Disoriented Savings Strategy

Standard

Gah.

Where I have had a few lean months over the summer, I’m looking at a bit of a credit card bill again in addition to having depleted my emergency savings substantially.  On the plus side, I’ve figured out three new ways to bring money into the house, even if it is sometimes at a trickle.  I find that my savings goals are absolutely overwhelming me.  There is simply too much to save up for and now I’m confused as to my priorities.  Halp!

Money needs:

Emergency fund.  Goes without saying why you need one.  While I’m so aggravated to have bled mine down, boy am I glad that I had one to bleed down!  It did its job.  But now I need to put it back.  I’m just always so confused on what constitutes a good amount of money for me.  Personal finance gurus all have a different number.  Dave Ramsey advocates $1000 while you’re digging out of debt.  People like Suze Orman say 6 – 8 months of emergency money.  That is nearly a year’s pay for me, as I work on a 9 month contract.  No idea what to do here.  My emergencies in general have been under $1000.  Should I consider that my lean emergency fund operating margins and once that is hit move on to the next money goal?  I have about $650 left in the fund.  Is this a number one priority?  I don’t know anymore.  My job contract is good for the next three years, but even that is no ironclad guarantee.  That’s as good as it gets in academia, though, for a non tenure-track person.

Summer money.  This is a critical thing for me to accumulate every year.  I only get paid for 9 months.  I have to live 12 months.  I need around $7500 to cover the amount of time I’m off work, as my operating budget is around $2500 a month, give or take.  I’m not sure if this is a #1 priority or further down the list, but it’s something I have to deal with every year.  Last summer, I was able to get some supplemental work with the college developing a course.  But between that and some copywork, I still had to hit the credit card and dig into the emergency fund a few times.  This is the main reason why it’s bled down to where it is now.  It just wasn’t enough.  I’m sure some of this is budgeting skills and money management related, but I also cannot always guarantee I can find 3 months of supplemental work every year to help me pay my mortgage.  Some years I might need more or less than $7500, but I know that’s what it takes to see me through to my next fall paycheck.

Random crap that keeps nickle and diming me to death.  This is eating me up alive.  It’s some school supplies here, a medical bill there.  I have no way to predict these things, and any extra cash I might be able to save dies a death by a thousand nicklings.  I don’t even know how to track this problem appropriately.  I feel like I’m fighting a thousand tiny foes and don’t know where to turn first!  Do I need a “mad money” fund or a “miscellany” fund or something??

New-to-me car.  This is the big x-factor in my future.  My trusty little 1998 car goes to the shop about four times a year.  She never needs anything huge, but she always costs me a couple hundred in random repairs.  I don’t think I’m going to stay this lucky for the next four years.  She has an oil problem and is basically blowing oil out of the exhaust.  I’d still rather pay a few bucks in oil every two weeks than a new car payment.  But the writing is on the wall — her final days are here.  I don’t want to be surprised with the need for a down payment and now a new bill to pay every month.  I’d like to prepare for this in some way.  I have no idea how much money to divert per month, etc.  I just know I’d like to pay cash.

Credit card balance.  Not very high, only a few hundred dollars.  But I end up having more month than money, it seems, so I’m dipping into the credit card more than what I want.  I do have a slight threshold for a credit card balance, mainly because I cannot seem to avoid it.  My rate is 7.5%.  I understand that a continuing balance is costing me money.  I’m just freaked out as to whether it’s better for my situation to have $200 in the bank cash on hand, or throw it on the credit card bill and have no cash on hand and have to use the credit card.  Ugh.  I’m feeling very demented chicken and egg on this one.

Roof.  When I bought my house 2 1/2 years ago, the inspector said I’d need new shingles within about 3 years.  That time is upon us.  I have the labor organized for it, I think, but I’m still looking at materials costs.  This will be around $1500 – 2000 I think.  The roof doesn’t leak, so I might could push it another year, but I feel like doing so potentially opens you up to bigger problems.  Ugh.  Not sure.

Divorce debt coming due in 4 years.  My biggest outflow is that in four years, my divorce settlement debt comes due.  I bought out my ex-husband’s down payment into the house.  So, $30,000 is what he has coming to him.  I *might* have enough equity in my home to cover that amount.  But probably not.  I will need to come up with the money somehow.  I’m trying to avoid a HELOC loan.  I’d like to pay for this in cash.  There is a very good possibility that I’ll have to pay at least some of it in cash and take the rest out in equity on the house.

Total Needed:  ~ no idea.  lol.  I was going to put around $55,000, but I realized that is hard to determine.  How much do I want to spend on a car?  How much emergency should I have?  That could push that figure to $70,000 in the next 4 years.  That makes me want to pass out.

Things that Compound or Help the Problem?

The money coming in is erratic.  My regular money, my paycheck, is usually mostly spoken for.  I can most times eke out about $200 a month to throw into savings.  But I only get paid for about 9 months of work.  Even if I faithfully saved that money, it’s a far cry from what I need to live on in the summer time.  Hence why I went looking for other income streams.  I took in an international exchange student, and I get about $2200 a semester for that.  It’s not guaranteed, however.  I go one semester at a time.  I cannot bank on this regularly, though it has been regular so far.  Additionally, I’d like to NOT do that over the summer, for example, and have some alone time.  But it pays my mortgage.  So I think I have to resign myself to doing this as long as I can and count myself lucky that I get on well with people and this opportunity is available to me.  If I did it year round, I could make $6600 on it.  My copywork is very erratic.  Some weeks I’ll make a couple hundred dollars.  Other weeks there will be no work.  I used to use it for my fun money.  Now I think I’m going to have to shove it all into savings regardless.  I also finally filed for child support, something I should’ve done a long time ago.  I don’t know what that will amount to, and that’s still an ongoing process.

Strange thinking about payments vs. paying in cash.  I really, really don’t want or need more payments.  I don’t want a HELOC or a car loan.  I’d like to figure out how to start paying for things in cash.  Maybe I need to get over this and just take the damn payment.  I can figure out how to come up with a payment.  I have a harder time figuring out how to come up with savings.  But this is a big skill I’d like to develop over the next few years.  Seems worth figuring out instead of taking the “easier” (and costlier) payment.

Not sure how to save the money for all these things.  I’m not sure if I add it all up and say I’m trying to save $X for everything.  I’m not sure if I rank order them and check the box each time I hit a new target.  The problem is, some of these are recurring costs.  I’ll always need $7500 for the summer — so even if I save it, it’s gone and needs replenished every year, while a car would be a one time purchase (and then hopefully it lasts as long as my old gal has so far!).  The divorce debt is also a one time gig.  Not sure how to even think about or process these things.

Hard to save.  I suppose I could try to save the summer money by living on reduced pay and saving what it would take to cover the summer.  Living on 12 months with 9 months of pay, basically.  But that means saving $350 a pay — I can barely seem to manage $200 a month.  I can try for a while, I guess.  Even if I am not 100% successful, it would be more saved than what I normally did.  This, of course, works only if there is no emergency (like car repair).  And with my first paycheck for the fall coming this Friday, I already have car repair scheduled.  Sigh.  I have, as someone else put it to me, “very thin operating margins.”  It doesn’t take much to shove me in the red.  If I hadn’t developed other income streams, erratic though they might be, I would be able to save very little.

Motivation.  I’m overwhelmed, not galvanized to do something about it.  On the one hand, I’m very proud of my little home, with its comforts and cheap mortgage.  I’m proud that I’m supporting my teenage son and myself on what money is coming in, and that our lives are comfortable — not fancy by any means, but comfortable.  But most times I feel like I’m treading water and that is the only victory I get.  I fear that I am one push away from a disaster — a skipped mortgage payment, a big, new bill that I can’t figure out how to pay, or taking on another part time job and being exhausted to make ends meet.  Granted, having divorce debt is a very temporary problem.  Getting a car is a temporary problem.  So it could be that this is just one of those tight, hard times that one has to live through.  But that is depressing as hell, and I need energy to meet such big goals.  I feel like I’m barely treading water and surviving, not thriving.  😦

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  1. Pingback: Weekend Roundup: Politics as High Comedy Edition | Funny about Money

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