Monday, September 10, 2012

2012 Goals - September Update

(1) Max out 401k(s) - $27,697 (81%)(goal is $34,000)
(2) Max out IRA(s) - $5126 (51%)(goal is $10,000)
(3) Add to e/r fund - $7200 (72%)(goal is $10,000)
(4) Pay down mortgage - $2490 (50%)(goal is $5,000)
(5) House projects - $900 (18%)(goal is $5,000)
(6) Trading account fund - $50 (1%)(goal is $5,000)

Total - $43,463 (63%)

At present, we are approximately $5,600 behind on our 2012 goals and the gap is widening.

Due to the mortgage refinancing, our mortgage pay down goal is on hold.  Our thinking was that we will have closing costs approaching $4,000 and we ought to save our pennies for those costs.  Do we count the closing costs towards this savings goal or not?  Once the refinance is completed, our closing is scheduled for this week, we will have two years in which we are not permitted to pay off the mortgage in full.  I need to understand whether that restriction extends to paying extra towards the principal or not.  If we are restricted on paying extra towards the principal do we keep saving the money we committed to the mortgage pay down or do we put it towards another goal?

For the house project goal, when we were getting ready for our refi appraisal, we spent close to a $1000 on getting the house cleaned up.  Do we count those expenses towards our house project savings or not?

We also have the added expense of the life insurance policies coming up.  And, we also have to get our 2011 taxes done which will include a payment to the IRS.

In sum, we have a lot of outgoing expenses in the next few weeks, but we need to get our savings back on track.  Mr. Sam will max out his 401k savings by the end of September which will free up some extra cash to put towards our other goals.  We also need to get ourselves refocused and recommitted in order to close out the last year with saving success.


Frugal Coconut said...

I don't think that the closing costs should count toward the goal of "pay down mortgage" because it's not paying off principal ... it should accelerate it down the line so it's a positive step ... but it doesn't *directly* contribute toward the goal.

I hate restrictions ... but if you are restricted from making ANY extra principal payments for two years, then you could either hold those funds aside and continue as normal otherwise (although you won't be earning much in the way of interest/dividends) or you could simply increase the other goals during those two years and then, when year three hits, triple the mortgage paydown goal and forget about any other ancillary goals.

Regarding the house projects goal question, it may depend on what your plans are for that money ... if you have specific projects in mind that didn't include the stuff you spent the $1000 on, then no I wouldn't include it ... but if it's just a general home improvement fund, then I would be fine with counting it toward the goal if that's what you would like to do.

Sam said...

FG, thanks for your feedback and for keeping me honest.

I'll know more about the restrictions on prepayment today (since we are scheduled to close and I'll review and read all the paperwork today). My recollection is that we are restricted, the first two years, in paying off the loan in full which is a common refi term.

The house fund is undefined, I have ideas for the money, but living in a 1920s home there are always other projects that come up before I have a chance to spend it on my wishes. We actually have an upcoming $1500 roof repair and we are going to be tenting our carriage house which will cost $800. I would count those kinds of projects for our house fund. The general maintenance that we did to get ready for the appraisal included at least one "project" but overall I would define it more as general upkeep.