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Money Management

How I Budget Every Month

How I Budget Every Month

This post may contain affiliate links. Check out my Disclosure Policy for more information.

When you are first budgeting, it can be a process to figure out. After awhile, it becomes second nature though. The most important thing is to find a system that works for you. Once you’ve found the system that works, the key is streamlining it.

I would suggest trying different ways to budget until one feels natural to you. I love hearing how others budget and manage their money. It always gives me a new perspective and things to consider when I manage my money.

Sometimes I get stuck in my ways with budgeting. It’s good to periodically look over your budget to see where improvements can be made.

This is the process I do to manage my money every month. I use a template I created on Google Sheets, you can get a copy of the template here.

1. Before the month starts, I copy my budget from the previous month and make adjustments.

The great thing about using Google sheets is that you can simply copy the tab from the previous month. This makes it much easier to create my budget every month. The first thing I always do before the month is make a new tab for the upcoming month.

Once I have the new tab for the new month I can start making adjustments based on the previous month. I’ll look over my variable categories and see which I can lower or need to increase. Also, I’ll add any expenses I’ll have for that new month.

2. Throughout the month, I check in every Sunday.

I have been budgeting since 2014. When I first started, I checked in every day with my budget. This kept me accountable to my goals and made sure I was staying within my budget.

Now that I have created better habits and am naturally more frugal, I only check in once a week. During that time, I update my actual spending for the week in my different categories. Any of my bills that were paid, I add them as well.

By checking in with my budget, it allows me to see where I’m at in my budget and how much more I have left until the end of the month.

I do use credit cards that I pay off every month. This allows me to quickly update my transactions every Sunday. If you use cash, you can easily track your spending with your receipts.

Since I do a few side hustles, I will also add the additional income I make each week as it comes in. This allows me to see where I’m at with my additional income. It holds me accountable to reaching my goals and allows me to see if I need to work more to reach my goals.

This also makes it easier to work more. Sometimes it’s hard to work so much, but when I see how much closer I am getting to my goals, it’s easier. For example, I can calculate how many more VIPKID classes I need to teach that month and it might encourage me to stay up a little later or get up a little earlier.

3. At the end of the month, I zero out my budget.

I follow a zero based budget, so every single dollar has a job by the end of the month. At the end of each month, I add up all of my income and all of my expenses.

My salary is the same every month, this is the number that I budget with at the start of the month. Throughout the month, I add my side hustle income to my budget.

This means at the end of the month I have leftover money, assuming I didn’t need to cash flow any unexpected expenses. The leftover money goes to my debt.

Find your system and make it work for you.

This system took me a while to figure out. It’s what works for me, maybe it will work for you. Or, maybe part of it will work for you. Take the time to figure out what works for you and get your money to work for you.

Budgeting your money is just that, telling your money what to do. It’s not about restricting yourself, it’s about making your money go where you tell it to go. So, figure it out as soon as possible and stop letting your money slip away from you. How do you budget?

Money Management

What I Do When I Don’t Reach My Goals

What I Do When I Don't Reach My Goals

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Last month I didn’t reach the goal that I set for myself. Going into the month, it was a bit of a stretch. But, I really wanted to cross that off. I love setting big goals and seeing how far I can go.

My goal was to get under $70k in student loan debt. It didn’t happen. And I missed it by about $150. Of course I was disappointed in myself, but it happens.

I’d never reach any goals if I let it get me down. There have been so many times that I could have given up. I know there will be so many more as well. It happens and we need to know how to deal with them.

This is what I did last month when I didn’t reach my goal.

1. Got upset.

At first, I definitely was upset and I let myself be for a bit. When you’ve been on this journey it’s inevitable to get down on yourself every now and then. Personally, I love challenging myself and seeing how far I can push myself.

I knew my goal was going to be a stretch for me, but I wanted to do it anyway. That’s the thing about goals, they gotta be a little scary to make real progress. It killed me that I was short by $150.

Immediately I started thinking about all the “if only” things in my budget. If only I worked a little more in my side hustles, if only I didn’t use my eating out budget this month, if only I didn’t budget my hair appointment this month.

I let myself take sometime to be upset that I didn’t reach my goal. But, I didn’t let myself stay there.

2. I reflected on the last month.

Once I actually looked at my budget, the reality was that I just didn’t make enough in my side hustles. I got paid from my April after school program hours. April was spring break for my school, which meant I worked a lot less than normal.

May was also weird for my babysitting and tutoring. I love babysitting and tutoring, but the reality is that you work for your client. If they don’t need me one week, I don’t get paid that week. This unfortunately happened a lot more than I expected.

And being totally honest, I was anticipating my retro payment on May 15th. In my current district, we haven’t received a raise since 2016 and were told that we’d be getting retro pay from the last two years. Things happened and it still hasn’t been processed.

This was disappointing for me, because I wanted to make a massive debt payment. But, this is why you should never anticipate money, wait until it is actually in your account. Even though I know I can make that payment whenever the money hits my account, I was excited to do it last month.

3. Make a plan to continue towards your goals.

I know I’m going to get under $70k next month. Just my minimum payments will get me there. So, I’m excited for that. It will be especially nice since this summer is going to be so up in the air for me. And I still hit a huge milestone of paying off $130k, so I can’t dwell on the bad too long.

I am moving out and switching jobs in June. It’s going to be a little crazy for sure. But, I have planned for this and I am confident that I will be fine throughout this summer.

I honestly don’t have any plans in my budget to make extra debt payments in June, July or August. My plan is to try my best to only use incoming money throughout the summer. If I need my summer sinking fund, I will obviously use it.

Once September rolls around and I get my first paycheck from my new job, I will empty my summer sinking fund and my moving out fund to make a debt payment. My current school doesn’t offer 12 month pay, only 10 month pay. So, I would rather have more money stashed away throughout the summer, than make extra debt payments.

You have to keep moving forward  to reach your goals.

The important thing to remember is to just keep moving forward. Whenever you make big goals, you’re risking the chance of failing. But, if you let that failure hold you back, you’re never going to improve.

Failing is a part of life and it helps us learn. I learned the hard lesson of not tracking my side hustle income more closely and anticipating funds before they come in. If I had tracked my income better this month, I would have seen that I was short in this area.

Take failure as an opportunity to grow and learn. Don’t spend much time sulking about not reaching the goal, keep pushing forward with a different outlook about it. I have outlined my plan that I use in my financial life in my ebook, it will help you get started on your own path. How have you navigated not reaching a goal?

Money Management

How to Balance Multiple Financial Goals at Once

How to Balance Multiple Financial Goals at Once

This post may contain affiliate links. Check out my Disclosure Policy for more information.

When you are first starting to tackle your finances, it can be overwhelming. There are a lot of moving parts. And you need to find a way to manage them all. The good news is that there is an easier way of doing all of this.

You need to find a way to slow down and not get ahead of yourself. This was very hard for me. When I want something, I want it yesterday. This has been especially challenging throughout my debt payoff.

I couldn’t just get rid of my debt and there was no quick fix to $201k in student loans. No matter what, I’d be on this journey for awhile.

That’s where managing it all comes into play. It’s still not easy, but you can learn from my mistakes and tackle this a much better way.

1. Find what you truly value and start tracking your expenses.

As hard as it might be, it’s important to take things slow. Don’t dive in and put yourself on a budget. I tried doing that and guess what, I failed. Set yourself up to more likely be successful by tracking your expenses first.

This allows you to truly see where your money is going. You should never create a budget just by randomly thinking of how much you want to spend. Your budget needs to be realistic.

Another benefit of doing this is that you see your spending habits. I know I got so angry when I saw how much money I was spending eating out and on coffees. Of course, these two categories aren’t going to make me rich, but it was a decent amount going to these two categories each month.

Once you see where your money is going, you can decide where you want to cut back on.

2. Create a list of your goals.

Your goals are obviously going to change. Some of them will have strict time constraints and others will be broader goals for now. I suggest you put everything on this list. Even as small as getting your eating out budget under $50 each month. Or, increasing your income by $50.

The reason you want those small goals on there is because they are moving you towards your bigger goals. It will help you feel accomplished when you are working on massive goals, like paying off $201k of student loans. You’ll be able to look back on your list and see all that you have already done.

Figure out what goals have time constraints on them. For example, I need my summer sinking fund full by July 1st. If I start this in September, that means I have 10 months to reach this goal. I can put aside $300 every month until then and have $3,000 saved for the summer.

$3,000 seems very daunting, but $300 is much easier to manage. Plus, this can easily be added to my budget. I like breaking my bigger goals into smaller monthly goals. This makes it easy to add to my budget each month and easier to reach.

3. Align your budget and your goals.

When you create your budget, keep your goals in mind. You’re going to have to figure out what needs to take priority for you. Of course, you can’t work towards all of your goals at once, you won’t feel any traction on any of your goals. I have shared the spreadsheet I use to create my budget and track my expenses, if you’re a Google Sheets person, this is for you!

My suggestion is to always have a budget in place with sinking funds and then get started on your 1 month emergency fund. This sets you up for success while you tackle your bigger goals. I’m currently working towards paying off my student loans. It is by far the largest expense I have right now.

I’ve been working on this goal for almost 4 years. It’s a long road and I’ve had to slow down a few times to focus on other goals that needed to get done first.

Every journey is different, but you need to make sure that your budget and your goals are aligned. As you complete one goal, remove it from your budget and start working a new goal into your budget.

4. Re-adjust your goals and your budget.

Most of time, life doesn’t go as we plan. Sometimes these are good and sometimes they are bad. What’s important is that we adjust for them. I have always struggled with this, but I know it’s important.

While working on my goal to pay off my student loans, it’s really hard for me to slow down. I want to always put the most amount I can towards my debt. The reality is that it can’t always happen that way.

This is when you have to adjust your goals and your budget. The reality is that sometimes other things need to be a priority. The one that usually gets me is filling my car sinking fund back up after I get work done. The reality is that I need to maintain my car and I have a sinking fund for this. It wouldn’t make sense to not fill this back up because my car will always need maintenance.

To manage multiple financial goals, you need to stay organized and keep an updated budget.

Having multiple financial goals is a good thing. With a little bit of organization and budgeting, it is easy to manage it all. When you’re first getting started, I suggest to only have one goal. As things come up in life, you can add more as you feel they are needed. This can easily be done by figuring out when you need the goal to be completed and how many months you have until then. This monthly number will be added to your budget.

When you’re just getting started with working on your finances, it is overwhelming. Take it one step at a time and try not to overwhelm yourself. As always, I’m here to help if you’re struggling to get started. Do you have multiple financial goals? How are you managing them all? 

 

Money Management

May 2019: My Current Financial Goals

May 2019_ My Current Financial Goals

This post may contain affiliate links. Check out my Disclosure Policy for more information.

Your goals will always be changing. Whether it is because you met the goals, or because you needed to adjust for life. It’s our reality. We need to change and adjust for what life throws at us.

I’m not saying I give up on my goals. But, I have had to slow down on my goals when life throws a curveball. It doesn’t make sense to throw thousands of dollars to my student loans in a month when I have unexpected medical bill or car repairs.

This is a perfect example for when I usually slow down on my student loan payments and cash flow those expenses. I do have sinking funds for my car and medical. But, in certain situations I have added more to each of these funds, even when they were fully funded.

One example was when I developed an allergy to multiple antibiotics I had been given. After the fourth one made me break out in hives, something that had never happened to me before. My doctor would no longer prescribe any antibiotics until I went for allergy testing.

They also told me that during this time, if I needed to have antibiotics, I would need to be hospitalized. Of course, I was hoping this wouldn’t happen, and my health insurance is pretty great. But, I did know that I would be going regularly for allergy testing that cost me $40 each time.

I started adding $100 every month to my medical fund. I figured that covered at least 2 allergy tests a month, with some extra for the prescriptions. Once we found safe antibiotics for me, I stopped contributing that $100 every month.

We can’t just ignore what life throws at us. Of course I wanted to throw that $100 to debt, but I also didn’t want to get stuck with a drained medical sinking fund. Especially in the midst of dealing with all these allergy tests.

Right now, my goals are pretty slim because I have been spending the last couple months adding more to my sinking funds. My life is changing a lot in the next month and I want to be prepared. In June I will be moving out of my parent’s house and in August I will be starting at a new school.

I’m super excited for all of these changes and I have definitely made sure that my budget reflects it.

1. Summer sinking fund. Goal End Date: June 2019

I am so excited to finish this sinking fund. I have had a summer sinking fund for the last 4 years. In my current school, I am a 10 month employee, so I don’t get my salary in the summer. To manage this, I add $300 every month to my summer sinking fund.

This sinking fund covers my minimum student loan debt payments for July and August. I do work in the summer, but it isn’t consistent income because I babysit, tutor, and work for VIPKID.

After this summer, I won’t need a summer sinking fund because my new school pays 12 months. This is definitely an adjustment for me. But, I am excited to get a paycheck in the summer.

2. New Emergency Fund Amount. Goal End Date: December 2019, or July 2019

In my emergency fund I typically have at least 1 month of expenses while paying off my debt. This has been the case for the last 4 years while I lived at my parent’s house. Since I am moving out, my expenses each month are increasing. Currently, I am putting $100 every month to my emergency fund.

The end date of this is uncertain currently. If I continue to put away $100 every month, it will be fully funded in December. However, I filled a moving out sinking fund a couple of months ago.

I hope that most of that fund will not be needed. If that is the case, then I will move that money into my emergency fund and be fully funded.

3. Student Loan Debt. Goal End Date: June 2021

This is very up in the air. My end date is based on the payments I have been able to make for the last 4 years. With my new monthly expenses, this most likely won’t continue. I’m okay with that because my plan was to pay off as much as I could while I could live at home. The time has come to move out and I have paid off a ton of debt in the time I’ve been home.

I have now paid off most of my high interest debt. Once I have paid it all off, I will be starting to contribute more to my retirement accounts. Currently I contribute very minimal. Right now, my minimum payments to my debt are $1,167.

I am currently focusing on my private student loans, which have a minimum payment of $865. Once this debt is gone, it will free up a ton of money in my budget.

Your budget and goals should be aligned and changed.

If you align your budget to your goals, you will see them get accomplished. When you don’t tell your money what to do, it’s not going to go where you want it. I suggest having multiple accounts for different things.

For example, I have different Ally savings accounts. This allows me to have a line item for my emergency fund and summer sinking fund in my budget. As soon as I have the money, I make a transfer to those accounts. This ensures that the goal is being met each month. It can be tricky when first starting, but I’m here to help you. Do you align your budget to your goals? 

Money Management

How to Budget by Paycheck

How to Budget by Paycheck

This post may contain affiliate links. Check out my Disclosure Policy for more information.

There a ton of ways to budget out there. You need to take the time and figure out what works for you. It’s going to take time, but once you find a system that works for you, you’re going to be so much happier.

For the most part, a budget just needs to track your income and expenses. As long as it does those things, it works! Don’t be afraid to find your own system that works.

I personally use a zero based budget and am working on getting a month ahead. It works for me to use a zero based budget.

The reason this works for me is because it allows me to put a name on every single dollar. Every dollar that comes in, goes out by the end of the month. This has been especially helpful during my debt payoff of $201k. My zero based budget has absolutely been a major part of me paying off $127k in 3 and a half years.

When I first started budgeting, I tried to budget by paycheck. It didn’t ultimately work for me, but I know so many people that it has helped!

This is how I did it. It is great for people that are struggling to start or are having a hard time figuring out an entire month. I think this is a great first step to ultimately getting to a month ahead with budgeting.

1. Map out your pay schedule and how much you’ll get paid in each paycheck.

If you’re on a salary, this is relatively easy. Find out your pay schedule and then how much you’ll make. If you’re on a variable income, this will be a little bit trickier.

Whenever you’re on a variable income, you need to be prepared for lower months. I always recommend people on a variable income to either have a sinking fund for this, or a larger emergency fund. Honestly, I would use a sinking fund.

What this means is that in higher income months, you throw extra money into your sinking fund to be used during lower income months. I do this currently for my summer months. In my current school district, I am paid 10 months of the year. I add to my summer sinking fund every month that I am paid my salary to be used throughout the summer.

2. Make a list of your bills and due dates for a month.

My recommendation is to list out all of your bills and due dates. Even if all of your bills are due at the end of the month, you can still use your first check to pay them. My suggestion would be to evenly spread your monthly bills across your paychecks in a month.

For example, if you get 2 paychecks a month, you can spread all your bills across those two paychecks. You just will pay some bills very early and some bills may be paid just before the due date. It’s just important to pay them a few days before they are due.

3. Make a list of your variable expenses.

This would be anything that varies or can be changed. These are things like gas or groceries. Once you have these expenses listed, you need to figure out how much you’ll need per paycheck.

For example, if you’re paid every 2 weeks, you need to figure out how much gas money you’ll need for 2 weeks. I personally give myself a bit extra for my gas and groceries. The reason I do this is because I’m now at a point where I spend minimally and am naturally frugal.

By having a bit extra in these two funds, it means that I will usually come in under budget. This also means that I’m usually not over budget. When I get paid again, anything extra from that budget gets put towards my financial goals. I replenish my emergency fund and sinking funds, if needed, and then everything goes to debt.

4. Create your budget for 1 paycheck.

Once you have your income figured out and your expenses, you can put it into a budget. I personally use a spreadsheet to track my income and expenses. For me, zero based budgets always work best for me. I would still do this for a paycheck budget.

The reason why I love the zero based budget so much is because by the end of the budget period, all of my money is dealt with. None of my money just sits in my checking account. By the end of the budgeting period, it all has a new job.

This doesn’t mean I spend all of my money, it means it all has a job. This could mean going to savings, or going to paying down debt.

5. Implement your budget and track your expenses.

Just writing out your budget is a great first step, but you need to actually track your expenses throughout the budget period. This means tracking all of your expenses and updating your budget throughout the period.

You can do this daily, or less frequently. If you’re just starting, I recommend doing it daily. This allows you to check in with yourself and see how you are doing with your budget.

When you check in, you can also see if you need to make any adjustments to your spending in your variable expenses. If you’re getting close to your grocery budget, you may need to see how you can stretch what you have for the rest of the budgeting period.

6. Zero out your budget when you get your next paycheck.

WOOO! You made it through your first budget by paycheck, this is so exciting! The game changer will be what you do once that budget is done. Everyone needs to check in on their budget at the end of the budgeting period. Even when you budget for years.

The reason this is so important is because you may have gone over budget, or gone under budget. If you’re over budget, you need to figure out how you’re going to deal with getting that money. If you’re under budget you need to figure out what you’re going to do with that money.

Some people roll over the extra money, some pay off debt, some add it to savings. It all depends on what your current goals are.

Figure out the system that works best for you.

Every person will have a different budgeting system. You need to figure out what works for you. It’s so important to budget in order to reach your goals. Take the time to find a system that helps you to reach your goals. Do you budget by paycheck?

 

Money Management

How to Get a Month Ahead in Your Budget

How to Get a Month Ahead in Your Budget

This post may contain affiliate links. Check out my Disclosure Policy for more information.

I have always zero based budgeted. Zero based budgeting completely changed my life. It made me go from thinking my debt was impossible, to something I could actually get rid of. That may sound crazy, but that is how life changing a budget can be.

It’s incredible what happens when you start giving every single dollar a name. You will be shocked by how much further your money goes when doing this. When I first started this journey in 2015, I didn’t have enough income for my expenses. I was completely drowning.

That was when my zero based budget really helped me. It made me have control over where my money was going. It also made me realize that I would never make any traction on my goals unless I increased my income.

Now that I have increased my income through my many different income streams, budgeting is so much fun for me. At the end of the month, I get to zero out my budget and decide where all that extra money is going. I’m totally joking, there is no decision to be made, it’s pretty much always going to debt (for now!).

Up until now, I have had a very consistent income. I am paid 10 months of the year by my teacher salary. Then, I have my side jobs and I have my summer sinking fund for when I don’t get my salary. This has always made budgeting extremely easy for me.

Also, let’s be real. My bills are pretty minimal since I am living at my parent’s house to pay off my student loans. This has allowed me to play the very risky game of budgeting money before I have it. I don’t recommend anyone to do this. Honestly, it was stupid of me to ever even do this.

But, here we are. I have been budgeting this way for the last 4 years or so while living at home. It has worked for me up until this point. But, I need to make a change.

I am moving in with my boyfriend next month and will now be increasing my bills and expenses each month. This means that I will be back to a very strict zero based budget. I plan to get myself a month ahead this summer. Here’s how I plan to do it.

1. Utilize my summer sinking fund.

I always use my summer sinking fund in July and August. Even if I don’t need it, I empty this sinking fund by the end of August. And by emptying it out, I mean I throw whatever is leftover to debt.

Even though I do this every year, my new school pays me 12 months. So, I won’t even need a summer sinking fund next summer. Yes, I get paid less during the year because of this. But, now I’ll get a paycheck when I’m not even going to school every day.

What I plan to do is use this fund to help me get a month ahead. I will budget out this money for July and August. For July and August, this will be $1,500 of my income.

You might be wondering why I decided to create my summer sinking fund of $3,000. I chose this number because it is just above my minimum student loan payment. I can cover my monthly expenses with my side jobs. Or, I can always make my monthly expenses less, if needed. I’m always concerned I won’t be able to pay my student loan minimum payment.

2. I will use my “leftover” money in June.

In June, I will need to pay half of my rent, $400. Since I will still be living at home for most of the month, my expenses will still be lower and I will still have my salary. Currently, I usually have a lot of money leftover at the end of the month. This money always goes to replenishing sinking funds and then an extra debt payment.

For June, I plan to already have my July budget made. This will allow me to know how much money I need to set aside to pay for July.

I do still hope to make an extra debt payment in June, but the reality is that it might not happen. I’m okay with this because I am setting myself up for future success.

3. My VIPKID income will add to my summer income.

At the end of April, I started working with VIPKID. I didn’t get a paycheck for April because I didn’t work enough to get a paycheck. However, May isn’t even done yet and I already know I’ll have a $151 paycheck coming in June. This will get larger since I still have the rest of the month to work.

This paycheck will immediately be one of my income lines in my July budget. I plan to work VIPKID every morning and some nights this summer. This will be my main source of income over the summer.

4. Cutting my expenses.

In order to get a month ahead, I plan to cut my expenses a lot. Since I will be working from home this summer, my gas expense will be very low. Luckily, where I am moving, everything is very close and won’t require a lot of driving.

Recently, I have been trying to cut my grocery expense down a lot. This is done by not eating meat, or stretching the meat I do buy with other cheaper food items. For example, whenever I make taco meat, I throw 2 cans of kidney beans in. This allows us to make many more meals out of the same base.

Another way I cut my grocery bill down is by being very conscious about my portion sizes. Especially if I am eating meat.

Get yourself on a strict budget to get a month or paycheck ahead.

I am very fortunate that I have leftover money currently to help me get ahead. If you don’t have this, I recommend just getting a paycheck ahead. Honestly, this will probably be what I will have to do once I start working at my new school.

My plan is to try to stay a month ahead, but realistically, it might not happen. I currently budget monthly, but I am okay with changing it to paycheck, if that works better for me in this new season of life. That’s what is so great about budget. You can do whatever works for you. Are you a month ahead? How did you get there?

 

Money Management

Building My Emergency Fund While Paying Off Debt

Why I'm Building My Emergency Fund While Being in Debt

Usually it is always said to pay off your debt before you build your emergency fund up. I would encourage you to have at least 1 month of expenses, if everything is very predictable in your life. What I mean by this is you don’t have any health issues, no kids, no house, fixed income every month, etc.

If you are someone with a variable income, kids, or a house, I would strongly recommend you having a larger emergency fund. At least have more sinking funds that can help you in the event of the unexpected. I would feel more comfortable with at least 3 months of expenses, in this situation.

Currently, I live with my parents, have no kids, no major health issues (I do have a sinking fund though), and have a fixed income I can rely on with additional income that varies. I only have 1 month of expenses saved up right now.

This has worked for me for the last 4 years while I paid off my debt. But things are about to change for me and I want to be prepared. I will also be changing my debt free plan shortly as well.

As always, personal finance is personal, so you need to do whatever works best for you.

1. I am moving out in June and my monthly expenses will be increasing.

Since I will no longer be living at home, my monthly expenses will be increasing and will be more unpredictable. This means that I will need a larger emergency fund. I’m not planning to stop my debt free journey for this, but I am adding to it now each month as the move approaches.

I have saved $950 for a moving out fund. This it to cover anything that might come up in the process of moving. If this is not used, then it will be immediately transferred to my emergency fund account. This will help me to hit my new emergency fund goals much faster.

Once I move out, I will continue to add to my emergency fund until it gets to my 3 months of expenses amount. I will not stop my debt free journey for this, but contribute some each month to help me get there. I do have cash available in a few sinking funds in the event that something happens that is larger than my emergency fund.

2. I will be done paying off my high interest debt shortly.

I started with $201k in student loans ranging from 3%-8.05% rates. This basically guarantees a long debt free journey on a teacher’s salary. When I first sat down and tracked it out, it was going to take me 8 years. This would bring me to about 31 years old. This didn’t take into consideration income increase or change in living situation.

I knew that I’d be able to do it quicker since I planned to increase my income with side hustles. And I wouldn’t be living with my parents until I was 31!

Once I am done paying off my high interest debt, anything over 5%, I will be shifting gears a bit. I plan to still pay off debt. But, I will also be building my emergency fund. Then, I will contribute more to my retirement accounts.

My plan is to split the difference of my leftover money each month. This means that any money I have leftover in my budget, half will go to debt and half will go to those goals.

I cannot wait for this to happen. I hope that it will happen at some point in the next year. With me starting a new job and moving out, things are a little unpredictable right now.

3. Time is on my side right now with compound interest.

The reason I am planning to change my financial plan once my high interest debt is gone is because I will still be in my twenties at that point. This is important because it gives me more time until retirement. For me, I consider time to be super important to consider when making your plan.

For me, I want to start investing more as soon as possible. The reason being that the longer my money can sit in my investment accounts, the more compound interest will work for me.

Compound interest, in simple terms, is when your interest earns interest. This is what will really build your wealth because it will make your money grow much faster without you even adding more money to it.

4. Since I will only have low interest debt, my investments will have higher returns.

I’m still going to be making debt payments, but I will be also focusing on my savings and then investing. A lot of people say it isn’t worth it when you still have debt because you are losing more money in interest then you’re making.

This is why I am waiting until my high interest debt is paid off. I will also wait until my private loans, which are 4.97%, are paid off. The reason being that my minimum payment each month is very high ($865.00). By getting rid of that monthly payment and my high interest debt, my money will be working much harder for me.

The high monthly payment I have with my private loans is a very large amount and I know once that is gone, I will be able to reach all of my other goals so much faster.

You have to do what works best for you!

You need to do what works best for you and your current life. Your finances should change as your life changes, and that’s exactly what I am doing. I am so excited to start this new part of my life because I will finally be seeing my money grow instead of putting it all to debt.

I encourage you all to look at your finances and make sure that you are financially set for emergencies, even if you are paying off debt. The point of paying off debt is to never go back into debt. If you are prepared for an emergency, you’re going to end up right back in debt. That’s why I don’t believe in having only $1,000, it’s not practical and potentially sets you up to not be prepared for an emergency. Do you save and invest while paying off debt?