In this post, I’ll discuss the strategies I used to:

• Live on $530 a month;
• Save $4,500 for my emergency fund, reaching a $10k goal in 4 months;
• Earn an extra $3,430 this quarter (and why that might not be a great thing);
• Save $6,900 for investing in 3 months; and,
• Why I’m investing instead of paying off my low-interest student loans.

This quarter was filled with travel and adventure. I visited Colorado, Utah, New Mexico, Kansas, Texas, Oklahoma, Missouri, Pennsylvania, Maine and Maryland! Much of this travel was for work, but I was able to mix in some trips to see family and friends as well. I also decided to make my down time during work travel a brew tour of the United States, hitting large and small breweries in almost every state I went to!

Thanksgiving and Christmas were also this quarter, and we were able to see my partner’s family and my family for both holidays. We also took a nice work-funded trip together to Maine for my partner’s birthday. With the holidays came slightly higher food and alcohol expenses, and I plan to take that into account when making my spending plan next year.

Spending Plan Review

(October, November, December 2017)

The first number shown is the yearly allocation for the category, and the Q4 – $ amount shows how much was spent in Quarter 4 – October through December. In parentheses, the percentage spent of the yearly allocation is shown. 

(Read this post for an introduction to spending plans)

Student Loans

Low-Interest Minimum Payment – $790: Q4 – $160 (20%)

High-Interest Minimum Payment – $7,025: Q4 – $0 (0%)

High-Interest Extra Payment – $24,000: Q4 – $0 (0%)

In July I finished paying off my refinanced high-interest student loans! I plan to continue paying the minimum payment on my remaining low-interest loans. Now that I’ve successfully saved a $10,000 emergency fund (see below), I am able to divert the $2,585 that I was previously using for the high-interest loans to investments.

Why would I choose to invest instead of paying down the rest of my student loans? I could just crush the remaining $21,000 of low-interest loans and then start investing. Well, I don’t want to miss out on the power of compounding interest. More importantly, however, I don’t want to miss out on the tax benefits that my investment accounts (such as 401k and traditional IRA) offer. I will also get a better return on investment (ROI) when investing rather than paying off my student loans. Stock investments in a low-cost index fund can be expected to return about 7% on average. That is nearly double the ROI that I receive when I pay off my student loans, which are sitting at interest rates of 3.4% to 4.6%.

Student Loan Payments – $31,815: Q4 – $160 (0.5%)

Savings Goals

Emergency Fund – $10,000: Q4 – $4,500 (45%)

October is when I started traveling far and wide (and frequently) for work. Unfortunately, the way this works is that I have to put all expenses on my credit card and then submit an expense report to my company for reimbursement. Because of my high travel expenses in October, I did not save anything towards my emergency fund. However, once I received my reimbursement in November, I was able to save the final $4,500 needed to reach my $10,000 goal (I already had $500 saved since 2016). I was able to build this emergency fund in 4 months due to extra income from working overtime at my full time job (see extra income report at bottom).

Investing: Q4 – $6,900

As noted above, I was not able to do any saving in October, but in November, my savings were supercharged. In addition to the $4,500 I saved for my emergency fund, I was also able to put away $2,500 for investing in November. In December, thanks to my bonus, I was able to save $4,400 for investing.

This is the first time since I graduated in May of 2015 that I have had enough “extra” income (that wasn’t going towards student loans) to be able to set some aside for investing.

Total Savings – $10,000: Q4 – $11,400 (114%)

Expenses

Enjoying Life – $2325: Q4 – $135 (6%)

This quarter, I enjoyed life by taking an aerial tram ride in Albuquerque, going to an awesome Halloween party, attending a friend’s wedding, driving to several states to visit my friends and family for the holidays, and seeing Star Wars in theaters. I’m not the biggest movie fan in general, and I will rarely spend the money to see a movie in theaters. Of course, Star Wars is an exception to this rule, and I thought it really was enjoyed better on a gigantic screen. In keeping with the theme, my partner and I also hand-made our Halloween couple costumes – gender-bended Hans Solo and Princess Leia.

Projects: Q4 – $205

In 2016, I was saving for my tiny house project, which I plan to build in order to live virtually rent-free for the rest of my life. However, back then I decided to use these savings towards paying off my high-interest student loans instead, and I haven’t saved for this goal since.

However, a new project just came up that is going to serve as a sort of trial run for the tiny house. My partner and I are going to build a teardrop trailer/camper (we’ve dubbed this the micro house) that we can use for more comfortable car-camping and travel. This will also save money because now we won’t have to pay to stay in hotels when we travel! Expenditures this quarter included the hitch and trailer. We have plans to build the trailer by September of next year, before we spend 2+ weeks camping around Newfoundland, Canada!

Food & Alcohol – $2,220: Q4 – $655 (30%)

I took my trip out west and turned the leisure part of it into a brew tour of the United States. This meant, of course, elevated spending in the alcohol category. So did our trip to Portland, Maine, where we celebrated my partner’s birthday by bar hopping (something we rarely do at home). The holidays also resulted in jacked up grocery and alcohol spending, and I spent more on food this quarter because I dined out frequently during my personal travel to see family and friends.

Business – $225: Q4 – $60 (27%)

I bought a one year subscription to the Headspace app because one of my goals for 2018 is to begin meditating regularly. This ended up in the business category because I believe it will help me focus on the work that I want to do on TwentyFree and become more productive at my full-time job. I also did not have a category that I felt this purchase was well suited to, so I will be creating a category for my goals and habits in my 2018 spending plan.

Automotive – $2,930: Q4 – $2 (0%)

My automotive expenses ended up coming out to only $2 for the quarter, despite the fact that I bought new tires in October, which set me back $550! Due to hundreds of miles of travel via car for work this quarter, my mileage reimbursements covered all fuel, toll, parking, and maintenance costs (including the tires).

Rent – $1,200: Q3 – $10 (1%)

As mentioned previously, my partner and I are very lucky to be in a living situation where we pay rent in home improvement labor and costs. The spending in this category was for plant stakes and mulch for winterizing the strawberry plants in our garden. Our next big project is going to be insulating the rest of the house (we did half last year).

Objects – $1,010: Q4 – $215 (21%)

This spending was composed of various miscellaneous expenditures. I bought some journals for next year in order to prepare for my 2018 goals of gratitude and mindfulness.  I bought more video equipment, a few more items for our emergency kit, some under-bed storage and socks. Overall everything I purchased was necessary so I am happy with this category for Q4.

Misc – TIAIC: Q4 – $250

Nearly $125 of this was medical expenses, again. Shockingly (or is it?) I was still paying  hospital bills for my 2-week stay in November 2016, one year ago. I also splurged and bought my partner a nice set of harmonicas for his birthday/Christmas (don’t worry, at this age he’s gotten over getting joint gifts). Next year, though, we’ve decided to not buy gifts for each other at all.

Losses – TIAIC: Q4 – $55

All losses were related to slush again. I am terrible at keeping track of where my cash goes. That is why I try to spend almost exclusively on credit cards, which of course I am sure to pay off on-time and in-full each month. This category was not as bad as some previous quarters.

Total Expenses – $10,165: Q4 – $1,590 (16%)

Total Expenses + Student Loans – $41,980: Q4 – $1,750 (4%)

Extra Income

Additional Full-Time Income: $3,385 – With all the travel I did for work for a huge project with a tight deadline, I ended up working 60-70 hour weeks for almost 2 months. Since I get paid straight-time overtime, I was fortunately compensated for my time. Additionally, this sum includes my holiday bonus.

I do want to note that despite the extra earnings, working so much took a serious toll on my work-life balance. 12+ hour days (6 days a week) leave little time for anything else, and I was basically just working and sleeping. I am incredibly lucky to have a supportive partner – at the time he had a flexible work schedule, which meant he could cook and clean and pick up my slack while I was at work all the time. If I didn’t have him, I suspect my health (I had no time to prepare food, but he cooked almost every night) would have taken a serious hit. However, this wasn’t all rainbows and sunshine either. I was overworked, stressed out, and generally irritable, even towards the person who was helping me most. This certainly took a bit of a toll on our relationship, but we got through it.

Lesson learned – some amounts of stress and time-commitment are not worth the money. I didn’t have a choice of whether or not to do this project, but it taught me the value of my time and my mental serenity.

Credit Card and Bank Rewards: $35 – I love earning free and easy rewards from my credit card cashback bonus, which I can apply directly to my bill, freeing up extra money to save for my emergency fund and invest.

Interest:  $10 – This is from my high-interest savings accounts, which should start earning even more interest now that I have $10,000 saved in my emergency fund account.

Total Extra Income = $3,430

Investments

401k: I am continuing to contribute the minimum to my 401k in order to gain the employer match. However, now that I have $6,900 saved to invest, I need to get an investment plan in place. Honestly, I knew that I had to do this for a while, and didn’t get around to it because I thought I had more time. I didn’t anticipate having extra money to invest this year.

However, I crushed my goal of paying off my high-interest loans, so now that I only have the low-interest loans, it makes the most sense for me to begin investing, since I should be able to get returns that double that of my student loan interest rates. Stay tuned for my investment plan in the first quarter of 2018.

Final Thoughts

SAVE for later on PINTEREST!