Week 118: March Recap, Taxes, and the Light at the End of the Tunnel

Monday, 3 April 2017

I hate March.  It’s one of the most expensive months on our yearly calendar, and downright depressing.  Taxes are the reason.  You pay all year, and then pay again.  However, we are better prepared than just a year ago, when we started 182 Mondays, and I need to really focus on that as I write because this monthly recap is not pretty, and I’m feeling really depressed . . . but I’ll get over it!

As always, a different month, different expenses.  In March, we paid state taxes, received a federal refund, and paid property taxes.  It was also time to restock our coffee supplies and meat supplies.  These all added to the costs for March.

  • Taxes paid:  $4295.00
  • Credit cards paid:  $1602.00
  • Student loans:  $786.00
  • Electricity:  $167.00
  • Mobile phone:  $198.00
  • Land line:  $80.00
  • Household gas:  $65.00
  • Gardener:  $100.00
  • Insurance (house, car, life):  $612.00
  • Trash:  $60.00
  • Dog food:  $38.00
  • Gasoline:  $97.00
  • Groceries:  $612.00
  • Coffee:  $64.00
  • Household supplies:  $505.00
  • Dining out:  $61.00
  • Hobbies (major parts purchases):  $745.00
  • Vehicle registration:  $238.00
  • Savings:  $1000.00

Total costs, without including savings, is $10,326.00, and with bimonthly savings of $500 each, it is $11,326.00.  We have been saving for taxes, so that pulled money out of the savings account; this brings total monthly costs to $7031.00, not including mortgage.

Observations:  This month was expensive beyond the normal allocations.  Taxes in all directions, but as they were anticipated and saved for, there was not any more stress than is normal when you have to write those checks!  Next month, our mobile phone will drop, I think to $160.00.  Groceries should remain under $400.00, trying for $350.00.  Coffee supplies should be good for the rest of the month – we buy about 6 lbs. of coffee at a time, to blend and to grind at home.  Vehicle registration was another annual fee.  Household gas was up because we had several weeks of wind, cold, and rain.  Hobby supplies were high as Mr. 182 is working on making a fancy brew rig and I bought some art supplies and a book.

Remembering to put money into savings every month is a top priority around here!

Looking ahead to April:  This next month I want to stay on budget as much as possible.  Overall monthly expenses, including mortgage, are about $8100. 00.  Add in savings, and we have $9100.00.  Again, credit cards are the biggest problem, but we are paying out minimally $1500.00 / month.  Yes, we could change our mobile phone charges, but the in-laws pay us a monthly co-pay; Mr. 182 is reimbursed for the land line, which he needs as he works from home.  This reduces our monthly bills by about $180.00 / month.  Hobbies were planned and budgeted for last month, but no high costs are expected in the foreseeable future.

And down the road, we expect to begin saving $2000.00 / month for vacation, while still allocating $1500.00 for the credit cards.

The fact is, we are really tired of paying on the credit cards!  These should be paid off – they better be! – by the end of May 2019, in time for the end of 182 Mondays to Retirement!  To make this bitter pill more tolerable, I calculated our net worth, and that was fairly good news . . . the question is, do you include life insurance value or not when you calculate it???

There is light at the end of the tunnel.

 

Monday 119: A Week Off

Tuesday, 28 March 2017

Late by a day!  Currently, the 182s are enjoying a week off.

The last week of March is a traditional break from work for many involved in education.  Here, it is no different.  The only difference is what we plan to do!

Cheap thrills are the answer!  There is much to do, with little if any cost, in most areas.  We live close to a major city – if you call 50 miles close – but there is a lot to do just locally, or sort of locally.  Besides doing things by going somewhere for entertainment, things around the house can also be squared away, like cleaning the refrigerator, or other chores that require a bit more focus.

Community publications and other resources often are a great way to find things to do.  Locally, we have magazines which are free to the public because they are supported by advertisers.  Everyone wins!  Categories include things specific to age groups, and then by subject.  From my favorite local publication, topic headings include:

  • Theatre
  • Fine Arts & Crafts Fairs
  • Arts
  • Art Education
  • Music
  • Dance
  • Garden Events
  • Events (in general)
  • Family Hikes
  • Baby Boomer Generation
  • Lectures & Education
  • Pets
  • Hobbies & Clubs
  • Be Entertained by Nature
  • Sports
  • Bike Riding
  • Health & Fitness

Besides local publications, Meetup is another way to find groups with interests matching your own.

Entertainment is a big source of pleasure for people.  Cultural events, family events, get-togethers.  All these enrich our lives.

Connections with people are very important, and more so, I think, as we grow older.  Children leave the family home and the empty nest syndrome sets in.  Many women find themselves flopping around, at a loss of what to do.  Men who have worked all their lives frequently have no idea how to spend their free time after retirement.  Older people, who are outliving their friends, become increasingly isolated.  Extended families are scattered throughout the country, and often the world, so those connections begin to diminish.

We ourselves are approaching such a time in our lives.  We are planning financially, but we also need to “practice” retirement.  How do we fill our time with meaningful activities?  Such activities have to have meaning for the individual, not necessarily the rest of the world.  Personal accomplishments and satisfaction are the center of such, and can lead to outward expansion.  For many, retirement means a lot of time – how to use it?  how to use it and not just fill it?

Retirement requires more than financial forethought.  It means understanding what is of value to you.

Retirement requires practice, and what better time to practice than before the performance?

Week 120: More Reasons to Plan Ahead

Monday, 20 March 2017

Anyone who doesn’t get disgusted or displeased by his job is a rare creature!  This is where planning ahead, short-term or long-term, can have its payoff.   Having F*** You money begins to look pretty darn good.  Planning ahead might just get you that freedom to walk when you want.  Or keep on walking if someone gives you the boot.

Unfortunately, we are not in that place of having F*** You money . . . fortunately, we are pretty content with our jobs.  Still, there are times when retirement looks better and better.  This past week has been one of them.  Rather than go into the dreary reasons, which are really just manifestations of pettiness, I prefer to focus on how annoyances become gifts.

Let’s back track a bit.  As I have written before, my work hours drain me of any sense of self a lot of the times.  As introverts, time alone with our thoughts is what refreshes both Mr. 182 and me.  Consequently, I often flail around, neither here nor there, but just waiting until Friday morning when the weekend begins.  It seems as if my life – what remains of it – is just going down the drain, day after day.  That’s a pretty grim place to be.

The question has been – and continues to be – how to not feel like I do?  It’s easy to over-do, to compensate for a lack of sense of value in my daily life, but that only leads to greater dissatisfaction.  What finally seems to have helped is reading a book:  Essentialism, by Greg McKeown.

Essentialism focuses on both businesses and individuals.  For the individual, he has you look at your own life and choices.  In a nutshell, McKeown writes about getting rid of things that you don’t need (like emptying your closet) and choosing the things to keep.  He also focuses on how do you know when you have a good goal or mission statement?  How can you measure it?  And finally, he talks about passion.  What are you passionate about?

That question made me think . . . especially after focusing on simplifying my life by not doing things I don’t want to do, or have very little interest in doing.  That’s housecleaning.  And that leaves room for other things, the things I feel passionate about.

So, work becomes a task needing to be done, but not the bloodsucker it can be.  I enjoy the people I work with, and much about what I do . . . but it does not feed the core person I am.  I did decide on my passion:  writing and paper.  It’s big, it’s narrow.  Already, I see a difference inside.  I am more content.  I am more productive.  I feel more alive.

The power of focusing cannot be overstated.  By finding the essential, we create ourselves anew.

Week 121: The Value of Planning Ahead

Right now, Mr. 182 and I are chafing under our debt pay-off plan.  It would be nice to be able to go out and do whatever we want, spend whatever we want, and not think about it.  That’s what we have done for years, and here we are, proverbial nose to the proverbial grindstone, and not really happy.  We have two more years to go, unless we up the program.

What is it about spending money that feels soooooo good?  Freedom?  Love?  What is that little hook that gets so addictive?  Not spending money also feels good – but it’s a different type of feeling.  It’s addicting in its own way – more intellectual – certainly a lot less emotional.  Perhaps that is the hook of spending – it is an emotional rather than intellectual feeling.

I don’t think there is anything wrong about our feelings of frustration right now.  It is probably part of the program with spending addicts.  It’s uncomfortable because it is new.  Being on a leash is not fun.  What is important is to recognize the feeling, acknowledge it, and then have the self-control to not give in, even when the little voice inside starts hollering, “I want!  I want! I want!”

Planning Ahead for Vacation!

Now, this is fun to come.  We have a budget, and we have a goal.  We are traveling for two weeks with Mr. 182’s parents, to visit the wild west and family history.  We have booked all our lodgings, come cheap, some not, and organized our route.  This is all for August!  The nice part is, we know what and where we will be, and we can figure out what we are going to do.  Even better, we know the costs.  And we can plan for those costs.

It’s good to plan and take vacations.  So is paying off bills.  Every month, the amount owed goes down, and the money in the bank, in equity, in investments, go up.

The long term debt payoff is important, but so is the short term.  What I mean by short term is the day-to-day stuff.  One thing that helps us out is to make sure we have play money.  We need to be able to indulge our hobbies, which, fortunately, don’t cost a lot.  They are in the monthly budget.  We also get a small monthly allowance which we don’t have to explain to the other how we spend.  These tactics take the edge off our chafing when we feel it.

There is true value in planning ahead, but planning ahead is not just for debt pay off.  It includes planning ahead for contentment with one’s daily life, one’s little pleasures, and the daily things which keep one connected to one’s true inner being, to one’s soul.

Monday 122: Expenses & Observations

Monday, 6 March 2017

Once in awhile we gain instant insights into ourselves.  Things right in front of us suddenly become crystal clear.

I made this observation last week:  We fall apart at the end of the month by spending a bit less carefully because we know there is more money up ahead in the form of a paycheck.  We don’t spend unnecessarily, we just aren’t as careful.

That’s rather self-defeating!

On the other hand, reconciling money brings its own insights that are numerical in value.  I’ve learned that limiting our food budget to $350 / month – no matter how long – is not really a good thing.  Instead, averaging about $90 / week is very do-able.  We live within it, do a couple of trips a week to keep produce fresh, and are quite happy with it as a habit.

February 2017 Expenses

feb-2017

Looking at this, it may seem excessive in areas.  It is!

  • Our credit card payments take a lot of cash – this is one reason why we are considering paying off a part of it with money from an IRA.
  • Water is expensive in our part of the world.
  • We just cut our mobile service by about $80 / month, and in April I think it will be even smaller (we bought our phones and paid for them through the mobile service company).  Because we have 2 or more lines, we now received a 5th line, with unlimited data, for free.  This will be great for the laptop when we are on the road, and in the middle of nowhere!
  • We keep a landline for emergencies (what if the cellular service went out?).
  • Mr. 182 got a bonus, and we stuck most of it in savings.
  • We upped our credit card payments by paying for things as they went on them.
  • We had a vacation-planning event with the in-laws, and I decided to make coq au vin and bought a bit more wine than needed (and it was delicious!).  Recipe to follow.

Continuing on, nothing is changing except us – which is the reason we got into the mess we are now changing!

Monday 123: Tax Season Strategies

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Monday, 27 February 2017

Last year we made more than ever before; this year we will make even more.  Because of making more, we have pretty much lost all our tax write-offs, and if we lose the property tax credit and gain taxes on our health insurance – things potentially on the Republican agenda for tax reform – we are screwed even more.  This is not a pleasant prospect to us, especially as we work toward cleaning out debt.

In the desire to escape the debt we have, we are considering the sale of stock I have in an IRA.  We are in a tax bracket where the sale makes no difference – we will just have a higher tax burden at the end of the year, but will not jump to a higher category.  To offset this, the idea is to increase withholding for me, and to increase 401K contributions for Mr. 182.  I need to crunch the numbers to see if this is financially do-able.  Doing this makes sense to get out of debt, and the long term picture is more positive with today’s known facts about tax laws.

The unknowns of our current administration cause me concern for pulling money out of the IRA.  Talk of removing the tax deduction for property taxes and state income taxes, along with taxing healthcare benefits from work, are worrisome.  Increasing our funding the 401K is a smart move, but I need to consider what our final monthly income will be to determine the percentage increase.  We still have other bills, we have a variable mortgage.  Uncertainties need to be considered in the big picture.  I have no desire to dive into something we may not be able to handle six months from now.  In other words, I need a good financial buffer zone, and we are not yet there.

I will not be rushing into the decision to pull money from the IRA.  Instead, I want to take the time to play with the numbers, and think about things.  In my opinion, the IRA is an all-or-nothing proposition.  To use only part of it is not okay.  I have no idea why, except it seems rather half-assed.  Do it or don’t do it.

Plans for 2017

With our taxes now complete, I can move ahead with the next year’s goals more easily.  We get a small amount back from the Feds, and owe the state about $1000.00.  Our goals for 2017 are:

  • increase monthly savings by $500 (if we pay off one credit card using the IRA funds)
  • continue the steady debt reduction
  • stay within budget
  • continue to look for ways to reduce debt
  • work toward increasing pre-tax savings
  • pay cash for everything
  • anything on a credit card is paid off each month
  • review our credit rating mid-year

Looks like a long list, but it really isn’t!  It’s just sorta detailed.

Monday 124: Reflections on 2016

profits-1953616_1280

Monday, 20 February 2017

While our finances do not look like this – geometrically increasing – our finances do reflect this curve as far as overall net worth.  As our bills decrease, our net worth increases, even though we have taken on more debt.  This latter is frustrating, but we signed up for the program when we sent The Student off for undergraduate work.  The same when we bought the car.  The car was the result of several months of increasingly expensive car repairs on the Subaru and spending about two months looking for an affordable replacement and not finding one.  Looking back a year, I can see we could have done things differently.

So, while not completely happy with what we have done, I think it wouldn’t hurt to step back and look what we have accomplished since January 2016, which is when we started working on our debt snowball.  These are “guestimates” based on simple multiplication and a quick look at historical balances.  Some adjustments have been made for assumed interest payments, knowing what our rates are.

  • House:  $42,500
  • Car:  $3,110
  • Credit Cards:  $10,000
  • Student Loans:  $4,000

The total we paid off is $59,610.  That’s more than the average American makes in a year, based on government statistics.

Should I feel good or bad about this?  I don’t think that is important.  More important is what do we do – can we do – not should we do – and what are we going to do?

Decisions

So, in discussing various aspects, we are considering cashing out some stock to drop the snowball further.  We are already in an obnoxious income tax bracket and live in a high-tax state, but in discussing this with our accountant, he says that pulling money for the snowball will increase our taxes, but in doing so, we can up the 401K contributions to offset this, as well as increasing our withholding from the checks.  I need to do some math, but to me, that is a good solution.  We would pay off the one credit card that has a 20.49% interest rate.

We are also not using Amazon or any credit cards, unless we need to for security purposes.  Then the cash is moved immediately to the credit card.  The result is that our “Amazon” card has a positive balance (meaning it’s not maxed out by our little fingers) and when the next monthly payment comes along, it will be dropping, and our snowball will be better funded.  That is a big change.

We changed our mobile bill service plan to one that gives us what we need / want, but costs less.

We will increase our savings rate by sweeping all extra cash into our savings account at the end of the month.  This means every month, every penny will have a job, not just a roll-over into the next month.  I want more money in the bank in cash this year, not just debt reduction and increased retirement savings and matching.  I want to meet emergencies and needs more successfully this year.  We are currently working at saving $1000 / month, but also are using it to fund big purchases, taxes, and vacations.  That really is too little considering all we are using it for.  The kicker is how to balance pay-off of debt with the need for cash – that is the hard decision, and one which will most likely be tweaked as we progress through this year.

Altogether, I see a lot of positives from one year of debt reduction.  We feel more sane.  Nice!