Monday, October 29, 2012

31 Days to Financial Freedom, Day 29: Percentages

I was watching my usual Financial marathon yesterday, including one DVRed episode of the Suze Orman Show, and two episodes of Till Debt do us Part.  The host of TDDUP was talking about her "Life Pie", and I jotted down some quick notes because I thought it was very interesting.  Here's Gail's Life Pie:

According to Gail, this is where your money should be going every month.  I wanted to see how our finances matched up with what Gail said we should do.  I sat down this morning to go through our budgeted amounts, and was kind of at a loss of where to start.  I Googled her Life Pie, and guess what I found?  A website that will do it for me!  Shut the front door!

I plugged in our information, and was slightly surprised that we were spending 165% of our income, and that our housing alone was 65% of our income.  Say whhaaaaaaat?  And then I figured out that was because I only put it half of our income.  Doy!

 I entered in all our information, and this is what the website told me:

Our total housing costs were $789, or 15.36%.  It should be 35%.
Our total transportation cost was $679, or 13.22%.  It should be 15%.
Our total life cost was $1,241, or 24.16%.  It should be 25%.
Our total debt cost was $150, or 2.92%.  It should be 15%.
Our total savings was $567, or 11.05%.  It should be 10%.
We're spending 66.72% of our income.

There are a few reasons this makes me feel better.  First, we're spending within our means, finally.  Second, I was concerned that our house was too expensive, and that's the reason we weren't getting ahead.  Seeing that we are way under our housing costs for the month is fantastic.  It also lets me know that I am on the right track, and where I should focus my efforts.  I have decided to make it a goal for November to pay off a majority of our debt.

Medical Bill #1: $390
Medical Bill #2: $359
Medical Bill #3: $450
Collection: $1,000
Mom: $1,000

I'll be honest, I haven't been able to make a payment on any of these bills in quite some time, with the exception of a $50 check I wrote to my mom last Friday.  I've been more concerned with paying my regular bills on time.  Two of those bills are already in collections, and another one is dangerously close to going there.  I'm hoping to combine Medical Bills 1 and 2 together and make one monthly payment on them.  Until I get #3 paid off, we can't go to the dentist.  #4 has already gone to collections and "dinged" my husband's credit score, so I'm not in as much of a hurry to pay that off.  I also want to prove to my mother that we're being responsible now, so that includes monthly payments to her as well.  I've rearranged our November budget a bit to accommodate for more spending on debt, and I'll keep you updated on how it's going. 

I hope you'll use the website above to see how you're doing!

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