May was an interesting month when it came to our finances. The current debt that we are on as far as our Debt Snowball goes is our Upromise Credit Card which held a balance of $4188. Here’s the breakdown of how we planned to attack it:
Minimum Payment: $78
Debt Snowball Payment: $472
Add’l Payment Goal: $1000
We started the month off on the right foot by creating our budget and committing to following it. Things were going great until my husband had a run-in with a deer on his way home from a friends house one night. This cost us half of our insurance deductible $250. We shook this off and continued on, that is until the electric company decided that they need to deduct our payment twice. So instead of paying $207 we ended up paying $414. Of course when I called the electric company about this error they assured me they would remit a check to us for the $207, and of course like all big companies who take your money unwarranted they decided the money would be better off if it were credited to our next bill. You know just in case we decided not to pay it or something. (insert eye roll) I then had a few blogging related expenses come up that I should have been keeping track of, but somehow missed on the calendar.
All in all we were able to pay our Minimum Payment as well as our Debt Snowball payment, but we were only able to pay $613 extra on our Upromise card leaving us with a balance of $3056.93.
While we didn’t meet our goal we learned some great lessons along the way.
Lesson 1: You need an emergency fund.
How many people can honestly say that they would be okay if the Electric Company took out their payment twice? We live in a day and age where people live pay check to pay check and there is no room for error. Since we had our emergency fund in place we could afford to deal with the Electric Companies error. We moved money over from our emergency savings account and put it back into the budget. We then replaced the money in our emergency fund with the extra income we made throughout the month. An emergency fund doesn’t have to be huge. It can be as little as $500. Dave Ramsey suggests starting out with $1000. You just need enough to help cover you when “life” happens.
Lesson 2: Don’t get discouraged when you don’t meet your goals.
I think not meeting our goals was harder on me than it was on my husband. As the month of May drew closer to an end I kept racking my brain, trying to figure out how to come up with the extra money. My husband had to remind me that even though we fell short we still took a giant step forward. With the minimum payment and the debt snowball, we were paying off $550 the debt this month. Now when you compare that to the minimum payment of $78 due we were doing pretty good! Not having the last $387 was not going to kill us. Sure it might mean that we’ll be working this debt for 4.5 months instead of 4, but we still were on track to becoming debt free.
So here we are at the start of June. We’ve already made our budget and set our goals for the month. I’m dreaming big and hoping we can pay off the entire balance of $3056, but I know it’ll be pushing it. I’ve already posted items to my PoshMark store and surprisingly two have already sold! I know I’ve said it to you all before, but I have to keep reminding myself that “Paying off Debt is a Marathon, not a Race”.
Here is our June 2015 Budget alongside our EveryDollar Budget that I took a screen shot of from my iPhone app. The best way to get started living Broke on Purpose is by setting up your Debt Snowball and making a budget. You can download your free Debt Snowball Attack Plan Worksheet here.
So, how are you planning to live Broke on Purpose this month? Are you just starting out? How much have you paid off? Share with me in the comments!