Category Archives: Finances

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?

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?

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

10 Minutes to save $15 per month

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I just spent 10 minutes on the phone with Verizon’s “Elite team” and lowered our Internet bill *and* increased the speed (not that we need more speed).

We have FIOS Internet, and have since we moved into our house.  In fact, one of the “requirements” for our house when we were looking was that FIOS was already in the neighborhood, or being put in (not just in the planned stages).  We started at a small 5/1 speed for $59.99 – you couldn’t do any better without bundling, and we didn’t need TV or phone, so that’s what we got.  Over the years, We made it up to $64.99 for 15M/5M – I honestly haven’t noticed the difference in speed – at most, we’re streaming *one* show/movie/music at one time, so 5 really was just fine for us (I’m also reminded of when DSL speeds were 384k/56k and we liked it – get off my lawn!)

I got the notification of my new Verizon bill, and I was being charged $72.99 – whoa! With no notice, my rate goes up, so I checked online to see what the new prices/rates/bundles were.  I could get a 3/1 for $69.99, but for $3/mth, we were going to just stay with the 15/5.  Nothing much available for us through their web page.  So, I looked over at Cox – our local cable company: they had 25/5 for 48.99/mth for 3 months, then 59.99/mth after that.  I don’t really like the cable company, but we use them for our office, and it’s been stable and we haven’t had to deal with their customer service, but hmmm..

I called Verizon and got transferred to their “Elite team”, and spoke with a nice gentleman who asked me how I’m liking the FIOS and what I’m using it for.  He did try to up sell me to a TV package, but I told him we just don’t watch TV (and anyway, our house isn’t wired for TV – I’d have to run the wiring myself – yech!).  I told him what Cox was offering, and he said “let me see what I can do for you”.  He looked through his computer and was able to offer me 20/5 for $57.99/mth for at least one year, but after that, it’d go up to whatever the current rate was at the time.  I accepted and set a reminder in my calendar to call again next January!

The whole call took me about 10 minutes, and some of that was BSing with the guy who lives in Pittsburgh about Pittsburgh (I gave him my Pittsburgh area code cell phone for a callback number).

Twice this year, I’ve been able to save money by talking to a human on the phone for about 10-15 minutes.  Have you called the services you use to ask for a better rate?

Student Loan #1 Paid Off!

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Technically, it’s loan #3 according to the servicer, but it’s the first loan I’ve paid off.  I got the official “paid off” letter this morning, although it was a very interesting road to get there.  I submitted the payment (about $6 more than the estimated pay off amount), the loan showed a -$6 balance, then I logged in last week and it showed a positive $6 balance – I owed them 6 more dollars (WTF?!?!).  I called, and apparently, it’s super common for the payments to not be applied properly for a payoff.  The customer service representative was able to change that so that it was applied properly.

Figuring I did something wrong when I submitted the payment, I asked if I should have done anything differently – and he said nope.  So, this just “happens”.  With two more loans to pay off, I can guess it’s going to happen at least two more times – so I’m annoyed by the servicer even as I pay off the stupid loans!  I’m planning on paying off the next one in June, and the last one in July, and then I’ll be done with the servicer!

How I’m Going to Meet My Financial Goals

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Our financial goals are pretty modest, mostly to account for the fact that we’re not completely in control of two of them – the market has a lot to say about it.

Our Goals

  • Pay off all non-mortgage debt that carries interest
  • Get to 650k in Net Worth, with a stretch goal of 700k
  • Increase our assets to 1.2 million (conservative to account for market fluctuations)

Pay off Debt

Our goal this year is to pay off all non-mortgage debt that carries interest.  We’re on track to have my student loans paid off around July.  Then, the only debt we’ll have is the car loan at 0% interest and the mortgage at 4.125% interest.  We’re still waffling on killing the car loan this year – we can do it – but because it’s 0%, we’d rather that extra money work for us.  The current plan is to set aside $2500/mth to pay off non-mortgage debt (principal and interest).

Once the student loans are paid off, the plan is to put 20% of my salary and 17.5% of Dad’s salary towards our 401(k) and 403(b) plans (the percentages that get us just over the legal maximum not counting any bonuses).  That won’t max us out for this year, but it will give us our new “normal” after-tax income for 2015, and once we get those numbers, we’ll allocate the rest of that $2500/mth to either a Roth, beefing up the emergency fund (my preference), a taxable investment account, or the car loan.  We don’t want to go hog-wild and try to contribute an almost combined $35k in 6 months leaving us without what we need for “normal” spending.  But, if the contribution limits change in 2015, we’ll be increasing our contributions along with it – both of our retirement plans have a “contribute the legal max” button that we plan on using for 2015.

650k Net Worth/Assets of 1.2million

We added almost 150k to our net worth in 2013, and almost 200k to our assets. A good bit of that was the market run-up, and I don’t expect that to continue in 2014, but I do expect to increase our net worth and assets by contributing substantially more to our retirement accounts, and paying off debt.  If the stock market starts running up again, I may revise our goal, but gaining 100k in one year will make us happy.

We’re also dependent on our housing market to stay stable (or grow), and while it’s been stable and growing for the last 3 years, I’m just hoping it stays stable.  The DC area has a “special” housing bubble in that so many people are moving in and out of the area, that housing has remained relatively stable – even through 2007-2009.  Values did drop, but not as sharply as other areas of the country.  I’m counting on that protective “bubble” to remain throughout 2014.

Detailed Financial Picture – January 2014

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December’s Numbers

As of January 6, 2014, we are $450,453.74 in debt (that includes the mortgage).  Without the mortgage, we’re at $31,918.46 in debt.  This includes student loans and an auto loan.  We currently have $1,012,394.70 in assets (including our house).  Our retirement accounts are at $348,080.08.  Our Net Worth is $561,940.96 (includes house and mortgage), up from $538,555.92 last month (4.34% increase).

We topped $1 million in assets before the end of the year (thank you stock market!), so I guess I can call that goal completed – even if it was down to the wire.

Our investments increased 31.38% over the course of 2013 – a good portion of that was contributions, so we have no secrets for timing the stock market.  Our net worth increased 28.38%, with a lot of thanks to the stock market.  We did pay down just shy of $30k ($29,996.34) of debt principal this year, so that helps with increasing the net worth.

We paid off the last credit card.  All we have left now is student loans and our car loan.  Our current plan is to aggressively pay off the student loans (expected about June-July) and then contribute towards our retirement accounts before throwing everything else to the car loan.  The student loans are broken up into three loans, one (very small one) at 2.15% and the others at 6.55%.  January is a three paycheck month for Dad, so that extra paycheck is going towards a ~$2,300 loan at 6.55%, completely paying it off. I just have to (impatiently) wait until after the January auto-debit clears to get a final payoff number to schedule the payment.

Daughter Person is “graduating” to the next room at daycare, and starting next week, our tuition will drop almost $20/week – giving us anywhere from $80-$100 extra in the budget every month.  She’s been hanging out in that room for the last few weeks when there are too many kids in her room, so I think she’ll do just fine during the transition.

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

  • Line of credit (8.75%): $0.00
  • Chase (4.99% for life): $ 0.00 (-1,992.53)
  • Student loans (aggregated 6.55%):  $12,500.73 (-142.27)
  • Car loan (0%): $19,560 (-490.00)
  • Mortgage (4.125%): $ 418,535.28 (-673.77)

Total paid off in December: $3,298.57

Looking Forward to 2014

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With 2014 here, I wanted to evaluate my goals for the upcoming year.  And actually write them down this year.  I’ve split my goals into three categories, and three goals in each category.

Health Goals

I’m overweight – borderline obese (although you wouldn’t know it by looking at me, I’m one of the people BMI just does NOT work for), and I’d like to get close to a “normal” weight, which for me is between 115 (hah!) and 154 lbs.  I’ve never been 115 in my adult life, and even 150 is hard for me to maintain for longer than about a month.  I also look like I’m terminally ill below about 145. 15lbs isn’t going to get me to “healthy”, but it’s a start.  I’m more focused on my body fat percentage and jeans size than actual weight.

  • Lose 15 lbs, with a stretch goal of 20 lbs
  • Exercise at least 3 times per week for at least 20 minutes each time
  • Eat at least 3 servings of fruits or vegetables per day – potato based foods do not count as a veggie

Financial Goals

I know I mentioned wanting to pay off all non-mortgage debt this year, and we could likely do it, but with our car payment at 0%, we’re going to pay the student loans down, then increase our retirement contributions to the maximum allowed (and maybe qualify for a Roth?).  It will slow down our car repayment, but since it’s not “costing” us anything, I’d rather put the money to work for us.

  • Pay off all non-mortgage debt that carries interest
  • Get to 650k in Net Worth, with a stretch goal of 700k
  • Increase our assets to 1.2 million (conservative to account for market fluctuations)

Household/Parenting Goals

These are random goals around the house that I want to complete this year.  These are the big ones, although I have smaller ones in mind already.

  • Get rid of diapers!
  • Get rid of another 365 things in 365 days
  • Finish the tile in our basement project