I’m writing this post on a lunch break, while sitting on a salon, getting a pedicure. So while I’m furiously scribbling, somebody is removing my cuticle. Gross.
It’s not that I am rewarding myself after my 7am client meeting. I am getting the pedi because I have to. My toes are hurting from ingrown nails. It’s excruciating, so getting the nail job is a necessity.
Ok, enough with that.
One of the biggest challenges of being a single mom is the financial aspect. It’s very expensive raising a baby alone. And I am now slowly finding out just how much. Formula, milk, clothes, vitamins, diapers, and, the most pricey baby expense of all, the vaccines. To make the long story short, I incurred debts. It’s from various sources but if you sum it up, it’s considerable for my income bracket. A huge portion of this was from my C-section operation. It was an emergency/unplanned operation and I did not have the necessary funds to cover the cost. So I had to borrow. If you are curious, no, I do not have health insurance or medicare or any of that shit that would have made my life easier. More about that in future posts (maybe).
But now that I am getting income from 2 different sources, it’s finally time to get serious about paying them off. While I still can. Haha. More importantly, I came across Man vs Debt today and I felt empowered to take control of my finances as well.
So here is what I did:
1. List all of my payables.
Every single one of them. Up to the last cent. List all the credit card balances, loans from the bank or other financial institutions and loans from friends. Everything. Be honest. Get it out there and see the extent of your debt and the gaping hole that it is.
2. Find out how much of your monthly income you can spare to pay them off.
What I did is I added all the income I regularly generate from all sources and deducted all of my regular expenses: rent, utilities, transportation costs, groceries, salary for the nanny and all baby expenses I had previously mentioned. 70% of what is left will be used to pay off debts. The other 30% will be used for petty/miscellaneous expenses. Here is an example:
Total income from all sources———————————Php 45,000
Less: All regular expenses————————————(Php 22,000)
Income after expenses—————————————–Php 23,0000
Multiply that number to 70%= Php 16,000–> This is the monthly budget I’m going to use to pay off my debts.
The most important part of this step is to evaluate your finances realistically. How much can you really spare? If you have a particularly huge debt, you may have to let go of a few luxuries. For me, that is no new clothes, bags, or shoes in the next 3 months. But I also do not want to have to compromise my usual budget for, say, groceries and end up scrimping on food or, worse, running out. And I may also allocate a budget for a cheap day-out with the baby once a month.
3. Schedule your payments.
Scheduling your payments is really important if you have multiple sources. It will avoid the guess work every month on who you should pay and how much. Of course, you will need to take into consideration that some of the payables will due earlier than others and base your schedule off of that. For example, this is my July schedule:
Budget for Debt Payment——————————— Php 16,100
Full payment to X—————————————–(Php 7,000)
50% payment to Y —————————————-(Php 4,000)
Credit card due——————————————–(Php 4,000)
Small portion of payable to Z—————————–(Php1,100)
After coming up with this, I may also be able to come up with next month’s schedule as early as now. I may decide to fully pay Y in August and pay another portion of my debt to Z. Again, the key is to be realistic. Bear in mind that you will not be able to pay all of them in one month. So set the proper expectations before hand.
Now that I have this, I feel pretty freakin’ awesome. I have half of my debt problem solved. Now the other half, which is the harder half, is sticking to that budget and schedule. Most people will need a referee, a trusted friend or a family member who is going to help them stick to that. But since I have a superhero-slash-goddess complex, I’m going to try and do it on my own. I’m going to give an update on how I ‘m doing on this front from time to time. Wish me luck.
P.S. I had just about enough time to allow the polish to dry a little. Time to go back to the jungle, err, office.