27 and Frugal

Back in December, I made some goals for the year 2010. One goal was to pay off my car.

I had a plan: To make a car payment of $500 in October & November (over double my minimum payment) then pay off the last thousand dollars in January; Six months ahead of schedule.

Then I lost my job.

My hopes of paying off my car anytime soon were gone. Instead, I used the extra cushion I made for myself in the previous months and didn’t make a car payment in December or January. During this time, I put as much money as I could into savings since I had no idea how long I would be unemployed.

In the middle of February, some light started to shine through. I received a federal tax refund that was close to my car pay off amount. I decided that I felt comfortable enough using the entire check to pay off my car instead of adding it to the savings. A week later, my decision was justified when I was offered (and accepted) a new job. I used my entire tax refund to pay off my car, leaving my savings intact.

And now… I own my car!

A Setback is not the End

My life did not end when I lost my job. Things had to change but that was manageable. Sure, I didn’t pay off my car when I thought I would, but in the end it worked out. It’s important to think through your finances and plan ahead when dealing with an unstable income. Stay rational. Don’t get discouraged that you’re never going to find a job. But don’t get overconfident that you’ll “have the money to pay that bill next month”. Make your budget one month at a time and focus on building your savings.

I will have a more detailed look on severely cutting a budget in the face of unemployment soon.

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