September 2014 Early Retirement Progress

Now that it’s the middle of October, I should catch up on this. My only excuse was that we’re on vacation – currently in Vienna, Austria (and pouring down rain).

We contributed $4,787.72 this month to our retirement accounts  We lost $10,095.63 in interest this month – a little less than we gained last month.

We have all of our employer offered tax-deferred accounts maxed out at this point. I have about $300 going towards Loyal3 and my taxable Fidelity account per month. Next year, I would like to also save enough to contribute to two Roth IRAs, but it may or may not happen. In the past our AGI has been too close to the limit to even think about Roths, but this year, with 35k going towards 403(b) plans, we might make it (although, we won’t have as many deductions going forward either, so it may be a wash). I’ll try to save the money anyway and we’ll just have to contribute it all at once in that magic time frame between January and April 15.

Watching the markets, this month may wipe out any gains for this year, but we’ll see…

2014 Totals

So far, for 2014, we’ve contributed $31,693.07 (79.23% of the new goal of 40k), and we’ve gained $15,945.46 in investment gains (78.70% of our planned total).

Detailed Financial Picture – October 2014

September’s Numbers

As of October 9, 2014, we are $15,000 in debt without a mortgage to speak of (yet).  We currently have $506,961.16 in assets.  Our retirement accounts are at $396,992.38. Our Net Worth is $491,961.16 , down from $507,579.11 last month (3.08% decrease).

This is a short update as we’re enjoying ourselves in Zurich today.

I used the proceeds from our house sale to pay off our line of credit – I got hit with a $36 interest “fee”, but we were just floating the money until the house sold anyway.  We have no mortgage (or house) any more, so that affects our net worth significantly.

We “spent” about $44,000 in seller’s costs to sell the house (concession and broker’s fees), so that’s where most of the drop comes from.  Considering that, I don’t think we did too bad.  The house sold for less than we bought it for – but it sold for list price and we didn’t have to do any repairs to it after inspection.

That leaves us with our car payment for the next few months.  Because it’s at 0% interest rate, we’re not planning on paying it down quickly until we’ve moved into our new house and see what else we have to spend money on. We’ve already got the down payment for the house, now we’re just saving up for the closing costs.  That’s where all of our extra money will be going in the next few months.

Debt (in the order we’re paying it down):

  • Line of credit (8.75%): $0.00 (-8,000.00)
  • Chase (4.99% for life): $ 0.00 
  • Student loans (aggregated 4.21%):  $0.00 
  • Car loan (0%): $15,500 (-500.00)
  • Mortgage (4.125%): $0.00 

Total paid off in September (not counting the mortgage): – $8,500

Home-less!

One of those things you never think about enjoying – but we’re “officially” home less. Closing was on the 1st, and I’ve got the final HUD-1, and the confirmation that USAA is mailing us a check (MoversAdvantage), but I don’t have the money in our account, nor is our mortgage showing as zero balance. They said it could take until this morning for that to happen, so I’m not going to start making any phone calls yet.

Last weekend, we finished packing and put all of our furniture, and a good bit of our “stuff” in storage. Anything we didn’t sell, donate, trash, or bring to my mom’s with us is in storage – and it still takes up a lot of space: 12 storage pallets…

On Saturday, we’ll be making our last drive to DC for a while – our flight to Europe leaves from Dulles. We’re doing a park and fly deal with an airport hotel – we’ll leave our car there for two weeks, then stay there the night we get back into the states: all for $99+tax, less than we’d pay for 14 days of parking at Dulles ($140 in the economy lot). Our flight from Europe gets back about 9pm as well, so having the chance to rest the night before driving 4 hours will be much appreciated.

Here’s to enjoying our vacation without a home on the market to worry about!

Healthcare updates for 2015

Dad’s company has sent out details to the health plans for next year. We had to select the HRA plan this year because we were already under an FSA plan when we had to switch from my company’s benefits to his. But, this year, the HSA plan is the only option. The company contributes $2250 for a family plan and we’ll contribute the rest of the allowed maximum – one of the few things that is deductible on PA state taxes. They also lowered the employee contribution prices of their health plans. We’ll be paying $77 less per bi-weekly pay period starting in 2015 (about $166/mth).

We rarely go to the doctor except for preventative appointments (and the random blood test for medicine maintenance), so I don’t foresee that we’ll use a lot of the HSA money – but we’ll be able to keep it from year to year.

I’m also playing with our portfolio goals spreadsheet in Google Sheets – and we *might* be able to contribute a total of 75k (including company contributions and matches) in 2015. I don’t want to say for sure since I can only guesstimate our mortgage and utility payments as of now. But, I think I’m going to be shooting for a 60k contribution goal, which might change as we settle into our new house.

The last bit of good news is that Dad’s company no longer has a vesting schedule. He will be 100% vested in his 403(b) as of January 1, 2015. I still have to wait 3 years until I’m vested in my employer’s contribution, but that’s not a big deal.

Here’s to hoping that in 10 years, we’ll be financially independent!

Closer to Closing

We spent the weekend selecting the floors, carpet, cabinets, countertops, etc that we’ll be putting in our new home. We also got the final contingency expired or removed for selling our house in VA. We’re actually going to sign all of the seller paperwork tomorrow at the bank. We’ll be getting about 82k estimated by the HUD-1, plus about $2500 back from escrow, and $2500 from USAA’s MoversAdvantage. Well more than the 20% we need for our new place.

We’ll be putting down only 20% on the new place, and saving the rest to buy the appliances that the house doesn’t come with (fridge, washer/dryer, freezer, blinds) and networking. We’ll also be saving about 2k per month towards “extras” while we have no mortgage. Our new mortgage plus “escrow” will be about $2100, more than we originally thought, but we’re also getting a lot more than we originally thought, and it’s still less than we are paying on our house in VA, so it’s an improvement. We’re probably not going to escrow – it may depend on any fee/interest rate hit we take by not escrowing – but we’re leaning towards not escrowing. We have the discipline to save it ourselves, and almost 9k/year gaining interest, even at less than 1%, is still pretty good.

The movers are coming this Saturday to take everything out of the house and put it in storage, then we’ll be “homeless”. Closing officially happens on October 1, and we’re 95% of the way there. I’m not going to say 100% until the money is sitting in our account though! Interest on ~85k for at least 5 months will be kinda nice.

Donating, Trashing, Selling, Moving

Total items out of the house: ???/365

I really have no idea how many things are no longer in the house, because this past weekend, we almost finished packing up the house for the movers to come on the 27th. I took 2 RAV4’s (with the middle seats folded down) worth of trash and recycling to the dump. We also had a junk removal company come and take the piano, a couch and a daybed. We thought about listing them for free on craigslist, but I was concerned about timing (we were only in town for 1.5 days) and potential damage to the house with amateurs trying to move the piano. Since the piano was going, we had them take two other large furniture items we knew weren’t going to fit in the new house as well. $450 well spent I think.

I tried to sell three more items via a Facebook yard sale, but no bites. I think we won’t be using them in the new place, but they’re either worth much more if I had time to let them sit on craigslist, or they might fit in the new place, so we’ll just pay to move them with us and address the issue later.

I have a few (3) boxes marked donation – I don’t have time to get them to the donation center, so they’re in clearly marked boxes and will go straight to the donation center in Pittsburgh once stuff is out of storage. We’re paying by weight, so I’m not too concerned about the cost to move/store them.

When you put all of your stuff in the garage in boxes, you really get an idea of just how much stuff you have. We have a two-car garage – pretty normal in size. It is completely full of boxes about 4-5ft high with a little path all along the edge, and we have more boxes scattered throughout the house. On the plus side, we have almost everything packed up – there are a few last minute things (like sheets on the beds) to pack, but we’ll be able to do that the night before or the morning the movers come. We’ve gotten to the point where we wonder how exactly to pack certain things – like snow shovels…

We’re almost to closing, and it’s looking like we’ll make it to closing on October 1 without any issues. I’ve already put on my calendar when to call the electric company and water company to come out and get final readings. Looking forward to being mortgage free for a few months!

To Escrow or Not Escrow

With our new house, since we’re planning on putting down 20%, we were given the choice to escrow our taxes and insurance or not.  I didn’t realize this was even an option – we’ve *always* escrowed.  Of course, this is the first time we’re putting a full 20% down on a house.  There are advantages and disadvantages to each option, but I think we’re leaning towards not escrowing because we know we have the discipline and would like the interest.

To Escrow

Escrowing is “easy” – we don’t have to worry about paying our property taxes each year – the mortgage company takes care of it.  If we were bad at budgeting, escrow would be a good thing.  However, we’re pretty good at budgeting for long term expenses (we do it for our vehicle property taxes as well as car and life insurance).  If we don’t escrow, we’ll have to save up for the first payment – which is in April for my mom (same county, different school district).  Now, our home should be assessed as unimproved land for that first April payment, but then we’ll need to pay the full amount once they figure that out.   That’s potentially having to save 8k in one month for taxes.

To Not Escrow

One of my pet peeves about escrow is the analysis that they do each year and it alternates between sending us a check for a few hundred dollars and us owing a few hundred dollars per year.  I wish they’d just assume that the taxes will be higher (because they probably will be!), and charge the difference – instead they send us a check, and are “surprised” when we owe money the following year.

If we save our money ourselves, we’re looking at earning interest on about 9k/year – not much right now, but possibly more in the future.  And we want to pay the mortgage off in about 10 years, so we’d be paying the taxes and insurance ourselves anyway at that point – might as well get used to paying it ourselves now.

Have you had the choice to escrow or not?  What did you choose and why?

Detailed Financial Picture – September 2014

August’s Numbers

As of September 8, 2014, we are $436,450.69 in debt (that includes the mortgage).  Without the mortgage, we’re at $23,500 in debt from our auto loan and line of credit. We currently have $944,029.8 in assets (including our house).  Our retirement accounts are at $403,223.11. Our Net Worth is $507,579.11   (includes house and mortgage), down from $619,406.42 last month (18.05% decrease).

I’ve adjusted our home value to be our sales price minus the estimated selling costs (about $48k), and adjusted our vehicle values as well.  The selling costs are where we’re taking the big hit.  I also pulled money out of our line of credit to put the 8k escrow down on the new house, thereby increasing our indebtedness.  I’m expecting to pay that off when closing on our house happens.  We’re expected to get about 85k out of our house, and we’re only expecting to put down 75-80k on the new place in February/March.  In addition to being able to save an additional $2,000/mth by not paying a mortgage, we’ll be able to cover down payment plus closing costs plus paying off the 8k line of credit.  One thing I have to keep track of is all the expenses we’re expecting *after* we close on the new place.  We’ll have to pay “out of pocket” (ie. not in the mortgage) for any networking we’re doing – est $2,000, a fridge – est $1700, and washer and dryer – est $1500, and any window coverings (and the whole moving thing).  I need to at least pay for some sheers there to keep privacy in the upstairs bedrooms.  So, basically, I’m hoarding money until we get through closing on the new place and moved in, then I’ll see what we have left and pay off anything I reasonably can.

I’m really looking forward to things settling down and starting a new routine and new budget – even if it is the “temporary” routine of living at my mom’s without a mortgage.  If my guesstimates are close, we’ll have the line of credit paid off by the end of the year, and just the car payment left for a while.  Then once we start with a new mortgage, we’ll be able to save quite a bit – and we’re hoping to pay off the loan in about 10 years – if not sooner (we’re still taking a 30yr fixed loan).

The markets were OK to us, we’re about flat this month, with just our contributions.  Next month will hopefully see an increase as my first 403(b) contribution will show up.

Debt (in the order we’re paying it down):

  • Line of credit (8.75%): $8,000.00 (+8,000.00)
  • Chase (4.99% for life): $ 0.00 
  • Student loans (aggregated 4.21%):  $0.00 
  • Car loan (0%): $15,500 (-500.00)
  • Mortgage (4.125%): $412,950.69  (-715.75)

Total paid off in August: – $6,784.25

Under contract to sell!

Our house in VA is officially under a ratified contract and off the market.  The expected closing date is October 1.  *fingers crossed* that we make it to closing on time!

We’re going in to sign the paperwork to start our new construction on Saturday – putting 8k into escrow, with a ballpark final price of 362k.   That’ll put our estimated mortgage (with taxes and insurance) payment at as low as 1800/mth , and as high as 2100/mth, depending on the interest rates available when we close and how many points we can pay.  One local lender is offering 3.25% right now for 2 points, but if we go with them, we’ll lose out on a 35k builder incentive credit.  We have to go with the builder’s lender to save that – already figured into the 362k amount.  Their rates aren’t bad, but I don’t know what options we have for paying points to reduce our total payment.

I ran a few numbers, and paying points up front will lower our payment more than putting more down.  We’re going to put 20% down, whatever the final cost is, and save the rest for either paying points or paying for appliances that aren’t included (fridge and washer/dryer).  Anything else will go towards paying the movers and replenishing our emergency fund.

August 2014 Early Retirement Progress

We contributed $3,806.57 this month to our retirement accounts  We gained $10,857.66 in interest this month.  That’s almost as good as we did in February when we gained just over $14,000.  The markets were nice to us this month, and hopefully they continue.

At this moment, I’m more concerned about mortgage interest rates remaining relatively low.  We wouldn’t borrow the money for our new house until February at the earliest, March as likeliest, and April as a late option.  Interest rates do more for our monthly payment than our option choices.  We’re looking at about 1900-$2100/month depending on exact rates for the new construction – but that wouldn’t start until March probably (maybe as late as April).  We’re hoping that our house in VA sells before the end of the year – preferably in the next few months, so we can save that payment until we move in.

I’ve maxed out my 403(b) contribution percentage which will start coming out in my September paycheck – 20% of my salary (~$2100/mth with “match”).  That will increase our monthly contribution for the rest of the year, pushing us just over $45k in contributions for the year.  We’re just going to learn to live on a lower take home pay.  (I’ve also figured out that we’ll end up paying more PA taxes at 4.07% of gross than VA’s 6% of Federal AGI :( )  I have to wait until my September paycheck to figure out our new monthly net amount.

2014 Totals

So far, for 2014, we’ve contributed $26,905.35 (67.26% of the new goal of 40k), and we’ve gained $26,041.09 in investment gains (128.53% of our planned total).