Things with the roommate are going well, and we are still on a month-to-month basis in terms of how long she will be staying, but each day, it seems more likely that she will be around for quite a few months. I’m delighted to have her around, but now I’ve really started thinking about the financial aspect of it. What do I do with all of this extra money?
I think a lot of financial advisors would say “Save all of it.” Which makes sense. I’m not sure that’s the best plan for a few reasons. First off, my rent went up this month. Additionally, I’ve had to keep things very tight in my budget and after my summer of illness and pet illness, the budget is a mess. But I can’t just spend all of it either.
I think I’ve figured out how I want to deal with the extra income, at least for this month.
First: Fix my budget. I use YNAB, so for every month that I spend over budget, I have that much less to spend the following month. I’m going to first pay myself back for all of last month’s overages.
Second: Give myself an extra $200 to budget every month. Why $200? That covers the increase in my rent and gives me an extra $100 to place in various budget categories. It means that my spending won’t be as tight as it has been over the past few months.
Third: Put the rest into savings.
For the following months, I plan to only do steps 2 and 3, even if I have spent over budget. I’m working on padding up my pet care and health care budgets so that I won’t run into the same problems again. Budgeting is a fluid experience, and you have to learn on the go and learn to be flexible.
I realize that come October, she could decide to move elsewhere and then all these plans will be for nothing. But at the very least, I will have covered all my budget overages from last month and put away a bit of money. And there’s nothing wrong with that.
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.