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.