My 2016 Budget Challenge: Why I Need to Find $31K This Year


My editors at Wise Bread asked me if I would be interested in writing about my 2016 personal debt reduction challenge as a series. Of course, I jumped at the opportunity to share the gory details of my financial life with the reading public.

After all, I need the money.

It's the beginning of the year and already I'm an extra $16,000 in the hole, not counting the $15,000 loan my husband and I have been diligently paying down. That means my family needs to come up with an extra $31,000 this year. I'll be documenting my progress for you in this regular blog series. This exercise will hopefully not only share my learning and experiences with loyal readers, but also serve as a motivator for us both. It'll give me accountability, and it'll hopefully give you a little inspiration to improve your own financial situation this year.

So, how'd I get into this $31,000 financial mess in the first place?

How to Dramatically Increase Your Insurance Costs With This One Easy Trick

In November, my insurance agency called to ask if they could do a walk-through inspection on my rental property. I have 100% replacement cost insurance for the house, and the insurance company wanted to make sure that I had enough coverage given my home's value. Since I hadn't had the house assessed for years, I thought it was a good idea.

The good news is that my house has tripled in value.

The bad news is that my house has tripled in value, and that means my insurance costs have also tripled.

I discovered this information when I opened up my December 2015 insurance bill and noticed that my premium had gone up by a whopping $528 a month. I suppose this outcome should have been obvious to me as a financial writer. But sadly, I didn't connect the dots of how getting accurately insured would trash my 2016 budget until that hefty bill arrived.

Now, $528 per month (or $6,336 per year) may not seem like an insane amount of money. But it's a lot of money to me. A lot. I work freelance, so my income varies wildly from month to month and from year to year. And by freelance I mean I do odd jobs. And by odd jobs I mean more "odd" than "jobs."

How to Spend All Your Money by Making Your Passion Your Work

In the past year, my super-nerdy, architectural photography hobby has resulted in actual paying work. Last March, one of my favorite photographers started following me on Instagram and plucked me out of obscurity to work as his sometime assistant. This March I will be shooting the work of an architectural icon as my very first professional photography commission. Getting a paying job as a photographer — of anything — is nothing short of miraculous, especially since I've shot all the photographs in my Instagram feed portfolio with my very fancy camera phone.

The good news is that I got a plum assignment. I couldn't ask for a better debut as a professional photographer.

The bad news is that I am not Brooklyn Beckham, so I cannot actually do this plum assignment without a proper camera, tripod, and lenses. I'd actually been scrimping, saving, and stressing, stressing, stressing, about finding the oh, $10,000 it costs to buy the camera package I need to get to the next level as an architectural photographer.

Up until December, this stress was just an annoyance — not owning a camera was simply an obstacle that came between me and my best work as a hobbyist. I was planning on buying the camera elements, individually, over the course of the next year or two, using any surplus funds I had left over after paying all my bills (which, as of December, includes an additional $528 per month). However, now that I have a professional gig looming on the horizon, my cameralessness has become a financial emergency. I need to either immediately add $10,000 in debt to my books or figure out how I'm going to start working in March without actually owning the equipment needed for the job.

The good news is that $10,000 is a lot to invest in a favorite hobby, but as the start-up cost for what could be a second career as a photographer, $10,000 is nothing. At least this is what I am telling myself.

The bad news is that in total, I now actually need an extra $16,000 because my rental property has so much equity that it is financially preventing me from starting my dream job. Yes, cry for me. Cry for me, and my First World problems.

If it sounds like I'm whining or humblebragging or humblewhining about my success, believe me I'm not. One of the reasons why I am good at living on a really tight budget is because I know that my financial problems are not special. At its core, my problem is one that millions of Americans are facing right now — my house is too expensive for me, and the house costs are keeping me from making life changes that would improve my financial future. My problem is so common that I know there have to be solutions. At least one person out there has already been in my shoes and is now wearing better shoes. I just have to find the better shoe store. (Or, more likely, I will just have to make myself better shoes. Pulling up my own bootstraps and all that).

My Secret Method of Paying Off a Loan Early (If Only He Would Behave)

My husband works as an environment artist for video games, has a radio show, and does wildlife rescue in his free time. I know. If you saw my husband in a movie as a character, you'd roll your eyes at the ridiculousness of it all. This is me bragging: he's pretty much perfect.

I say pretty much perfect because my husband has one flaw: he loves to shop. He can go into any store, and regardless of how esoteric the merchandise, still find something to buy. I am trying to make my husband save money. He is terrible at scrimping. He is also the breadwinner of our household. Alas, I cannot simultaneously stomp my little foot and demand more fiscal responsibility from him while also asking him to bail me out, especially considering that he already pays for 70% of my life.

Yes, my husband would happily give me the $16,000 now, but that would come out of his not-nearly-enough retirement savings that I'm already worried about. Also, my husband's work contract is up in October, so we've been socking away cash in an emergency fund in the event it takes him six months to find a new job. While I am willing to bet $10,000 that I can make money as a professional photographer, I'm not willing to bet that I could make more money next year as a photographer than he could as a video game artist. The emergency fund has to come before my camera.

All that said, I could still push him to help me pay down some of our debt — a five-year, $21,000 loan — two years ahead of schedule. In our first twelve months, we've already paid down the loan by $6,000, and that was with us also putting money into our emergency fund. I think if we really focus on saving money wherever we can, and get really lucky, we will be able to completely pay off the loan by the end of the year, even if my husband loses his job. My husband does not think it's possible to find that much money (a whopping total of $31,000 when you add it all up) in one year, as it's more than 30% of our household income before taxes. However, in the two years before I bought my now problematic rental property, I managed to save $30,000 for the down payment on just a $40,000 a year salary. But even with this past achievement, my husband still doesn't believe I can do it again.

In short, 2016 presents me with the following financial challenge: Find an extra $31,000 in our household budget, or find some magical way of making a lot more money this year. That's in addition to growing our emergency fund sufficiently by the time my husband's current work contract ends later this year. It's a double whammy of a challenge that's sure to stretch our budgeting creativity and willpower to the max.

Will I succeed? Stay tuned and see for yourself.

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Guest's picture

Why would the value increasing mean the insurance goes up? Don't you guys insure the rebuild value like here in the uk?

Max Wong's picture

@ Dan--

Hi Dan, excellent question. There are two methods of insuring homes in the US. One is the cost to rebuild a house of a similar size, the other is the actual cost of replacing the insured house. While this will sound quaint and hilarious to a Brit, my house is almost 100 years old, which in Los Angeles is a very vintage house. I have full replacement cost insurance. If my house burned to the ground, I would want to be able to rebuild the house with all the crown molding, the arts & crafts movement hardware, and the vintage tile...all which give my house incredible value for its size currently, and were the reasons why I bought it to begin with. What I didn't think about in advance of my inspection, is that in the time since I bought my home, all of those vintage parts have become rare, and the cost of specialized skills like finishing carpentry etc...have all gone up. This is the main reason for the dramatic increase in my insurance. My insurance company actually has comps for my type of home in my neighborhood so they know how much these things cost to replace. This is all kind of a pain in the ass to explain...hence the shorthand for the article. I really should have just said my mortgage went up to make it easy, but then all the helpful, and savvy Wise Bread readers (like you) would assume that my ARM went up and would start supplying me with all sorts of great solutions to refinancing, which aren’t applicable to my situation.

Guest's picture

Rooting for you! Anything is possible. Looking forward to following up and hearing your updates!

Max Wong's picture


Thank you! I need all the rooting I can get!

Guest's picture

I don't have landlord insurance, but that rate seems astronomically high. Have you shopped around?

Max Wong's picture

Hi Guest!

Currently I am shopping around. Stay tuned for the gruesome details and analysis.

Guest's picture

$31000 is more than I make in a year, so you are ridiculously lucky that its only about 30% of your income each year.

Max Wong's picture


Hi there! Yes, as I stated clearly in the article, I am very aware that all my problems are First World problems, and for that, I am grateful. I am also aware that I have all sorts of privileges--everything from a college education to good teeth--that make $31,000 an easier challenge for me, than for the average American.

That said, with regard to your income, no, you will not be able to save $31,000 this year if that is more than you earn, but, there are financial moves that even homeless people on disability ( can make to incrementally improve their finances. I learned many of my money saving/money earning strategies while working my first post-college job that paid just $12,000.

Guest's picture
NZ Muse

Oh, wow! Massive goals - good luck (and what a cool story about Instagram).

@Dan - yeah I wondered about that, guessing home insurance must work differently than in the UK/NZ.

Max Wong's picture
Max Wong

@NZ Muse

Thanks for your comment! Yes, I totally have an amazing "Instagram changed my life" story. It's miraculous, but at the same time validates my belief that if I always try to do my very best work, eventually the right person will notice.

Also, see my response to Dan above about the home insurance. (Yes, there is a reason why you both correctly questioned this).