I mentioned in my last post that we're paying ahead on our mortgage. Right now it's only a couple hundred dollars per month. We'll re-evaluate how much we pay ahead when we have our emergency fund in place.
I found this calculator at Mortgage-x.com. According to this calculator, we could save ourselves almost $56,000 in interest and pay off our mortgage almost seven years early if we kept paying only this couple hundred extra per month. Now that's some incentive!
If we doubled our extra payment to $500 a month we could save ourselves over $90,000 and over eleven years!
We'll definitely keep paying ahead and look for ways to increase that amount when we can.
72 Hour Pay for 80 Hour Work
My temporary 10% pay cut went into effect last week Monday. I finally received confirmation yesterday that it did indeed go through. There was some discussion that our site might be exempt from the company wide pay cut but when all was said and done only a portion of the workforce fell under the exemption. Due to the type of work I do, I was not exempt. I'll see the pay cut on my May 8th paycheck. This is supposed to go through the 3rd quarter so hopefully this will only impact us for five months.
I've completed a first cut at a May budget and really the pay cut won't impact us that much for this first month. That's only because this is a three paycheck month for Chuck. I already have budgeted that last payment to the HELOC. May is going to be our debt free month.
June's budget will be a little tighter. I'll have to watch our spending. There's a bunch of expenses coming up with my sister's wedding in July (bridal showers to throw, bridal shower presents bought, alterations to my bridesmaid dress, etc.) and I'll have to try and keep those in check.
I'm hoping to still put $1000 into our emergency fund per month until we reach our goal of $20K. And we're still going to pay ahead on our mortgage. We have to if we have any chance of re-financing before our ARM resets in 2010. I don't know if we'll have any additional money each month of the pay cut to save. I'm just grateful that we're in a financial position right now such that we can afford a 10% pay cut and be just fine. Now there's some peace of mind!
I've completed a first cut at a May budget and really the pay cut won't impact us that much for this first month. That's only because this is a three paycheck month for Chuck. I already have budgeted that last payment to the HELOC. May is going to be our debt free month.
June's budget will be a little tighter. I'll have to watch our spending. There's a bunch of expenses coming up with my sister's wedding in July (bridal showers to throw, bridal shower presents bought, alterations to my bridesmaid dress, etc.) and I'll have to try and keep those in check.
I'm hoping to still put $1000 into our emergency fund per month until we reach our goal of $20K. And we're still going to pay ahead on our mortgage. We have to if we have any chance of re-financing before our ARM resets in 2010. I don't know if we'll have any additional money each month of the pay cut to save. I'm just grateful that we're in a financial position right now such that we can afford a 10% pay cut and be just fine. Now there's some peace of mind!
Financial Health Quiz
I took the CNN Financial Health Quiz that I've seen linked around the blogosphere in the past couple days. Even though we've come a long way, according to the quiz, we have a couple areas to improve yet. Our overall grade was a B+.
Here's where we scored poorly:
(disclaimer: I did this as a household rather than just myself so where it asked for income I put our household income, where it asked for life insurance I combined our policies, etc.)
Emergency Savings:
Since we're still in debt elimination mode I can completely understand the poor score here. We currently only have about 1 months of expenses in savings (between emergency fund and travel fund while also stealing from the kids' savings accounts - let's just say that 1 month is a stretch). Our emergency fund alone only has 10% of what our overall goal is for our six month emergency fund. Come June though and this is going to start rising!!
Company Stock:
I've recently rebalanced my 401k to I'm not so heavy in company stock (of course my 8% match is all in company stock and so is Chuck's 2% match). Chuck hasn't rebalanced and while his overall total is less than mine, it still accounts for too much of our overall percentage. Chuck's company is a privately owned small business, and so I'm not sure what we're going to do about rebalancing his account. That's a discussion we should probably have.
Places we did well:
Retirement savings:
I'm saving 8% with an 8% match and Chuck is saving 4% with a 2% match. Between the two of us, we're saving a significant portion of our income. We're doing OK here. I do still have a goal of starting Roth IRAs for both of us (or at least Chuck) when we have our emergency fund fully funded.
Housing payment:
We're below the magical 28% of our gross income. We're actually just under 20% of our income that goes to our mortgage payment each month.
Debt:
Our debt (mortgage and HELOC) is below the 36% threshold set by the quiz. Since our HELOC minimum payment is only $100/month combined with our 20% housing payment, we're well under the 36% rule. Yay us!
Diversification:
We're heavily invested in stocks right now in our 401k's. That's of course due to our relatively young age. According to the quiz, we're invested appropriately.
Life insurance:
Chuck and I both have sufficient policies according to the quiz. Nice to know I guess.
Have you taken the quiz? How did you do?
Here's where we scored poorly:
(disclaimer: I did this as a household rather than just myself so where it asked for income I put our household income, where it asked for life insurance I combined our policies, etc.)
Emergency Savings:
Since we're still in debt elimination mode I can completely understand the poor score here. We currently only have about 1 months of expenses in savings (between emergency fund and travel fund while also stealing from the kids' savings accounts - let's just say that 1 month is a stretch). Our emergency fund alone only has 10% of what our overall goal is for our six month emergency fund. Come June though and this is going to start rising!!
Company Stock:
I've recently rebalanced my 401k to I'm not so heavy in company stock (of course my 8% match is all in company stock and so is Chuck's 2% match). Chuck hasn't rebalanced and while his overall total is less than mine, it still accounts for too much of our overall percentage. Chuck's company is a privately owned small business, and so I'm not sure what we're going to do about rebalancing his account. That's a discussion we should probably have.
Places we did well:
Retirement savings:
I'm saving 8% with an 8% match and Chuck is saving 4% with a 2% match. Between the two of us, we're saving a significant portion of our income. We're doing OK here. I do still have a goal of starting Roth IRAs for both of us (or at least Chuck) when we have our emergency fund fully funded.
Housing payment:
We're below the magical 28% of our gross income. We're actually just under 20% of our income that goes to our mortgage payment each month.
Debt:
Our debt (mortgage and HELOC) is below the 36% threshold set by the quiz. Since our HELOC minimum payment is only $100/month combined with our 20% housing payment, we're well under the 36% rule. Yay us!
Diversification:
We're heavily invested in stocks right now in our 401k's. That's of course due to our relatively young age. According to the quiz, we're invested appropriately.
Life insurance:
Chuck and I both have sufficient policies according to the quiz. Nice to know I guess.
Have you taken the quiz? How did you do?
Almost There!
Usually I wait until the end of the month to give you a status of our debt payoff and savings. I couldn't wait this time though. Check this out!
I made a big payment to the HELOC this week plus we paid our minimum payment as well. We are below $1500 left! We are so close!
And if we wanted to, we could take money out of savings to pay this off entirely and be debt free but mortgage today. I think we'll keep our little savings cushion though and pay off this loan next month. It will cost us less than $10 in interest for that peace of mind.
We're almost there!!
I made a big payment to the HELOC this week plus we paid our minimum payment as well. We are below $1500 left! We are so close!
And if we wanted to, we could take money out of savings to pay this off entirely and be debt free but mortgage today. I think we'll keep our little savings cushion though and pay off this loan next month. It will cost us less than $10 in interest for that peace of mind.
We're almost there!!
First Family Vacation
Growing up my family always took a road trip during the summer, usually it was out East to visit family in North Carolina. Sometimes it was local or West though depending I'm sure on the economy of the year and our relative's plans. Those road trips are some of my greatest childhood memories though and I want to start an annual summer family vacation tradition of my own. Now that the kids are a bit older, and now that we're almost out of non-mortgage debt, I think this is the summer we'll start that tradition.
I don't want to go too far away from home this first time so Chuck and I are thinking the W!iscons!in De||s area (Hiding that a bit as the last time I mentioned some place - Br@nson - I got way too many spam comments and e-mails. It was down right annoying!) might be the place for us this summer. It's a huge tourist trap, we know from experience, but it also has some really fun places for kids like the zillion and one water parks. I've done some preliminary research into the area and I'm starting to formulate a budget. I'll share more of those details when we've made some decisions.
This trip, our first in a very long time not sponsored in some way by our parents (see annual March trip with the in-laws or the long weekend getaway two autumns ago courtesy of my Dad), will also be a bit of a hooray-we-did-it debt free celebration. Debt free in May, quick family vacation (thinking 3 nights, 4 days) in July. I can't wait!
I don't want to go too far away from home this first time so Chuck and I are thinking the W!iscons!in De||s area (Hiding that a bit as the last time I mentioned some place - Br@nson - I got way too many spam comments and e-mails. It was down right annoying!) might be the place for us this summer. It's a huge tourist trap, we know from experience, but it also has some really fun places for kids like the zillion and one water parks. I've done some preliminary research into the area and I'm starting to formulate a budget. I'll share more of those details when we've made some decisions.
This trip, our first in a very long time not sponsored in some way by our parents (see annual March trip with the in-laws or the long weekend getaway two autumns ago courtesy of my Dad), will also be a bit of a hooray-we-did-it debt free celebration. Debt free in May, quick family vacation (thinking 3 nights, 4 days) in July. I can't wait!
1st Quarter Review of 2009 Goals
Sorry for the prolonged silence. Things are still up in the air at work. I'm hoping to hear this week how we are to proceed. Things at home on the personal finance front are going fine though. We've spent most of our discretionary budget for the month already so we'll have to be extra frugal the rest of the month so we don't go over. We haven't spent any money eating out so I guess all is not lost. There's really only one budget category close to it's limit already. Everything else is actually doing OK. Amazing how a budget can help you see your spending patterns and help you stay focused on your goals!
Since the first quarter of the year is now over I thought it was time to see how we're doing against the goals I set for this year:
~~~~~~~~~~~~~~~
1 - Pay off HELOC by June 30, 2009.
We are on track to pay this off in May! Even with the (potential - this may not apply to my site - all up in the air right now) pay cut I think we can do it. Chuck gets three paychecks next month and we'll only have about $1500 left to pay. We can almost do that in a regular month so we should definitely be able to do it next month! How exciting is that!
2 - Grow emergency fund to $8K by December 31, 2009.
If we are able to pay off the HELOC next month and if all stays fine in our world (gainfully employed, funtioning vehicles, etc.) then I think this is still a realistic goal. Starting in June I'll begin funding this again along with some travel fund increases and maybe a bit of Christmas savings too. It's my goal to put at least $1000 a month in the emergency fund and any extra I can scrape together into our travel fund, Christmas savings and yet-to-be-established Basement Finishing Savings. We also need to start a new-to-us car savings account. Man! There are just so many things we still want to do and not enough money (yet!) to do it with. All in time though. Patience.
3 - Lower mortgage principal balance by $6K this year. If we did nothing but pay our total due each month we'd lower it by approximately $4200. I'd like to add an extra $1800 on top of that.
I think we're well on our way here! Through March we've paid over $1400 in principal on our mortgage. That's right on track for the year! We're paying over $500/month in principal now with our extra payments so I think, if things continue to go well, that we can make this goal as well!
~~~~~~~~~~~~~~~
I feel so blessed that we haven't encountered any serious emergencies on our race out of debt. And that we're making such great progress on our goals. How are your goals going for this year? Have you reviewed them lately?
Since the first quarter of the year is now over I thought it was time to see how we're doing against the goals I set for this year:
~~~~~~~~~~~~~~~
1 - Pay off HELOC by June 30, 2009.
We are on track to pay this off in May! Even with the (potential - this may not apply to my site - all up in the air right now) pay cut I think we can do it. Chuck gets three paychecks next month and we'll only have about $1500 left to pay. We can almost do that in a regular month so we should definitely be able to do it next month! How exciting is that!
2 - Grow emergency fund to $8K by December 31, 2009.
If we are able to pay off the HELOC next month and if all stays fine in our world (gainfully employed, funtioning vehicles, etc.) then I think this is still a realistic goal. Starting in June I'll begin funding this again along with some travel fund increases and maybe a bit of Christmas savings too. It's my goal to put at least $1000 a month in the emergency fund and any extra I can scrape together into our travel fund, Christmas savings and yet-to-be-established Basement Finishing Savings. We also need to start a new-to-us car savings account. Man! There are just so many things we still want to do and not enough money (yet!) to do it with. All in time though. Patience.
3 - Lower mortgage principal balance by $6K this year. If we did nothing but pay our total due each month we'd lower it by approximately $4200. I'd like to add an extra $1800 on top of that.
I think we're well on our way here! Through March we've paid over $1400 in principal on our mortgage. That's right on track for the year! We're paying over $500/month in principal now with our extra payments so I think, if things continue to go well, that we can make this goal as well!
~~~~~~~~~~~~~~~
I feel so blessed that we haven't encountered any serious emergencies on our race out of debt. And that we're making such great progress on our goals. How are your goals going for this year? Have you reviewed them lately?
Stress
It had to happen some time. We couldn't sail through this debt reduction journey without at least one hiccup. That time has arrived.
I still have a job. That is the good news of the day. The bad news is my pay is being cut by 10% from April 20th through the end of the 3rd quarter. Basically instead of saying 80 hours on my paychecks, it’s going to say 72 hours. (I'm not sure yet how this is going to play out - do I still have to work 80 hours? Will I being taking unpaid time off each two week period? Details coming.) That is a large chunk of money we’ll be missing each month. Chuck and I will have to sit down and figure out what we want to adjust to account for this. Luckily, we’ve made some great progress with our finances in the last 18-21 months so we can still pay all our bills, still do fun things here or there and still save money each month. We’re fine. And at least I still have a job.
Preliminary discussions are to keep paying ahead on our mortgage, cut back on some of our discretionary spending (eating out, new clothes, etc.) and slow down on the HELOC debt elimination in order to absorb this approximately $450 reduction in pay per month. It's only five months or so. We can do this. More planning and examining to come.
I still have a job. That is the good news of the day. The bad news is my pay is being cut by 10% from April 20th through the end of the 3rd quarter. Basically instead of saying 80 hours on my paychecks, it’s going to say 72 hours. (I'm not sure yet how this is going to play out - do I still have to work 80 hours? Will I being taking unpaid time off each two week period? Details coming.) That is a large chunk of money we’ll be missing each month. Chuck and I will have to sit down and figure out what we want to adjust to account for this. Luckily, we’ve made some great progress with our finances in the last 18-21 months so we can still pay all our bills, still do fun things here or there and still save money each month. We’re fine. And at least I still have a job.
Preliminary discussions are to keep paying ahead on our mortgage, cut back on some of our discretionary spending (eating out, new clothes, etc.) and slow down on the HELOC debt elimination in order to absorb this approximately $450 reduction in pay per month. It's only five months or so. We can do this. More planning and examining to come.
March 2009 Month End
March is over! Can you believe it went so quickly!?! I spent barely any time on our finances this month. We did OK even without diligent overview but not as well as I'd like. I'll change that in April. Here's how everything came together:
Debts:
HELOC: $2,862.38 (-$1,138.73) - We dropped from the $4K range to the under $3K range! Another healthy month of debt reduction. Those snowflakes (this month $138.73) are helping tremendously! Our minimum payment is $100 and we usually have that in snowflakes alone! I predict I'll be able to pay this off in May. That's so close! Just need to buckle down a little bit to get it done.
Savings:
Emergency Fund: $2,028.59 (+4.61) - We're not earning a ton of money right now in interest but that's OK. The peace of mind this money gives me more than makes up for the downturn in interest. I can't wait to add to this fund!
Short Term Savings: $154.79 (-87.94) - We purchased our Garmin this month using money out of this account. That is exactly the reason we have this fund - so we can purchase things every now and then that we normally wouldn't treat ourselves too. I think our next purchase might be blinds for the master bathroom window. That window still has a sheet covering it 3 1/2 years after moving in! The last window left to treat. I'd say it's about time!
Travel Fund: $440.84 (+20.58) - Slowly building, just as it should. I dream of vacations. We haven't had a "real" vacation in quite some time. I'll keep dreaming for a little while longer.
Christmas Savings: $331.08 (+0.45) - I'll have to put a little more money into this account before December 2009. I'm debating right now whether I should start putting $50 into here each month starting in July or if I should just take a chunk of money some month and stick it here. Decisions, decisions. Of course, after we're debt free but mortgage it will be a lot more fun to make those trade-offs. (hmm, put money in this savings account or that savings account?)
Our NCN chart went from 85.64% to 89.7% this month. We are so close to that 90% paid mark! If only I'd known we were so close, I would have scraped together a few more dollars to get us over the bump. I'll be patient though. It will happen soon enough, like within the next two weeks! I can't wait to make that next large payment. Be gone purple pie slice! Be gone!
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Debts:
HELOC: $2,862.38 (-$1,138.73) - We dropped from the $4K range to the under $3K range! Another healthy month of debt reduction. Those snowflakes (this month $138.73) are helping tremendously! Our minimum payment is $100 and we usually have that in snowflakes alone! I predict I'll be able to pay this off in May. That's so close! Just need to buckle down a little bit to get it done.
Savings:
Emergency Fund: $2,028.59 (+4.61) - We're not earning a ton of money right now in interest but that's OK. The peace of mind this money gives me more than makes up for the downturn in interest. I can't wait to add to this fund!
Short Term Savings: $154.79 (-87.94) - We purchased our Garmin this month using money out of this account. That is exactly the reason we have this fund - so we can purchase things every now and then that we normally wouldn't treat ourselves too. I think our next purchase might be blinds for the master bathroom window. That window still has a sheet covering it 3 1/2 years after moving in! The last window left to treat. I'd say it's about time!
Travel Fund: $440.84 (+20.58) - Slowly building, just as it should. I dream of vacations. We haven't had a "real" vacation in quite some time. I'll keep dreaming for a little while longer.
Christmas Savings: $331.08 (+0.45) - I'll have to put a little more money into this account before December 2009. I'm debating right now whether I should start putting $50 into here each month starting in July or if I should just take a chunk of money some month and stick it here. Decisions, decisions. Of course, after we're debt free but mortgage it will be a lot more fun to make those trade-offs. (hmm, put money in this savings account or that savings account?)
Our NCN chart went from 85.64% to 89.7% this month. We are so close to that 90% paid mark! If only I'd known we were so close, I would have scraped together a few more dollars to get us over the bump. I'll be patient though. It will happen soon enough, like within the next two weeks! I can't wait to make that next large payment. Be gone purple pie slice! Be gone!
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