When I write posts to share with all of you, I try to write about things that not only could apply to just about anyone, but also about topics and tips that I can apply to my own financial plans. I try to follow all of my own advice, and writing about ways to be a better saver and stick to a budget has made me more financially responsible than I’ve ever been. But what happens when a wrench gets thrown into even the best-laid plans? I’ve stumbled into a bit of a pickle, and I’m working my way through it. Luckily, it’s nothing long-term, and will likely self-resolve over the coming months, but until then, I’ll be thinking of the smartest route to take to get back to normal.
THE PROBLEM: I’m paid bi-weekly, and I divide up all of my monthly expenses (including what I contribute to savings) between these two paychecks. It usually works out, week-to-week and month-to-month, that the contributions are pretty equal, and I’m usually left with the same amount of money that I use for “free spending.” Recently, I’ve cut back on unnecessary spending, and I’ve been using this leftover fund to pay down my credit card, which has accrued a small balance from frivolous spending here and there (guilty as charged). The problem I’m facing is that next month, my paychecks fall in a way that will require me to make an additional car payment ahead of time so I can allocate the following paychecks for my other bills without going into the red. The next month or two will leave me with virtually no leftover cash because of this. I still really want to continue to contribute the amount I’ve dedicated to savings, but I really want to get rid of my credit card debt. So what should I do?
My first thought was sheer panic – “OHMYGODI’MPOORANDINDEBT!” I’d been doing well, balancing both my bills and all the fun stuff we’ve done this summer, and I was suddenly filled with regret – that I hadn’t saved more, that I’d spent less, that I should have been more careful. But really? I was, and I still am, and I’ll figure out how to power through this. I’ve been stuck in this situation before (usually due to those rare months that have a third pay period that throws everything out of whack), and I survived, so I’ll make it work this time, too.
THE PLAN (SO FAR): My priorities are to pay the bills, pay down my debt, and continue to build my savings. My plan is to cut costs where I can. This means that I may have to say no to a few nights out and scale back on my annual trip to the outlets in a few weeks. I’ve been consistently overpaying on my student loans to keep interest from building up, so I can bring those costs back down to normal for the next month or two, which can save me up to a few hundred bucks. I can also trim my savings contributions just a tad (but never eliminate altogether!). My last resort will be to pull from savings; it’s a good thing we talk about how important it is to have an emergency fund! I’ve mentioned this before, but I split up where my savings goes to in order to get a better view of where I stand in relation to my end goals (thanks for making this easier, PNC Virtual Wallet!). I have a little stash I’m using to build my emergency fund that would hopefully cover six months’ worth of expenses, and I never touch that, but I have a few piles that are a little more flexible when it comes to borrowing from (i.e. vacation funds, savings for a new bag or clothes, etc.). Do I want to? Not really. But will I if I have to in order to avoid more debt? I sure will! I may not be able to save quite as much or make as large of payments on my credit card as I have been, but I’m still contributing to both, slowly but surely.
The best part of budgeting is that you can visually see where all of your money is going, and where you can make changes to fit your current needs. Hopefully, this creates a little more financial flexibility for you. Have you encountered any obstacles that have thrown you off of your financial path? How did you work around them?
