Sunday, March 31, 2013

Financial plans

Although I have several more months before I finish clearing my debt, I'm getting restless and decided it was time to set out some concrete plans.  Once I have made my last debt payment I am going to take two months to just spend whatever I like on whatever I like.  The only requirement is that I don't spend on credit, obviously!

I do want to build up some savings though so I will be adding 10% of my salary to savings.  Enough to make me feel like I'm doing something but not so much that I can't relax and enjoy the post-debt feeling.  Of course, it's possible that once I don't have to allocate so much of my money (to debt), that I'll no longer feel any need whatsoever to spend every penny.  I'm planning for a 'worst case', in which I have a couple of spendthrifty months and don't make much progress on savings at all.  Like that old customer service mantra we were taught in my first call centre job: Underpromise, overachieve!

I've added some of those fancy percentage bar things to the side.  Thanks to Tanner from Working for a Goal for providing the code and help in getting that set up.

Here's what I have decided on for now:
Emergency fund of 5,000 - made up of:
  • 2,000 positive balance on my German Mastercard - no interest charges are incurred if I use it when it is already in credit and I'll actually earn a small amount of interest on any positive balance.  
  • 3,000 balance on my Irish current account - no transactions fees if I maintain a minimum 3,000 balance at all time so I will aim for a 3,500 balance, which gives me a bit of leeway to use this account without dipping below the minimum balance.

  • Annual expenses (German savings account/Sparkonto) - I would like to get this account to a 1,000 plus balance so that I maintain a minimum of 1,000 as well as whatever money is needed for actual expenses.  To that end, I have set my goal at 2,000.
  • Travel (German savings account/Topzinskonto) - Initially, I'll aim to always have 1,000 in this account.  That's enough to get me home at short notice in an emergency with money for hotels or car hire if necessary. Once I have that, I'll need to start seriously thinking about what kind of travel I want to do every year and how much I need to save to finance it all.  Going to Halle for Happy Birthday Handel every year, for example, will cost around 300 for the event and hotel, 100 for train and 100 spending, at least.  Visiting my sister in France is around 200 for the train and bus, plus a small amount for spending while there.  Flying back to Ireland once a year would set me back at least 300 as well (cheapest flight deals around 100-130 with no luggage, then bus/train or car hire while there and spending money).  So there's more than 1,000 a year, just for three basic trips, not even particularly big travel plans.  There's usually a choir weekend or tour every year or two as well, which is another couple of hundred, as well as shorter weekends travelling to Frankfurt or Brussels, for example, to visit friends (or other expenses if they come to visit me).  This one will need careful consideration because with family and friends spread out the way mine are, not to mention the fact that I haven't yet quite found the place I want to put roots down in, travel will be a part of my life for quite a while yet, it seems.
It's going to be a whole other way of living - actually having the choice of what to do with every cent I earn!

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