Category: Homeowner

Real Talk February 2018

Real Talk February 2018

I’m going to be straight right from the start – I spent wayyy more money in January 2018 than I thought I was going to. I did a terrible job estimating my expenses. I am trying not to be too hard on myself since I knew I was in a time when everything is up in the air, but at the same time, I need to do better. I had estimated in Real Talk January 2018 that I’d spend $711 on bills and more than $850 on various moving expenses. I definitely spent more than $850; that’s for sure. This would be a sum of about $1561 but I really spent $1971.42 on those things.

Take Home Pay…

  • January 12 = $1110.82
  • January 26 = $1206.00

My January 12 check was lower than I expected because my 403(b) contribution didn’t update, so I still paid $100 into instead of $25. The January 26 paycheck is what I should be getting regularly. That is, until the tax withholding tables are updated with my employer. I’m not holding my breath.

I also got a refund of $66 from my renter’s insurance policy.

I also had $850 already in my checking account. I had a total of $3232.82 to spend on the items below.

What I really spent on bills…

Car Payment = $300

Car Insurance $96.65

Student Loan = $160

Gas = $0 ~ they forwarded the balance to my new home’s account so I don’t get to pay it until next month. It was $51.77.

Water = 28.85 * 2 = 57.70 ~ they double deducted my bill for some reason, this should be forwarded to my new home’s account balance

Sewer = 16.40

Electric =52.47

Internet = 88.47 ~ Thought I could manage without internet for a while, but it is impossible to do my job without internet. This cost includes the installation fee and the first month’s cost

Groceries = $175.43 ~ yikes!! by the time I had posted in January, I had already spent $39.62 and was expecting to spend $70 more. But I actually spent $135 more. Part of it is because I hosted a dinner at my house last week to celebrate the new home and I always go all out on those meals. Part of it was I am just plain inefficient with groceries most of the time. I have to do better on this and make meal plans.

Gas for Car = 69.58 ~ I’ve been driving wayy too much and that’s going to change. I won’t be driving back and forth from my old rental to my new home and I also won’t be driving to certain places anymore. I’ve got to bring this cost back down to $50 or less.

Physical Therapy = $30 ~ I just made this payment this morning through my FSA. I didn’t include this in my overall expenses since the FSA contribution is deducted from my pay check. I will be making payments as my FSA is filled. Since I go to PT twice a week, my copays per pay-period will total $60 but my FSA contribution is only $21.15 per pay period. But eventually I will drop to 1 time per week and 0 times per week. I will keep making payments of $40 per month until I get the whole bill paid off. Unfortunately, my employer doesn’t let you front load any account so I just have to spread out these payments according to their schedule. It’s kind of annoying but I can’t do anything to change it. As long as you’re making payments the Clinic doesn’t charge you late fees or call you about the bill.

Total Bills = $1016.70

What I really spent on moving into the new house..

 

Moving Expenses = $497.19 ~ nearly $200 more than I had hoped. I moved   literally in the middle of a blizzard. I had to buy salt, and I felt I needed to buy my friends who helped $25 gift cards to Amazon because it was a difficult and miserable experience. I had to buy salt for the ground and gas for the moving truck, among other things.

Change of Locks = $80.32

HVAC Service = $109

Washer = $738.47 ~ I did a ton more research after my January post and determined that an energy efficient washer would be worth the money. This washer would use less water and less electricity to run so there would be savings over the life of the washer. I am happy with my choice to spend more for a higher quality product.

General Household Items = $46.99 ~ I had budgeted $200 for this, but after spending so much on the washer and moving, I didn’t rush out to buy anything I didn’t absolutely need.

Total Moving Costs= $1471.97

 

 

Other Expenses…

YMCA membership = $65.88 ~ this covers registering, and membership through Feb 14. Working out in the water is a good part of my physical therapy and I am also able to ride an exercise bike, the other staple of my PT.

Netflix = $11.87

Savings = $63.13

Synagogue Dues = $110

Eating Out = $119.96 ~ wow. way too much. I’ve known I was spending too much on eating out. I was hanging out with people who eat out a lot and just spending without thinking about it. It’s also super easy to spend money during a turbulent time because it’s easier than cooking. This is all money I could have saved.

Other Expenses Total = 370.84

 

Total January Spending = $2859.51 

If I do a calculation of income less spending, I get $373.31. Some of these items had already been paid for when I wrote on January 5. Some of the items haven’t yet been paid for because they are on my credit card (I need to pay $93.20 from my next pay check for the card bill due March 7). I don’t like to just save the remaining balance in my checking account in case something comes up, so I am going to save and even $300 to my emergency fund.

 

February outlook…

I once again don’t know what any of my bills will cost. My home is much bigger than the place I have been renting. That means it will cost more to heat and there are more lights to turn on. I have kept the house at a chilly 66 degrees to counteract this. I am going to give myself an estimate of $935.50 for bills in February. Since I get paid this Friday and no bills are due before then, I do not need any of the money that remains in my main checking account. I have a daily spending checking account with a balance of $61.21 which should cover any groceries and gas I need before Friday. I will be doing a bit of driving this week due to doctor’s appointments that aren’t close to home. My income this month should be $2412. My second paycheck of the month will need to cover my first mortgage payment which is due March 1! Bills will actually total $1695, which leaves $717 for saving and extra expenses. I feel confident that I will have more regular spending by the end of this month since bills will start coming for the house and I’ll know what to expect.

Another item of income this month will be my Federal and State tax returns for a total of $2141. This will go straight to my Roth IRA. I want to max that account out for a total of $5500 this year.

Net Worth

After reading about the motivation that many people find from tracking their net worth, I decided to do this myself. Net worth is the difference between your assets and your liabilities (loans or debts). I calculated mine yesterday. Things that are not included: value of checking accounts and the savings of $300 that will be added in this week.

Assets Liabilities
Home Equity 13650 Mortgage 76250
VCLFU 4766.20 Autoloan 12847.55
Barclays 1001.97 Student Loan 20987.15
Schwab Brokerage 1448.10
Schwab Roth 972.69
STRS 12977.00
AXA 403b 2029.13
457b 200.00
Total 37045.09 110084.7
Net worth -73039.61

 

When I see my financial picture laid out this way, I am more motivated to save money and to become more efficient with my spending. I’ve been lazy because I already do a “good job.” I automatically save 20% of my gross pay through retirement plans and I save between $300 and $500 of after tax money. But I can do much, much better. I want to get my net worth to $0 as soon as possible.

Things to note about this net worth table:

  • My STRS account value is only updated one time per year. I get the statement in September. The value is actually much higher than $12977 but it is difficult to calculate its current value.
  • After my 5th year teaching, I will be able to have my student loans forgiven, so I will not be working hard to get than number down. The federal government will forgive up to $17500 in loans for teaching 5 years in a high need district. My goal is to get as much of that $17500 as possible, which is why I only pay $160 per month on that loan instead of sending extra income toward it.
  • My main focus of paying down debt is the auto loan. I am working my way up to paying $50 then $100 extra per month, so I can pay it off early.
Real Talk January 2018

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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“The price of anything is the amount of life you exchange for it.”

-Henry David Thoreau

“It’s not about how much you make; it’s about how much you save”

-millionaire grandma