Let’s Get Down to Business

Here is a graphic of my current budget from my last post:


Now, in order for me to be able to throw about $500 at my student loan debt, I need to shift some things around. I crunched a bunch of numbers, and this is what the new budget looks like:

LvtL budget

New budget allocations:

Necessary Expenses – 29% (from 40%)
Currently, I’m living in a 3 bedroom flat with 2 roommates in San Francisco. I’m paying about $900/month ($825 rent, plus electricity, water, utilities) for a master bedroom with my own bathroom. As I mentioned in my previous post, I will be moving in with my mom, auntie, and brother in about a month and instead will be splitting the mortgage. My own contribution will be $600 flat (this will include electricity, phone, water) – savings of $300/month.

However, my monthly Clipper Card (SF/Bay Area travel costs) will be increasing from $62/month to about $150/month. Still, I’m saving more than $200 in this category.

I’ve also moved my monthly loan payments from this category to the next category.

Student Loan (SL) Snowball – 19%
[For those who don’t know what a snowball in personal finance is (or an avalanche, for that matter), I’ll be a doing a post on it sometime in the near future. Keep a look out!]

I’ve decided to throw about $500/month at my loans. At this rate, I’d have my loans paid off by December 2015 – exactly 5 years from my graduation date.

Savings – 37% (from 30%)
I know, why did I increase my savings from 30% to 37%?

Well for starters, I’m starting to save for my own car and I want to buy this car by December of this year. So the savings for that aspect went up from $50/month to about $300/month.

Also, I’ll be starting to study for the CPA (Certified Public Accountant) exam in about a month or two. Registering for the exam and reviewing for it is not cheap ($100 initial registration, $743.20 total for all four parts of the test, and $3,245 for the review). I’ll be taking out an interest-free loan (the best kind!) for the review, but I need to start saving up for this whole process. Increased career savings from $0/month to $200/month.

Spending – 7% (from 20%)
I currently take out $100 cash every Monday and that is the only cash I’m allowed to use for lunches, nights out, groceries, and gas (when I get rides from people). I’m decreasing my weekly spending from $100/week to $40/week. *gasp* I know, I might cry, too! Initially I was going to go down to $20/week, but I think that just might be impossible. Well, we’ll see how this one goes! This means bringing lunches every day to work, less happy hours (drinks are expensive!), no more hookah (it had to be done), and no more careless spending (bye bye expensive makeup).

Tithing – 8% (from 10%)
I knew for sure that I was not going to eliminate tithing from my budget. Although I spend a lot of time doing ministry work (I’m very involved in my parish’s Young Adult Ministry), I still think that I can donate money to my home parish. I decreased my monthly contribution from 10% to 8% – not a big change.

So there’s the plan. June begins this Friday (already? goodness…) and so will this new budget. Can’t wait to get this ball rollin’!

Happy Memorial Day, everyone! Let’s not forget what the troops have done for us.


Budgeting 101

Everyone’s budget is different.

But if you don’t know where to start, many personal finance experts suggest you start off with a 50/30/20 budget – 50% of your post-tax income goes to necessary expenses (mortgage, rent, loans, etc.), 30% goes to your wants (nights out, movies, etc.), and 20% goes to savings (long-term, short-term) (see illustration below):


I used this budget model when I first started working, and whenever someone asks me what is the best way to budget, this is the model I point them to.

However, as I mentioned before, everyone’s budget is different. Once you get a hang of managing your budget, you begin to realize that these rules might not work for you and your goals. This model worked for me for a while, but my financial goals started changing, and the budget just didn’t fit me any more.

After about a year of using the 50-30-20 budget model, I adjusted my budget to a 40-30-20-10 model – 40% necessary expenses, 30% savings, 20% spending, and 10% tithing (see below):


I just want to highlight a few of the changes:

Decreased monthly necessary expenses from 50% to 40%in about a month, I’ll be moving back in with my mom, brother, and auntie, saving a significant amount on rent. I’ve also just finished paying off my credit cards, so my necessary expenses have decreased on their own.

Increased monthly savings from 20% to 30%I have a lot to save for – my retirement, my future car, my future career plans, and my future life in New York. 20% just wasn’t cutting it anymore.

Decreased monthly “wants” spending from 30% to 20%When I began taking my lunch to work, I realized I saved a lot of money this way! Ever since then, I’ve been finding ways to cut my ‘wants’ budget and I’ll be sharing these insights with you all in the future.

Added a 10% tithing allocation – Tithing is something that I as a Catholic firmly hold myself to. I’ll be doing a full post on this later.

So there it is – if you want to get a hold of your finances you must, must, must create a budget!!!  Believe me, I tried managing my finances without a budget, and it only led to disaster (a.k.a. credit card debt)! I’ve provided you with two guidelines, so take one and adjust it according to your own personal finance goals.

In my next post, I’ll show you how I plan to further edit this budget in order for me to be able to throw about $500-600/month toward my student loans.


And So It Begins…

I made a lot of stupid decisions in college.

One of those decisions was to apply for five credit cards in the span of one semester (seriously, what the hell was I thinking?! Shoes. Shoes was what I was thinking). I was terrible at handling my credit and by graduation, I had a lot of credit debt to pay off.

As soon as I graduated from the University of San Francisco in December 2010, I vowed to myself to pay off my credit. I landed a job in the financial district of SF and started a debt snowball on all five of my credit cards. I made plenty of mistakes along the way but in January 2012, I paid off my last credit card!!! I now have a pretty good idea of how to handle all my credit and now have a credit score in the top range!

That’s not all, folks! Paying off all that debt was such a rush that now – I’m addicted! I’ve decided that starting in June 2012, I will aggressively pay off my student loans! The goal is to have them all paid off by December 2015 – exactly 5 years from when I graduated from USF. Many payment plans nowadays allows students to pay off their loans in 10 years, even all the way up to 30 years, so this will definitely be a challenge.

I have my reasons for doing this, and I’ll post on those in the future. But for now, here’s a look at what I’m dealing with:


According to CNN, the student loan debt for the class of 2011 (the year I was supposed to graduate, but more on that later) topped $25,000. As you can see, I’m about $5,000 shy of the average. However, my financial aid package also included a work-study program, so I guess you could say that I was given about the average throughout my 3.5 years at USF.

Over the past year (I didn’t start paying these loans until May 2011), I’ve made a very modest dent at this debt: about $1,500. Yet, I’ve only knocked off $889.65 of the principal (damn you, interest!). Moving forward, I hope to throw about $6,000/year at these loans – about $500/month – a 300% increase in contribution. On top of that, I still plan on fully funding my Roth IRA and I’ll continue saving for emergencies, a car, and my future life in New York (but more on that later). And no, I’m not rich. Although I will not discuss my exact income, I will say that I make less than the median income in my counties (San Francisco and Solano) as of 2011 (source).

Anyways, the beginning is always the most exciting part! This blog was made mostly to keep myself accountable, but hopefully you can learn a thing or two by reading about my journey, and in turn you’ll be inspired to pay off your own debts!

[Bear with me, I’m not exactly the best writer, either :)]