Many of the things I do stem from random little ideas that slowly grow larger and larger until I have an entire plan formed in my head and it’s time for action. I haven’t had cable in years and never really cared for it, I grew up without it. (Internet however is a must) Last week, I realized I’ve been paying for a Netflix subscription for nearly two years that I only use sporadically to binge-watch random shows. It’s fun when it’s needed, but wasn’t really warranting the expense. It felt like a waste of time and a waste of money.

I cancelled the subscription and kept the $7.99 monthly payment going towards my house debt, instead of Netflix. Theoretically I should barely notice the change as I haven’t watched more than a few shows on Netflix in months, and my debt will continue to go down. Win-win? I’ll find out over the next few months. I’ll update mid-July to see if this plan is working out for me.

How do you feel about Netflix?

I bought YNAB last year in October and November 2010 was the first month I tracked every single penny coming through the NBN household. What have I learned so far?

First, I spend nearly three times as much on clothing and shoes as what I thought and budgeted for.  From October 2010 to date I’ve spent about $925.57 on clothing, underwear and shoes. I think that by most standards that’s not that bad of a number for a 25 year old girl, but… My goal for the year was about $300-350. I don’t buy cheap shoes or cheap underwear (actually, I can’t buy cheap underwear) so I’m not sure how realistic my goal ever was.

*sigh* If only?

Second, I spend about ten times as much on blow money as I planned. Though I have weeks where I have little or no discretionary spending that falls into this category, there are also times that I blow the budget. June has been especially bad. I now know where my money goes though, which is a good thing. So far the $4,323.90 spent on Blow Money from October 2010 to date includes a new bicycle, Christmas gifts, a camping trip, a kayak and accessories, a return ticket to Europe, many many nights out with the girls, books, gadgets, two theatre visits, haircuts and a few household items. I’m definitely good at getting value for my dollars but It’s important that I really keep an eye on this category. It’s important do do the things you want, but you can’t have everything you want.

Third, I spend much LESS on groceries than I thought before YNAB, but MORE on restaurant visits. This was surprising

Fourth, My barebones budget – the minimum required to survive –  to have a roof over my head, a full belly, heating and meeting my minimum debt payments, is actually less than I thought. That’s a good thing, I always like to keep this in account because there is always the possibility of losing my job.

And fifth, the reality of interest has hit home. I tweeted last week that “I started paying attention to the interest that’s added to my mortgage, shouldn’t have done that #depressing’ and RevancheGS from A Gai Shan Life replied that maybe I shouldn’t do that without icecream. So true! I hate paying interest, ugh. I can’t believe I ever carried creditcard debt… it’s so hard to get ahead when you pay fees and interest and every dang corner!

Observe, the resting corner, the arrows indicate where the rest of the foundation has... been laid to rest?

About a month ago I wrote (here and here) about a renovation that I need to do this year;

I have a porch that was built on to my house. It sits (sat, I guess) on a poured concrete foundation and about a quarter of that foundation has fallen over leaving the corner of the porch sitting on the concrete pad that functions as a step to the door.

The porch wasn’t an original part of the house and was built on probably 20 orso years later, the foundation fiasco happened, in a nutshell, because some nitwits should not be allowed to renovate houses.

You may understand that this is not a cool situation, I’ve lived with it for two years… it actually happened only a few months after I bought the house. Go figure. I’ve freaked out about it a couple of times but have pretty well come to terms with it now. I mean, what can you do, right? After having a few conversations with my parents about the issue they’ve pressed me to renovate and you, my readers, have also encouraged me do do so, so I am.

I went to talk to the bank about it, because you know, I’m in DEBT, I don’t have extra cash sitting around to redo my bathroom let alone rebuild portions of my house. (Lesson: don’t buy a fixer-upper without a BIG wad of cash) I was initially told I could blend & extend my mortgage, which would lower my interest rate a bit and wouldn’t cost me interest & fees. *sigh* It turns out that that is not the case and in order to borrow what I need to fix my house I would have to break my mortgage and sign up for a new one, not happening! Then we considered a HELOC, using the equity I already have in the house (up to 80%) to pay for the reno. That also requires about a $1000 in legal fees when all is said and done… Ugh. That threw all the options I had written out before out the window.

Then, this week at the bank we got talking about something else… I still have my student line of credit… with a big shiny limit of $16,000… and I only owe about $7,500. That’s $8,500 I can pull out in cash… at a rate of 4%, which is more than enough to do what I need to do, and I only pay the interest for the next two years…. (I’ll also get Airmiles on it, does that count?) if, after that I haven’t paid it off (unlikely) I can throw it on top of my mortgage, because by then I’ll be done of my 5 year locked in period.

Are you still following?

That student loan I’ve been working so hard to pay off, yeah I’m going to max it out again to pay for the renovation. BUT! The pro’s outweigh the cons:

1. – Currently my house only has one bedroom, it’s a big bedroom… but it’s only one. I have a big sunroom on the front that isn’t being used that can easily be transformed into a proper entry. Smack the washer and dryer in there and there’s no need for the second porch.  The porch, that needs to be rebuilt anyway, will be enlarged – adding sq ft –  and will become a proper second bedroom!
2. – The value of the house will go up proportionately to what I will owe… leaving my Networth (and thus my progress) unchanged. 🙂
3. There will be a french door… onto a small deck… with a walkout to the backyard… It will be bright & cheery & sunny, I’m already planning on moving my bed to the new bedroom. :p
4. The reno extends the time period I could stay in the house, an extra bedroom would allow me to stay longer in the case of any potential future husbands or babies. (though not in the immediate future – eek!)
5. No legal fees or crap to deal with, the loan already exists and like the girl at the bank said (in a hushed voice ;)..) “save your money, you have a great rate so do with it what you want”
6. This plan is in line with my year end goals.

The only con is of course that it sucks that I’m spending money that isn’t mine, because I don’t have savings in the bank. The good thing is that I learned this lesson at the ripe ole age of 25 so this won’t happen again in the future. I’m also going to do part of the work myself to save a bunch of dollars, yes you read that right.

I’ve had to overcome the mental hurdle of maxing my student loan again, it feels like I’m going back to where I started but that’s not true at all. I’m still going to hit my goals for the year, I am still going to continue paying off the remainder of my student debt this year ($7,500 left right now) while also using the loan again for this renovation. Does that make sense? I guess it’s just mental hoops. I’ll be adding a seperate category into my budget labelled Renovation and I will keep track of my student & renovation debt on the blog so that it doesn’t turn into one big depressing student line of credit. I think it’s important that I keep track of how many dollars for what end up on the SLOC so I don’t ‘accidentally’ add in a new wardrobe or fancy toys…

When all is said and done, by the end of the year I will have (most of) my student debt paid off, I’ll still owe money on my SLOC for the house renovation and I’ll still have my mortgage… but I’ll have added a bedroom to the house, adding resale value, fixing problems & it also gives me greater potential in renting the place out in the future if I wanted to.

I’m still scared shitless though, haha, so much change this year… so many GOOD changes. 🙂 Do you think I’m making the right choice, did things turn out the right way?