I’m addicted to coffee. I cannot function without it, a serious migraine will set in if I haven’t had my fix by noon. A coffee cup with one of those little brown coffee sleeves is an accessory just like a cute pair of earrings or a bright colored handbag. I grew up in a coffee-centric family. I remember my mom loving coffee as I was growing up and at some point switched to decaf for health reasons. Family car trips would always start with a stop at Dunkin’ Donuts. Now that my sisters and I are older, one of my parents will wake up on Saturday morning and do a coffee run, not to one place, but to each person’s favorite coffee shop. My dad like’s Dunkin’s, and my sisters and I like the local bagel shop that has about 15 different flavors of iced coffee (I think it’s a New England thing). But anyway, you get the picture.
In NYC, where you buy coffee is almost a status symbol. As specialty coffee shops have been popping up all over the place, it’s not unusual to be judged based on where you grab your morning jolt. If you can’t afford high end designer clothing, you can still spend about $3 on a designer cup of coffee to elevate your status.
Over the past couple weeks while I’ve looked for ways to replace certain habits with cheap alternatives. My first switch (for which I named this blog) is making the change from buying coffee everyday, to drinking the free Keurig pods in the office kitchen. According to the Huffington Post American workers spend about $1100 a year on coffee (about $3/day) or $91/month. I would estimate that I was spending slightly more, at $5/day, $150/month, about $1800 a year as some days would include a morning and afternoon cup. That’s enough to rid myself of two debts!
How have I done so far? Well, I’ve cut back significantly and have managed to buy coffee just one day each week for the past two weeks. Last week I was suffering from Starbucks withdrawal so I caved in but settled for a tall. This morning was nice and sunny so I treated myself to an iced coffee but stopped and got a small from a coffee cart ($1.50 as opposed to the $2.75 at Gregory’s!) I don’t feel like a part of myself is missing. Instead, I’ve found that making my office coffee and drinking it from a coffee mug is a lot more cozy than drinking from a paper or plastic coffee cup. And much greener too!
Week 1 was off to a good start. I began the week feeling empowered and in control. I felt like I was steps away from accomplishing the dreams of having my own apartment, buying nice clothes and taking a dream vacation. It all suddenly seems within reach.
This week I:
1.) Got Organized
– Cancelled recurring payments that went to my credit card
– Reduced my 401K contribution from 10% to 6%
– Cut up my credit cards!
2.) Reversed daily spending habits (i.e. buying coffee and lunch, ordering takeout, cabs, etc)
3.) Recording daily purchases onto a spreadsheet
4.) Started an accessible savings account to start saving towards discretionary goals (Hello! San Francisco in August!)
Since I’m allotting myself $500 per pay period, I do have to fund some necessities such as: co-pays for my therapist ($25/week), groceries ($25/week), cable (approx $60/month) plus planned expenses.
As far as planned expenses this month are Easter Brunch with friends (budgeted: $35), a bachelorette party (budgeted: $150), gift for a friend (budgeted: $50) and a bus ticket home to Boston (budgeted: $50).
By deducting these expenses from the allotted $1000 to get my remaining discretionary budget for the month.
Before spending, I’m learning to ask myself “do I really need this?” and most often times the answer is actually, “no”. Each time I walk away, I feel stronger and that I’m getting closer to being the financially independent confident person that I aspire to be.
Getting on track wouldn’t have happened without the guidance and encouragement from my sister. This girl has been my brain, my rock, through out the budgeting process. Instead of yelling at me or judging me last week, she realized I needed help. She’s always been a “saver” and offered to put me on a budget. While I know some strategies (for example, I had already transferred money to a 0% interest for 18 months card), I had trouble committing to a plan.
Just to give you an overview of my debts:
- $5000 on CC#1 (0% interest card for 18 months – $310/month payment)
- $3957 on CC#2
- $500 on CC#3
- $800 loan to the bank of Mom and Dad
My sister put together a super easy plan to follow. First I took $1000 that had recently gone into my savings from my tax return toward the $5000 credit card which would reduce my monthly payments on that card. I reduced the amount direct deposit that I had going into my small savings account and the percentage of my 401K contribution. That should give me $200-$300 more per month in cash flow to pay down my debt.
The most important element of the debt plan is to allow myself enough money to live off of so that I don’t have to default on my credit cards. She recommends $500 every two weeks, so a total of $1000/month.
Here is the initial budget that she came up with:
Pay Check 1 : $1348
Pay Period #1 Spend: $500
Pay Period #2 Spend: $500
Left Over: $348
Pay Check 2: $1358
Mom: $260 ($200 to pay off debt, $60 to cell phone)
I already felt elated having this plan. A weight had been lifted off my shoulders. Having control over your money is empowering and I’m already feeling a new found confidence knowing that I’m on a path to financial freedom.