“I got my mind on my money, and my money on my mind,” or so once said an undoubtedly wise man.
2009 did not begin well for me financially. But I managed to overcome the uncertainty of the economic climate as well as the uncertainty of my own future in such a way that I can be proud of, by balancing a rigorous schedule of paying bills and a somewhat happy lifestyle.
My car has crashed! Yay!
My 2000 Pontiac Grand Am was totaled in an otherwise minor car accident on New Year’s Eve 2008, so I suddenly needed a new car.
All while realizing that, in the deep end of the economic recession, I would most likely accept a full-time permanent position as a web developer, where I had been contracting as a temp. The position was an $8,000 cut in gross pay. And let’s not forget I’d get paid monthly, not weekly. But the offer was there, and the company had been (and luckily has continued to be) doing great.
In my state of shock after the accident, I went car shopping with my friend Jenny, who took pictures of the adventure. I went in thinking I would buy a Honda Civic (even though for years I thought my next car would be a Toyota Prius). But we walked by a brand-new, 2009 Honda Fit. And it was a fit: The dashboard interface was the clear winner here, as the Civic interface was too black with indiscriminately distinct buttons. I bought the car, even minutes (hours?) after sitting with Jenny and (I still remember now) telling her, “I just need something that takes me from point A to point B.” With a kick-ass interface, apparently. But I digress.
I had a credit card with a $6,000 line of credit. I used it for a car down payment of $5,000. I did this to lower my monthly payment for the car loan, which became just under $300. Three hundred more dollars per month that I now had to find, with a smaller salary.
However, I was banking on receiving a check from the insurance company for the worth of my Grand Am, so I threw that money at my new credit card balance, paying that off a grand per month. I wanted that bill gone ASAP, and by April, it was.
With some of that extra insurance money, I paid $500 for one car payment. I also doubled the amount I paid per month on my debt loan. I had consolidated all my credit card payments back in late 2007 into this five-year loan. By the end of 2009, less than halfway into the loan’s term, the loan was paid off.
The only other debt I have is my consolidated school loan, which has the lowest interest rate and therefore I just have $100 each month deducted automatically without me thinking about it.
All this with a lowered salary and a new car loan? Thankfully, no.
I did do some additional freelance work at the beginning of the year. I had worked with them before, developing emails for a lawschool textbook publisher, so another gig with them was perfect timing. It wasn’t the most exciting side job, but it literally did pay the bills for a while.
All bills and no play…
Amid all the bills, I knew I needed to balance work with play.
In late 2008, I had stopped dancing Argentine tango, which had been my primary social outlet since 2003. Frankly, I didn’t know what else to do, so, on my own, I went to concerts — BB King and Buddy Guy at the new House of Blues in February; Rustic Overtones, and the Blind Boys of Alabama in March; Gomez twice in April and June; Great Lake Swimmers in April; Federico Aubele in May; Roomful of Blues in October; and Jonny Lang in November.
I also went to the Brattle Theatre, among other places, to see old movies and new documentaries, such as Examined Life and Easy Rider. I saw The Diving Bell and the Butterfly, which was part of an Arlington yoga studio’s film series. I saw my first IMAX film, the new Star Trek, at Jordan’s. And last month I saw, for the first time ever, It’s a Wonderful Life on the big screen at the Brattle.
I went to the Grub Street Muse and the Marketplace writers workshop in April, paying a substantial (but worthwhile) price to see if the writing bug was somewhere still inside me (it is). I started dating someone I met there, and with time (and a couple of spending moratoria later), we went on vacation together. It was my first real vacation in nine years.
More to do…
I have a couple of savings accounts and a couple of checking accounts. I have a couple of credit cards that I did not want to touch after years of debt. With the residual balance of credit debt gone, I have started using my card again, soley to rack up Rewards points. (The caveat is that I make sure I pay the balance each month to avoid finance charges.) The products I could get with these points are not really interesting to me, but they could make good gifts for the family. Ideally, by the end of this year, I could probably not need to buy any Christmas gifts.
I’ve been thinking for a long time about CD ladders but have yet to do it. I haven’t been financially secure enough to do this, but I think I might be able to this year.
I have had a traditional IRA and a Roth IRA for years, but have never contributed any money to them. This is the year to start doing it. So many people don’t even have IRAs, and the earlier you get this, the better your retirement will be, as they say.
Even though December 2009 was arguably my biggest spending month last year, I was already two months into saving 30% of my take-home pay into my ING Direct savings account. My plan for this year is to let that be an untouchable account, for large purchases, for unexpected but inevitable turns-for-the-worst.
It may go without saying, but for me more than two years ago, it needed to be said: You must have a budget. Whether it’s a spreadsheet or some other way for you to keep track of where your money is now and where it’s going. For years I slogged through tremendous debt. But once I was able to map out where my income was going, and when my bills were taking that money away, and then plan that out for the rest of the year … well, I could see past the dark cloud. I saw a way out of debt.