Today’s post is from our regular Tuesday contributor, Sally.
Writing this kind of post has been a long time coming for me. I’ve never been good about sitting down and figuring out an actual full-on budget for myself, but it was so exhilarating once I was done – I’m now a little obsessed.
The main reason I struggled in the past was because my income fluctuated every paycheck, which made me stress about coming up with a set-budget, and sticking to it.
I feel like I was so silly!
However, that was in the past and this is the present, and I’m doing my best to empower myself with the financial basics (for now) so that the future is much more pleasant :)
Before I launch into what I consider my “baby budget” (I call it that because I feel it’s very basic) I thought it was important to share with everyone the current financial goals I’ve figured out for myself. These goals will most likely evolve over the course of 2014, and I am so ready for that – I’m actually looking forward to changing -and hopefully – advancing them!
Interest
Last week I talked about how much student loan debt I have and mentioned that although my loans are deferred, a portion of my budget is going towards the interest that is accruing each month. My goal for my interest is simply to pay the interest on the loans off every month.
Emergency Savings
I want to build up an emergency savings this year of at least $1k. This might be a bit low, but it will be the most I have ever had in savings and I believe it will be a good start. Plus, it’s better than nothing!
New Computer and Travel Fund
As I mentioned before in this post, I plan on purchasing a new computer in the future, so I definitely felt I needed a ‘new computer fund’ to help me keep track and ensure I’m saving money specifically for the new computer. My ‘travel fund’ is to mainly help defray the costs of flying between school and home (I’m out-of-state for it) however, since Southwest always has such great deals and I have no current plans to fly home, I may use it for some other travel expenses I have coming up, such as a hotel room or gas. Regardless, unless there is an extreme emergency I absolutely need the money for, my new computer fund money will be untouched until I purchase a new computer and my travel fund money will remain untouched unless it’s for travelling somewhere.
And that’s it! I have these four goals, but definitely a good start for myself and as I said, I’m hopeful that they will become more advanced with time. Now….let’s bring on the budget!
The stipend I receive each month is the same amount – $500. It’s automatically deposited and since it’s the same amount every month, that’s where I started for the core of my budget. Calculating my monthly interest rate for my loans, it comes out to about $220 per month. I want to say that currently, the interest on my student loans that I’ve accrued over the years is over $10k, so right now; I am putting $250 of my $500 stipend towards my student loans every month. The monthly interest will be paid and I’ll be slowly starting to chip away at the $10k I owe in interest on top of that. I’m not panicked about paying my student loans off within a certain amount of time; I’m more concerned with being out of school and being able to afford the monthly payments, which is definitely a reason as to why I am not putting more money towards my loans currently.
Out of my $500 stipend, I have $250 left. I’ve divided that amount three ways, with $125 going into savings every month, $85 going into my new computer fund, and $40 going towards my travel fund.
If we do the math, $125 multiplied by 12 (months in a year), would put me at $1500 in my savings. This means that I would exceed my savings goal by $500! I know I can do this, but 1k seems a more-obtainable goal currently, so that’s what I’m aiming for until I hit it.
While that’s the core of my budget, I also have my side-incomes to consider. I have a part-time job where I get paid every two weeks. This amount varies depending on how often I work, so I plan on doing a mini-budget every time I get paid from that job. That money is going to be spent on items such as toiletries, apartment necessities, eating out, clothing, presents, etc. Within those budgets, toiletries and apartment needs are my top priorities, but thanks to research, I’m able to plan out those costs pretty easily. Any excess money at the end of those two weeks will be put towards my savings one week and the next time towards my new computer fund.
My other side-income is from my freelance writing and that money is directly deposited into my PayPal account. Honestly, I ignore that money. The purpose it serves for me is to purchase items online, instead of having to use my card information and I basically treat it as a savings account. It’s there if I need it, but I typically don’t touch it. Once it hits a certain amount (which I don’t have figured out yet); I do plan on channeling it towards either my savings or interest payments. It’s simply too sporadic right now for me to count on it continuously.
So there it is! My very basic budget breakdown.
What do you think? Have any suggestions or tips for improving it or to work towards in the future?
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Photo by Chris Potter
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Be careful not to blow through your paypal money! I did that once. I sold a bunch of stuff on ebay and built up my account to a few hundred bucks. The next thing I knew it was gone and I had spent it =(
Look into making money through dividends as well. But looks like you have a plan!
I would set a goal for the paypal money rather than having it sit there- plus it doesn’t earn any interest in your paypal account.
Like others said, I would encourage you to set a goal for your PayPal money. Other than that, I think a goal of $1000 for an E-Fund is a great place to start and would put you ahead of many out there.
I think you have it covered pretty well. It’s a good plan based on your individual needs.
I think it’s great that you have different income streams and that you’re funneling each one to a different goal. I agree that you shouldn’t just let the paypal money sit there. Maybe put some of that toward whatever goal is more important, to reach it quicker. Then you can focus on the next goal.
Paypal is so tempting and dangerous at the same time! But unless you do all of your household shopping through paypal (which you can totally do!), I wouldn’t want that temptation!
I agree with many others here. I’d make the money you have in Paypal work for you…it’s not earning anything in that Paypal account. Unless you are someone who can’t resist temptation and will spend that money…I think you should put it towards building your emergency savings fund…in an interest bearing account.
RIght now it seems as though your using your paypal account as a bit of a pseudo emergency fund. Ignoring it unless you need it. I understand why you do that but echo what others have said that it may make more sense if you rarely use to put it towards one of your goals and earn a little bit of interest. Otherwise I think your budget looks great overall and they are so liberating! :)
I am definitely more in the building savings vs. paying off student loan camp, so I would probably put more to savings than student loans. I just see so many young people put their extra cash (that would typically go to savings) to student loans and then get into credit card debt or cash trouble because they don’t have enough savings. I understand that interest accrues, but I feel as though that interest is what you pay for cash flexibility. When the savings gets big enough, you can take portions of it and pay down the loans then.
Do you have any money for spending — going out to drinks, seeing a movie, investing in time with friends?
But, to echo everyone else get that money out of paypal and into an account that is working for you.The $1000 e-fund is a good goal. $1000 really can help you out in a pinch so don’t feel that it’s too small.
Agree with the thoughts on the paypal money. Even if its transferred to a bank account, it could earn a small interest. I did the same thing for about a year, and regret it. Although, if it’s a very small amount, or you buy items online frequently, it might be more hassle than its worth. But you’ve got some solid goals here- best of luck to you!
I love that you are saving your freelance money in paypal!! Can’t wait to hear what you do with it. :)
I would definitely spend that money if I left it in PayPal. I transfer all PayPal funds immediately into my checking or savings account to remove the temptation.
Your baby budget looks pretty good to me!
I started my first e-fund with $1000. It’s amazing how much peace of mind it gave me to have that little extra cushion for if anything went wrong. I think that’s a great way to start.
I actually disagree with people who say to withdraw your money from your PayPal. Savings account interest rates are abysmal, I almost completely disregard them (I know, that’s like a sin to some people…) and I’ve found over the past couple years when I’ve done side jobs or got money from the blog it’s always nice to have it in the PayPal as a separate sort of “savings” account. Seriously, leave it in there and don’t touch it for as long as possible, that’s my advice!