Finally feeling the effect of the Recession

I know it's been almost a year that we've been hearing about the recession on the news. I've had my fair share of friends and people I sort of know get laid off or receive a salary cut. However, I must say that I haven't personally felt the effects of the recession... until now.

Since I've been in debt reduction mode, I don't really shop so prices don't affect me. Luckily for me, I was just hired so I wasn't laid off. My company froze salaries but since this was my first year working, I wasn't accustomed to salary increases at the end of every year so that didn't affect me. Some credit cards reduced my limits or closed my cards but since I have been trying to not increase my debt, that was just fine with me.

Today, the state of the economy came pretty close to screwing me over. Like I said in my last post, I am giving my folks back 10k (it's actually 9.6k since I had already made a $400). I had to pull money out of my credit cards that I had paid down.

First shocker came when I called USbank and was told that cash advances had been limited to 25% of my credit line. In the past, I could borrow up to the whole amount. 25% was not going to be enough to pay my folks back.

Okay, on to Bank of America. I hate them but I have a line of credit with a ridiculous limit. I call them up, only to be told that my account has been closed. I'm confused because I have a letter stating they were reducing the limit not closing the account. I am not really in the mood to argue so I hang up.

Solution happened when I called my Bank of America Credit card. I was able to get the advance from there but they are definitely more thorough about the process. For one thing I was asked a lot about my job and what I did. They also wanted to know what I wanted the money for.

I was definitely scared for a minute that I wouldn't be able to pay back my parents. I'm glad it worked out but I can see that now is definitely the time to beef up savings. If there's an emergency, you need to have something to rely on.

I'm slowing down my debt payments

I feel like I write a variation of this post every couple of months. The truth is, I really struggle between saving and paying down debt. In the beginning, I was very gung-ho about reducing my debt. My outstanding debt was a big prickly thorn in my flesh.
Nowadays, I feel like it's more like joint pain that comes and goes. In plain english, I'm tired of focusing on my debt. I feel like I'm in my twenties, and there are a lot of things I am sacrificing in order to be debt free as soon as possible and I don't have to be that frugal. On top of that, the fact that I have very little savings is becoming the new thorn in my flesh.

I thought everyone that wanted to get rid of debt did it the way I had been. Pay down as much as you can, as quickly as I can. An article over on debtkids site made me rethink that. He has a lot of debt, and he is paying it down, but he also has close to (or over, I don't remember) 10k in savings. I started thinking about it, and I think that is smarter.

Hypothetically, if he were to lose his job, he could pay his personal expenses AND continue making payments on his debt for say, 3-4 months. In this time, I'm sure he could find another source of income. Now if you look at me, I'm paying a high percentage of my income towards my debt, but if I were to lose my job - I wouldn't be able to pay next months rent AND I would miss my next credit card payment b/c I wouldn't have any extra money. See?

Additionally, I want to be able to do fun stuff. I want to travel and take dance and writing classes. I'm tired of feeling like a college student when I make 62k a year.

All this rambling is just a way to say that I am reducing my payments to my credit card by $200 a month. That money will go towards my various savings accounts (I have like 10 accounts at ING hehe). I'm still going to throw any extra money I get towards my debt, but $1100 a month towards my debt is a bit high and I'm ready to change.

I think I'm going to look at the extra interest I pay due to my decision as the cost of enjoying my life. I'm okay with that.

Thoughts?

This is why I track my money so closely

Sometimes my friends laugh at me because I count for every single penny I make and spend. I can spend half an hour trying to figure out why there is a 10 cent discrepancy between my budget sheet and my bank account. I admit it, I can get obsessive. The other day my friend told me she was tired of hearing me talk about money. "We're young," she said. "We are not supposed to be worried about all these things now." Well to that friend (and all the others) I say a big fat HA!

The obsessiveness pays off every now and then. It's attention to the minutiae that allows you to cut out all unnecessary income loss. Alright let me stop philosophizing and tell you what happened. I got paid on Friday and immediately recorded the income in my spreadsheet. I was a little taken aback because it was about $60 less than what I normally receive. Since I was home, I could only check the details of my paycheck on my blackberry and saw that income from a giftcard I had received was part of my income. "Oh it's just the tax on that giftcard," I thought in my half awake stupor.

Once I got to work, my brain kicked in and I realized that it made no sense whatsoever to pay $60 tax on a $100 giftcard. Upon further inspection, I noticed that some of the deduction for my transportation that should have been taken out BEFORE tax was taken out AFTER. I won't bore you with all the details but suffice it to say that Payroll is working on it.

I know that if I didn't keep such an eagle eye on my finances I probably would have missed this. It's only when $60 less means that you can not pay a bill that these things have a big impact. This habit is something that I take with me when I go to the grocery store. I scan my receipt like a hawk and make sure everything (including sales) ring up correctly. I have caught a couple of things in the past and I think it's a good habit for everyone to have.

When it rains...

you know the rest.
It's been a really interesting week financially. Last week seemed like I was repaying some mortal sin I had committed. It was that bad. After the news about capital one almost tripling mu APR. I got hit with a $600 bill. Due this week. Are you shocked? Because I was. It was from my gas company who has never billed me since I moved in (October 2008). I had called in November, December and January to let them know I hadn't received any bill. The first time they told me that their guy was not able to get access to my building and the second time they said a bill would be going out the next week. I called them of course because I was not about to be charge a late fee for not paying $600 with a weeks notice. The long and short of it is that they still have not read my meter. The last time it was read was in August (before I moved in). Nobodies meter in my building has been read actually. I guess another department saw the gas was being used and issued an estimated bill and closed the account. They put a hold on the bill and I have to call my landlord to find out what's going on. I'm not sure how they are supposed to gain access to the meter so that's on hold.
Then i got two parking tickets. Both for $115 dollars. Total $230. Looking at the second ticket I notice my plates expire at the end of this month. Which reminds me that my insurance is up in June/July. All these financial curve balls made me panicked and helpless. I hated the fact that I have all this debt. I hated the fact that I make a supposedly good salary (62k) and I can only afford to give myself $10 a week to spend. That despite that sacrifice, I still don't have enough. I was definitely in depression mode. I quickly went to my budget and revised what I could. I increased my credit card payments from $700 a month to $800. I reduced the amount in unplanned spending. Cut eating out to $15 a month (from $20). I found all these little spots I could shave $5 here $3 here and resigned myself to living a life of poverty even though I make double what I made in my very first job.

Time is wonderful. It shows why we shouldn't rush into decisions. After thinking more this weekend, I realized I was panicking for nothing. Yes my APR went to a ridiculous percentage and I would be charged ridiculous monthly interest effectively slowing my debt reduction. But that would only happen if I accepted the changes. Which I didn't. I opted out and the account will be closed in May. I get to keep my 7% interest rate. So nothing changed in terms of payments. These unexpected bills I have coming up will not get paid because I increased the amount I pay on my credit card. Matter of fact, putting all that extra money towards my credit cards will mean i can not pay for those expenses.

Looking back, I think I just really want to be rid of this debt TODAY. It's not possible. There's not magic about it. It takes time. I didn't get all that debt in one month and it's not going to take 3 months to get rid of it. I have to start thinking in terms of years and just be happy that the number keeps going down. I mean, I owe about what I make in a year. I pay about half my salary in rent. Which means that even If i only used my salary on rent and debt, it would take a year to get rid of all of it. Obviously, that's not a feasible situation. I have to eat. I have to pay for transportation and all. Basically, I think I am going to go back and play with my budget. I need to contribute more to my savings. That way when things like parking tickets come up, I can pay it off without thinking too much about it. This means my debt reduction rate will slow down but hopefully I'll be able to avoid these anxiety-ridden moments. I'll also be able to enjoy life a little more.
Trust me, I'm not about to input $80 a month for clothes. I'll definitely still be frugal and look for ways to cost cuts. I'm still going to ask myself if something is necessary. There is just no need for me to be a martyr. I think that if being a martyr meant I would pay by debt off in 3 months, I would do it. I don't think I want to live like that for 2-3 yrs. The key is not to add to my debt.

I'd really like to know what you guys think about this strategy and If you've had to make this decision yourself as well.

Gone for a minute

now I'm back with....UPDATES!
sorry you guys. Things have been pretty busy these past couple of weeks. It's a busy period at work so I have been working 12 hours days. Unfortunately, I don't get paid extra for all these hours. The only upside is that the company buys dinner for us. This has been good for my wallet but so bad for my stomach. I think I have gained 5 lbs in the last two weeks!
In terms of spending, working so long has prevented me for spending any money for the last two weeks. I have not even had time to take out my weekly $10 allowance (for the last 3 weeks). I finally did yesterday and now I have $50 ($20 that I didn't spend last month). It seems like so much! It's funny because last year my weekly allowance was between $50 and $60 and sometimes it would be gone by tuesday (I take it out on Fridays). This "extreme saving" as I like to call it has changed my outlook. I have another example of how it's changed my mentality. My job is such that I work on different clients for a set period of time. Sometimes I work from the main office. In the past 2 months, I have always brought my lunch. I changed locations this week and brought my lunch on Monday. Imagine my surprise when not a single other person on my team did. It seemed so bizarre to me. That office didn't even give it's employees access to a microwave. I had to ask the deli guy to heat up my food! Anyway, I thought that maybe things were cheaper in this cafeteria because the office is not in NY. Tuesday, I was running late and didn't have time to make a real lunch so i grabbed 2 packets of oatmeal with the intention of having that for lunch. During the day, I started thinking about how much of a hassle it would be to make the oatmeal since I couldn't heat it up myself. I like my oatmeal just so and I didn't think the deli guy would take that much direction from me since he still had to make sandwiches and was doing me a favor. Long and short of it, is i decided since I had money in my wallet, I could buy lunch just this once. I got a quesadilla and a drink. It cost $10. I was so shocked and annoyed. It REALLY upset me to just hand over $10 to the cashier lady. I just kept thinking, now I only have $40. I know I will not be getting lunch at this office anytime soon. Thing is, before I wouldn't even have thought about it. The quessadilla was not even that good by the way.

I had a houseguest this week and he also did a lot in terms of me saving. Although I had to feed him and drive him around, he bought my groceries for the month and filled up my tank. He also paid for everything that we did the whole week! That's $90 that i will not be spending this month and splitting between savings and credit cards.

There is one bad thing to report, I got cable and internet over the weekend. There were two main reasons.

1. I was so busy at work, I no longer had time to surf the internet or blog. If I wanted to maintain this blog and keep up with all of yours I needed access to internet. I also need it to pay bills and just keep up to date.

2. Working so many hours was making me miss my fav tv shows (they are all on network tv) and I felt I needed DVR so i could record them. If i'm going to be saving money by going out less, I needed some form of entertainment. Problem is that it costs about $100 a month. I am going to have to use part of my tax refund to pay it otherwise i'd be in the red by june.

I'm sure I could have chosen to keep sacrificing but then i'd be really depressed and bored and I don't think I'd have the motivation to keep paying this debt off.
Anyway, this post is long so i'll write more later. I just wanted to let you guys know about another blog that's pretty interesting. Check out greenizblack.blogspot.com. It's an interesting read.
I'll update my meters this wknd.