I just realize that my budget is out of sync. It’s actually a symptom of me failing to plan accordingly. As some of you my know, I bought my first house last year. Things were looking good and I was excited. I have a three bedroom two bathroom house. Well, because I am single, I used to live with two roommates that helped me pay for the mortgage. So far, one roommate has already moved out. Also, the last remaining roommate is moving out in a couple of weeks. They were two of the best roommates I’ve ever had.
The problem is that the income I used to get from there rent is no longer coming in. The current levels of savings and investing that I discussed in my post entitled “my credit score went down” was based on that income coming in. I just got my end-of-the month paycheck. This is normally used to cover my expenses for the first 15 days of the next month. Unfortunately, my income could NOT cover all of my mandatory fixed expenses for the first 15 days in July. This does not take into account variable expenses such as food, entertainment, etc. And the July 4th holiday weekend is coming up and I know I’m going to spend money. So, something has to give.
Now, I normally make a $500 payment to my small student loan during the first half of the month and a second payment of $1500 during the last half of the month. Well, that student loan has a remaining balance of about $1000. By my calculations, if I pay only $200 towards that loan, then I have will about $140 to last me for 15 days. A very small number indeed. I guess my roommate’s prorated rent for July and reimbursement of his half of the utilities will help some. But, the larger problem is that July is going to be a rough month because of the transition process at work.
I’m actually moving out in a couple of weeks also. I have to move because of work. And so, I’m going to have to rent the place out. I have already secured a property manager and we have a showing scheduled for today. The good news is that if I can get the property rented, even at the minimum amount I’m willing to accept for rent, I will take in more income than my two roommates who were living with me.
I am mindful that there are increased expenses when I turn everything over to a property manager. So, I have to get used to the fluctuation in income to account for those expenses, such as vacancies, repairs, etc. Based on my honest assessment, my income is sufficient to cover the mortgage, taxes and insurance, even if I have 100% vacancy for the year. As I won’t have very much living expenses where I’m moving to, I will still only have one property to worry about.
Conclusion
I know my budget is out of sync, but it shouldn’t have been a surprise. Deep down I realize this was coming, but it just dawned on me today when I was doing my budget for July. Hopefully, things will settle down by September. But until then, it may be a bumpy ride. Thanks for taking the time to read this post.
Ah yes, roommates (decent ones), are greatly mi$$ed when they’re gone.
singledadmoney recently posted…Purchase #5 – (O) Realty Income Corp
Yup. I’ve actually lived with roommates for most of my adult life, except for one year when I decided to live on my own. They definitely have their pros and cons but every now and again you find your diamonds in the rough.
Maybe try some AirBnb this summer? Just for some quick cash?
Stockles recently posted…How To Travel The World On A Budget
I really won’t have the opportunity to do so, but I like the idea.
I’ve given up on a budget. Over the past few months, I’ve had a lot of miscellaneous expenses. Right now I’m focused on growing revenue instead of cutting costs/expenses
Troy @ Bear Market recently posted…How Trump’s potential trade war will impact the U.S. stock market
I don’t blame you Troy. Some people can make budgets work for them and swear by it. But, those are only some people. Nothing wrong with focusing on your revenue, although there’s nothing that says you can’t also try to cut costs/expenses. But, regardless, good luck on that endeavor.
Sounds like a temporary problem. Hope you get good tenants. If you know there is going to be some fluctuation it sounds like you just have to put away some extra money during the good months. But I don’t have any experience as a landlord. Perhaps a silly question, but do you have an attachment to the house. Perhaps selling would be a more permanent solution.
No attachment to the house. But I probably would lose money if I sold it since I just bought it a year ago. I bought with the intention of renting it out eventually so this is part of the overall plan. I’m just hoping it goes well.
Hey – it was bound to happen. But, budgets have to be flexible. It isn’t like you decided to go out every night and spend hundreds of dollars on worthless items. You had a pretty significant change in circumstances, so it is quite alright that you need to adjust your budget or that it fell out of sync. I do feel your pain too. I had aggressive, great goals for 2017. I knew I was going to buy a house, but with how quickly that process went down, my goals couldn’t have run faster out of sight. I’m not mad, I just know that I have to re-adjust and find something else that is going to work.
Looking forward to seeing what you have up your sleeve.
Bert
Thanks Bert. Well one thing for sure I’ll be posting on my blog here.