After the big move that dominated June and July’s financial situation, it’s back to a monthly review of my finances. I generally break things down by evaluating my assets and my debts (which together make up my net worth), and then using these numbers, I attempt to set goals for the coming month. This is a useful exercise for everyone to do, simply so they can keep tabs on their overall assets and debts and make sure that they are consistently heading in the right direction. Let’s break it down.
Assets After spending a lot in June and July, August was a very frugal month, with almost no spending at all other than the basic bills. We ate almost exclusively at home (I actually don’t think we ate out at all this month), didn’t buy anything frivolous, and basically just spent the month settling into the house and getting ready for the arrival of the baby in September.
Debts With the mortgage added into the debt column, debts are going to go down slowly for a while, I fear. Since I am using a “savings account debt snowball” (meaning I’m saving up money in a savings account for the strict purpose of paying off larger debts all at once), there will be months where a big minus will appear here (when I get rid of our student loan debts, first of all). After that, I will build up a very healthy emergency fund, then start making larger payments on my home loan.
So, let’s set some goals for September! Short term goals like these make it easier to stay motivated throughout the month.
An asset gain of 1.25% In September, the baby will arrive, so that means that I’ll probably have some extra expenses related to her arrival. Still, I shouldn’t have to spend too much and with some frugal living and not much spending, I can meet this goal.
A debt reduction of 0.25% I decided to bump up my overpayment on my highest interest student loan for the coming future. I am really living way below my means and my emergency funds are making me feel comfortable enough to start being more aggressive with my debts. According to my math, this should bump up my debt reduction to this level.
Can I do it? Tune in next month. Even better, set your own goals and see if you can make it!