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Tax planning

October 5th, 2014 at 01:55 pm

I decided to try to get us some more tax money back this year by putting my husband's IRA contribution in a traditional instead of a Roth. Which is great but when I forecasted our taxes this year, it became clear that the last contribution to his IRA will have to wait until after I know exactly how much we made. We are in the phase out of the deduction so part of his 2014 IRA will need to be Roth after all.

Its a good problem to have and we still make a significant amount of money back from taxes, just shocking that we tripped it. I thought we would have more room this year.

Our variability in income has always proved a challenge in tax planning.

Checking in with an update

August 28th, 2014 at 02:04 pm

I transferred my husband's IRA to his 401(k) which has expense ratios that make Vanguard look expensive and transferred my IRA to Vanguard to lower my expense ratios as well. I will have maxed by 2014 IRA contribution by November and will have half my husband's contribution for 2014 in September, the rest of it will be in the beginning of next year or December depending on cashflow.

We have made progress with the food budget but there is still a lot of progress yet to be made. We have saved over $1800 YTD over last year's food budget but I still am struggling with being motivated. I suspect dropping this expense will also be a goal for next year.

End of May Update

June 1st, 2014 at 07:20 pm

April was on track but May was a big spend month for both food and miscellaneous expenses. June however is a new month and I will be aiming to get the food budget back on track (miscellaneous expenses hit a couple times per year and tend to take care of themselves, no shopping addicts in this house).

My brother is employed once more so I don't have to worry about that expense now.

Its looking like the auto loan will be paid in full at the end of August and then I can start on the 2014 Roth IRA contributions.

I still struggle with how much do I care about the food budget being low but even attempting to cut it has resulted in saving $914 this year so far. So I figure I will keep trying since its the easiest area to make a dent in and by far our most ridiculous expenditure. Sadly, all of that savings was ate up by my brother's period of unemployment. This, however, was my brother's final bail out for stupid decisions so further savings should go towards our actual goals.

End of March Update

April 4th, 2014 at 02:00 am

While we are averaging $900 per month on the food budget, it was up in March. April will see us focusing once more on keeping this down. I am okay with averaging $900 per month instead of meeting $900 every month but do not want us to start trending up.

Helped the brother out a little but gave more advice than money. His budget was a lot better than I was fearing which was nice.

We are still doing the daily breakfast shakes, have started adding more vegetables to them which is interesting. It helps to cut the sweetness of the fruit (why on earth people sweeten fruit smoothies is beyond me).

I appear to have essentially given up soda, which was more than I was hoping for when I cut back so I will take the victory.

Food budget update and dietary changes

March 8th, 2014 at 02:56 pm

Only spent $736 out of the $900 goal amount in February so doing much better than expected. I am not going to change the goal amount, however, as some months we may have a hard time staying under $900.

We have undergone a major revision to our diet which should be interesting long term. We do breakfast smoothies (plain greek yogurt, a splash of milk, massive quantities of fruit and leafy greens) every weekday morning. I have never eaten this much fruit in my life. I have always been big on veggies but never much cared for eating fruit but even I have been consistent in my breakfast smoothie (helps that I keep changing each day what fruit is in the smoothie). I have been doing them for 2 weeks, hubby has been doing them for 3 weeks.

Another revision I have made is that I am drinking unsweetened tea and water during the workday. So coffee (with its creamer and sugar) is only allowed in the morning (usually half a cup) and is not drank all day either. I think I am going to try giving up buying mountain dew for at home as well as I just ran out earlier this week.

During the transition from eating out a lot to eating almost exclusively at home, I made a lot of sweets, kept mountain dew at home and was willing to make some pretty high fat meals to ease the transition. The key was breaking the eating out habit. But since we are now used to eating at home, I have noticed that the high fat meals are getting rarer, the craving for sweets is diminishing (thank you breakfast smoothie) and we are eating a huge variety of vegetable based dishes (I have never been a bread and pasta fan so veggies tend to dominate in my house).

I think we still have a lot of changes to implement but I think we have made a tremendous amount of progress nonetheless.

This and That

January 30th, 2014 at 06:10 pm

My taxes have been filed (and accepted boy was that weird). Apparently I was part of a test batch sent early to the IRS, no early refund though, processing doesn't begin until the 31st. Don't much care either way, just glad I was able to check that chore off my list. First year I didn't have to do it in late February though because all the forms reached me early.

When I get the refunds, that will top off my 2013 HSA contributions and I will have finished that goal (my HSA contributions being after tax is the only reason we are getting a refund from the feds).

We are coming in under the $900 mark for our food budget for the month and we are coming in under the $1k mark for our vacation.

Since the markets have been down for a little bit, I took the opportunity to scrounge up another $1k in the budget for a 2013 Roth IRA contribution. Thanks to massive overtime and a lower food budget, we had the wiggle room. It wasn't one of our goals but I always make a point to add more when markets are down as a sort of game to increase my retirement savings. It would be nice to max my 2013 Roth contributions but I doubt I have that much wiggle room. Still, having accomplished the 2013 HSA, my 2013 Roth is the next up for savings prior to April 15th.

2014 401ks and family HSA (since we changed my insurance as of January) are already on autopilot for the max so after April maxing 2014 Roths for both DH and I and then upping our emergency fund will be our next priorities.

2013 Year End Review - Real Numbers

January 1st, 2014 at 02:18 am

Category Amount
Home $17,886
Food $14,951
Credit Cards $11,879
Shopping $10,601
Car $8,275
Student Loan $7,991
Brother $4,800
Health Ins $4,183
Utilities $2,555
Pets $2,152
Personal Care $1,867
Travel $1,063
Spent Total $88,203
Savings $35,698
Taxes paid $33,842

Retirement Savings 23.36%
Total Savings 41.29%

Amount spent in 2013 on obligations that don't continue = $25,556. This includes the brother category (money given over the year for transitioning to his own), credit cards, student loan and about $900 of health insurance expense because my new premiums are much lower.

1st category to explain is shopping. Way more vague than many people may like but includes most non-food household items and $6000 in big ticket, one-time purchases. As I am not particularly concerned about this category at this time, I feel no need to break it down further.

Personal care can be translated as massage and hair cuts. Travel is low because it only includes air fare, hotels and airport parking and we did mostly day trips this year.

Now the category I have been avoiding, Food. See that awful number up there? That is why my big project for 2014 is going to be averaging under $900 per month by year end. For the curious, I started this goal in December and came in at $805 for the month. Hold the applause though, my goal is to get that consistent and one month does not a pattern make. I managed low numbers at the beginning of last year as well and we had already sprung back up to $1400 per month by the time I decided to cut it again.

I use gross income not net for calculating the savings rates since we have pre-tax and post-tax savings. Total savings includes debt payoffs and disappearing obligations as this money is freed up for savings goals.

Contemplating 2014 Priorities

October 27th, 2013 at 05:46 pm

So I expect October to end at 82.39% increase in networth YTD (~187k networth). November and December of this year are as planned as they can be given the huge variable of income so I decided to turn to next year's priorities.

The for sure priorities include maxing DH's HSA and 401(k) and my 401(k). I would also like to max both Roths and my HSA. Looking at the yearly total on that amount however, is very intimidating. Especially since I would like to build up our cash reserves as well. That said, despite the scary yearly total, its really not much more than we were able to accomplish this year when you add in the debt payoff we did.

Temptation - Do I or Don't I?

July 16th, 2013 at 01:01 pm

Despite the variability in our income, I am pretty good at projecting it out. I have reached the point where I know by December we will have enough to pay the car loan in full. If I do, one of the Roths will need to be funded in the beginning of 2014 instead of December 2013.

The benefit is that a payment of $409 would immediately disappear. Its the last of my non-mortgage debt (come December). The con is that it delays building the EF and delays putting money in the Roth.

Really it doesn't matter tremendously either way. It is more a psychological victory than anything. It would certainly fit with the theme of 2013 as debt payoff year.

On the other hand, I am wondering what I have against saving up cash. This would not be the first time I delayed building a more robust EF (we have a small one built in to the budget already) in order to payoff low interest debt. Maybe I just really hate monthly payments, hmmm... I seem to have no problem saving to retirement accounts so its not that I can't save money.

I do think a part of it is that I like a simple budget and I like seeing big changes quickly. A car loan disappearing and then being able to save up more money quickly just works for me.

I figure I will probably debate it for a little bit and see how I feel come December.

Halfway through the year

July 10th, 2013 at 01:40 pm

Since the end of June gives me a nice clean set of data for 6 months, it makes it easy to track where we are headed for the year.

Yearly spending with debt payments is $68k, $20k worth has been dedicated to debt or other payments that won't outlive this December. Another $18k in spending services debt that will be around at least one more year (read mortgage and car loan). There is something disturbing about spending more on debt payoff than actual spending but we have been making large payoffs of our debt so not too surprising.

We have only 2 more months before the credit card is wiped out so August is the final payment. We already have less credit card debt than at any other point since college.

Our networth increased 52.47% YTD as of end of June so we are still on track with that as well.

I revised our expected income up this year. Even though this is our first year breaking the 6 figure mark, we will surpass that by a decent amount. In fact, barring layoffs or job changes, DH will probably break that barrier all on his own.

Added a spending goal

April 19th, 2013 at 02:38 pm

Because I don't have enough goals to work on, I am planning on buying DH and I road bikes this year. It's my fault because I mentioned wanting to get road bikes again and DH went and researched the ideal ones for long distance travel (we think of 30 miles as a quick bike ride). Long term its a fairly cheap hobby and we got our use out of our bikes we bought last time (sold them awhile back because they were too small long term and we knew we needed larger frames). Fortunately with all the overtime DH has been working and the raise he got, it won't actually slow our debt payoff.

If you include debt payoff, we are saving 45% of our gross income this year (25% gross to retirement savings). While I would have preferred to wait another year, I think we are doing well even with this big purchase.

End of March Surprise

March 29th, 2013 at 12:27 pm

As we get DH's pay stubs the Wednesday before payday, we thought we had the final tallies for March. It appears though that the quarterly match from his employer hits in March, not April. Not only that, they matched his new salary for the entire quarter instead of the old salary. Nice little surprise.

So retirement is revised to 60962 for this month which increases our YTD networth increase to 33.05%.

That's what I get for jumping the gun, lol.

End of March and beginning CC payoff

March 27th, 2013 at 01:57 pm

We have increased our networth YTD by 31.6% which means we just beat 2011's entire networth increase.

Assets Debts
Checking 3097 Mortgage 113362
Taxable 0 Student Loan 7189
Savings 300 Credit Cards 11279
Retirement 59470 Car Loan 10013
Home 200000
Car 11000
HSA 2786

(Ain't that savings amount the most pitiful amount you have ever seen? Mind you the checking holds a part of savings as a cashflow cushion but still...)

The next 3 months will be all about the credit card payoffs. I just scheduled the first payment for April 22 for $2100. May will see the payoff of the 1st card and probably a payment to the second card and June will finish the second and final card payoff. July we will allow the coffers to refill and then August and September will finish the student loan.

That just leaves October through December to stash money in our Roths which is doable. Any excess cash will go into our EF which needs to eventually get to 24k.

For the curious, even during the payoffs, we are keeping about a 2k "cushion" so our EF is technically larger than my savings but its definitely not large.