Thursday, December 13, 2012
2012 Savings Goal - Update
(1) Max out 401k(s) - $33,293 (98%)(goal is $34,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000)
(3) Add to e/r fund - $9,600 (96%)(goal is $10,000)
(4) Pay down mortgage - $2,490 (50%)(goal is $5,000)
(4)(a) Savings for goal (4) - $1,250
(5) House projects - $1,500 (30%)(goal is $5,000)
(6) Trading account fund - $50 (1%)(goal is $5,000)
Total - $58,183 (84%)
Well, the good news is we have finished maxing our our non-deductible IRAs for 2012. The other good news is that we are on track to max out our 401ks and to complete our emergency fund goal.
As, I posted previously, our revised* goal is to complete goals 1-4 which means that as of today, we have to save another $2,357 before the end of the year. I am confident that we can do it. We have, generally, completed our holiday spending (which is funded by our ING holiday savings account). I have a trip this weekend, that is paid for already. We, also, have a New Year's trip planned, we've paid for the condo for the trip, but we will have gas, grocery and misc. expenses associated with that trip. My hope and plan is to have our 2012 savings completed before we head off on our New Year's trip.
* We are $8,163 behind on our original 2012 goals.
Thursday, December 6, 2012
Mortgage Musings
Now that we are a few months into our new loan term it is time for me to start dreaming about killing the mortgage again.
As a reminder, our new loan term is 15 years (or 180 months) and our new rate is 2.75% fixed. Post-refinance, our monthly mortgage payment actually went up, although our rate went way down, about a $100 because we shortened the loan term by 6 years. Our current monthly loan payment is more than 60% principal payment, so we are already making good progress at chipping away on our principal.
If we continue to pay an extra $415 a month towards principal, which is what we have been doing the last couple of years, we will shorten our loan period by 40 months or 3+ years. We actually don't save that much in interest by prepaying on our loan because our current interest rate is so low. If we keep to this prepayment schedule of an extra $415 a month, we will save $13,500 in interest.
If we increased our prepayment to $830 a month (doubling what we are prepaying now) we will shorten the loan period by 65 months or almost 5 and a half years. Meaning that we would have the mortgage on our primary home paid off in under 10 years. Doing so would mean saving $21,800 in interest.
Having our mortgage paid off in under10 years is very appealing, but we'll have to balance that against whether it makes mathematical sense to do so and the priority of other goals.
As a reminder, our new loan term is 15 years (or 180 months) and our new rate is 2.75% fixed. Post-refinance, our monthly mortgage payment actually went up, although our rate went way down, about a $100 because we shortened the loan term by 6 years. Our current monthly loan payment is more than 60% principal payment, so we are already making good progress at chipping away on our principal.
If we continue to pay an extra $415 a month towards principal, which is what we have been doing the last couple of years, we will shorten our loan period by 40 months or 3+ years. We actually don't save that much in interest by prepaying on our loan because our current interest rate is so low. If we keep to this prepayment schedule of an extra $415 a month, we will save $13,500 in interest.
If we increased our prepayment to $830 a month (doubling what we are prepaying now) we will shorten the loan period by 65 months or almost 5 and a half years. Meaning that we would have the mortgage on our primary home paid off in under 10 years. Doing so would mean saving $21,800 in interest.
Having our mortgage paid off in under10 years is very appealing, but we'll have to balance that against whether it makes mathematical sense to do so and the priority of other goals.
Wednesday, December 5, 2012
2012 Savings Goals - December Update
(1) Max out 401k(s) - $32,693 (96%)(goal is $34,000)
(2) Max out IRA(s) - $7,898 (79%)(goal is $10,000)
(3) Add to e/r fund - $9,200 (92%)(goal is $10,000)
(4) Pay down mortgage - $2490 (50%)(goal is $5,000)
(4)(a) Savings for goal (4) - $830
(5) House projects - $1,400 (28%)(goal is $5,000)
(6) Trading account fund - $50 (1%)(goal is $5,000)
Total - $54,566 (79%)
At present, we are $10,453 behind on our 2012 savings goals. Currently, our revised plan, is to complete savings goals 1-4 which requires a total of $5,889 in savings contributions before the end of the year. The remaining 401k contribution will take care of itself, via payroll deductions, so that means we really have $4,582 that we need to pull together before the end of the year.
Can we do it? Reflecting on on my last post, I'm going to say that I will do whatever it takes to get this money into savings.
Tuesday, December 4, 2012
Goal Setting
As I start planning our 2013 savings goals and I reflect on our progress to date on our 2012 savings goals this NYT Bucks Post by Carl Richards really resonated with me.
When setting an important goal, he focuses on financial goals, how do you respond to the question "how badly do you want it?"
Mr. Richards notes that there are generally two kinds of answers to this questions:
When I set our 2007 debt killing goals, I had the mindset that I (we) would do anything to reach our goals. Frankly, Mr. Sam thought I was a bit loony and he wasn't on board until he saw the plan on paper. During 2007 there were a number of times that we got derailed and our plan seemed like it was destined for failure. What did we do, we doubled our resolve and get going. The result, we paid off $55,500+ in just over a year.
Thinking about our 2012 savings goals, I can honestly say that we did want to save $69,000 but we were unwilling to change our lifestyle to meet our goals. Yes there were lots of other important expenses, our refi expenses, Mr. Sam's certification classes, that derailed us. But, more importantly, we did not make the sacrifice necessary to meet our goals.
I'll be thinking about this article as we set our 2013 savings goals and its further applicable to some career goals and personal goals that I'm working on.
When setting an important goal, he focuses on financial goals, how do you respond to the question "how badly do you want it?"
Mr. Richards notes that there are generally two kinds of answers to this questions:
- I want it badly, and I’ll do whatever it takes to get there.
- I want it badly, but I don’t think it’s possible.
When I set our 2007 debt killing goals, I had the mindset that I (we) would do anything to reach our goals. Frankly, Mr. Sam thought I was a bit loony and he wasn't on board until he saw the plan on paper. During 2007 there were a number of times that we got derailed and our plan seemed like it was destined for failure. What did we do, we doubled our resolve and get going. The result, we paid off $55,500+ in just over a year.
Thinking about our 2012 savings goals, I can honestly say that we did want to save $69,000 but we were unwilling to change our lifestyle to meet our goals. Yes there were lots of other important expenses, our refi expenses, Mr. Sam's certification classes, that derailed us. But, more importantly, we did not make the sacrifice necessary to meet our goals.
I'll be thinking about this article as we set our 2013 savings goals and its further applicable to some career goals and personal goals that I'm working on.
Friday, November 30, 2012
Monthly Networth Review
I have started my monthly update of our networthiq profile for December 2012. Updating our net worth numbers is part of my monthly personal finance tasks which also include the following: (1) update monthly spending plan (our form of a budget); (2) pay beginning of the month bills; (3) update 2012 savings goals chart and move money to savings goals as appropriate; (4) review and monitor automatic payments/automatic savings/automatic distribution of our allowance monies.
When updating our net worth numbers I review, on line, the status and amount of our ING/Wells Fargo savings which is reflected in the "cash" category on our networthiq chart. I, also, review our non savings ING accounts, these would include our various escrow and short term savings accounts for travel, holidays, fun, etc. and these monies are reflected in the "other" category on our chart.
Then, I review all of our retirement savings/investments. I log on to Fidelity and review my IRA accounts and my 401k account from a prior employer. My current 401k account is at Vanguard so I log on and check those numbers. I also log on as Mr. Sam to Fidelity and review Mr. Sam's IRA accounts and his 401k accounts. My IRA monies are reflected in the "stocks" category and Mr. Sam's IRA monies are reflected in the "bonds" category on our chart. Our 401k monies are combined into one number and are reflected in the "retirement" category on our chart.
The other asset categories on our networthiq chart include the value of our home, the value of our other real estate, the value of our cars and the value of personal property. Those numbers get updated about once a year.
On the other side of the networthiq chart are our debts which right now include the mortgage on our primary home, the mortgages on our investment properties and, currently, some Home Depot credit card debt (0% interest rate) incurred at Rental # 3. I update the debt numbers when we pay our various mortgages.
Keeping track of all these numbers and updating them on a monthly basis certainly takes some work, but I find the tracking to be beneficial. First of all, for me, tracking these numbers helps me stay motivated in our personal financial and savings goals. Second, checking in on our investments online, at least once a month, is useful. Today, while I was checking my Fidelity numbers I converted my non-deductible traditional IRA to a Roth IRA (I'll be posting about this later if you are curious) which took less than 5 minutes to do. I would have, and I did consider, doing the same for Mr. Sam but I figure I ought to ask him before I go ahead and convert his account. Three, being familiar with the online tools for our retirement accounts is very helpful because there are some great research tools. When you jump onto those accounts once or twice a month you get much more familiar and comfortable with the tools and terms, you increase your education and knowledge.
When updating our net worth numbers I review, on line, the status and amount of our ING/Wells Fargo savings which is reflected in the "cash" category on our networthiq chart. I, also, review our non savings ING accounts, these would include our various escrow and short term savings accounts for travel, holidays, fun, etc. and these monies are reflected in the "other" category on our chart.
Then, I review all of our retirement savings/investments. I log on to Fidelity and review my IRA accounts and my 401k account from a prior employer. My current 401k account is at Vanguard so I log on and check those numbers. I also log on as Mr. Sam to Fidelity and review Mr. Sam's IRA accounts and his 401k accounts. My IRA monies are reflected in the "stocks" category and Mr. Sam's IRA monies are reflected in the "bonds" category on our chart. Our 401k monies are combined into one number and are reflected in the "retirement" category on our chart.
The other asset categories on our networthiq chart include the value of our home, the value of our other real estate, the value of our cars and the value of personal property. Those numbers get updated about once a year.
On the other side of the networthiq chart are our debts which right now include the mortgage on our primary home, the mortgages on our investment properties and, currently, some Home Depot credit card debt (0% interest rate) incurred at Rental # 3. I update the debt numbers when we pay our various mortgages.
Keeping track of all these numbers and updating them on a monthly basis certainly takes some work, but I find the tracking to be beneficial. First of all, for me, tracking these numbers helps me stay motivated in our personal financial and savings goals. Second, checking in on our investments online, at least once a month, is useful. Today, while I was checking my Fidelity numbers I converted my non-deductible traditional IRA to a Roth IRA (I'll be posting about this later if you are curious) which took less than 5 minutes to do. I would have, and I did consider, doing the same for Mr. Sam but I figure I ought to ask him before I go ahead and convert his account. Three, being familiar with the online tools for our retirement accounts is very helpful because there are some great research tools. When you jump onto those accounts once or twice a month you get much more familiar and comfortable with the tools and terms, you increase your education and knowledge.
Wednesday, November 28, 2012
2013 Goal Planning
It is that time of the year, time to start thinking about our savings plan for 2013.
Always first on our list of goals is to max out our 401k contributions. This year the 401k contribution limits a are going up to $17,500. So, goal number one will be to save $35,000 in our 401k.
Second on our list of goals is to contribute the maximum to any other tax advantaged savings. For us that means we will want to max out our non-deductible IRA. We will later convert our non-deductible IRA to a Roth IRA, see this article for more information on how to do so. IRA contribution limits are also going up from $5000 to $5,500. So, goal number two will be to save $11,000 in our IRA. Because of the respective contribution increases our retirement savings will be going up by $2000.
Other goals that are up for discussion: (1) continuing to add to our emergency fund; (2) working to pay down the mortgage on our primary home; (3) increasing our non tax advantaged savings (also known as adding to the trading account); and (4) adding to the house project account.
For me, paying off the mortgage is a primary goal as I've explained here, here and here. Although, with our new lower interest rate of 2.75% from our recent Refi I recognize that paying extra on the mortgage really doesn't make good financial sense when you crunch the numbers.
We also have some house projects that I've been dreaming about for two years now.
How about you, have you started planning your 2013 savings goals? What is on your list?
Always first on our list of goals is to max out our 401k contributions. This year the 401k contribution limits a are going up to $17,500. So, goal number one will be to save $35,000 in our 401k.
Second on our list of goals is to contribute the maximum to any other tax advantaged savings. For us that means we will want to max out our non-deductible IRA. We will later convert our non-deductible IRA to a Roth IRA, see this article for more information on how to do so. IRA contribution limits are also going up from $5000 to $5,500. So, goal number two will be to save $11,000 in our IRA. Because of the respective contribution increases our retirement savings will be going up by $2000.
Other goals that are up for discussion: (1) continuing to add to our emergency fund; (2) working to pay down the mortgage on our primary home; (3) increasing our non tax advantaged savings (also known as adding to the trading account); and (4) adding to the house project account.
For me, paying off the mortgage is a primary goal as I've explained here, here and here. Although, with our new lower interest rate of 2.75% from our recent Refi I recognize that paying extra on the mortgage really doesn't make good financial sense when you crunch the numbers.
We also have some house projects that I've been dreaming about for two years now.
How about you, have you started planning your 2013 savings goals? What is on your list?
Tuesday, November 27, 2012
Budget Busters - Cell Phones?
Are cell phones now number two on the household budget?
Upon reading this article I decided to review our AT&T bill which includes one home phone, two cell phones (one of which is a smart phone with a data plan) and our internet service.
This past month our bill was $202 (which is about $20 higher than normal). In studying the bill there are certainly charges that jump out at me. And of course each phone has separate surcharges and taxes which further ups the costs.
For my iPhone I have a data plan (unlimited) which my employer reimburses, $30, each month since I regularly use my phone for work. But, I don't have a texting plan and last month I had $6.00 in texts. I don't have a text plan because I don't normally text but others text me. I've thought about adding a text plan, but I always worry about changing my plan and losing my grandfathered in unlimited data plan. Frankly, I don't trust AT&T to change my plan without screwing up something else.
Mr. Sam doesn't have a smart phone so he calls directory assistance quite often, those calls are billed at $1.99 each and last month he had $7.96 in such charges.
We continue to maintain a home phone which Mr. Sam uses when he works at home. This past month he had $12 in long distance charges. After discussing whether to seek reimbursement for those charges from his employer we have decided not to because the amount he saves in gas by working at home far exceeds the telephone charges.
How about you, how much is your phone bill? Have you undertaken efforts to curb your phone bill or is it simply the price of being connected these days?
Upon reading this article I decided to review our AT&T bill which includes one home phone, two cell phones (one of which is a smart phone with a data plan) and our internet service.
This past month our bill was $202 (which is about $20 higher than normal). In studying the bill there are certainly charges that jump out at me. And of course each phone has separate surcharges and taxes which further ups the costs.
For my iPhone I have a data plan (unlimited) which my employer reimburses, $30, each month since I regularly use my phone for work. But, I don't have a texting plan and last month I had $6.00 in texts. I don't have a text plan because I don't normally text but others text me. I've thought about adding a text plan, but I always worry about changing my plan and losing my grandfathered in unlimited data plan. Frankly, I don't trust AT&T to change my plan without screwing up something else.
Mr. Sam doesn't have a smart phone so he calls directory assistance quite often, those calls are billed at $1.99 each and last month he had $7.96 in such charges.
We continue to maintain a home phone which Mr. Sam uses when he works at home. This past month he had $12 in long distance charges. After discussing whether to seek reimbursement for those charges from his employer we have decided not to because the amount he saves in gas by working at home far exceeds the telephone charges.
How about you, how much is your phone bill? Have you undertaken efforts to curb your phone bill or is it simply the price of being connected these days?
Monday, November 26, 2012
Executing on the Holiday Plan
Earlier, I posted about our holiday plan and budget and since its Cyber Monday it is time for me to start executing on our plan.
As I previously posted, for the past few years we've been sending out holiday wreathes to our adult family members (we don't exchange holiday gifts with the adults in our family). The past few years the holiday wreath giving has also supported one of my favorite charities, but they have opted not to participate this year. So, I was thinking of sending wine from a winery we visited this year. But, that option ended up being too expensive and too complicated although I am going to order a 6 pack of wine to give as gifts locally (work and hostess gifts).
For the wreathes, I decided to go with L.L. Bean. First, L.L. Bean makes the wreathes right in Maine, so the company supports American workers. Second, the wreathes ended up costing about the same amount, with free shipping today and 10% off today, as the charity wreathes. Also, I will receive $40 in gift cards, $10 per $50 spent, which I can use for other holiday shopping.
As I previously posted, for the past few years we've been sending out holiday wreathes to our adult family members (we don't exchange holiday gifts with the adults in our family). The past few years the holiday wreath giving has also supported one of my favorite charities, but they have opted not to participate this year. So, I was thinking of sending wine from a winery we visited this year. But, that option ended up being too expensive and too complicated although I am going to order a 6 pack of wine to give as gifts locally (work and hostess gifts).
For the wreathes, I decided to go with L.L. Bean. First, L.L. Bean makes the wreathes right in Maine, so the company supports American workers. Second, the wreathes ended up costing about the same amount, with free shipping today and 10% off today, as the charity wreathes. Also, I will receive $40 in gift cards, $10 per $50 spent, which I can use for other holiday shopping.
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