In hindsight, I think life and my financial management plan was going a bit too smoothly yesterday. I was definitely due a few setbacks. Last night, I went to bed feeling confident and calm. I knew I had a lot of debt, but I had a plan (and a budget) and it would all be okay. Today, not so much.
Not one of the setbacks I expected to face
Let me begin by saying, that of all the setbacks I expected to face this month – this is not the one I had in mind! I haven’t overspent in any category (yet, but the budget is just a day old). Nor have I found bills I hadn’t budgeted for. No, instead – my income is down on my expectation.
Yes. My pay has been docked 30% this month, because some of my leave has been treated as unpaid leave. Which would have been fine, had I known about it earlier. I’m annoyed because I did ask how it would be treated when I joined the company. I was told that my leave would be treated as paid, but that I would go significantly into deficit (and therefore, please don’t quit). Well, clearly that was wrong.
So, what does this mean for the Debt Pledge?
In short, I’m now even more stressed financially this month than I was. This was not one of the setbacks I was ready for, or wanted to face. And certainly not at the start of my first month of frugality!
The good news is that with the sale of my Macbook Pro (assuming the buyer actually pays me), I won’t be going backwards this month. In fact, I should even be able to meet some of my goals, like:
- Paying off my overdraft ($1000)
- Closing my Certegy account ($205)
- Closing the Ferratum payday loan ($246)
So, it’s not the worst situation in the world. I am still making some progress.
But not as much as I’d wanted to. Selling my Macbook Pro was meant to boost me through January (which was already tight, since I’m moving house) so that I could really beat away at my debt in February.
So, what now?
- I am going to create a cash buffer.
This will be a precursor to my Emergency Fund ($2000). To do this, I’ll be making only the minimum payments on my debt this month. My overdraft will be paid off and I’ll have about $600 in cash. I have a few other cash injections due this month in the form of rental payments for my carpark, which together should bring me up to $1000 by the end of January.
Unfortunately, I can’t call this my Emergency Fund because I will be dipping straight into it in February, before my cashflow rights itself again.
- Time to hustle
I’d already planned to do some serious hustling this year. Initially by selling old things to make money and subsequently by renting out my spare room on AirBNB. As far as setbacks go, this one means I’m going to have to put my foot on the accelerator and get on with it as soon as possible!
Of course, you do have to spend money to make money. I don’t own furniture for a spare room and will need to buy a bed and a mattress at least. A cheap frame from gumtree is fine (and maybe even the roadside, if I’m lucky), but an old mattress? I’m not sure how I feel about that. Plus there’s the linens – although hopefully Target, Kmart or Big-W will be able to assist!
Finding a positive
I do think it’s important to recognise the obvious positive of this situation.
I will start accruing annual leave 3 months earlier than I originally thought.
This is actually great news, because it means that I will have a couple of days up my sleeve by July / August, when the work year is usually getting a bit long in the tooth. I had resigned myself to not taking leave until Christmas 2017, when I’d only have a couple of days, but now I can take an ad-hoc day if I need to.
Definitely a win.
But wait, there’s more!
If my employer had given me a full paycheque as I’d expected, I would have owed them an extra 3 months of work!
Which means that I have actually accrued less debt than I thought I would. And, in fact, because I usually treat accrued annual leave as a form of forced savings (redeemable for your future salary on resignation), I will start ‘saving’ sooner than I anticipated.
The biggest lesson I’ve learnt from this experience, is that I need to have an Emergency Fund. No doubt I still would have been disappointed, stressed and a bit angry – even if I had an Emergency Fund – but I doubt I would have had to sit down and rapidly crunch numbers to work out if I could pay all the bills coming up.
So priority number 1, is saving up a $2000 Emergency Fund!