I just don't get it . . .

iVillage Member
Registered: 04-10-2003
I just don't get it . . .
12
Mon, 03-09-2009 - 10:21am

Well, the end is in sight for the CC. With my tax return and rent money in April, I should have almost have that sucker paid off. This is great news. But I was sitting down the other day (after reading two Elizabeth Warren books) trying to figure out what I would do after the CC is gone. My plan has always been to take the rent money and put it into savings because I don't ever want to include it in my general budget (i.e if suddenly rent stopped, I would be okay). But then if I do that, I should ALSO have savings in my general budget in order to be more realistic. So I was playing with numbers and I end up with LESS spending money then I had before!!!


Here is the background (this may get long).


I rent two rooms in my house, one to sister and one to another roomie. This brings in $1000 a month. Roomie #2 is moving out May 1, and BF is moving in. BF is going to pay exactly what old roomie did. Part of the rental agreement with my roommates is that a cleaning lady who comes biweekly (cost $80 each time). I also provide all utilities, cleaning supplies, internet, phone etc.


Once roomie moves out, I am going to make the following changes:


1) Reduce phone to basic service and cancel long distance. He uses it because his family is all over the country and it was part of the rental agreement. I got an offer for a basic line for $18.00 a month and am going to use a calling card or


Bex -

Pages

iVillage Member
Registered: 08-04-2008
Mon, 03-09-2009 - 10:33am

Oh, you confused the heck out of me! LOL


And I did a long post too, so you are forgiven, it is Monday and we must have the need to post or something.


So you are getting the SAME income, and REDUCING outgo, how can that result in LESS in spending and savings?




iVillage Member
Registered: 07-26-1999
Mon, 03-09-2009 - 10:35am
Maybe I missed something, but when the cc is gone, where do the payments go in your budget? Don't you have those still to fund your savings? I'm assuming you have cc payments built into your budget? Once the cc is gone, you would still have that amount in your budget and you can call it "savings" can't you? So you can be saving without having to find more money. Please clue me in if I have missed something.
iVillage Member
Registered: 04-10-2003
Mon, 03-09-2009 - 11:22am

Hehehe, I guess I wasn't clear at all!


The payments for the CC have been coming out of the rent money. On the first of the month I deposit the rent checks ($1000) and immediately put all of it on the CC. Cable, phone, charity etc automatically go on the CC each month so the net effect is paying down the CC by $700.00 each month. It doesnt' come out of my general budget at all.


Once the CC is gone, that $700 is going to get redirected to savings, never to be put in the general


Bex -

iVillage Member
Registered: 08-04-2008
Mon, 03-09-2009 - 12:09pm

Why can't you put the WHOLE $1000 of rent payments into savings, the same way you were putitng it all into CCs?




iVillage Member
Registered: 04-10-2003
Mon, 03-09-2009 - 12:19pm

Each month I put $1000 on the CC, but $300 goes towards the preauthorized payments that I have come through on the CC everymonth


Bex -

iVillage Member
Registered: 08-04-2008
Mon, 03-09-2009 - 12:50pm

So basically you are saving almost $800 a month, that sounds pretty good.




iVillage Member
Registered: 08-22-2008
Mon, 03-09-2009 - 2:00pm

If it were me, I'd count the 1000 from the roommates as income, or take it off the mortgage.

iVillage Member
Registered: 04-10-2003
Mon, 03-09-2009 - 2:33pm

Thanks for the reply. Your suggestions make total sense (I've never thought of it the way you put it!).


1450 is my take home pay every two weeks AFTER my pension is taken out. I work for the federal government so that pension is as secure as it gets. My goal was to find $150 a pay to equal 10% of my take home pay for savings. But as PP mentioned, I think i will lighten up. If I simply continue doing what I'm doing, I will be saving $700 a month.


I think when my pay increase kicks in I will just start sending more to the mortgage. Mortgage interest in Canada isn't tax deductible :(


Bex -


"Yesterday is history, tomorrow is a mystery, today is a gift -thats why its called the present."


Bex -

iVillage Member
Registered: 11-14-2008
Mon, 03-09-2009 - 4:14pm

You could do that or invest the 700-800 a month, then reinvest the savings and be meeting your goals. I thought I rambled on on and to my bf! LOL. Now I know why he looks at me like a deer caught in the head lights when numbers come out of my mouth. It makes sense to us and that matters!! LOL



iVillage Member
Registered: 07-14-2008
Mon, 03-09-2009 - 7:03pm
Bex,
I agree that putting $700 towards savings every month is spectacular. Once I finally have my car paid off (can't wait!) I will do the same thing...move that money towards savings. Congratulate yourself. Many people use the money to spend once they have there credit card paid off. But not you! Good for you!





Pages