Author Archives: Mom

About Mom

A family of three living in the Pittsburgh area. We both work full-time and work on raising our daughter.

Detailed Financial Picture – March 2014

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February’s Numbers

As of March 6 , 2014, we are $445,055.54 in debt (that includes the mortgage).  Without the mortgage, we’re at $27,841.81 in debt.  This includes student loans and an auto loan.  We currently have $1,034,763.35 in assets (including our house).  Our retirement accounts are at $363,981.50.  Our Net Worth is $589,707.81 (includes house and mortgage), up from $571,497.88 last month (3.19% increase).

Thanks to J Money, we’re listed on the Ultimate List of Blogger Net Worth.  I was surprised that we were as high on the list as we are, but we live in a very high cost of living area, and all of our numbers reflect that.  Do I wish we had as high of a net worth without our house?  Sure, but our house is a significant chunk of our assets.  If you count the mortgage, but not the house, we have a net worth of -$33,292.24.  As our house can be sold, or we can borrow against it, we have some access to the equity in our house.  In our area, just having more than 20% of your house in equity is a pretty big accomplishment (we have 33% using our last official appraisal, which is probably on the low side since it was over two years ago).

My 401(k) contribution hasn’t made its way into the account yet, so I have money “floating” around the ether until it’s deposited – have I mentioned before that I’m not a huge fan of my 401(k) plan?

Dad’s new withholding rate starts on the next paycheck, so we’ll see what it does to our cash flow.  I expect to have $2-300 less per paycheck, but I won’t know for sure until the 14th.  But, it will increase our investment accounts at a much faster rate.

The markets improved in February, with our investments increasing by 5.85% this month.  They’re up 4.94% since the beginning of the year.  I’m hoping for a modest 15% increase this year (remember, our investments increase from both the market and from our contributions), bringing us closer to our early retirement goal.

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

  • Line of credit (8.75%): $0.00
  • Chase (4.99% for life): $ 0.00 
  • Student loans (aggregated 5.32%):  $9,294.76 (-882.14)
  • Car loan (0%): $18,580 (-490.00)
  • Mortgage (4.125%): $ 417,180.78 (-678.41)

Total paid off in February: $2,050.55

Index Investing Small Amounts

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I have a small taxable account that I’ve slowly built up with my “fun money” – $25/month.  It’s only got $550 in it at the moment – not enough to buy an index mutual fund now nor or in the near future.  But, I like to invest in low cost index funds.  How can I do that when I don’t have the minimum to buy into one?

Exchange Traded Funds

Enter ETFs.  ETFs are sort of mutual funds, sort of stocks.  They’re traded throughout the day, and so are priced “instantaneously” vs end of the day like mutual funds.  They have some of the benefits of mutual funds, but some of the risks of stock trading (most notably, buy-ask spread).   Some are low cost, others are very high cost – just like mutual funds.  Actively managed ETFs are more expensive than passive index based ones as you’d expect.

The best part – you can buy just one share.  As long as you have at least the value of the share plus any trading fees in your account, you can buy a share.  Fidelity (at least) offers a lot of no trading fee (NTF) ETFs – mostly in the iShares line of ETFs – so, for the cost of a “share”, I can invest in an index ETF.

The biggest disadvantage is that I can only buy whole shares (at least at Fidelity).  That means that I have some money sitting in the “Cash” bucket not really working for me like it could be in a fractional share of a mutual fund.

My Strategy

This is a taxable account, and is kind of my “playground”, even if it’s not a very big one.  Every 3 months, I transfer $75 into my Fidelity account – a decent amount to be able to afford most ETFs I want.  Then I buy one of ITOT, IDV or HDV.  This allows me to dabble in dividend investing for less than buying stocks outright (and less research required!), yet still be primarily index investing.  How did I pick those?  I looked at all the ETFs Fidelity offered that had no trading fee and an expense ratio of 0.5% or lower (use their ETF picker).  These looked interesting.

When I have the minimum $2500 to invest in the index mutual funds I prefer, I’ll likely sell the ETFs and buy the mutual funds, but at my current investment rate, that’s still a few years off.  Once all of our tax-advantaged accounts are maxed out, this account will begin to see more cash flowing into it, but it will likely be next year at the earliest that I can consider mutual funds.

Adjusting Insurance Premiums

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March is when we owe USAA our auto insurance premium.  This year, it was topping $500/6mths for our two cars (after all the discounts!), and I don’t think it should be.  We have never had an at fault accident, and Dad has only had one moving violation in the last 3 years (it was adjusted from “speeding” to “failure to obey posted sign” – no points).  Dad’s car still has collision on it, because it’s a difference of $1/mth, so we might as well.  Mine has collision as it’s financed still.  I removed the rental car option – we *can* survive on 1 car, and hopefully, it’s the “other guy” who’s paying for the rental car anyway.  I also raised our deductibles to $1000 per vehicle.  We have that money in our emergency fund, and it saves us about $50/6mths.  It’s also the highest deductible allowed, so I can’t reduce it any further.

I also looked at our homeowner’s policy.  It had us replacing the inside contents of our stuff at a 75% of home value rate – over $355k of “stuff”.  I can’t imagine how we would spend that much on the interior items in our house, it’s *maybe* $100k-$150k.  I was able to lower that coverage to 50% of home value or about $250k.  It lowered our premium by about $50/year.

I *almost* changed our deductibles as well.  We have a $2,000 deductible for both options (“wind & hail” and “other”), and I considered raising them to $4,500 – tied to home value, it will always be 1% of the home rebuild value.  It would have saved us another $500/year.  The only reason I didn’t do it was that our emergency fund would not be able to take two car deductibles *and* the homeowner’s deductible at the same time.  We’d need another $1500 in our emergency fund to do so.  By the end of this year, I hope to have a lot more than that in our emergency fund, so I will likely raise those deductibles then.  We could raise them as high as $10,000, which may be a consideration as we have more and more savings to self-insure.

How often do you look at your insurance premiums and coverage to make sure you’ve got the appropriate amount of insurance for you?

Maxing Out One Retirement Account

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Today, I had Dad change his retirement account withholding.  We checked the box that says “take out the legally allowed max”.  We’ll be contributing about 16% vs the 10% we do now, which translates to approximately $250-$300 “less” per paycheck (bi-weekly).  We were already contributing so high because that was the minimum to get his company’s match (8.33%!), so we figured we’d delay debt-repayment for one month to just go ahead and max it out this year.

Dad works for a non-profit, so instead of a 401(k), he has both a 401(a) and a 403(b).  For all intents and purposes, the two together are the same as a 401(k) as far as the employee is concerned – except they’re two separate accounts at Fidelity.  We’ll be contributing $17,500 of our own money this year, and an estimated $8,500 of his company’s match for a whopping $26,000.  He wont be 100% vested until he’s there for another 2 years though.

I upped mine to 6% for this month, and once the student loans are paid off, I’ll up it 2-3% a month until we either get to the max or get uncomfortably squeezed on cash flow.  After student loan repayment, we’ll have an estimated $2300/mth to play with, so even if I maxed out my contributions, we should still be fine on cash flow.

I’m very excited to see the light at the end of the debt repayment tunnel and be able to really start saving that money.

Personal Finance as Required High School Education

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I came across this news story today:  Oklahoma schools required to teach high school students to manage finances.  This is the first I’ve heard of schools requiring a personal finance class (if they have a class at all) to graduate.

I think this is a huge step in the right direction and would love to see it compulsory in all states and school districts.  I think the personal finance knowledge is more important than the diploma really.  And, unfortunately, it seems that parents aren’t doing a great job of teaching their kids either.

Does your local district have a personal finance class?  Is it required to graduate?

Zip-top Bag Replacements

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We’re trying to be as green as possible in our home, and one thing that we don’t particularly like doing is using the disposable zip-top bags for freezer cooking – not the kind with plastic zippers, but the kind that “lock” together.  But, we haven’t found a great replacement yet.  We’re able to replace some of it with Pyrex dishes and mason jars, but most of the raw meat in marinades haven’t done well in those – the liquid isn’t covering the meat (Pyrex), or the container isn’t big enough (Mason jars).  We’ve looked at several of the zip-top replacement bags available online, but they either close with velcro or a “real” zipper – neither of which can keep liquids in the bags.

The liquids is one of our concerns – we need to be able to remove a lot of air to allow the marinade to touch the meat all around (not just at the bottom).

Raw meat in a container is our other concern.  We generally do not reuse bags that have had raw meat in them because the nooks and crannies are difficult to wash – even for the dishwasher.  We do wash and reuse them for things like bread, waffles, and pancakes, but that’s a *very* small percentage of the bags we use compared to the raw meats.

Has anyone else replaced their zip-top bags with something reusable?

Replaceable Car Parts

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Well, it might be July/August before we have my student loans completely paid off – we just replaced the struts on Dad’s car for a cool $1,200.  That’s about half of the car’s worth, but it’s “normal” maintenance according to our mechanic.  We had been talking about replacing his car at the end of the year, but after hearing that it’s “normal” maintenance, we might keep it until it’s unreliable – and maybe avoid another car payment.  At this point, I think we’ve replaced everything in his car except the engine, transmission, and body.  So, it should hopefully last us a while longer.  And to be fair, there have only been two “non-maintenance” repairs to the vehicle since I’ve known Dad: a window motor, and a seatbelt retractor (kept setting off the SRS light).

His maintenance manual doesn’t mention a lot of these parts that have had to be replaced, but seem to be very common “wearable” items that just eventually need replacing.  My car manual has pretty much nothing except oil/filter changes until 200k miles.  Does your car’s manual/maintenance schedule have things like catalytic converters and struts?

Supplies Needed for Freezer Cooking

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It’s now been over a year since we started seriously freezer cooking – we’re in the middle of our 5th session – and I expect to have meals through May/June.  We’re trying almost all new recipes this time, with 2 favorites that we’ve previously made.  Dad is getting two soups for his lunches: Slow Cooked Split Pea Soup and Tomato Leek Bisque.  And I made some Cheesy Breadsticks (almost all of them mad their way into the freezer!) and Garlic Bread for appetizers. The rest of the meals are primarily for dinner.

I’ve talked about the planning and the shopping. But what about supplies?  We cooked and canned a lot prior to starting freezer cooking, so we had many of these supplies already, but you do need larger pots and pans to be able to cook some of these recipes.  We have an induction burner that is our primary burner, so you may not need to spring for the specific versions of things we have as we need the “induction-ready” stainless steel.

  • Large stock pot – we have both a 20qt and a 40qt one.  We need the heavy stainless steel for the induction burner, you might be able to find similar sized ones cheaper (although, those are pretty cheap!).  The 40qt is used for cooking 5 lbs of potatoes at once, simmering soups (and canning).
  • Large mixing bowls – We have a set from Oxo.  The 5qt one is used a lot.  If you try any of the recipes from the Dream Dinners book and triple them, the 5qt will barely hold it all.  You’ll want several mixing bowls in general, of various sizes – we use them to store chopped onions before putting them in recipes, mixing sauces and spices.
  • Measuring cups/spoons – several sets!  We have 3 full sets and one partial set, and we’re still washing measuring utensils all the time.  We use mostly pyrex 1-4 cup measuring cups.
  • Good knives – whatever style/brand you like, you’ll likely need a chef’s knife, a slicer, and maybe a deboning knife or cleaver – depending on the meats and cuts you prefer.  We each have a knife so that we can work at the same time.
  • Onion Goggles – seriously, just get them (or come up with some other way to chop 10+ lbs of onions without crying).
  • Saute pans – We have a 3qt one, and wash it often.
  • Sauce pans – You’ll want at least a 2qt one, but the stock pots can replace sauce pans for the most part.
  • Dutch oven – Several recipes want a dutch oven rather than just a stock pot, so you’ll want one – at least a 7qt one. It needs to be able to go from stovetop to oven.
  • Crock pots – If you’re just doing single batches, you can get by with the standard 4.5qt crockpot.  If you double or triple the batches, you’ll want the smaller one *and* a larger 6-7qt one.  We have both because you want the crock to be at least 3/4 full of “stuff”, if you don’t have that much, the larger crock pot will be too big and burn your food.
  • Freezing containers/bags – we’d like to use less zip-top bags for freezing, but we haven’t found a great replacement yet.  We use the no-leak Pyrex (buy at shopworldkitchen.com for better prices) where possible, but for marinades, the bags are still the best.  For soups, we use wide-mouth pint and pint and a half jars with storage caps. (Buy those at your local hardware store, much cheaper!)  We even tried marinades in the mason jars once, but it didn’t work out so well.  For casseroles, we use foil pans covered with foil (half-size chafing pans from Costco, once rinsed and clean, we can recycle them).

Much of this you probably already have in your kitchen.  You may not have the large sizes that I mention here, but you can always reduce a recipe to fit whatever you have, instead of trying to make it all at once.

Taxes finalized – and already plotting to amend them

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We filed our taxes this weekend with the feds and with the state.  Last year, we spent more than 2% of our AGI on tax advice for our 2011 taxes (involved selling a rental property), and got to take the nice “other deductions”.  We were $600 short this year – until I started researching into what counted and what didn’t.  I can claim all of my membership fees for professional organizations and certifications – that’s *easily* above $600 for the year (and it all comes due in November/December!).  So, even though I’ve filed our taxes already, I might amend them and include my membership fees.  What will decide me is if I have to pay another filing fee to TurboTax and for how much.  If the fees are higher than I’d get back in taxes, not going to bother, but if it’s less, totally going to bother – I have all the records easily accessible.  I might also *gasp* mail in the forms….

Next year, we hopefully won’t be paying for a CPA to defend us during an audit, so it will go back to not mattering any more.

Update: We’d get back ~$50 from amending our 2012 taxes, and $9 from amending our 2013 taxes.  I’d have to mail all four tax forms (two federal and two state), and the certified mailing fees would really eat into that.  I’m not mailing them not certified, so I’ll just chalk this up as a learning experience and if the opportunity comes up in the future, I know I can take that deduction.

Have you gone back and amended returns?

Detailed Financial Picture – February 2014

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January’s Numbers

As of February 7 , 2014, we are $447,106.09 in debt (that includes the mortgage).  Without the mortgage, we’re at $29,246.90 in debt.  This includes student loans and an auto loan.  We currently have $1,018,603.97 in assets (including our house).  Our retirement accounts are at $343,855.36.  Our Net Worth is $571,497.88 (includes house and mortgage), up from $561,939.69 last month (1.70% increase).

We paid off one of the three student loans this month, with two more to go.  We owe taxes (based on the documents we have so far and estimates on the others, I don’t have all of the paperwork yet), so I put aside $1k to handle those in February – it’s not unexpected, it happens every year.  I don’t expect the estimated amount to change significantly, I’m pretty good at doing the estimating based on end-of-year statements.  It still eats into our payoff schedule.  I’m hoping that we’ll be able to pay off the last two student loans in June and July – and forward looking numbers indicate that it’s very possible, but if something large comes up, we could miss.  I can’t wait until those are paid off!

I updated our car values from KBB into our assets, and they both went up (huh?).  Not by much, but that’s a bit odd – I use “very good” for the 1.5 year old RAV4, and “Fair” for the 14 year old Accord – which runs perfectly, it just has some scratches and dings on it.  A house down the street from us is on the market for almost $600,000: it’s much smaller than ours, and at the end of a pipestem, so Zillow’s estimate of our house at ~$633k is probably pretty accurate, but I don’t know what that house will ultimately sell for.  Most of our net worth increase is from our house, and I suspect Zillow’s prices will continue to go up through the spring and summer, it’s a “hot” time to sell in our neighborhood.  There are already about 4 “coming soon” signs as I walk through the neighborhood.

The stock market overall had a not so stellar month, but we did OK relatively.  Mostly because of our contributions.  I upped my contribution to 6% total (1% into the Roth 401(k)).  We *always* get an obscene amount back from our state taxes, and so I adjusted my withholding for the state and it pretty much made up the difference, so I didn’t notice much in my take home paycheck.  Dad on the other hand needs to change his federal withholding since we always seem to owe the feds a significant chunk.  Between state and federal taxes, we are pretty close to even, but we fall into the married with similar high incomes withdrawal trap and so we never have the correct amount taken out of our paychecks.

Dual high incomes sounds nice until it comes time to do taxes. Then it’s a PITA because there’s always an assumption that one spouse makes a lot more than the other – you can see it mostly in phaseout limitations – 200k AGI for a single, 250k for married.  At least it’s no longer in the tax tables – married filing jointly is pretty much double what single is in almost all cases.  I used to contribute to a Roth – until we were married, and all of a sudden I couldn’t any more yet my income didn’t change significantly.  Overall though, I’ll take the higher incomes!

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

  • Line of credit (8.75%): $0.00
  • Chase (4.99% for life): $ 0.00 
  • Student loans (aggregated 5.32%):  $10,176.90 (-2,323.83)
  • Car loan (0%): $19,070 (-490.00)
  • Mortgage (4.125%): $ 417,859.19 (-676.09)

Total paid off in January: $3,489.92