April showers bring May flowers. In my case, it’s a shower of money in the form of a tax refund, and it will flower into less expenses, so I can have a bigger debt snowball to tackle future debts with.
Last Month’s Review
Over the course of the last month, a number of things have happened. I completed my taxes this past week and I’m getting a bigger refund than expected. However, I still have to pay the accountant though and I’ve got to pay California’s Franchise Tax for the side business. Having the American Express card paid off has given me quite a bit of wiggle room, but I need to make sure I’m using that money to pay down more debt.
I took on a client for my Career Coaching side business, so that bought in some decent income. I’m hoping to parlay that income into more leads. I’m starting to do more market research again around career development for software engineers. If you are a software engineer and are looking to make your next move in your career, whether that be a promotion, raise, or job change, I’d love to speak with you about the challenges you are facing making that leap.
There wasn’t a big unexpected event in the late March/early April time frame, which is a good thing. Doing a weekly financial review keeps finances at the top of my mind and helps me avoid impulse purchases for the most part because I know my numbers will look terrible at the end of the week if I let it get too crazy. This doesn’t mean I haven’t splurged a bit here and there, so I do need to keep my spending in check, especially around going out to eat.
I did manage to make a $400 payment towards the Barclay card, so that dropped the balance down a fair bit.
Net Worth Recap
Here’s where my net worth is at as of April 13th, 2016:
- Assets: $45,130.41
- Bank Accounts: $4,311.22
- Investment Accounts: $36,407.19
- Rollover IRA: $15,403.37
- Roth IRA: $15,975.04
- 529 Plan: $5,028.78
- Car (2006 Audi A4 in KBB’s Fair Condition): $4,412.00
- Debts: -$100,942.57
- Barclay Credit Card: -$2,364.23
- Personal Loan: -$5,137.72
- Ex-wife’s Attorney: -$4,800.00
- Chase Credit Card: -$19,049.68
- Student Loans: -$69,590.94
- Net Worth: -$55,812.16
As I’m not accruing any more debt (hopefully that continues to be the case), I felt safe dropping the American Express card off the debt section since it was paid off last month. I’m flirting with the 6-figure to 5-figure transition on total debt, and with the tax refund, I’m very confident that when I make that transition at the end of this month and stay that way going forward.
Net worth is still improving, which is unexpected because I figured dividing the investment accounts would have already happened, but things take more time than expected with divorce.
This Month’s Budget
Here’s what I’ve got going on with the budget:
- Income: $14,598.42
- Day Job: $9,134.34
- Tax Refund: $5,003.00
- Taxes set aside for Business: $461.08
- Expenses: $14,436.68
- Rent: $750.00
- Car Insurance: $79.40
- Student Loans: $1,253.00
- Chase Credit Card: $428.00
- Barclay Credit Card: $89.73
- LendingClub Personal Loan: $197.95
- Cell Phone: $40.41
- AWS: $0.56
- Alimony: $3,000.00
- Ex-Wife’s Attorney’s Fees: $50.00
- Food: $200.00
- Gas: $100.00
- Blow Money: $100.00
- Date Night: $100.00
- Christmas: $100.00
- Model 3 Reservation: $1,000.00
- Extra payment towards Barclay debt: $2,764.23
- Extra payment towards LendingClub: $2,000.00
- Personal Development Group: $49.00
- Accountant’s Fees: $535.00
- Business Taxes: $1,600.00
- Difference: $161.74
Three paychecks this month plus the tax refund means I can do some serious work on debt. I did put aside $1,000.00 to reserve a Model 3, which as long as I remain employed at Tesla, I’ll get one of the first ones delivered, which will lock in the $7,500 federal tax credit and the $2,500 California Tax Credit. I didn’t see an issue with doing this as I can get the reservation refunded in the event I change my mind about the car. Also, I would take delivery of the car in late 2017 at the earliest, and by that time I’ll have all consumer debt paid off long before that, leaving only my student loans that I’m aggressively working towards. Yeah, it’s blatantly obvious that I’m rationalizing the purchase, but you gotta have something to look forward to, I suppose.
You’ll see that I’m taking the debt payoff process a little out of order by paying down LendingClub first rather than the Attorney’s fees. As the debts were similar amounts ($5,137 vs. $4,800), the Attorney’s fees don’t have interest accruing, and paying off LendingClub would free up more money in the budget, I figured it would be better to pay that off first.
Improvements to the Budget
At the end of this month, I’ll be using the tax refund to knock off the Barclay card debt. I’ll then use the remainder of the tax refund to toss at the Lending Club balance. That won’t change the Lending Club payments any, but it will knock down the debt enough to make some headway.
That’s all I’ve got for now! See you soon with next month’s review!