Friday, April 22, 2016

Keeping Up With the Joneses - Part I

So, for the past few years, probably five or so, more and more of my friends and peers, and even people who report up to me at work (so, I'd consider them non-peers) have been buying homes at purchase price points ranging from $700,000 to a million.

I find this phenomenon strange, but also incredibly alluring.

Let's start with an analysis of these folks.   I will start with the ones who started this trend, and I do believe there is a somewhat contagious trend among friends that equates to keeping up with the Joneses.  The ones who started the trend, in my humble opinion, likely made smarter choices.

1.  It started with my friend Mary, all names changed to protect the innocent, and her husband George.  Back in 2011, they actually got a great deal and paid mid $500s for a home that is now likely worth close to $800,000.  They bought a 5000 square foot McMansion in a better school district, they have a small child, with 5 bedrooms, 4 baths in a new development.  Their family consists of 3 people and they do not plan to have any more children so this is a house bigger than they need.  Their real estate taxes are more than $8000.  They took out a $400,000 mortgage.  Five years later they are putting in a pool.  The house they sold they had owned since 2002 and they made about $50,000 profit when they sold it.  They were buying in a buyers market due to the 2008 real estate crash which means they were also selling in a buyers market.

Mary is in the same profession as I am, I assume she makes similar money to me.  Her husband is in law enforcement.  While he makes less money, he has a great pension that will be coming to him (and soon) such that their retirement savings is less crucial.  I have one other friend who will have a federal pension, but she cannot collect said pension until closer to traditional retirement age.  George will be able to start collecting his pension in less than 10 years and his pension is for life.  As a result, they don't have to save as much for retirement.

2.  Jennifer and Alan were next.  They are a dual income, professional, couple.  Both are in the same profession I am in.  They have three kids.

In 2012 they bought a 4 bedroom, 3.5 bath, 5000 square foot home.  It also has a 2000 square foot out building (with air conditioning) and a pool.  They bought the home for $775,000 (the prior owner had bought it for $800,000 so, again, it was likely a good buy) and it is likely worth close to a million now.  Taxes are $14,000 a year.  They took on a $620,000 mortgage.  Later they took on a $35,000 home equity loan.

They held onto their prior house for a couple of years, while the Florida real estate market improved (likely a smart move), and they later sold it in 2015 for a $265,000 profit.  I don't believe they took that profit and reduced or refinanced the mortgage on their current home, rather before they sold their prior home they put it into a trust and I assume the profits also went into that trust.    

They have engaged in a variety of real estate and trust maneuvers in the last few years.  This is probably because Alan also bought an office building and they are creating protection for their other assets.

Does it sound like I'm stalking my friends' personal business??  Well I guess I am.  All of this information, at least in Florida, is public record and readily accessible on line.  I also am learning from what they are doing, and that is both positive and negative (more on that later).

Tuesday, April 19, 2016

Tax Day Update

Well its the day after taxes are due, so its a good time to think about our 2016 progress.

First, we haven't filed our taxes since we normally seek an extension which is what we did this year.

Second, we skipped 2015 IRA funding.  Just didn't happen for a variety of reasons.  Lack of discipline, baby and child care expenses, life, etc.  So, that means we have a bit of extra savings to put towards 2016 IRA funding.

Third, I'm still waiting on Mr. Sam to make my 2016 Excel savings chart.  He's as busy as I am, so it hasn't happened.  Hard to track progress without the chart.  But see below.

Definite goals:
(1) Max out 401k, $18,000 for each of us, for a total of $36,000.  On track.
(2) Finish funding our 2015 IRAs - $8900,  Skipped
(3) Fund 2016 IRAs, $11,000 for the both of us, for a total of $22,000.  $1100
(4) Baby Sam'college fund, add another $5000 this year.  On track

Updated tentative goal, so this is a definite goal now:
(5) Add to emergency fund, $10,000, increased this from $5,000 to $10,000, since we utilized a chunk to buy my nused car.  On track

Debt killing goals:
(1) Pay off lingering credit card debt in the amount of $4261.  Down to $2403
(2) Pay off Mr. Sam's new car, remaining debt $2000.  Down to $1000


Overall debt below $450,000 goal:  Total debt $474,731.

Thursday, April 14, 2016

I Keep Trying to Get Back on Track.......

I've been spinning my wheels now for more than a year.

With the time pressures of a more than full time job, baby, husband, landlording, life, etc. my ability to manage our finances has been backsliding.

I'm not paying bills on time, rent is not being collected (that is Mr. Sam's duty), our savings rate has gone down.  I haven't even started to create our 2016 spending plan (our form of a budget), although I've put down on paper what I'd like to accomplish for savings.  Mr. Sam has not created our 2016 savings Excel chart.

I know the reason for all of this:  full time job, baby, husband, life, etc.  I've yet to figure out a solution.

I used to spend 20-30 minutes 2-3 times a week working on finances or reading about finances (money blogs help me stay on track) when I arrived at the office.  But, I used to arrive at the office @ 7:30 am.  Now, on average, I'm arriving at @ 8:45 am.

The solution is to get up earlier so I can get to work earlier.  Today, I arrived at @ 8.20 and spent an hour or so on finances and made good progress.

Friday, January 22, 2016

Focusing on Debt

This was my December update on debt:

Debt killing goals:
(1) Pay off lingering credit card debt in the amount of $6500.
(2) Pay off Mr. Sam's new car, remaining debt $2500.

Of course, we've added to our debt by buying me a nused car.  But, I'm ignoring that for right now.

I've been chipping away at our credit card debt.  We killed the 0% credit card debt that we took out for tile in one of our rental homes.  Mr. Sam also cancelled that card/account.  As for our revolving credit card (Chase) that has been hanging around since Baby Sam arrived, it is now down to $3809.  I'm utilizing Dave Ramsey tricks by throwing a $100 at it here and there, and sending payments from various checking accounts on the same day.  I expect that Chase will be killed off by mid-March (hoping for end of February).

Mr. Sam's truck is down to $2000 and we have 4 payments left.  I don't plan to pay ahead as we have a 0% situation.  So, by May the truck will be paid in full.

Once the Chase is killed, we really need to ramp up 2015 IRAs savings since the deadline to fund is 4/15/16.  At present we have $2500 in our 2015 IRA savings.  That means we need to find $9000 before 4/15/16.  Our available savings is down because of my nused car purchase.  We do have $4200 in our vacation/travel fund, which means I could likely raid it for a couple of thousand.  And I could probably take $1,000 from savings.  That would mean we need to find $5,500 from other sources in about a month or month and a half.

Monday, January 11, 2016

Pulled the Trigger

I wanted to keep my old car, a 2006 sedan, for another year.  But, it didn't happen.  My old car was simply becoming too unreliable, especially since I'm often driving Baby Sam.  So, my options included investing about $4,000 in repairs or moving on.

I opted to move on.  While I could have kept my old car and invested in repairs, our lifestyle and needs have, with a baby, changed.  Babies bring along stuff, strollers, bikes, pack and play contraptions, etc.  So even if I spent the money to repair my car, I still felt like it no longer fit our needs for a family car.  Mr. Sam has a relatively new truck, but since its an open air bed truck, we don't normally use it for family trips or travel.

We ended up doing the research, test driving several models within the class we were interested in (small SUVs), shopping for the one we settled on, negotiating sale, finding financing, buying the car and selling my old car within a week.

Which means, instead of paying off our car debt this year (Mr. Sam's truck will be paid off by summer), we added a new debt to our family budget.  We paid for my nused car half in cash and then financed the other half at 2.8%.  I was bummed that I couldn't get 0% which is the interest rate on Mr. Sam's truck loan.  But, its a short loan, 24 months so the interest total overall is low.

I'm disappointed that we didn't save up and pay in cash for my nused car, in the same way I was disappointed that we didn't pay cash for Mr. Sam's truck (we basically did the same thing for Mr. Sam's truck, paid half in cash and then financed the other half except we got 0% since it was a new truck).  I believe in Dave Ramsey's plan to never have another car payment in your life, yet here we are with car payments.  On the other hand, I need reliable transportation both for family and work and I didn't want to empty out our savings account solely to avoid taking on the debt.  

Friday, January 8, 2016

Updated 2016 Savings/Financial Goals

Still working on our goal planning, some changes since I last posted.

Definite goals:
(1) Max out 401k for each of us, the limits have not changes for 2016 so that is $18,000 for each of us for a total of $36,000. Automatic payroll debits are in place, I will just need to check them in January
(2) Finish funding our 2015 IRAs - $8900, The 2015 IRAs must be funded by 4/15/16. As such, we will have some heavy upfront savings of about $1110 per pay period between 1/1/16 and 4/15/16.
(3) Fund 2016 IRAs $11,000 for the both of us, this number also is unchanged from 2015.
(4) Baby Sam'college fund, add another $5000 this year.

Tentative goals:
(5) Add to emergency fund, reducing this annual goal to $5000 (this year we saved $10,000)

The above savings goals total $65,900.  The highest savings number we have ever hit with our savings efforts is @$64,000 (back in 2013). So, this would be a stretch for us, especially with our child care expenses for Baby Sam.

I've deleted the nused car savings goal, because I went ahead and bought a nused car in December.  More on that in a later post.

Debt killing goals:
(1) Pay off lingering credit card debt in the amount of $4261 (this was at $6500 in my last post, we've made progress).
(2) Pay off Mr. Sam's new car, remaining debt $2000.

Above debt totals at $6261.

Also, I'd like to reduce our total debt to under $450,000 total.  At present our debt total is at $491,863 (this number went up due to the nused car) which would require killing the above credit and car debt and also killing another almost $35,602 in debt. I think that is this is may be a reachable goal since we paid off @$34,000 in debt this year.

Additional financial goals:
Roll over old 401k to my current employer 401k.  This has been a previous goal, and guess what it is still an item on my to do list.

Thursday, December 3, 2015

2016 Savings/Financial Planning

Starting to think about 2016 savings and financial goals.

Definite goals:
(1) Max out 401k for each of us, the limits have not changes for 2016 so that is $18,000 for each of us for a total of $36,000. Automatic payroll debits are in place, I will just need to check them in January
(2) Finish funding our 2015 IRAs - $8900, The 2015 IRAs must be funded by 4/15/16. As such, we will have some heavy upfront savings of about $1110 per pay period between 1/1/16 and 4/15/16.
(3) Fund 2016 IRAs $11,000 for the both of us, this number also is unchanged from 2015.
(4) Baby Sam'college fund, add another $5000 this year.

Tentative goals:
(5) Add to emergency fund, reducing this annual goal to $5000 (this year we saved $10,000)
(6) Save for a nused car for me $10,000.  My car will be 10 years old next year and its got some expensive repairs that I've been holding off on. I replaced my last car after 9 years of life so I'm thinking this car will need replacing soon.

The above savings goals total $75,900.  The highest savings number we have ever hit with our savings efforts is @$64,000 (back in 2013). So, this would be a big stretch for us, especially with our child care expenses for Baby Sam.

Debt killing goals:
(1) Pay off lingering credit card debt in the amount of $6500.
(2) Pay off Mr. Sam's new car, remaining debt $2500.

Above debt totals at $9000.

Also, I'd like to reduce our total debt to under $450,000 total.  At present our debt total is at $484,848 which would require killing the above credit and car debt and also killing another almost $26,000 in debt. I think that is this is a reachable goal since we paid off @$34,000 in debt this year.

Tuesday, December 1, 2015

End of the Year Updates

Well it is December 1, 2015 and I still never got my 2015 savings/debt killing Excel spreadsheet chart from Mr. Sam.  It has been that kind of year, new baby, maternity leave, new baby expenses, balancing work with new baby, child care expenses, etc.  We also converted a rental property to a family property which brought along a ton of expenses as well.

These were my goals from May of this year, posted on one of the other personal finance sites:

(1) Max out 401ks: Goal $36,000
(2) Max out IRAs: Goal $11,000
(3) College fund for Baby Sam: Goal $5,000
(4) Add to emergency fund: Goal $10,000
(4) Pay off baby debt:  Goal $0, started with $7000
(5) Pay off Mr. Sam's truck loan: Goal $0. started with $7500
(6) Save for nused car for me: Goal is $20,000. This is two year goal, so this year's goal is $10,000)
(7) Get total debt under $500,000: $519,000 was thestart of the year number, goal is $499,000, difference of $20,000

Savings goal of $72,000 and
Debt killing goal of $34,500.

So let's start with the bad news.  We only put away $2100 for our 2015 IRAs, we can continue to invest for 2015 until April 15, 2016 so we have some time next year to finish this goal.

Baby debt, well it really morphed into debt, we have rental property conversion debt, some baby debt and just other cr_p debt that popped up this year since our finances were pretty crazy this year.  At present, the misc. credit card debt is $6275.  Can we kill it by year end?  Maybe, but doubtful.  But, I am working on it with renewed focus.

Nused car for me, didn't really happen at all this year,  I put away $400 and that is it.  I did spend some money on the car this year, about $1500 in repairs and the mechanic says I have about $4000 in repairs that could be done but were not necessary at the time.  Need to work on this goal in 2016 as the time is coming, car will be 10 years old as of next year.

The good news, we are on track to max out our 401ks by the end of the year.  At present we are at $33,009 and we will complete the $36,000 goal.

College fund for Baby Sam, we hit this goal as well and we have $5,781 in the 529 plan.  About half of that was from us and the other half from family as we have asked for 529 contributions in lieu of gifts for birthdays, Christmas, etc.

Emergency fund, we are also on track for hitting this goal.  We will have an additional $10,000 into the e/r fund by end of year.  At present we have $19,215 in our e/r fund which sounds like a lot, but it really isn't when you take into account our investment properties.  We have been working on rebuilding our fund after buying Mr. Sam's truck (we paid half in cash) and our IVF, pregnancy and birth expenses.  I've never really figured out how much I want in the e/r fund, but I'd be more comfortable closer to $30,000.  We do have $20,000 in other short term, liquid savings, for things like insurance, taxes, vacations, etc.  So that money is also available if we really got in a jam.

Mr. Sam's truck, we are paying $500 a month, 0% loan and at present we have a $2500 balance.  No current plan to pay ahead, but will be paid off early next year.

And as for getting our debt under $500,000, we easily hit that goal with $34,152 in debt paid off (even including the debts we added during the year).  Our present debt number is $484,848.

So grand, estimated, total for 2015 savings will be:  $53,881  (falling short by $18,119 of our 2015 goals).

And, grand, estimated, debt killing total for 2015 will be:  $34,152 (which does not include additional debt payments that I plan to make) so we basically hit that goal.

Thoughts, how did your 2015 financial year go?  What are you planning for 2016?