2013 Savings Goals - Final Report (Edited)

(1) Max out 401k(s) -        $29,695 (85%)  (goal is $35,000)
(2) Max out IRA(s) -         $11,000 (100%)  (goal is $11,000) completed
(3) Add to e/r fund -          $10,800 (108%)   (goal is $10,000) completed
(4) Pay down mortgage -   $5,000 (100%)    (goal is $5,000) completed
(5) Trading account fund - $5,000  (100%)    (goal is $5,000) completed
(6) House projects -          $3,200 (107%)     (goal is $3,000) completed

Total:  $64,695 (94%)

Final report shows a deficit of $4,305 in our 2013 savings.  But, as noted before, we exceeded our 2012 savings total of $62,446 and exceeded our 2011 savings total of $60,060.  And, we did so even with Mr. Sam's layoff in July.

Additionally, when you add in Mr. Sam's 401k match of $3,501 (from prior employer) and my !surprise! 401k match of $5,000, our total savings in 2014 exceeds $73,000.  That is a lot of money, and therefore we can't be disappointed in our efforts, our discipline, and our progress.

Happy New Year!

*Edited to reflect 12/30/14 auto transfers to emergency fund and house project account.  

2014 Planning - Third Time is the Charm

So, for the third time we are going to plan/try to save $69,000, maybe 2014 will be the year we hit this number.  Now that we have our 2014 total goal number, we have been working on planning.

Some goals are pretty easy to establish.

First, tax advantaged retirement savings.  I will max out my 401k savings, $17,500, in 2014.  We both will max our our non-deductible IRAs for 2014, so that is $5,500 each or $11,000.  We will save $17,500 for Mr. Sam in 2014, that money will be after tax until he is eligible for his 401k in September.  Then we will max out what he can contribute from 9/1/2014 until 12/31/2014 which Mr. Sam thinks will be about $12,000.  So, the monthly savings we do for Mr. Sam's 401k between 1/1/2014 and 9/1/2014 will be used to supplement income for the last quarter when he is putting the bulk of his paycheck into his 401k.  Then, the amount that is left over will be put into our trading account.  While Mr. Sam will not be able to save as much in 401k savings, we will make sure to save at least the same amount in our non-tax advantaged trading account.

(1)  Max out 401ks (goal is $35,000)
(2)  Max out IRAs (goal is $11,000)

As for our IRAs, we have already saved $1800 towards our 2014 goal.

Second, other savings goals.  I probably will maintain the monthly savings already set up which means we would put another $10,000 into our emergency savings in 2014.  I like having money go towards e/r savings.  With our various real estate properties, a health emergency fund makes me happy.  For similar reasons, I probably will keep the $200 a month that goes towards our house account.  With an old house, there are always repairs or projects (last year I imagined plantation shutters, but that project got put off).  This year, we are also likely looking at a roof repair or roof improvement on our carriage house.  Accordingly, I am putting $5,000 into roof project savings.  If the roof project costs less, then we will put that money towards mortgage principal prepayment.

(3)  Emergency account (goal is $10,000)
(4)  Roof fund (goal is $5,000)
(5)  House fund (goal is $3,000)

Third, Mr. Sam is going to need a replacement vehicle within the next couple of years.  So, the last goal for 2014 is car replacement fund (goal is $5,000)

(6)  Car replacement fund (goal is $5,000).

How about you, what are your financial plans and goals for 2014?

NetWorth - Retirement Investment Progress

So, at almost the end of 2013 we have just over $800,000 in total retirement investment accounts which is mostly due to the performance of the market.  $200,000 more and our investments will be evenly divided between real estate and retirement accounts.

Holiday Cheer - 401K Match

For the first time in my corporate career, this year I received a 401K match.  My employer contributed "profit sharing" in the amount of $5,500.  

That was a surprise and certainly welcome holiday cheer at the end of somewhat tough financial year for us (with Mr. Sam's layoff).  

Stock Sale - Update

Back in October I posted about my hot stock dilemma and trying to figure out when and how to plan my stock sales (since I'm more of a buy and hold gal).  In particular I had a stock that was up 500% since I purchased it and I was trying to figure out if I should sell it or not.

I ended up selling the stock and making $4300 in profit (tax free since I hold my stock in my Roth IRA) but I did have regrets, what if the stock kept going up and up?  So I decided to calendar a two month follow up (which is today) to check and see the status of the stock I sold.  I sold the stock at $32, it has hit $34, but today it is at $28.

So, how do I feel.  I feel pleased, right now it looks like I made a good decision.  I sold close to the peak based on expert research telling me to sell and that research seems to have been correct.  We shall see, I will check again next year.

2013 Goals - Progress Has Exceeded 2012

(1) Max out 401k(s) -        $28,327 (80%)  (goal is $35,000)
(2) Max out IRA(s) -         $11,000 (100%)  (goal is $11,000) completed
(3) Add to e/r fund -          $10,400 (104%)   (goal is $10,000) completed
(4) Pay down mortgage -   $5,000 (100%)    (goal is $5,000) completed
(5) Trading account fund - $5,000  (100%)    (goal is $5,000) completed
(6) House projects -          $3,100 (103%)     (goal is $3,000) completed

Total:  $62,827 (91%)

Because I have contributions to our emergency and house fund on automatic transfer, those contributions continued even though we completed those goals.  As a result, our total has nudged past our 2012 total of $62,446.  Of course, we are going to fall short on our 2013 goals due, in large part, to Mr. Sam's layoff.  But, I am happy that we have at least completed 5 out of 6 goals and that we have saved more this year than last year.

Hopefully in 2014, we will save more than in 2013.  And sticking with that theme, I've already put away $800 into our 2014 IRA savings account.

Another Budget Proposal

In my humble opinion, if you have a budget, a spending plan or some other written system for managing your personal finances you are way ahead of most people.  Having a plan and working that plan, whether it is an envelope system, an Excel spreadsheet, an allowance system, etc. will help you kill debt, save more and have better control over your money.

We work off a spending plan/allowance system, but even though we have a plan that works for us I still am interested in reading proposed plans by the experts.

Mitchell Weiss via NBCnews.com suggests the 25% plan (25% for taxes, 25% for housing, 25% for debt and 25% for living expenses).  I think his advice of planning your budget before locking in expenses is a good one.  If you are going to limit housing expenses to 25% of your before tax income, then you need to know that number before you buy a house or rent an apartment.  And limiting big expenses is a great way to free up income to kill debt or save money.

But, the rest of the advice fell flat for me.  First, I was surprised that he would include payroll taxes in the budget plan.  It is true you need to pay attention to taxes, but I think most budget plans and advice just utilize after tax income which to me seems easier.  I guess if you are an independent contractor or you run your own business this advice makes more sense since you will be responsible for taxes.

25% of pretax income for housing seems reasonable, most guidance provides for limiting housing expenses to no more than a third of after tax income.

I thought the debt advice was lame.  Sure, limit your debt obligations to 25% of your gross monthly income, but that ignores a whole variety of issues.  Maybe your budget should be set up to put more towards debt if you are trying to kill debt, etc.  And since this advice seems geared towards recent graduates it ignores the topic of student loans all together.

Finally, the last 25% of the formula is for living expenses.  But, living expenses is supposed to also include savings for an emergency fund.  Nothing in the post mentions retirement savings, so I would assume that long term savings is also supposed to come out of the last 25%.  I prefer a budget plan that prioritizes savings rather than lumping it together with living expenses.

Weekend Reading

Slate has put together a selection of Longform articles on debt. Happy Reading.

2013 Savings Goals - 5 Down

(1) Max out 401k(s) -        $28,327 (80%)  (goal is $35,000)
(2) Max out IRA(s) -         $11,000 (100%)  (goal is $11,000) completed
(3) Add to e/r fund -          $10,000 (100%)   (goal is $10,000) completed
(4) Pay down mortgage -   $5,000 (100%)    (goal is $5,000) completed
(5) Trading account fund - $5,000  (100%)    (goal is $5,000) completed
(6) House projects -          $3,000 (100%)     (goal is $3,000) completed

Total:  $62,327 (90%)

Completed, completed, completed - feels fun to type that five times in a row.

In July when Mr. Sam was laid off, I assumed we would just have to throw our 2013 savings goals out the window.  But, he was able to find reemployment before his severance ran out.  And while he took a pay cut, I received a raise that off set his pay cut so overall our household income remained the same.  Even so, we had to work hard to catch up since I had put many of our savings efforts on hold while he was job searching.

I have one more pay check before the end of the year, so the 401k number will increase and, as a result, we will exceed our savings from 2012 and come close to saving $63,000 in 2013.  

What Would You Tell Your Younger Self?

Over at Get Rich Slowly April Dykman posed the question of what would you tell your younger self regarding personal finance.  Below is my post.

This is fun! 

To College Sam – walk away from the credit card offer, you don’t need that free t-shirt.
To post college Sam – good job on taking that personal finance course through the local extension system. You learned a lot and it will help you in the future. Good job on paying off that college credit card, now you really ought to cut it up. Also, congrats on opening your first IRA even though you are earning poverty wages in social services. And tell your parents thanks for paying your way through college, you probably didn’t even appreciate the fact that they saved each month your entire life to give you a great education. 

To post professional school Sam – good job on paying off that student loan debt and good job on keeping your student loan debt lowish during school. You rushed into your first house purchase, but it will turn out great. Now that you are making a good living you are making a lot of good choices, paying off the student loan debt, creating your first budget (2001), investing in your work 401k and paying off all credit cards in full each month. I sure wish I could tell you that even when you are paying off your credit cards in full each month you are still spending too much money. You should have listened to me when I told you to cut up those cards post college. 

A few years later Sam, just because everyone is investing in Florida real estate doesn’t make it a good investment, maybe you should do some more research before you buy that investment property in 2005, 8 years later it will be worth half of what you and soon to be Mr. Sam paid for it. Good thing its rented. 

To engaged Sam, good job on picking a spouse that is hard working, frugal and recognizes that even though he has the MBA he is terrible at budgeting and bill paying so he turns it over to you upon marriage. 

To married Sam, whoo-hoo, good job to you and Mr. Sam in paying off $55,000+ in just over a year during your first year of marriage. That first year of marriage in which you created your first annual spending plan (an update on the 2001 individual budget), finally cutting up the credit cards, creating an allowance system, prioritizing savings and making sure that you and Mr. Sam are on the same page when it comes to money, that will pay off big time. Seven years later and you guys have increased your net worth by $550,000. 

Now, stop eating out so much.  :)

Looking back at my own journey, I certainly have made some mistakes along the way.  It is hard not to, and many of those mistakes or detours have helped to make me a better person.

I think the most important ingredients to my financial success are as follows.  First, I invested in a good education which lead to a well paying, good, professional job.  I was able, both due to my parents and due to smart choices (savings/grants/working) in professional school, to avoid student loan debt until the very end of my education. Second, early on in my career I started utilizing a spending plan/budget and focused on paying off debt and having a plan for my money.  Third, I met and married a frugal man who, while horrible at paying bills and tracking spending, is fully on board with living a debt free life and prioritizing savings/investing rather than consuming.

How about you, what personal finance guidance would you give your younger self?

FitBit Data - Update #2

I now have three full months of FitBit (pedometer) data.  In October, I increased my step count by more than 10,000 steps.  In November, I increased my step count by another 3,000 steps.  I am also increasing the number of days where my step count is above 7,500 which is considered light active.

But, but, but, I still have quite a ways to go.  I still have too many days below 5,000 steps which is considered sedentary. 

Surprisingly, I often have low step count days during the weekend.  It would seem on days that are less structured, I should have more exercise opportunities but I don't.  Instead, I sleep in, hang out on the couch with my husband, maybe run a few errands but I don't schedule exercise and that means it doesn't happen, 

Onward and upward.