I suppose wishes for a Happy New Year are in order even though, unbelievably, we’re almost at the mid-point of January already. Indeed, the first two work weeks of 2012 are already done, although the first, for me, was only three days long.
I’ve had a whole whack of blog topics come to mind in the month since my last entry, but somehow I got distracted by other things.
Wondering If It Works
Many months ago, the geek in me found that it was possible to edit what’s known as the .htaccess file for a website to exclude visits from anyone whose IP is from a specific country. For instance, one common practice is to exclude anyone with a Russian IP given how many spammers use that set of IPs. But for my part, in an attempt to feel more free to write what I wanted in aMMusing, I added commands to exclude all IPs from a particular country in North America. You’ve got three guesses (literally!) and the first two don’t count. I’m not certain these commands really work, but like a gift, it’s the thought that counts, I suppose.
A Marvel I Don’t Understand
I told you at great lengths back in October that I did my budget this fall on a massive spreadsheet. It seems to be working well three months into maintaining it, although I can’t understand why. Crazy, eh? I mean, I developed it so I should be able to understand it! Then again, this isn’t the first time I developed something that works without understanding why. Some would say I’ve become totally obsessed with my budget spreadsheet, as I keep working on it and looking at how the numbers are playing out; however, there’s something extremely empowering about it for me since it’s about looking towards the future and figuring out how to build an emergency nestegg (and how fast) and how I’ll pay to replace my car (which I expect to do around Junior’s 10th anniversary in Spring 2013).
My financial hero these days is Canadian best-selling author and host of ‘Til Debt Do U$ Part (with the “Home Edition” aired on HGTV), Gail Vaz-Oxlade. Not only does she make a lot of sense, but her blunt “tough love” bits of advice pass well because of her delightful accent (she was born in Jamaica).
Among Vaz-Oxlade’s bits of advice, there’s the need to create a budget. Some people equate “budget” with “cutting back,” just like others equate “diet” with “losing weight,” but that’s not her point. Instead, it’s the preliminary step to finding out exactly how much money is coming in and how much is going out on what. It has to include not just weekly or monthly spending but quarterly and annual obligations as well, like property taxes, water taxes, haircuts, dentist visits, vehicule registration, and so on. That’s the point where one sees where there’s fat that can be trimmed or cut out entirely.
She gets the people on her show to stop using credit cards and even debit cards and rely only on cash which she places in specifically labelled jars. (Personally I use my debit card as cash and rarely to get cash from an ATM, and I find I spend less that way than having loose cash in my wallet and pocket.) In some more extreme cases, she cuts back participants’ expenses by as much as 90 percent. If they complete the challenges she imposes on them over a few weeks, she gives them up to $5,000 to go towards their debt.
I started with my budget as she suggests and found that, although I’m in debt, my income is greater than my expenses (unlike most of her participants). That’s the most enviable situation to be in. For sure, I could go to a barber instead of the delightful Gabriel for my haircuts, but that would only save me about $8 per paycheque and that cutback (pardon the pun) isn’t necessary at this point. In the end, my budget maps not only the net amount of each expense, but also the monthly and, more importantly, the per-paycheque net amount for each. Indeed, I always wondered why the two “extra” pay periods for someone like myself who’s paid every two weeks don’t seem to be “extra pay days” as one would expect when just looking at the surface.
I then considered, but stopped short on, imposing the “magic jars” system on myself. Instead, I took a two-pronged approach: the “calendar” approach for my cash flow in one sheet so that I can see when certain recurring amounts go out, and a combined “virtual savings accounts / daily expenses” approach in another sheet for daily expenses including those I automatically set aside (i.e., not spend right away), namely 6 fixed amounts ranging from $4.20 to $43.30 per paycheque for haircuts or any of those irregular or occasional musts.
As a result, in the cash flow sheet, I have only one line per pay period for stuff I lumped together like food and other expenses. During the current period, that amount goes up based on the entries I make on my daily expenses sheet. On payday, the surplus or deficit from the previous period is added to or subtracted from the net paycheque — often when there’s a surplus, I put it on my line of credit — and the 6 amounts above are immediately deducted from that “lumped together” total so that I will have the cash to pay for those things when they’re due. That leaves me with the remainder to play with, but although sometimes it seems like the cash flow is in the red, in reality the variable accumulated sum of those 6 “virtual accounts” remain part of the actual balance in my bank account.
What’s discombobulating about this approach is that the balance in my bank account doesn’t mean anything anymore. It seems like it should be heading into negative territory one of these months, but as long as I trust only what I see in my spreadsheet for any given day, that’s really where I stand. I don’t know how many times I re-examined my formulas to make sure I’m not double-counting (or not counting) some expenses, but the logic holds even though the bottom line in my bank account never seems to add up to anything I see on my spreadsheets.
So, I’m staying the course. I think the worse thing that can happen is that I’ll find that I’ve been too aggressive attacking my debt — it looks like I’m putting over 24% of my net towards debt repayment, which I gather is about 9% more than what Vaz-Oxlade suggests is optimum, although her 15% figure might be for when someone HAS to pay more than that in order not to sink further in debt — in which case I’ll just have to backpeddle a little bit on that front. Besides, even if it’s only a few dollars here and there, keeping one’s debt as low as possible means lower monthly interest charges on the line of credit on which I consolidate my credit-card expenses. Not only is the interest rate much lower on the line of credit, but the interest is paid monthly from my main account, meaning the outstanding balance on credit doesn’t balloon, not to mention that I never pay a penny in interest on credit cards due to the 21-day grace period.
Having Much of a Life Lately?
As you can tell, not really, but unlike a year or so ago, that’s not depressing me. Funny how only a few months in therapy changed my outlook so fundamentally.
Like I said, the budget thing has become very empowering for me. It’s actually set up to be the worse-case scenario, yet despite my expensive screw-up a month ago, it still looks like I’ll be relatively debt-free by the end of 2013. Given how time flies, that’s nothing and extremely encouraging! While I’m currently not following Vaz-Oxlade’s “pay yourself first” suggestion, that’s only because I have something up my sleeve that will turn this worse-case scenario on its head.
But I haven’t been going out much lately, either. I get that way in winter. However, if I must be candid, I haven’t felt like it because of the 20 or so pounds I gained in the last two years. A lot of my clothes doesn’t fit well, but rather than buy new clothes, I prefer to lose the weight. Granted, by that time, that clothes will be in need of replacing, too, but I rather buy “skinny clothes” than adapt and buy “fat clothes.” I may like bears but I don’t see myself as one. Besides, I prefer hunky bears over fatty bears.
Any Vacation Plans?
Yup! That’s in the budget and it’s also why I want to lose weight. My first vacation will be for a week around Easter when I’ll be flying to Moncton and spend that time with my mom. But the second vacation — the “for me” fun vacation — will be the first two full weeks of August when I plan to spend a few days in Provincetown and then drive up the coast to Moncton (again) and Halifax. It’s not my dream vacation to Mykonos just yet, but I hope that’ll come in 2013 or 2014, especially if I can find someone to travel with. It seems like it would be more fun to travel to Greece with a friend than on my own.
Do You Still Follow Politics?
Avidly! But whether it’s in Québec or Canada or the U.S., there just seems to be so much I could be railing against that I don’t know where to start. However, combined with the uncertain economy, politics has become rather depressing. There comes a point where it’s better to go inside a little bubble to preserve one’s sanity.