Real Talk January 2018

I originally wanted to do a monthly post that summarizes my current financial position and post it on the first of the month. But I am a little superstitious so I waited. Plus, I wasn’t sure if it was a good idea, because, well, I’m a hot mess right now. I am a member of several financial groups on Facebook and read a lot of other blogs. Everyone is posting images and spreadsheets of their 2018 budget. Not just the next month, but the whole year! And I’m over here like… with nothing. Then I remembered, though, that a lot of millennials either are in this position or have been very recently. It’s hard to admit that I don’t have a budget for the coming year, but I’m OK with it. A budget is just a tool for planning what to do with your money. And I have a plan, it’s just not filled with numbers yet. And that’s what I mean by being a hot mess. There are a lot of things in flux right now. A lot of things I don’t know. In one minute, I am absolutely freaking out about money, and in the next minute I remember it’s all going to be OK. I have done enough planning up to this point that I can withstand a period of weirdness and confusion. But I think sharing my thought process and my rough plan will be good for me and for anyone who decides to read this thing.

First of all, I bought a house. I have mentioned it briefly in earlier posts, but now I really bought it. It’s mine. I closed two days ago. I paid the down payment. The mortgage is in my name. I have the key. I am a homeowner. It’s the American Dream. Buying a house is a huge responsibility, and one that I’ve wanted for a long time, but it’s scary, overwhelming, and it costs money. So, I have items to buy for this house. I have a chimney that needs cleaned. Carpets that need replaced. I’ll need to buy a lawnmower. There’s a porch begging for a swing. And the list goes on, and on, and on. And it never ends until I sell the place. I’m fine with it; I think; it’s just new. It’s going to take some adjustment. I am used to letting a landlord know when something is seriously wrong with my property. Now it’s my job to go on youtube and then to the hardware store and figure out how to fix it. Or, worse, it’s my job to pay someone else to fix it.

While all of these things eventually are going have to be bought and paid for, it’s not happening all at once. One thing that no one ever mentioned to me, until I was in the thick of house hunting, is that buying a house has this weird financial buffer, that if timed correctly can free up a lot of income for these purchases I am talking about. When you buy a house, the mortgage payment “skips a month.” That’s how the realtor described it to me. This means that whatever month you close in, you’d expect the mortgage to start the next month, but it actually skips that month and goes to the next month. If you are like me, and close at the beginning of the month, that gives you almost 2 full months before the money is due. While I closed on January 3, my first mortgage payment isn’t due until March 1!  Instead of spending the set amount on my rent or mortgage, I am going to be using a chunk of my paychecks to tend to the house. I just don’t know exactly how much yet. I have to prioritize purchases, price out the different projects and items, and I have to continue earning money.

 

So let’s get into what I’m actually spending money on this January and see what we come up with.

 

Paychecks on January 12 & 26. My gross pay is 1964.34 at each paycheck. I have no problem sharing this since I am a teacher and it’s public record. Oh you didn’t know? Yeah, anyone who is a government employee has a salary that’s listed on the treasurer’s website. When I started teaching financial literacy, I made it a point to tell students my income and make the examples as specific as possible. People just learn best from concrete examples.

 

Gross Income: $1964.34

Pretax deductions:

  • STRS retirement 14% = 275
  • AXA 403(b) = $100 or $25, not sure when that is going to drop
  • 457 contribution = $100
  • Health Insurance = $45
  • FSA contribution = $22.91

Predicted Taxes:

  • Medicare $28.48
  • Federal $184.75
  • State $39.87
  • Local $49.11

 

I am not sure how tax withholdings are going to change now with the new tax law. Some sources report that new withholding tables were supposed to be ready for the new year and this new bill was terrible for accountants over the holiday season. I highly doubt, though, that in my school district things will be up to date. We’re always behind. I don’t think state and local taxes will change too much. And my calculations are a little off due to some new additions. I have added in a new retirement contribution to the 457 of $100 but dropped my previous 403(b) account’s contribution from $100 to $25. I don’t know when they’ll update that. An additional $25 of retirement contribution will alter my tax liability a bit, but it’s not going to be by much. And the new FSA (flexible spending account) will also alter my tax liability, again, just a bit. So even my taxes I can’t plan on!

All of those deductions would leave me with $1194.22, which is lower than my last paycheck, certainly. To be honest, I haven’t gotten a consistent paycheck since last school year. I got a raise. Then I got another raise that was a fake raise and they took back. Then I got a grievance settlement. Then people were sick at work and I covered classes. It’s actually been really impossible to budget the way some people do, way in advance. I just know I am going to have enough for food, shelter, and some savings. I plan the specifics when it happens.

 

What do I have to pay for then this month?

  • Car payment $300 – this has been the same for over two years
  • Car Insurance $96.65 – this number dropped $4.68 since I am moving – yay for not being by a highway anymore!
  • Student Loan $160
  • Gas ?
  • Water ?
  • Sewer ?
  • Electric ?
  • Internet $50 or $0 depending on if I can tough it out without it for a bit… I did it in grad school
  • Groceries $70 – I already bought some this month and I am trying to budget a little higher since I always spend more after a move
  • Gas for car $35
  • Physical Therapy $15 per visit, paid for from FSA – will pay for as the money goes into that account

 

All in all, I know I need to spend $711.65 on bills… or less. I also know I don’t know how much I am going to owe for any of my utilities. Since I am moving mid-month, I don’t know what the levels will be for my current place. And I guess I’ll assume that no bills will come or be due until February for the new place. Maybe I should just expect $150 for the rest of that. Could be more though since it has been very, very cold and the insulation in my rental is terrible. But it’s OK, because I can clearly afford those bills with my next paycheck. It makes me tense not to know those numbers, but I have to accept it.

I currently have $850 from my last check that can be spent on home items. What I am thinking about spending:
  • Moving Expenses $300 (or more)
  • Change of Locks $75 if I DIY
  • Synagogue Dues $110
  • HVAC Service – ?
  • Chimney Swept $150?
  • Washer $400?
  • General Household items $200

 

Obviously, I can’t cover all of this from that $850, but I can cover most of it and then push the washer to the next check or use my savings for it. When you buy a house, you have to leave over some savings. Don’t lump it all into the down payment. Since I have known and have been dying for my own laundry life for a while, I am definitely going to spend this money. I am lucky enough to be getting a dryer donated to me by my brother.  I also will be using several gift cards I have to make purchases from Home Depot/Lowe’s/Target. I have got $75 to Home Depot, $50 to Lowe’s, and $100 as a VISA gift card. I actually bought the Home Depot cards myself in December to prepare. The VISA gift card is a reward I got for getting a second opinion with Howard Hanna, which was perfect since I ended up getting my mortgage through them. What I am also planning on doing is using my credit card to make any additional Home Depot or Lowe’s purchases first, because I have triple rewards for that category this month. So a $400 washer with free delivery is going to earn me 1200 points. I’ll pay it off right away and not incur any interest.

 

As I said, I feel like I am a hot mess. It’s a really weird time for me right now. I know I have my income. I know I need to spend money, but it’s all so in flux that it’s driving me crazy. I think everyone is going to go through a time like this. Just know that you can still make budgets and frameworks for yourself even if you don’t have all of the numbers. I’ll let you know how things have panned out next month!

If you have a partner, be open in talking about money. If you have friends who are chill, talk to them about money. Ask your parents. Even if they were uptight about money when you were a kid, you might find that they are more willing to talk to you now that you are an adult. Research has shown that our brains really struggle to solve financial problems on its own. But with help, we experience less stress and think more clearly. When it comes to money, we need to drop the masks and have some serious real talk. Keep learning; knowledge is power. Good luck with your budgets this month!

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