From the Desk of Mrs. Broke on Purpose®
Today is the last day of 2017. Looking back this year has been for the most part a great one. I wrote and successfully defended my Ph.D. dissertation; graduated from my Ph.D. program, and was featured in Glamour Magazine as one of the New Money Experts alongside amazing women like The Budgetnista and The Fiscal Femme. I also started a new job which I thought was going to be my dream career but turned out not to be the best fit for me, and now I’m going into 2018
unemployed trying to figure out “what’s next.”
Choosing to be what Mr. Broke on Purpose considers to be “self-employed” was a hard decision for me to make. I struggled with how I would share this news as it’s not something I leaped into happily. This will be the first time since I started working at the age of 14, that I am not employed by someone else. Most of my friends will tell you that I am a workaholic. It was not unheard of for me to have more than one job. This transition has been one where I’ve had to take a step back and mentally wrap my head around everything that was occurring as it was happening so fast. Even though I was the one who ultimately decided to walk away from my job, I felt like a failure. I felt like by choosing to leave that I was letting everyone, including my readers, down. In my head, all I could see was the meme of Tyra Banks yelling “WE WERE ALL ROOTING FOR YOU.” I finally had a job making enough money to help knock out our debt, and here I wanted to walk away. The guilt was destroying me and yet I felt like no one was taking me seriously when I talked about what I was feeling. Maybe they figured I would just figure it out. This is why it’s so important to check on your strong friends and pay attention to things they may not be saying.
As I mentioned earlier this mentally took its toll on me. Luckily, I have a fantastic husband and immediate family who rallied behind me when I needed them most. Mr. Broke on Purpose was quick to remind me of why we started living Broke on Purpose in the first place. It was the jolt I needed to bring me out of my fog. I’d become so focused on paying off all our debt as quickly as possible that I completely forgot that one of the reasons why we started Broke on Purpose®, which we wrote in our first post back in 2015. One of the main reasons for starting Broke on Purpose was to not only get out of debt but also just in case I graduated without the next transition in place. What would we do if I wasn’t bringing in income?
This is what he said to me.
“We’ve been training for this for the past 31 months; now it’s Go Time.”
Our New Plan
Beefing Up our Emergency Fund
With this big life change, we’ve also had to make changes to our financial plan. After taking a good hard look at the budget, we both agreed that we needed to pause paying off debt and beef up our emergency fund. I don’t believe that $1000 is enough to have for an emergency fund unless you’re a college student, and I can’t give you a solid number of what you should have. I always tell people to choose an amount that allows them to sleep well at night. We’ve decided to increase our Emergency Fund to $10,000. Moving forward any extra income that comes in that is not needed for the household budget will go straight to our savings account. Once that $10,000 goal is met we will go back to paying down our debt. Currently, we have $7500 in our emergency fund. I’ve set a personal goal (because I can’t help but challenge myself) to reach $10K by the end of March.
Reconfiguring the Household Budget
With the loss of income, it’s always important to revisit your budget and see where changes can be made. We’ve paid down enough debt that we can almost maintain our same lifestyle on one income. After crunching numbers, Marcus and I realized that only $318 of my monthly salary was needed to sustain the household budget. It also helped that Marcus received a promotion that came with a raise. Since I never completely walked away from my side hustles we are confident that I can at least contribute that much. Also, I am not above getting a part-time job in the meantime. To give us a bit of cushion in our budget we decided to cut back on a few categories.
-Monthly allowance has now dropped from $600 t0 $500
-Groceries dropped from $525 to $450
-Diners and Drive-Thrus dropped from $200 to $100
-Petcare dropped from $250 to $125
-We will only pay the minimum amount due on our student loans.
With these changes, we have a remainder of $396 leftover to budget. We do not do a zero-based budget because we like a to have some cushion. Whatever is left over at the end of the month in addition to this $396 will be transferred to savings.
Year-End Debt Payoff Report
Many of you noticed that we did not post a November Debt Payoff Report, but hopefully, the explanation above will give you understanding why. To recap, we successfully paid off our $9071 student loan and began work on next loan of $6769.69
Amount towards debt: $4721.00
Remaining Balance of $6769.69 loan $4668.14
Amount paid since living Broke on Purpose (32 months): $106,366.92
During December, we only paid the minimums on all our student loans. Of the three student loan groups remaining, we pay a total of $701 in minimum payments.
We’re both very optimistic about 2018. We have proven to ourselves that even when living Paycheck to Paycheck and one emergency away from having to file bankruptcy we could buckle down and make things work. We’ve powered through these last 32 months and paid off over $106,000 of our debt and we’ve lived a good life while doing so! Here’s to another year of moving forward in our financial journey, destroying debt, and building a life with options! We’re going to continue to budget, and use the Broke on Purpose® Money Envelopes proudly Since I can’t help myself I’m setting the goal of paying off another $40,000 of our debt during 2018.
How was your year living Broke on Purpose®? We’d love for you to share in the comments below! Also be sure to follow us via our various social media channels where we share a lot more information and video content!