Markets in Turmoil

Man, what a crazy week its been.

Beginning with the liquidity crisis at AIG, the markets went on a roller coaster ride of epic proportions. Hourly, the potential for AIG's demise created more fear in the markets. Finally, when AIG had fallen below $2 a share, the government reacted and initiated one of the largest public bailout deals.

However, the days after were not much rosier, with Lehman Brothers filing for bankruptcy, Merill Lynch merging with Bank of America, and both Goldman Sachs and Morgan Stanley filing for bank holding company status.

Tonight, all of the world awaits a decision by the US Congress to enact a bill that will not only save the US financial markets, but the worlds.

Melodramatic as that last statement may be, it is really the ultimate effect of globalization. Nothing happens in the US that doesn't affect the world... and vice versa.

Current Outstanding Debt

I finally put together all my current outstanding debt obligations.

While a significant portion of my debt has already been budgeted for, previously, I did not have a good handle on how much to pay on the credit cards or what to sock away to pay back my parents.

Taking the remaining portion of my monthly income, I have written in red the expected monthly payments, which still allows for a small portion to of my income to be saved for a rainy day.

Obviously, my credit card debt will not be paid in full by the the time their respective 0% offers expire, but I hope to roll the remaining debt to one more year of 0% interest, while also planning to plow a significant portion of my year end bonus into them.

Day 3 - Understanding by Total Income

I went back to my financial planning sheets and reworked my income estimator. Before I figure out how much money I need to save additionally to pay down my debt, I first needed to know how much I had to play with.

To the left is the percentile breakdown of my salary into each expense category. At the end, I realized that I had been underestimating how much I had left over each month by 50%.

Rather than the 6.68% left, I had though I was at 3% and so I had been constantly worried about my bank account emptying. This is one positive piece of news.

Every day I will continue to revamp my sheets to become more and more accurate. While the preliminary debt figures are ready, I will wait until this weekend to post them so that I will have some time to also provide a plan to pay it down at the same time.

Day 1 - Formulating the Plan

While a full account of my current financial standing is forthcoming, looking in my fridge suggested to me my first easy and obvious budget planning measure: cooking more meals at home rather than eating out.

I went to BJ's today and bought a full stock of pasta, deli meats, and other basic salad and lunch combination items and then spent the next 3 hours preparing different choices for the next week. Lunch typically averages about $7.50 a pop, while the food I bought will probably be about $4 a pop, saving about $14 a week. While small, this also has an immense health benefit.

In addition, I had already embarked on my coffee savings plan by grinding and brewing my own morning coffee, but I have now also decided, for both health and economic reasons, to forgo my afternoon cup of joe. The afternoon coffee alone will save me about $11.25 a week.

By tomorrow, I should have a full financial picture and better Excel accounting sheets to track my expenses and then budget out each of my bills. But already, with these two measures, I can save an extra $100 and put it toward paying down my debt.

Rock Bottom

For anyone with an addiction, rock bottom is that point where the addiction has forced upon them a situation of utter nothingness. A sense of dismay with life. While I haven't actually reached that point, I see it coming in the future, and rather than waiting for it, I am going to address it now.

For the past month, I have found it difficult to blog about my financial life. As anonymous has pointed out in comments, things have very much taken a turn for the worse. My investments, while left ignored, have dwindled to nothing. My bank account continues to be drawn down due to constant trips to the casino. Sure there are times that I win, but I find myself losing more and more. In addition, I have been using credit to finance some of life's unavoidables, such as work clothes or a flight to a friend's wedding.

While none of these items have forced me anywhere near bankruptcy, nor am I near any kind of debt held by the average American, I know this is not responsible fiduciary behavior.

Ironically, I have often complained to myself that I had little to offer the world, since my finances are so different from average. But now I find myself in a situation that anyone could relate.

From hereon forward, I will be changing my goal. My near term (1-yr) goal is get rid of my credit card debt. My long term debt with my car and student loans are still on track and will continue to be paid down in regular installments.

This blog will then be about how I balance my new focus on decreasing debt, while trying to maintain a similar (but not the same) lifestyle.

Moving forward, my daily posts will be about my plans, my progression, and little things I'm doing to turn around my financial situation.

PS - I have not turned off the anonymous commenting. While to the point and typically stinging, I feel that posters should take some responsibility in what they write. After all, it is my life. While I open it up for debate and advice, I am not inviting you to be my mother. I already have a mother for that.

PPS - It will take me a little time to update the blog with my new debt figures and to formulate a plan. Give me some time.