December 2014 Monthly Review

Hi Everyone – This is a little bit late, but I’ve been busy. At any rate, I’m excited for 2015, for quite a few reasons. The first one being is that our “cash crunch” is finally over. When I switched jobs in June, I went from paying 100/mo for insurance for the family to paying over 1,000 per month for insurance for the family. We wanted to switch, but we couldn’t get on my wife’s plan until Jan 1, 2015 – leaving us with outrageous insurance costs for 6 months (honestly, we probably would have been far better off to self insure – nothing happened aside from a few routine dentist visits.

This period of super-high (to me) insurance also coincided with me switching jobs (and making less) and my wife going part time after the baby was born (and also making less). So, after looking at the numbers, I knew it was going to be a long few months, and I’d say we did pretty well. We ended up dipping into savings a bit, but that could have been avoided had we not done work on our house (we removed a structural wall & replaced it with an I-beam). We are happy we did it though, as it really opens up the room and will be nice for the baby to play in.

Debt

House

Mortgage $ 103,715 (-$1,761) This is higher than our normal reduction because we’ve already made our payment for january. In addition to our regular payment, we had been paying more every other week. I recently increased that to $250 ever other week, which equals 5.3 extra payments per year, and will really cut down on the loan duration. With no future increases, we should be out of our mortgage in about 6 years (though hopefully less). The nice part about having such a huge cash squeeze and living just fine with it is that I can take the “raise” I got after switching health plans and save it or put it to debt.

Total Debt: $ 103,715

It’s nice only have 1 source of debt (and even then, we know we can sell our house for more than what we owe on it. Now that this number is solidly in control, it’s time to ramp up our savings.

Savings

This is an area we did really well in this year. We were able to max out Roth IRA accounts for both me & my wife, in addition to the mortgage pay down we saw. We also built up some cash reserves, though we used them for the project on the house. We’ll still keep the goal of maxing our retirement accounts for 2015 (though we will be focusing more on pre-tax dollars this time, for reasons which I’ll explain later).

Vacation fund $1,000 – A dip in this account was cause by our severe cash flow issue (wife’s employer messed up her paycheck last month, so she was paid much less this month), so we had to move a bit out of savings to cover it.

Emergency Fund $8,800 – just the boring old 10k in here. Going to leave it steady at this level for the foreseeable future.

The house fund was zeroed out to pay for the contractor, and we dipped into the emergency fund a bit as well. We will go right back to building that up, then continue saving for our next goals (which I’m going to discuss later).

All in all, 2014 was a great year for us. Our spending went down almost 20k from 2013, and if you dont the almost $17,000 that we spent on our mortgage (and prepayments) alone in 2014, we are very close to getting down to our yearly expense goal. Of course, there’s going to be more on that later, but it’s a good number and exciting.

For 2015, I’m hoping to make some major strides on our home loan, as well as max out our IRAs and add a solid chunk of money into my wife’s 457 plan. Any money leftover from that will be used to build up assets in a taxable brokerage account. My business did well last year, and I’m hoping that continues on into this year, and if it does, I’m hoping that we will be able to make a major step towards our goals. I’m hoping to earn enough in the business to open a i401k for my sole employee (me), and do a few other things. We will see how it goes though I’m looking forward to it.

 

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