Tuesday, September 30, 2008

Fearing Tough Economic Times

I really have to stop watching the news. (Hard to do right now as my parents are still staying with us and have it on every morning.)

I have so much anxiety over the US Financial Crisis. The fact that the bailout didn't pass Congress yesterday has my stomach in knots.

I'm not even sure exactly what the effects of all this will be, but it all has me soooo nervous!

I so wish that we had all our debts paid off and had our 6 month Fully Funded Emergency Fund.

Oh well . . . coulda, woulda, shouda . . . - doesn't really help now.

I know that my family is in a much better financial position than we were a year and a half ago. But we still have a long way to go. We still owe $22,000 - and that is a lot of money.

We do have a lot in savings right now - $8,000 - but it is all earmarked for things. New heating system or windows ($5,000), DD's braces ($1,200), Sister's wedding ($4,000), plus low commission months. The way I have the yearly budget worked out right now, we will end the year (Dec. 2009) with $2,700 in savings. This would be for $1,000 emergency fund, and $1,700 (I prefer to always have $2,000) to cover for future low commission months.

So, on paper, this all works out.

What has me in a panic is the financial crisis. It could have a very real affect on my husband's commissions. They could possibly be 30-50% less than what we have budgeted. What will we do then?

I think that for my own peace of mind I need to do up a PLAN B BUDGET to plot out the worst case senario. I do have us snowballing a lot of money most months (though several months I had to go lower than the $1,100 that I would like to snowball, just to get the budget to "work").

Here is what I have planned to snowball each month:

Sep -$700
Oct - $1,100
Nov - $500
Dec - $500
Jan - $100
Feb - $100
Mar - $100
Apr - $1,100
May -$1,100
Jun - $500
Jul - $4,100
Aug - $1,100
Sep - $1,100
Oct - $1,100
Nov - $1,100
Dec - $1,100
TOTAL = $15,400

Now that I am looking at it, it's actually making me feel a little bit better. Originally I was very upset because we still owe $22,000 on our Home Equity Loan, and even with this payment schedule, we still won't have it paid off at the end of next year.

Now I am thinking that there may be some Storm Clouds coming - and maybe we need to stop our giant Debt Snowball temporarily, to see what happens with the economy and my husbands commissions (pay).

Our minimum payment on our HELOC is only about $100 a month. So, if we only paid that, we could put the rest into savings. That would be close to $14,000. That would make me feel A LOT better.

I hate to stop the debt payments, but I need to be able to sleep at night. If the storm clouds don't come, we can just take the large sum from savings and pay it directly to the HELOC. And if they come, at least we'll have an umbrella.

And there is also my jewelry business to consider. It has really been going quite well. I have been making close to $500 a month, getting busier each month. I have only budgeted $50 a month from my jewelry towards our family budget, but the fact is that I may be able to contribute more on that front.

Now that I think about it, maybe I can just use any "extra" jewelry money for the debt snowball. So, I would just pay the minimum payment, plus any extra jewelry money I can towards the debt. That way at least we would be paying something extra to the debts.

Well, I feel a little bit better now. :)