Is there any extra!
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| Tue, 03-30-2010 - 1:38pm |
I often wonder about this, and I was just reading an article that leads me ask(because I'm curious), what do you count as extra, and how do you define savings?
Let me elaborate. Most of us have budgets or are doing are best to create or tweak one. The basic concept being how much income there is coming in a month and what expenses are going out. If you are red at the end of the month you have more going out than coming in, if you are black it is the opposite. Now, some people set up their budgets to come out to zero. But I think those people too have extra. They just create another category they put the extra into called savings or snow flaking or what have you. This is the way it should be in my opinion but it begs the question(Sarah or maybe not so much now that you are catching up, can you fill me in or others) as to what a family/person does that has a deficit every month? If you did have this happen when you woke up one day and decided to pay down debt, how long did it take to make it balance?
Also, how do you ladies/gents define savings. I have a ticker at the bottom of my sig that is savings for kid's education. However, I really don't consider true savings because I plan on giving it away at some point. I have $500 in a retirement account, the equity in my business, and land that I consider savings because it will not be touched for years/decades to come. I am also trying to teach my kids the different levels of savings as in money you keep in savings and money you save for a short term goal like a video game that you don't get all in one allowance. How do you define savings in your heads?




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As you well know, we don't fit ANY definition of normal. However, here's what we do with our deficit, which is still about $1800/mo on paper b/c I only count our definite income.
1- We always take care of the most pressing bill first. If there's a disconnect on the electric, we pay that. If they're about to repo the car, we pay that.
2- If/when the time comes that we can throw extra money toward ANYTHING, we do it. Why not catch up first? B/c if I catch all the bills up this month, next month we'll skip a bunch of payments b/c they won't take anything away with one missed payment. Paying extra (even w/ late stuff out there) accomplishes two things. One, it keeps us against the wall for making all those payments the next month "or else" (we work well under pressure and have access to lots of sidework; I wouldn't ordinarily suggest such a thing). Two, it puts us closer to lowering our monthly obligations, which is about the only chance we have of even leveling things out so we don't have to scramble each month.
For us, "savings" is an abbreviation. As in "savings for XXXX". Right now we have no TRUE savings, which I would define as something that exists solely as a cushion and we have NO short to medium term plans for it. But the fact that we have savings out there for ANYTHING is a miracle with our deficit! =c)
As for extra, as far as I'm concerned there is truly no "extra" until we are debt free. Period. We can justify some purchases - especially to help DH with his sidework, which in turn brings in more money - but nothing is extra until everything we have is OURS.
FLINGING DEBT:
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