Yah! September! That means the worst season of the year is just about over I realized that I totally forgot to set August goals…oops. So here’s to a strong September:
1. Re-work my budget. Again. See below.
2. Run 2X per week and swim 2X per week.
3. Finish my new book. It’s PF-related, so I’ll definitely post about it!
4. Finish one-third of the scarf that I’m working on knitting.
So, my budget is torturing me. Really. Basically, the problem is that I’m spreading myself too thin. I want to save as much as possible, but I also want to be able to live a comfortable life. In the budgets that I’ve drafted recently, I’ve been neglecting two realities that I really shouldn’t have: 1) Living in the DC area is extremely expensive. Food is expensive, gas, housing…even trips to Target cost more than they did when I lived in Pennsylvania. 2) Compared to the cost of living, I really don’t make a very big salary, and (like pretty much everyone else) I’m not getting a raise any time soon. That’s just the reality of being a teacher in this economy.
I think the issue is that I’ve been looking at savings in terms of dollars, rather than as a percentage of my salary. If you try to figure out what percent of your salary the experts recommend saving, you’ll get a very mixed set of answers. After sifting through a lot of websites, it seems that saving about 10% of your gross salary is considered sufficient. So that means I should be saving about $4,900 per year. Ok, how am I going to do that? This is what I’m thinking:
$100 per month into my E-fund = $1200 per year
$100 per month into my Roth IRA = $1200 per year
$50 per month into my down-payment fund = $600 per year
That only adds up to $3000 per year, which is pretty far short of $4900. But I also get two “extra” paychecks per year, which I consider to be $2000 of found money since I base my budget on two paychecks per month. If I put $1000 of that into my E-fund and $1000 into my Roth, I’m up to $5000 saved per year, which is slightly over 10% of my gross income. Good?
– I think I’m going to start referring to my E-fund as my Freedom Fund. One of my favorite defunct bloggers, EM of An English Major’s Money did this, and I think it would work for me, too. I’ll explain more in a later post.
– My travel fund is kaput. I need to focus on saving for practical things like emergencies (err, freedom) and a home for right now. Travel will have to wait.
– I want to be steadily saving for a home, but I’m not ready to own anytime soon, so I think reducing my saving there will be ok.
Please, tell me what you think!