Why I trimmed $6K off my budget for the next 12 months

About a week ago, I realized that I’d have a 15K hole in my budget for the year or so ahead. I was pretty quiet about what transpired in order for me to arrive at this sudden conclusion.

Now that I’ve had some conversations about it in my home, I can share it with you.

You already know that I’m single, and that I’ve been divorced. In my divorce settlement, the agreement I have with my ex-husband is that one of us will pay the other child support depending on who has a child, and based on our income from our most recent Notice of Assessment. (There are tables for the rates published by provincial governments.) This is to continue until the child is 25 or no longer in school.

In addition, it’s my ex-husband’s workplace that provides the prescription benefit for my youngest daughter.

Fast forward to last week.  The post-secondary institution that my youngest really wanted to go to has turned her down. Since they only accept 20-odd students into the particular program she was interested in, the odds are greater that a student isn’t successful in their quest to get in.

I was financially prepared for her to go to post-secondary. Over the past number of years, I’ve managed to tuck away almost $15K in RESPs for her. I know her father has about the same amount saved. The kid is on easy street as far as paying for University goes. 

What I didn’t anticipate was the financial shift if she didn’t go to school. Come July, she will no longer be a student (bye bye child support) and she will no longer be covered by my ex’s employer health care coverage. The combination between the loss of revenue and the additional expense I calculated to be about $15K.

I went into a little fiscal tailspin in my head. Perhaps you noticed?  

At the same time, I actually think it’s best for my youngest to take a year off. There’s been more and more studies to reveal that kids actually do better when they take a year off. They’re not forced into studying something that wasn’t their first choice, and they have a chance to earn some extra money and save themselves from their own financial tailspin upon graduation.

The other factor in my house is obviously health. It’s been a rough few years health-wise. When you miss a month or so of school at a time, it takes a lot of energy to catch up. Sometimes that expenditure of energy causes another flare and another month off. It’s a cycle that is not only tiring, but pretty stressful. Somehow, the kid has managed to stay on the Honour Roll throughout school. No small feat.

I have no doubt in my head that she’ll go to University, she’s just not going in September 2011. As it turns out, neither of my daughters will be a full-time student in September 2011.

They’ll both be able to work and pack away some cash and prepare for the admission cycle next spring.

Meanwhile, I’ve had a conversation with my ex-husband. He actually would prefer to send the child support anyway because he knows that it actually goes to good use. His wife (whom I adore) is of course counting the pennies they’ll be saving in their own house. I would do the same. I’ve promised him I’m not going to create a situation.

He did, however, inform me that their benefits plan has changed at work. He’s under an impression that our daughter will be covered until she’s 22, whether she’s a student or not. I’m still waiting for word on this. If that’s the case, we’ll all exhale a bit.

Meanwhile, I’ve gone on the chopping block and I’ve found about $6K through expense reduction and a request for more income.

  • $963 saved through downgrading cable, and getting other discounts from Rogers
  • $110 saved on cancelling one more service from Rogers that I used rarely
  • $132 saved by giving the youngest her own cell phone bill to pay (starting July)
  • $1,360 saved by letting the housekeeper go (insert sad face here)
  • $2,220 saved by cancelling my disability insurance (and crossing my fingers)
  • potential $1,300 in extra earnings by taking on one more shift per week with my part-time job (requested, not confirmed)

Meanwhile, there are things I have not compromised. I have continued with my plan to increase my RRSP contributions (starting June) and I am still planning to take the girls on a Disney vacation this year (through savings).

I’ll await the word on the drug plan with my ex’s employer. If he’s right, it means I’ve already re-balanced the budget. If he’s wrong, we’ll just have to roll with it and come up with a few more strategies. I have to remind myself, we’re still way better off than many.

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7 responses to this post.

  1. Posted by joanne on May 17, 2011 at 10:19 am

    Sounds like you have a good relationship with your ex and he won’t set you or his children out to dry. It is refreshing to see that divorced couples can get along.
    I was going to suggest that your daughter return to HS to take a couple of courses to upgrade inorder to maintain her student status but then I read that she is on the Honour roll and this might not be a reasonable situation. However, is it possible for her to upgrade any classes or perhaps take other courses that will help her increase her chances of getting into the program next year?

    Reply

    • Hi Joanne, yep, my ex is a keeper. (Hey I know we’re divorced, but he’s a good guy. Part of what attracted me to him eons ago!)

      My daughter will likely go to High School to pick up one course that she had to drop. This will not necessarily improve her chances of getting into the course that she was denied from last week, but it will increase her attractiveness to other fields of study should she decide to expand her options next year. There are things she can do in the gap year that will open up the field for her a bit next spring.

      Reply

  2. I think a year (or two or three – or six) off is fine. I took 6 years off myself before going back to school and don’t regret it at all. My oldest is so determined to make it through without student loans, working two jobs and saving like gang busters. I guess he’s more like me than I thought. 🙂

    I think that’s awesome of your ex to help out that way. He’s not helping you as much as he’s helping his kids. I like reading stories like that as it restores my faith in men. 😛

    ps – also thinking of killing the cable (that I don’t even watch)

    Reply

    • Thanks Jacq. Yes, he’s a good fella. When we were in the throws of divorce and lawyers, things were mucky. Most of the muck was created by lawyers. Thankfully, we’re both reasonable people and we just want what’s best for the kids.

      Reply

  3. Just found your blog through Jane’s. LOVE that you were able to come up with $6,000 through some cutting of expenses. Even though some were small, they added up. It has given me an extra incentive to do the same to be able to put more money in savings.

    I believe you are on the right track with your daughters. Taking some time to figure out what they want to do can be a good thing.

    Hope the health insurance works out!!

    Reply

    • Thanks Sharon. Yes, I’m happy that I was able to come up with a sizeable budget re-write too! What amazes me is that I *thought* I was about as barebones as I could go. Mind you, some of the stuff I cut was contract based, so I paid a penalty to get out. In all cases, paying the penalty still saved me money in the long-run. I just hadn’t taken the time to really consider that before.

      In other cases, I’m taking a bit of a risk (disability insurance, for instance), but we’ll just keep our fingers crossed. Good luck to you to do the same and save more!

      Reply

  4. Great thinking and a good plan overall. I have to do something similar soon to get back on track.

    Reply

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