I’m 3 paychecks into the new job, and I’m starting to realize exactly how this lower pay is going to affect me. So, let’s talk numbers, shall we?

I knew before I accepted this job that if I was going to survive on $12/ hour I’d need to shift to a bare-bones budget. And really, I mean bare. No more dance classes in the budget, no more eating out (unless I include it in my groceries budget), no more miscellany. Even after cutting all that out I’d still be short. So I made the decision to take out my “irregular” line items from my budget….like license plates, car insurance, renters insurance. I’m obviously still going to have to pay them, but when I do they’ll have to come from my savings. [sigh]

And guess what? I was still short.

So I started thinking…maybe I should pay off my car?

Now, paying off my car would free up $229.50 each month. However I would still be about $180 beyond my means (meaning 4 paychecks wouldn’t cover my remaining expenses and I would still have to take money out of my savings to make it each month). On top of that it would also drain my savings by about $7,800.  The only thing that has me leaning towards paying it off is the psychological benefits…..1) it would feel better only taking $180 or so from my savings each month as opposed to $400+, and 2) it would feel GREAT knowing that I was finally rid of my car loan!

(Side bar: I was looking at my car payoff information and I noticed that they have my last payment date as 5/30/14. Which is 5 years after my first payment. That would all be fine and good except for the fact that I’d made a $500 payment last year….what happened to those two months it should’ve knocked off my loan?!!! Definitely looking into that…I don’t want to be robbed of my $500!)

For those wondering about the state of my savings, I currently have about $31k left, so taking out $8k would still leave me with about $23k. Which should be fine….

So, before I leave you all, here’s my “final” budget (with my car loan still in there):

Rent  $1,150.00  $13,800.00
Utilities  $   100.00  $  1,200.00
Groceries  $   150.00  $  1,800.00
Internet  $     45.00  $     540.00
Cellphone  $     40.00  $     480.00
Gas  $   150.00  $  1,800.00
Car Loan  $   229.50  $  2,754.00
Student Loans  $   167.25  $  2,007.00
Totals  $2,031.75  $24,381.00
Income  $1,623.52
Deficit  $   408.23

Oh, and a few footnotes….

  • The above assumes a 4-paycheck month.  5-week months will be a nice little bonus.
  • Yes, my rent is high. And I’m planning on moving to a smaller, cheaper place as soon as my lease runs out….which is in August.
  • There’s the occasional chance that I could get paid for overtime. However they only pay it on a per-project basis, so I’m not going to count on any of that. Bottom line is I need to budget for the worst case scenario, and this is it. (I hope.)
  • I need to negotiate my internet bill….

So, what do you think…..should I pay off my car loan?

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