Musings about personal finance, real estate investing, life in South Florida, historic house projects, Snarfle the dog and anything else that strikes my fancy.
Wednesday, October 10, 2012
2012 Goals - October Update
(1) Max out 401k(s) - $30,565 (90%)(goal is $34,000)
(2) Max out IRA(s) - $5529 (55%)(goal is $10,000)
(3) Add to e/r fund - $8000 (80%)(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 - $47,634 (69%)
At present, we are approximately $7,000 behind on our 2012 goals and the gap is widening each month.
The good news, Mr. Sam has maxed out his 401k for 2012 and we have completed savings for one of our IRAs. Other good news - we are on target to complete our emergency fund savings goals.
The bad news, principal prepayment is on hold at 50% due to our refinance. We don't have any prepayment penalties or restrictions on our new loan, so, in theory, we could complete this goal once our mortgage payment is set up with the new company as of November. But, we would have to scramble to do so. Of course we spent $3,000+ on the refinance but (I've decided) we can't really count that as principal prepayment.
As for our house projects and trading account, those both continue to lag behind. The plan was that once Mr. Sam maxed out his 401, which he has now done, to reallocate those funds towards some of these goals. But, as noted in my earlier rental posts we have been spending money on various house projects from our regular funds. We also have to see if we owe the IRS any money (which we normally do). I will know if we owe Uncle Sam this week.
Between the principal prepayment goal and the house/trading account goal, I'm leaning towards focusing on principal prepayment first, after the IRA savings is completed. I'd also like to end the year, although it will be difficult with the holidays and the rental expenses, at least ahead of last year so we need to save at least $61,000 (which is short of our $69,000 goal).
with your new low mortgage interest rate are you still planning to prepay the principal? I am in the process (actually following your lead) to refinance our home and 2 rentals to 15 year loans. With the low rates I am planning to take the 15 years to pay off the loans and instead of pay extra principal as I have been doing invest those founds now instead.
ReplyDeleteAnon - Yes we plan to continue to prepay principal at least for 2012 as it was one of our goals. More than likely we will continue to include prepayment on our primary home mortgage in 2013 and on unless something changes.
ReplyDeleteFirst, while our interest rate is very low (whoo-hoo) and we might be getting a better return somewhere else, we want to be debt free.
Second, we live in South Florida, the cost of insurance for our home and carriage house (both built in the 1920s and within a mile of the ocean) is expensive. Paying off our mortgage will give us flexibility when it comes to insurance and how much to carry.
Third, the low interest rate means we will make quicker progress in paying down our loan which is highly motivating.
As for our rentals, while it is part of our personal debt and we include that debt when we do our net worth numbers, we won't be prepaying those mortgages.