Apr 09 2012

Dorothy part 3: Not in Kansas anymore — it’s sweet home Chicago

We first heard from Dorothy in August 2011. Back then, she was living in Kansas and dreaming of moving back to Chicago. Well, her plans moved forward and she’s back in the windy city and having a wonderful time. After several months of transition (and one more move to another apartment) it sounds like she’s ready to get back on the debt-payoff track.

Here’s an update of her numbers and her story. I’ll write a post tomorrow with some ideas for her to consider.

The numbers:

  • Savings ($30 August) April: $300 difference of $270
  • Car loan ($6,549 August) April: $4,934 difference of $1,615
  • Chase credit card ($2,703 August) April: $2,621 difference of $82
  • Citi card (didn’t exist in August) April: $2,989
  • Sallie Mae ($11,884 August) April: $10,677 difference of $1,207
  • Federal student loan ($3,395 August) April: $2,986 difference of $409
Total debt: $24,207 (improved by $326 since August)
Monthly take-home pay: $2,850

Chicago Skyline 2008

Dorothy writes:

I can’t believe it’s been more than seven months since that original cry for help! Re-reading my story was really difficult. Maybe that’s why I’ve been putting this off for so long … My life has changed dramatically, my finances not so much.I moved back to Chicago in November!

I’ve been at my new job for five months and it’s a complete 180. I’m so happy, my coworkers are stellar, and I feel so surrounded by love and support. In Kansas I had few friends and a crappy ex-boyfriend. Here, my social life is filled to the brim and I never knew I could be this happy.

With my new job came a small raise—$45,000 up from $39,000. However, Chicago is much, much more expensive and the move put me even more in debt. I get paid the last day of the month, which has taken some getting used to and given me a valuable lesson in budgeting. I’ve been living with family for a discounted rate of $500/month, and spending an additional $250 a month on storage, but starting May 1 I’ll be living in a new apartment where I will pay $800 a month for rent, not including utilities.

The good news is I paid the first month’s rent, credit fee, and move-in fee (for a total of $1,050) out of pocket. I had stashed a grand or so in my savings account. As you know with my Kansas apartment I charged all of that. I won’t pay rent until June 1 so that’s nice.

I canceled the Victoria’s Secret credit card per your advice in August. I also transferred my Chase credit card balance onto a no-interest, free balance transfer Citibank card. All was well until…the move. I had to charge my entire move ~$1,500 to my Chase credit card, and then had it linked to storage at $250 a month, and let’s just say both of my credit cards aren’t doing well.

This is the last month I will be using the Chase card for the furniture storage payment. I will then focus on paying them down exclusively and not using them.

Monthly expenses:

  • Rent/storage: $750 a month, $800 a month (no storage) starting June 1. I did not pay rent this month because I’m doing a favor for my family, and I already paid May’s rent. I hope to use this extra money to pay for my movers and buying some essentials for my new apartment (shower curtain, trashcans, etc.)
  • Car insurance: $81
  • Gym membership: $80 (told ya Chicago is expensive…and this rate will jump up to $120 after my 26th birthday in December, at which point I will need to find a new gym.)
  • Utilities: None at the moment, that will change in May, but they will be split with a roommate.
  • Groceries: Hard to say, I do a big grocery trip twice a month and spend probably $70-90 each time.
  • Gas: UGH. It’s $4.59 a gallon here in Chicago. I do drive to work (way on the south side) and use just under a gallon a day. Public transportation is $5 a day, so I figure with wear and tear factored in, I’m spending about $5 a day driving. If gas prices get much higher, I will start taking public transportation every day. My new apartment is much more conveniently located to a train.

Other: I shop SO MUCH LESS now, despite the fact that I’m surrounded by all my favorite stores. I do spend more money on food and entertainment because as I mentioned above, my social life is pretty busy and usually related to food and drinks. I am not a big partier though, so I don’t have to worry about spending a ton of money on the weekends on alcohol and cabs like a lot of my friends.

Another note, I did claim my move on my taxes and got about $1,800 back, but I used most of that to get new tires for my car (those suckers are expensive!), and an oil change and filters. The rest was used to buy a ticket to visit a close friend in Los Angeles. I hate spending money on car stuff, so that seemed like the best way to do it.

I have my six-month evaluation and salary review coming up in July. I don’t know how it works here, but there could be a slight raise, which would be the difference in whether I get DVR or stay at my gym past December.

Alright, let me know if I’ve left anything out. My main goals are to pay off my credit cards, especially the Citibank one before March 2013. And I’d like to build my savings back to $1,000 or more. I know the numbers don’t really show it, but generally I feel much more financially stable than I did before.

[Kacie again: Feel free to jump in the comments section to share some thoughts with Dorothy, and remember to come back tomorrow for my follow-up ideas] {Photo Tom C}



3 Responses to “Dorothy part 3: Not in Kansas anymore — it’s sweet home Chicago”

  1. With the move out of the way, it seems like now would be a good time to really evaluate your spending and set a new budget. Start fresh!

    My honest advice? Get really serious about paying off those credit cards. Low interest student loan debt is a totally different beast from credit cards. The interest rates are killer, and as you’ve acknowledged, once you have a balance, it seems like it turns into a vicious cycle.

    In my experience, I’m more likely to charge on a credit card if it already carries a balance, because I think, “What the hay? Just put it on my tab. I’m already paying this down.” Dangerous! If you can get those credit cards down to a zero balance, you’ll be less likely to overspend, and it will cut down your monthly expenses by however much you’re paying back each month.

    When I was in savings/debt repayment mode, I split the difference so that I was saving and paying down debt at the same time. I would use that method until you have at least $1,000 in the bank, and then focus your effort on credit cards. I also would use any raise you get for savings for debt repayment instead of lumping it in with your regular pay. If you don’t even use that extra money, you won’t be missing out on anything.

    Good luck!

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  2. Sense to Save » Blog Archive » Part 4: How Dorothy can save $1k and pay off $5,600 in credit cards in a year
  3. Sense to Save » Blog Archive » Dorothy part 3: Not in Kansas … | Krispy Hut

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Hey! I'm Kacie, wife to Shane and mother to Jonathan (7), Vivienne (5) and Amelia (2) . I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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