Real Talk July 2018: Getting Overpaid & Paying Down Debt

Back in February, I got overpaid… by $8404. So, just a little mistake. From talking to some other teachers, this isn’t actually that uncommon of a problem. But it’s really messed with my head having money that isn’t mine and then having to get it fixed. A week after the incorrect paycheck came in, I moved all of the extra money into my high yield savings account. This would allow me to collect interest while the issue got sorted out, and to keep it out of my sight so I wouldn’t think I had money when I really didn’t. After waiting for replies to come, I had to start essentially harassing district and union personnel and finally at the end of May we had a meeting for me to pay the money back. I was tired of having it hang over my head and didn’t want my retirement account or taxes to be messed up. Knowing my district, they would take until next year to notice.

The problem is that you can’t just pay the money back. Taxes were taken out of that money and 14% of it was sent to my State Retirement Account. So what you have to do is have money deducted from future pay checks until it is all taken back. I got to choose how many paychecks this would take. Since I didn’t want to get a check of $0 since I still needed my health insurance premium,FSA money, and my tax deferred savings to be deducted, I decided to spend 8 paychecks paying the district back. This takes me through the end of August getting checks of less than $700. And boy is this screwing with my mind. In addition to spending lots of money on home fixes and getting my puppy healthy (and fixed this month!), I really am not saving anything in the post-tax world right now. I am still saving $125 each pay check to my 457 Deferred Compensation account. I usually want summer to last forever, but from the financial perspective, I cannot wait for September to get here so I can get back on track!

Regarding my puppy: I have no regrets about getting her even though she is kind of draining my potential and literal savings. She makes me SO happy. Puppies are most expensive in their first year so I don’t expect to always be spending so much on her. I plan to write a separate post on this after I get her fixed, but I know she has costs me $2500 or more. But, seriously, totally worth it. I have already been saving money by always buying her food on Chewy.com. The Nature’s Recipe food I chose costs $20.11 for a 12 lb bag at Pet Smart but it is $16.14 on Chewy. I buy two bags at once along with some treats so that my order will total $49, so I get free shipping. I also save 5% buy generating an auto-ship program. I recommend this process to anyone with pets because it can be personalized so easily. You can choose any number of weeks in between each auto-ship and they don’t care if you change it. So last month the pup was going through her food faster than I previously calculated, so I just went online and hit “Ship Now.”

Lastly, I am making a serious effort to pay down my car over the next year. After listening to about a dozen different podcasts that all bemoan new cars and auto loans, I am convinced I need to get rid of my car payment as fast as possible. I am going to be taking the money from my roommate #househacking and putting it directly towards my car. With less than $11k left, I should have the car paid off next July.

Oh, and I almost forgot! I am getting a bit of a raise in the coming school year. I got a new job at a different school in our district. Because they do an extended school day, we get compensated accordingly. I am so happy about this! I actually was working a longer school day, but it wasn’t officially extended so we weren’t getting paid more. I plan to increase my 457 contributions to $200 per pay check and increase the amount I throw toward my car payment. Right now I pay $310 but will up it to $380 from my paychecks, plus the additional rental income will give me a total of $900 a month paying down my auto loan. I am so excited to be free of this debt!

Net Worth Update

From the last time I posted, my net worth has increased by about $6750. This isn’t great considering that was 5 months ago, but see above for all the reasons why. My goal is to get my Net Worth to -$53,000 by the end of the year. I don’t think that will be difficult at all seeing as in September, one of my favorite statements comes in the mail: my state retirement account value. We only get a statement once a year because the money and our year of service are “dropped” in once the school year ends. How are you doing on your goals?

Assets
Liabilities
Home Equity 14,227.85 Mortgage 75,672.15
VCLFU 2,864.00 Autoloan 10,557.02
Barclays 2,005.97 Student Loan 20,639.81
Schwab Brokerage 1,439.20
Schwab Roth 3,442.07
STRS 13,085.31
AXA 403b 2,122.49
457b 1,407.14
Total 40,594.03 106,868.98
Net worth -66,274.95

2 comments

  1. Zachary Lerner - Reply

    I think you should list the entire market value of your house as an asset, with the equity just being the difference between the debt and value. This would probably return you to a nominally positive net worth, which is more logical than the idea the buying a house with a mortgage reduces your net worth by the entire amount owed on the mortgage.

    • miriam - Reply

      That’s an interesting point! There are different ways people account for their house in their net worth. The reason I chose this method is because of some articles I have read that say paying on your house is like a savings account. I have to remember that if I sold the house before I pay it off, proceeds from it would need to pay off the mortgage so I don’t really have the full $90,000 of its value. My equity paid in and the mortgage balance total $90,000. If the value of the home goes up upon a reassessment, I would consider combining your idea into mine.

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