It is that time of year again . . .

I have gotten an early jump on our 2012 Annual Spending Plan.  Last night I started working on our 2012 Plan and I've resolved to revisit each number on the Plan rather than just reusing the numbers from our 2011 Plan.  I've already determined that my 2011 numbers were outdated and the data was off for many of the categories.

What is an Annual Spending Plan you ask, it is our form of an annual budget/plan for our money. 

First, we start with how much money we bring in via our jobs, we use net numbers (deducting for taxes, health insurance, and we deduct our 401k monies). 

Second, we create sections for each item that has a bill associated with it.  Start with utilities, that would be phone, cell phones, data plan for cell phones (we add back any amount that is reimbursed by our jobs), Internet, water, sewer, electric.  Next on our list is our primary home, that would be mortgage, property taxes, hazard insurance, wind storm insurance, improvements, principal prepay (this was a 2011 savings goal, but since it deals with our primary home it goes under that heading).  Our next category is auto expenses, which would include car insurance, car service repair, and if we are going to start a nused car fund (which is a maybe for 2012) that goes under that heading.  Each line item has both a monthly amount and an annual amount. 

Third, we create a section for each investment property.  That includes the mortgage, property taxes, hazard insurance and wind storm insurance, and any services/utilities that we pay for (i.e. lawn service and water at one property).   We also list out things like rental license, business tax fees, a chunk for repair and improvements.  Finally, we add back in expected rental income.  Again, each line item has both a monthly amount and and an annual amount.

As I mentioned above, I'm drilling down on each number by going back through how much we are actually paying for each line item.  For bills I pay via e-payments, it is quite easy to review the payments for the last year, add them up and divide by 12 to get an average monthly amount.  For those items I pay by check, I'm digging out the paper file and adding up the bills to get an annual and average monthly amount. 

Fourth, we create a line item for each spending category that is not associated with a bill.  I call this discretionary spending, but at least half is really not discretionary.  Discretionary includes things like gas, grocery, eating out/entertainment, holiday/gifts, travel/vacation, fun, clothing, personal expenses, charity donations, etc.  And we use our Quicken data and/or past budgets to try and figure out how much we want or plan to spend in these categories.  This is the section of our Plan that really is much more in our control, to the extent we want to save more we need to squeeze the items in this category.

Once our 2012 Plan is done, we will use it to help us (1) set up our monthly spending plan/budget; (2) identify and set up our 2012 Savings Plan; and (3) identify bills/items that deserve our attention (i.e., I already know I'll be calling DirecTV to ask for a reduction).

Holiday Planning

According to this article, just 31% of "consumers" plan to set a holiday budget this year. And nearly half of those surveyed were concerned about being able to afford holiday expenses.

I've done our budget for the holiday season, which is generally similar to the our budget from the last few years. That is the great thing about budgets, once you set them up they are quite easy to tweak.  And, I'm here to say that holiday budgets don't have to painful at all.  We also have an ING holiday savings fund and we save for the holidays each month, which makes the holiday spending that much easier.

Our budget is about $1000. We don't have children and we generally, there is still a hold out or two, do not exchange gifts with adults in our families. So, I recognize that our family set up is designed, purposefully, to limit holiday spending and gifting.

First, we send out 70 holiday cards, it is an investment in money, costs about $200, but we like to check in with far flung friends and family at least once a year.

Second, as I mentioned above, we don’t buy gifts for adults.  I do send holiday wreathes, another $200, and if I’ve found the perfect gift for a family member I may send it during the holiday season. The holiday wreathes, a fundraiser, also support one of my favorite charities.

Third, for the kids in the family, I give them cash for college and send them a little something, $250 ($50 in cash for 4 kids and $50 for 4 little gifts).

Fourth, I budget $50-$60 for work gifts.

Fifth, we budget $100 for misc. expenses, hostess gifts, our Christmas tree, cookie baking (which we give to our neighbors).

Finally, $50 bucks for stocking stuffers for my husband and our dog.  We don’t normally give each other gifts, instead we are taking a trip this year which was already budgeted in our travel savings account so it doesn't get funded from the holiday account.

And last but not least, I sponsor a needy child through a charity for which I sit on the board of directors. $100 for clothes and books.

We have come to the realization, after many years, that shopping during the holiday season, buying gifts for folks in our families (who really have everything they could ever want), wrapping and shipping gifts, is just not what we care to do during the holidays.  So we decided not to do it and almost everyone in our families is agreeable.  Our biggest holiday project is the holiday card, which I've already created and ordered, came to $75, plus postage will total @$105 (so I have extra money in that category), and our holiday list is in an Excel spreadsheet that I just update each year and Mr. Sam prints out the labels.  

What is your plan for the holidays, do you have a budget, a handy "Christmas account"?

Coming Down to the Wire

(1) Max out 401k(s) - $28,494 (86%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $9,200 (92%)(goal is $10,000)
(4) Pay down mortgage - $4,565 (91%)(goal is $5,000)
(5) House projects - $2,161 (4%) (goal is $5,000)

Total - $54,420 (86%)

With 5 weeks to go, we are running out of time to complete our 2011 savings goals.  We maxed out our IRAs earlier in the year, so we completed that goal.  As for our 401ks, I am on track to max out my 401k and Mr. Sam recently increased his contribution to try and max out his 401k (he also gets a match of $5000+ per year, so even if he falls a little short on his contributions he still has basically maxed it out).  As for our emergency fund, we are on track to meet this goal, this goal is set up as an automatic contribution of $400 every two weeks.  Regarding our prepayment of mortgage principal, we are on track to meet this goal.  We pay $415 extra towards principal each month, and with the next payment that will bring us to $4980, I'll just add an extra $20.  Finally, as for our house project fund, we are @$2,800 behind.  Right now we have $50 every two weeks going towards this goal, so if there are no changes we will be about $2,700 short on this goal and $2,700 short on our overall savings goals.  We can probably find an extra $1000 to put towards this goal before the end of the year, but I doubt we will be able to find more because of the holidays and holiday spending (even though we have a holiday savings account, our spending just goes up due to family in town, parties, etc.)

Frictionless = Less Pain at the Cash Register?

An interesting article regarding the effect of credit card spending, this study indicates that using a credit card changes our perception regarding the value of the goods we are purchasing.

While I'm waiting for studies as to the debit card effect, I thought the discussion of other payment systems, i.e. Google Wallet and smart phone apps, intriguing.  I have one click purchasing set up through Amazon.com for my Kindle and it is, indeed, very easy and painless for me to buy e-books.  My book buying expenses went way, way up when I got my Kindle. 

2011 Goals - November Update

(1) Max out 401k(s) - $25,942 (79%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $9,600 (96%)(goal is $10,000)
(4) Pay down mortgage - $4,150 (83%)(goal is $5,000)
(5) House projects - $2,109 (42%) (goal is $5,000)

Total - $51,801 (82%)

We are behind by about $2700. 

Mortgage Numbers

We have completed the refinance of rental property #1, interest rate has gone from 6+% to 4+%, we were pleased we were able to refinance this property since, due to the value, we will be holding onto it for some time. 

We rolled the closing costs into the loan for rental property #1, so the mortgage balance went up.  As it presently stands, our total investment property mortgages total $328,391.  Our total debt is at $597,728 and that means that we have met our 2011 goal of getting our debt under $600,000 (even with the refi).

Yeehaw!

With the recent stock market bump, we are back up above the million dollar mark for our networth. 

I do like seeing that number, provides positive feedback for all hard work and sticking to our allowances, etc.  I also recognize it does not mean much since any profits are paper profits at this point.

Banks Back Down on Debit Card Fees

As an avid debit card user, I'm happy to see that most of the big banks, including our bank Wells Fargo,  have backed down on the plan to charge customers for using their debit cards. 

Hooray!