Progress Report: Month 6

Day 181 | $67,506 paid | $23,211 till freedom

I just paid the Fed $5,645 from my February income. Slowly, but surely, I'm chipping away at the remainder of my student debt. I'm down to $23,211.

Here's how February played out:

• Starting Cash:$2,500
• Starting Student Debt:$28,723
• Income:$7,893
• Expenses:$2,748
• Cash Paid to Debt: $5,645
• Accumulated Interest: $133
• Ending Debt:$23,211
• Ending Cash:$2,000
• Total Assets:$56,922
• Total Liabilities:$23,211
• Net Worth: $33,711

Predicted student debt at end of June:($5,635)

In other words, I’ll have a surplus of $5.6k at the end of June at my current rate of paydown. In fact, according to the projections, I’ll be exiting May with my debt completely paid down and a surplus of $1,467. Anything can happen in four months, of course–from a smaller-than-expected bonus to an unexpected disaster–so I’m not going to bank on any of these projections for now.

High-Level Analysis
I spent $249 over my budget, but between my birthday cash (I'm now 29) and cashing in some BofA WorldPoints, I offset that overspend by $75. This was also my lowest month of spend, coming in at $2,748, which is $122 lower than my previously lowest month, January, at $2,870.

I lowered my cash buffer by a full $1,000 in December from $3,500 to $2,500 because I just didn't see the value of holding that much cash. Well, I've grown even less risk-averse, and I've lowered it another $500 from $2,500 to $2,000. This reduction allowed me to pay down an extra $500 in February. The way I see it, I'll be getting $850 in rent checks on the first of the month, and the only expense I have to pay immediately is my $1,441 mortgage, which my checking account is debited for on the 1st. As long as I have enough to cover that and a little more, I should be fine. All other expenses incurred during the month go on my credit card and don't have to be paid off till the end of the month. Sure, I might get laid off or experience a disaster that requires some sort of cash payment before I get my next paycheck, but I think the odds are small.

Assessment of Expenses and Revenue
I want to take a moment to assess my spending habits on a line-item basis. Progress-to-date is detailed in the spreadsheet below. Click once to open and once to zoom.

Analysis: Expenses

• Insurance – $0 — After months and months of $171 insurance payments, I’ve sold off my second car and took collision off the S2000, and I’ve paid enough towards the once-high premium in previous months that I slid by without owing a single dollar on the remainder of the policy life. I thought last month was the last month of the policy, when I also paid $0, but it appears that I also got hooked up in February.
• Internet — $51 — Fixed and within budget.
• Cell phone – $85 — I budgeted for $86, so this is in-line with expectations.
• Mortgage — $1441 — Fixed and within budget.
• Haircut – $13 — TGF was running a special--$7.99 haircuts! Sweet! I gave a $5 tip.
• Energy — $32 — Same story as last month: I budgeted for $100, so this is a huge win no matter how you look at it. This is due to the colder months and the fact that the energy-sucking AC hasn’t been on.
• Water — $118 — I budgeted for $100, but this is actually two months combined into one--the bill for last month arrived after I closed fiscal January. So $118 is not bad ($53 + $65 = Jan + Feb)
• Gas — $35 — A loss relative to my $22 budget. This has gone up due to the cooler winter months and is being offset by a lower electricity bill since I haven’t been running my AC.
• Entertainment — $217 — A loss relative to my budget of $50, but better than last month's $380.
• Groceries — $444 — A loss relative to my $280 budget. I'm speechless. Moving on.
• Lunch at work — $18 — This is comprised of two meals out. For the first meal, I didn't have time to make my lunch for the following day, so I had to buy it at work. For the second meal, my entire team, including my boss, went out for an end-of-quarter lunch, and I would have been conspicuously absent. So I went.
• Fuel — $165 — A win relative to my budget of $160. $5 over ain't no thang.
• Drycleaning – $33 — A loss relative to my budget of $20, but that $20 assumed I'd be ironing my shirts during NMHD, which I've so far refused to do.
• Car – $5 — A loss relative to my budget of $0, but better than the $1,500 I would have spent to replace the convertible top instead of paying $5 to duct tape it.
• Unbudgeted — $91– This is comprised of $44 Turbo Tax, $38 to replace my watch battery, and $10 to park downtown for a video shoot I did for my job. The $38 to replace the battery was a foolish spend, and I felt like an idiot paying that much, but I was running late and just wanted to get it done instead of looking for another jeweler.

My expenses for the past six months averaged $3,105, while my expenses during the 15 months prior to NMHD averaged $7,754. I've been spending $4,652 less per month, on average, since I started this challenge.

Analysis: Revenue

• Salary -- $6,248 -- a win relative to my budget of $6,200. The excess is simply due to the inaccuracy of my forecast calculations regarding tax and expenses like health insurance and Social Security.
• Roommates -- $1,320 -- a win relative to my budget of $850. This should technically be $400 because my first roommate is leaving and she already paid for her last month's rent back in September. However, the replacement roommate already paid his first and last month's rent as well as the security deposit, so I experienced significant upside. He won't pay anything in March, however, so that's when I'll feel the pain.
• Birthday -- $165 -- Happy Birthday to me, and thanks to my parents and sister and grandma! :)
• BofA WorldPoints -- $160 -- I've spent $20k with my credit card during the past x months and took the opportunity to cash in my accumulated points.

March Outlook
March is going to be a pivotal month and will set the tone for the rest of this journey: it's bonus season. I've been assuming $8k after tax for my bonus, a figure that allows me to exit May with my loans completely paid down one month early and a surplus of almost $1,500 assuming I keep my expenses in line (which, as you know, I really can't). Anything substantially below the $8k, and even June is at risk. Anything substantially higher, and my end-date gets pulled in even more.

The bonus is determined by both company and personal performance. I got more than $8k after tax last year, but the company's performance and my personal performance were both very high. This time around, while the company performance has once again been good, my own performance has been a mixed bag: it was great while I was in my former role, but it has been only decent in my new and highly complex role that I'm still ramping in. I was in my former role for the first three quarters of the year and in my current role for the last quarter, and the personal component of the bonus is usually determined by the last couple quarters' performance, so to say I'm anxious to find out what it will actually be is an understatement. I'm hoping for the best.

Here’s the full ten-month outlook (click once to open, once to zoom):