A Predicament to my Budget

I knew this was coming sometime. I was just hoping it was going to happen a year and a half from now. The timing is just off for it to happen right now. I need to move.

The first 3 years of rent rates were affordable with minimal rent increases. Then the place was bought by corporate. They turned on the hot water with the rates the last couple of years.

Now they want to gentrify the place. Guess who is in an older abode? Moi & Co. I have been here half a decade. It’s walls contains many a life experiences. Some so dear to my heart that I am having a difficult time thinking about parting ways with the place. But I don’t have a choice to stay.

The business is reducing my leasing time and increasing my rent to where I personally will be hitting my cap in ability to pay. They want me out so they can renovate the place. They could not come up with a solution to keep its current tenants in and renovate at the same time. Or so they say. But I guess it doesn’t matter. I can’t afford it anymore. :(

To Stay in the Guidelines

Sentiments aside, the real issue is staying within my budget. Lower the expenses, faster I can pay off this debt. In deciding how much rent I can afford, the general guidelines say rent should be 30% of your income. Net or Gross? I think gross is great when a landlord is figuring out how much a tenant can afford. But as a tenant, I think budgeting net is a good compass to one’s level ability to pay rent (especially as a single parent).

Gross: $91,000 ÷ 40 = $2275

Net: $65,000 ÷ 40 = $1,625

As you can see, my current rate of $1715 is somewhere in between that. Personally, it’s a lot of money. And my monthly budget shows 30% gross rent payment would not in my (debtor’s) situation Because if I factor in the new rate, I am left with a deficit (see below):

Budget stupid debt

see the red. that was caused by the “new rate”. right now my current budget leaves me $6 left over.

But technically, I need to factor out the debt payments and 3rd paychecks when calculating the 30% rule.

Note: I don’t count in any 3rd-paychecks into the equation (there are 2). Which keeps me safe, allows room for error, and/or gives me snowballs to use.

Gross: $91,000 – $12,000 (annual debt payments) – $4,600 (3rds) = $1,860

Net: $65,000 – $12000 – $4,600 = $1,210

In this case, 30% based on gross could be adequate in this case, but net would be optimal.

By downsizing our quarters:

New Rate Stupid Debt

yes, it hurts knowing I pay $1,000/m in debt.

The new rate would leave me a tiny bit of wiggle room.

The current rate had me reduce the family’s clothing expenses to $0.  The new rate would allow me to put the $50 clothing expense back into the monthly budget. It would be a nice expense category to have back.

As a SIK (single income with kid(s)), an approximate range of $200/m makes a world of difference. And talk about parental guilt, that having debt is causing us the need to downsize. Debt Sucks. Stupid debt.

Overall, I will be looking at this as a challenge (because change is hard). A fun challenge towards becoming debt free. It’s team in training for tiny house living. The amount of money saved will really not be conducive in accelerating my debt payments,  but it will keep us in budget.  That’s key, right? And while this move is temporarily… temporary usually is longer than planned. So staying organized and spending more time outdoors will be key. Okay, I am off to finalize the details and play with the furniture layout of the new place. Thanks for listening to me rant and sort things out in my head.

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15 thoughts on “A Predicament to my Budget

  1. thedoffer

    Hey. The important thing here is that you recognise the need for change to stay within your budget and taking the responsible action of moving home. Hugely inspiring and great to see you sticking to your plan. Oh, and that stupid debt payment will one day be your savings amount. It will happen. Keep on going!

    Liked by 2 people

    1. I so needed to hear that right now. We are moving in like a week’s time. Last night, I did an a year’s worth of the monthly budget. I see it’s a temporary move. But will extend me the time I need to prepare in giving me a more permanent dwelling (and stay in budget). Plus I get to happily purge a bunch of stuff. Many thanks for stopping by.

      Like

  2. Just found you here! :) Subbed. What are you moving into, Friend? I too am in the midst of an unwanted/unanticipated move (eviction for landlord’s Summer of Vacation Rentals), and downsizing stuff even though we were already down to minimalism in 450 sq feet. Lots of emotion. You?

    Liked by 1 person

    1. Welcome :) it’s very unfortunate, but maybe the new will be good. but so much emotion yes. so much so it keeps me awake at night. but this current abode contained a lot of painful memories. so perhaps the timing of the growth is meant to be. breakout and bloom. it was move now or move at the end of the year. Might as well rip the bandaid off quick and roll with it. one way or another its all going to work out (for both of us Joon!).

      I am downsizing from 900+ sq ft to 600 sq ft. It will be interesting. but I like tiny homes… at least in theory. this move will hopefully prove it true.

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  3. Yes, it will indeed all work out! I have hours of ugh, and then hours of bliss and clarity and happiness and readiness. The second batch is way more fun than the ugh. I had given myself almost four months to get ready. I’m two months in and ready to go! Now what do I do with myself? lol

    Liked by 1 person

    1. Thanks! I realized this is the time of year my budget tends to go a bit haywire. between my tax return, paying off a big bill, then realizing that I should have kept it because rents go up and the general summer fun. But this time I will not be conquered. But will conquer and come out ahead! :)

      There is a bit of money being spent for the move. but very minimal and hopefully will all be reimbursed by EOM and come out even or ahead.

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  4. Kevin

    Moving is not an easy thing but I commend you for recognizing the problems with staying and taking action. What a great role model you are for your kids! You’ll get past this and when you are debt free you will be in such a great spot. We sincerely wish you the best of luck with the move and overall in your journey.

    Like

    1. Thank you Kevin et al! I feel like I just received a blessing in my move – an hour ago, I just received a call that funds were sitting in an old account (for years now) and need to be sent to me. The amount will cover the costs of my move and fill my EF. I am glad I answered the call. I don’t normally answer if I don’t recognize the number.

      Liked by 1 person

      1. Kevin

        That is fantastic! Almost too good to be true! I assume it is legit. So great to know that you are receiving this money and have a good purpose to put it towards.

        Liked by 1 person

    1. ya, that was cool to hear it is coming my way. hopefully it will arrive soon. And hopefully my closing deposits on my other place will be returned in full. but other than that, moving makes my spreadsheet messy. will be nice when debits and credits are balanced out.

      Liked by 1 person

  5. Good for you! In order to make change, we must take action. I’m also a fan of tiny homes / small spaces. At this point, a 1 bedroom apartment would feel palatial to me.

    I hope the move goes well and I’ll be rooting for you!

    Like

  6. Pingback: May 2017 Expense Report [Month 5] – Stupid Debt

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