now, I will rule out weekends as NSDs. I'll see how we go, and might intro Sunday as a NSD. It’ll be tough, but I can’t see it being impossible!

So, it’s agreed. Monday, Wednesday and Thursday will be NSDs.

Although, I’m breaking this already, as today is Thursday and I’m having dinner with a friend tonight. Dammit. Maybe I should organise lunch with BF for today and make tomorrow (Friday) a NSD instead. We’re not planning on seeing anyone tomorrow night, so it’s do-able!!! DONE!

Weddings are expensive!

So here is our Wedding budget:

Reception $10,350.00 (set price - $115 per head)
Dress $1,800.00
Bridesmaid $400.00
DJ $430.00 (set price)
Suits $750.00
Rings $1,600.00
Garden Permit $500.00 (set price)
Celebrant $400.00
Garden Decorations $330.00 (set price)
Alterations $500.00
Flowers $- (friend making bouquets for me for gift!)
Cars $800.00
Make Up $255.00
Hair $255.00
Wedding Night Accom $400.00
Photographer $1,500.00
Personal training $1,500.00

Honeymoon Flights $1,500.00
Accommodation $3,000.00
Spending Money $2,000.00
Passports $440.00
Vaccinations $200.00
Insurance $400.00

TOTAL $29,310

They’re almost all estimations, so I’m looking for ways to make them cheaper. The honeymoon is pretty much $7500 which is a pretty expensive 10 day holiday. But this is what we WANT and are working towards it. (Yes I know it’s not a need, but come on, it’s our honeymoon) We are not going to accrue any of these costs on credit cards, I am confident of this, so it feels pretty good.

Note the dress is listed as $1800 plus $500 in alterations. Here’s hoping the dress I get made for $255 (made to my own measurements) works out well and I can say that I potentially saved over $2000. Then I won’t feel so bad about have a luxurious honeymoon as that will be more than enough to cover the difference between a 3.5 star hotel and a 4.5-5 star hotel that we’re hoping for.

This coming month we’ve got some big payments coming up – Car insurance (I'll save $200 off $1100 if I pay for the whole year upfront), Footy annual fees ($170) quarterly rates ($280) and a speeding ticket that BF racked up ($260!) – So there’s not much making its way into savings. I put $1500 onto the wedding fund (via CC#2 as mentioned early), paid $255 for the dress and $500 for personal training so our total is now $2345. I'll put $2500 into savings next pay day (15th march) and then pay a chunk off the reception in the coming months (hopefully another $2500), as well as pay for the garden decoration hire ($330).

It’s all very exciting but I’m no where near as excited as some of my friends think I should be. Most of them are shocked I haven’t booked a photographer or a celebrant already! Come on, it’s 8.5 months away! I got PLENTY of time…

Expenses that are silly… and some things that just seem silly

TAXI’S: We ALMOST stuck to our budget last week – I had budgeted $50 for a gift for a friends engagement but last minute we made the joint decision that $50 wasn’t enough so we would give them $100 instead. That extra $50 came out of the $100 we were going to use for accommodation but didn’t, and the other $50 of that ended up going towards taxis. Why? I decided to have a few drinks and share a taxi with friends – and BF wanted to go into the city and took a separate taxi, hence $50 in shared taxis.
Such a waste of money. But for some reason we really hate going out for drinks with friends and one of us having to drive. But it’s a mind set I’m going to have to change, if we want to get ahead of our finances and not always live pay check to pay check. A taxi from the city to our place is about $60. OUCH. Definitely a silly expense.

PERSONAL TRAINING: I’ve just signed up for some more personal training sessions… $500 worth to be exact. I know that as people in debt this is a “waste” of money, but getting fit for my wedding and then having children is EXTREMELY important to me, and at this stage I need that extra motivation that comes from a personal trainer. AND, it’s a budgeted part of our wedding budget. Yes, it’s on the list of costs. Personal training: $1500. That’s 36 x 45 min sessions between now and our wedding day. It’s important to me and BF and I have discussed it and he’s happy to include this cost. I don’t think this is a silly expense; however I know many of you will argue.

BOTTLES OF WATER AND LUNCHES: I’m always late for work. I don’t know why but I rationale 5 mins more sleep over being about to get ready at a normal not-frantic pace. I’m always forgetting to make lunch the night before. Forgetting? Wrong word. I’m always TOO LAZY to make lunch the night before. Bought lunch is usually around $8-$10 and almost always unhealthy or carb-loaded.
I always forget to bring a water bottle to the gym. I hate plastic drink bottles so I just re-use water bottles. Except that word is also wrong: “reuse”. I just buy bottles of water. These are silly expenses. Everyone will agree to that. I am going to learn to drink out of a plastic reusable water bottle.

RISKY WEDDING PURCHASES: In order to keep the wedding a bit more realistic, I have ordered a wedding dress of ebay. Yep. Ebay. I’m scared that the $255 is going to end up a case of you get what you paid for… but this seller has such good feedback, over 2000 dresses sold and 99.7% good feedback. The reality is if the dress arrives next month and is terrible, I will still have several months to organise a “proper” dress. Yes I will have lost $255 but I did that hoping to save $1800. Seemed like a risk I was willing to take. Also discussed this with BF, and he agreed with my reasoning. I don’t think this is a silly expense.

ALDI: I’ve just started shopping at Aldi, and overall find the experience frustrating. There’s no gluten free range, some brands are sub standard and others just aren’t noticeably cheaper. But the worst thing is the fruit and veg. It’s always pre-packaged so it’s bad for the environment and also means I can’t choose it myself. Or even touch it. I’ve gotten home a few times to find most plums in the container are so badly bruised they’re beyond consumption. Or the entire punnet of nectarines is soft, or worse, chalky. My roma tomatoes had white mould forming in the eyes, but I couldn’t see that when they’re packed in plastic. The broccoli is always packaged in pairs (I only want one!) and always yellows faster than broccoli from Coles or Safeway. I really don’t like having to make two trips to the supermarket, one to Aldi to get bargains and one to Coles to get everything else. *SIGH* I feel I must commit to going to the market every Sunday for fresh fruit and veg. Still doesn’t help me with gluten free items or particular foods like tuna. Can I really manage a trip to Aldi, a trip to Coles and a trip to the market every week? Seems like a lot of work for a balance between price and quality
P.S Aldi does have some great deals tho. Their tasty cheese is really good value – I’m picky about cheese and normally get mainland. But this one actually cuts it… (not quite as good as mainland but of definitely liveable standard, and half the price) and their cereals are pretty good and I will always buy coffee from there.
There are so many lifestyle changes we need to make! I hope I keep discovering new ways for us to save money so we can do what we REALLY enjoy, like go on holidays and have special family events. That’s what it’s all about isn’t it? Friends, family and experiences? Not funky cars and fancy clothes, and certainly not overpriced food and taxis!

Playing the credit card game!

Our home loan is fixed at 7.45%, which will become unfixed in about 14 months time. Previously, whenever we have a bit of extra cash on our hands that we won’t spend for a while we pop it into our home loan instead of leaving it in our normal everyday account which doesn’t gain any interest there. I consider 7.45% interest saved as 7.45% interest earned. The problem is now I’m seeing that we have debt, about $25,000 worth of debt on credit cards that charge interest of 12% upwards. So our extra money isn’t working for us anymore, it would be better off paying off those cards.

By this theory, it’s also better that we put all our wedding money “savings” onto the cards and then use the cards to make wedding purchases. At the end of this year we’ll have spent as much as we paid on the cards but we’ll be saving on interest during the year. I realised this when we had our engagement party a few months ago, we knew it would cost us about $3500 and we were going to pay over the phone on credit card because we couldn’t be bothered organising a cheque to pay on the night and it wasn’t safe to be holding that much cash.

So I transferred $3500 of redraw money (i.e. savings) onto a credit card that owed about that much, bringing the balance to almost zero. We then paid over the phone, and brought that balance back to 3500 and I noticed the following month I didn’t pay any interest on the card because of the 55 days interest free! I had essentially saved myself the $40 or so interest for the month… plus that card has a 0.5% cash back on purchases, capped at $10, so I scored an additional $10 cash back… all because I transferred my savings to my debt before paying for something I was going to pay anyway!

This month I was planning on putting $1500 into savings for the wedding, but I’ve slapped it onto our Credit Card #2 which had a big chunk of balance transfer on it that is now being treated as cash advance and therefore we are paying 17% interest instead of 13%... so I’ve now saved quite a bit of interest for the next month or so until we pay another chunk off our reception….

Works for me!!! We just have to be diligent that we only spend what we have already paid onto the card, but I know this will work because I am just so damned determined!

Getting tough already!

This week’s budget money isn’t surviving very well! I took out $150 yesterday (Monday), gave BF $75 and then spent $6.50 on lunch because I slept late and didn’t get a chance to pack it (totally my fault) and tonight we went to the movies (with pizza and beers before hand) and I spent $20 on a round of drinks for BF, myself, my sister and my BIL $10 on a pizza and $18 on two movie tickets. So yeah… $20.50 left by Tuesday night! OUCH! I probably should’ve gotten my sister and BIL to get their own drinks, but it’s an old habit to buy a round – it all works out in the wash though, as there are definitely times when BIL will buy the round of drinks, it just happened that I went to the bar whilst the boys got the table. I never said this was going to be easy, did I? BF has more of his allowance left and has offered to give it to me since I bought the drinks and movie tickets but I told him I’d see how I go… he’s so good to me :)

So after the movie I was adamant that I wasn’t going to “waste” anymore money on lunches so I took BF to the supermarket and made sure I would have enough fruit, tuna, salad stuff and crackers to last all week. Spent $58 on groceries from the $100 budget – will go back on Friday to plan the weekend once I know what we’re doing. We had planned to go away this weekend, but now it looks like we might not be doing that. There was an extra $100 budgeted for accommodation and petrol so I'll be able to relocate that – might put it into our wedding fund. (Which is actually our home loan, we have a fully flexible loan, so we’ll put all extra money on it to save interest and redraw it as we need to pay for things – it’s currently sitting at $2865. I will discuss whether this is the right place to keep the saving tomorrow!)

BF goes back to night school this week, so tomorrow and Thursday night I will be on my own for dinner so we didn’t plan dinners for the week. I’m vowing to eat whatever is in the cupboards/freezer. I’m pretty sure there are a stack of Lite ‘n’ easy meals left over from my stint last year (which, may I add, is another bad use of perfectly good money!). I really don’t want to spend money if I don’t have to!

P.S Have discovered that last month’s phone bill was $86.21 because I’ve been surfing the net on my phone as well as over spending on my cap. Technically my bill should be about $57 because I’m on a $49 cap + insurance. May need to review my plan…

Paying back our debt means making some changes...

So here we are, Monday February 16th. Time for some change

We’re going to have an allowance.

First, to really understand our spending and where our money goes, I’ve put together a spreadsheet with every single cost I can think of that we incur within a twelve month period. There’s a lot of stuff there!!! Everything from weekly petrol, fortnightly house repayments, my monthly car repayments, our quarterly rates and water bills, annual school fees and car rego/insurance… all of it…

This is the list:

Annual stuff:
Car Rego
Footy annual fee
Fishing license
School Fees
Professional Association fees
Pet injections
Car Maintenance

Monthly costs:
House
Internet & phone
My Mobile
BFs Mobile
Life Insurance (BF)
Life Insurance (Me)
Car repayments
Car Insurance
Charity giving
House Insurance
Health Insurance
Caravan Insurance
Dog Food
Cat food
Pet worming

Quarterly costs:
Rates
Gas bill
Electricity bill
Water
Caravan park Fees
My Pill
Haircuts

Weekly costs:
Petrol
Groceries

The total is $66,320 a year.

WOW. We’re expensive people. This doesn’t include things like clothes, take away, eating out and movies. Everything else, the little luxuries and “wants”, would have to come out of our allowance. For example, we might buy a slab of beer, but it’s totally a “want’ and not a “need” so it’ll have to come out of our allowance. (Note: work clothes are different – but BF has subsidised uniforms. I will have to go back to my list and include work clothes costs, and maybe a quarterly allowance for other clothing.)

Last year, I tried to get more organised and gave us a rough allowance, of $150 a week EACH. I did it because I felt BF was, well, wasting money. But $150, that’s pretty huge. And we still blew it most weeks. This year I’m aiming to be more stringent. So this time, it will be $150 a week for BOTH of us. I read an entry on a PF blog that said “if you have credit card debt, you shouldn’t be eating at restaurants” and it was like a light bulb went off. Eating at restaurants was one of the biggest killers on our credit cards. And is long weekends away - $260 here on accommodation, $100 on a restaurant, $140 on a hire car, $100 on another restaurant. THIS HAS TO STOP! I know it’s not brain surgery, and I’ve always known eating out is a massive waste of money but it took reading it on someone else’s PF to realise that it doesn’t make sense to have those ultra-luxurious things when we’re drowning in debt!

Next on my list…. Cutting up credit cards!

Starting a debt blog: time for debt confessions!

I've been totally obsessed with PF blogs these past few weeks and have decided it's a great medium to be honest and accountable for our money. BF and I are getting married this year and I've always felt our debt is getting out of control but now we have the added stress of trying to pay for a $25k wedding as well!

Our debt is pretty scary.

Here's the ugly truth:

Credit Card 1: $3632 (Joint card - 19% - mostly things for house and BF's school fees/text books)
Credit Card 2: $4654 (Joint card - 13% - same as CC1)
Credit Card 3: $3758 (My card - 13% - left over debt from uni days and i used to have too many direct debits like insurance come off it)
Credit Card 4: $3279 (My card - 13%)
Credit Card 5: $7746 (His card - 13% - consolidated debt from other CCs)
Credit Card 6: $895 (His card - 12% - a few recent purchases for our pergola)
Store Card: $1687 (His gym set - 0% until Nov 2011)
Home Loan 1: $53,110 (Variable, currently 5.71%)
Home Loan 2: $206,832 (Fixed, currently 7.45%, becomes unfixed in May 2010)
Car Loan 1: $14,483 (my 2003 car, worth about $17,000)

TOTAL? A whopping $300,076!!!!

Jeezus! This doesn't even include my HECS but I as that is paid directly out of my pay before I see it, and is pretty much interest free except for inflation, I won't include it as a debt. (Altho it's up around $30k - I did two degrees.)


However, like I said, this year we are getting married and we've estimated the wedding will cost us just over $25,000. This is a lot of money to come up with in 8 months!

How did we get here?!

Now BF and I both have decent wages, so making repayments isn't a problem. We live pretty lavish lives and very rarely are left wanting. However we're not really working towards lowering our debt - I get paid monthly and always put a chunk on the cards but then we just keep spending on them. We have the wrong mentality so when a purchase is greater than $100 we tend to put it on the credit card, and then we're really bad at transferring money back onto the card.

But this is all starting to change. I've been quoted as saying "if we can get to this end of the year and have the wedding of our dreams without accruing any extra debt, then i'll be happy". Of course, I'd prefer to pay some debt back aswell, but my primary goal is to make the repayments we have to make while saving for the wedding.

The point of this blog is to keep me accountable, and give me a place to monitor our spending and saving achievements - i'm not convinced that anyone will be interested in what I've got to say, but in case anyone is reading this; welcome!