At the start of this year I described our family’s dream to leave the big city and move to small acreage outside a smallish town. To make that dream a reality we formulated The Plan – save up enough money to pay off our debts and put a downpayment on that dream property. We set specific financial goals that we committed to reach by year’s end. Accordingly, we took steps to pare down all expenses by reducing our spending and embracing the philosophy of Simple Living.
This week marks the end of the first quarter (3 calendar months) of the year, and I wanted to report on our progress thus far. Well, I’m very pleased to announce that we are way ahead of schedule. Our combined savings (RRSP plus cash) is now equal to one half of our goal amount!
Okay, now for the “buts”. First, part of our plan was to contribute any of Husband’s bonuses straight to savings and there happened to be some big ones in this first quarter. We’re not expecting the same bonus income over the next quarter and that should result in a smaller growth rate over the next three months.
In the Confessional department, our monthly contributions have not been up to par these last two months. We’ve gone over on our grocery budget and miscellaneous spending, not by much, but enough to reduce our monthly cash savings contribution to less than we’d committed to. I need to be more strict about weekly meal planning to keep my grocery budget in line. And Husband needs to remember to bring lunches to work. We also had some unexpected larger expenses and did not reduce our spending in other areas enough to compensate. We’re striving to do better on that.
The debt situation: The original plan called for paying off our debts in one lump at the end of the year. Because our debts are all low-interest, paying them off a few months early wouldn’t save us much money. So we decided that our sense of motivation would be kept going strong if we could see a continual increase in the amount of savings with each month, rather than seeing it build up and then decrease (even though it’s not a net decrease). However, for a number of reasons we’re now thinking of throwing some money at one of the debts and increasing our payments to get rid of it sooner. If so, this will also decrease the rate of savings over the next quarter (but will make up for it in a later quarter as the money currently used to service the debt gets added to our savings).
It’s all rather nitpicky, and I know what Dave Ramsey would say! But when we’re talking about low financing costs it becomes an exercise in trying to strike a balance between motivation (seeing those large numbers in the savings) and the psychological freedom of eliminating a debt.
I’ll end with some more positive news: my (very) part time consulting business. No, I’m not one of those motivational-type people – I provide a specific service to a very specific clientele on an as-needed basis (in other words, it’s very hard to predict how much work I’ll have in any given month). Because I just started up last year and my income is not dependable, we did not include any income from my work in our budget plans. I am still paying off some startup costs but I’m so close to being in the black I can taste it! In a few more weeks I should have enough to pay off my remaining costs and then everything I earn from that point on will go into savings (minus a very small monthly overhead). And…a client I’ve been working for on a short-term contract has just indicated that they would like to have me stay on for a few more months. If this goes ahead it could make a big difference over the next quarter.