Finance Friday: Announcing the March Money Challenge

There are English people and Math people. Guess which one I am? (There are, I understand, a few oddities who can do both, but I have not been one of those people.) In the continuing evolution of Charity, I've decided that it's time to become one of those strange crossbreeds of English/Math peeps.

After all, I've never been good with money. This is not a life sentence, understand? I can be good with money. In fact, scratch that. I will be good with money. Starting now.

But before I get into all the nitty gritty of my dollars, I need to be clear about my goals. This is about ME and about what I want to accomplish in my life. I feel like I need to know why I didn't do well with money before, and when I thought about that, I realized that I didn't care before because, well, I was young and stupid. I don't have that excuse anymore. I also didn't ever really believe that things would be different in my life. I thought that I wasn't truly worthy of love, that perhaps I would grow old and die alone (how depressing? What was wrong with me in my earlier years? Jeez). No amount of convincing on my friends' part helped. I assumed that there wasn't much of a point in saving for retirement because hell, what if I didn't make it to 65 anyway?

...but I never stopped to ask what would happen if I did.

Until now.

I hate to say that having Captain in my life is the reason for some change, but it's hard to deny the correlation. The truth is that when I met Captain, I had very limited expectations. He surprised me. He impressed me, but not because he was trying. It's just who he is, the person I've discovered in him somehow inspires me to be better than I am. Not that he inspires me to change who I am, just without him even trying, I feel more able to make changes in my life to become Charity 2.0--the version of me who's still awesome, but now to the next power, so to speak. After all, having Captain in my life has allowed me to ask some big, tough questions about the nebulous future. And, now--even as I said then when we first met--I have always, always told myself that no matter what happens, I will forever be grateful for Captain because of what he brought into my life. At a time when I was close to losing hope, Captain taught me that there is always a reason to have hope. In nerd terms, Captain became my light of Eärendil... "May it be a light for you in dark places, when all other lights go out." (Galadriel, Lord of the Rings). [That totally makes him sound so vital to my life, and I don't want it to seem that way; I just mean that he's taught me a lot about myself and about life without doing anything in particular, and I'm uber-grateful for it.]

That said, the things that enter my brain as a result of having Captain in my life go something like this: I would like to get married someday. Gee, getting married means that we're going to have to talk very frankly and honestly about money. I don't have any money, not really. In fact, I have student loan debt, which means I'm in the negative if we're looking at the big picture. And I'm bad at managing my money. Hmm, I should remedy this. IMMEDIATELY.

I want to be able to do things with my money, absolutely. But living for the moment can't be sustained for a long period of time because I have to consider my future and whether or not I'll be able to take care of myself later in life. Also, I want to be able to demonstrate that getting married to me does not represent a massive financial risk and that I can be a good steward of my finances. What's the solution here? Oh, I know! SAVING MONEY (for a number of reasons: an emergency, a wedding, vacations, retirement, a house, unborn children's college fund, whatever), GETTING OUT OF DEBT, and BEING MORE INFORMED (read: smart) ABOUT FINANCES.

All of this to say: I've challenged myself to design and stick to a budget for the month of March. This is not to say I will only stick to a budget for March, but that I will begin to do this now and attempt to continue it, making adjustments every 3 months as needed.

At this point, this is roughly what my finances look like (and trust, I've cut out pretty much everything I'm willing/able to cut):

• Income: $2,700
• Expenses: $2,100
• Left over for savings: $600

Just before the March Money Challenge started, this is what I have:

• a small life insurance policy provided for by my work
• $18k in a pension
• $1,600 in a Roth IRA
• $680 liquid savings

This is what I currently owe:

• $900 credit card debt* (this gets paid off every month, so really this is $0)
• $7,500 car loan
• $60k+ student loan debt

If I can stick to my budget, I can have $7k in savings in one year's time. It's a decent start, but a chunk of that savings is allocated to irregular expenses such as my dog, my haircuts, my car insurance and car registration, an emergency fund, a travel/vacation fund, a Christmas gift fund, and a regular savings account. When I take all those things into account, my regular savings + emergency fund should be about $4k of that at the end of the year. ($3k is allocated for travel/vacations + irregular expenses).

So, the goal list:

• Immediate goals: create and stick to a workable budget for 1 month, then stick to it for 3 months and make adjustments quarterly.
• In 6 months, build a regular savings + emergency fund of $2k+. After 1 year, build a regular savings + emergency fund of $4k+ 
• By summer 2014: pay off my car* (this may require that I adjust my budget and redirect a portion of my savings towards paying off the car, which I will revisit in 2-3 months time)
• After summer 2014: redirect my car payments towards paying off my student loan debt
• After I have my emergency fund set up: consider making more (perhaps regular?) contributions to my Roth IRA
• This year: Research and consider retirement plans beyond my pension (i.e. Roth IRA, 403(b), 401(k), etc.)

This money makeover is probably one of the most difficult things I've ever challenged myself to do. It's a lot like dieting & exercising. I have to be disciplined, vigilant, and aware. I need to question myself about each expense just like I have to question myself about every item of food I decide to eat/prepare. And perhaps most difficult of all, I have to stay motivated and never lose hope.