Barlotti in Boston II

[Barlotti]

Almost two years have passed since my last post. Since then, I got a large raise, paid off my car, paid off my student loan, and bought a condo.

My goals have changed. Two years ago, I was positioning myself to buy a home. To me, this meant paying down installment debt, and saving a down payment. Done with some help from my parents who gifted me $6K. (Thank you parents!)

Now, I want to catch up on my retirement savings and become financially independent of my job. Don't get me wrong. I love my job. I just don't want to be financially dependent on it.

I'm 37 years old, and I make $83,676 per year. I've wrangled with the psychology of saving money -- it's one thing to know that saving is good, it's another to actually do it. Now, I'm learning more about investment strategy.

Assets:
Home value: $180,000
Car value (quote from dealer): $5,000
403B: $20,092
Roth IRA: $9,638
Investments: $6,420
Emergency fund: $5,000

Liabilities:
Mortgage (5/1 ARM, 2.5%): $157,978
Credit card debt: $750

Net worth: $67,423

My goals for the rest of the year are to contribute $17,500 to my 403B and $5,500 to my Roth. To reach this goal, my employer will deduct 38% of my monthly gross income for the rest of 2013. $4,375 (or 25% of $17,500) of my 403B contributions will come out of my income tax, I think...

Given the deduction, I took home $2,800 this month. I've got $50 cash to see me through August.

Next month, I want to live on $1,500, pay off $750 in credit card debt, and invest $550.

[Barlotti]

It's my second month of journaling and I've reframed my goals. This is my first month of paying myself first, whole hog. What qualifies as whole hog, you ask? First, I'm going to max out my 403b. Previously, I was contributing 4% of my gross income of $6,973. Now, I'm contributing 38% (about $2,650/month) to reach the $17,500 max. Second, I'm going to max out my Roth IRA. I've been making regular contributions throughout the year, and I need to contribute about $437/month for the rest of the year to reach the $5,500 max. Third, for the rest of 2013, I'd like to invest about $400/month in my after-tax investments ("after-tax"). Fourth, by year's end, I'd like to contribute $1,000 to my $5K emergency fund.

So how am I doing? My 403b, Roth, and "after-tax" target contributions are automated, and $170 will be delivered to my emergency fund this month. By paying myself first, I will save about 52% of my gross income.

This will leave me with $1,793 to pay my bills. Normally, this would be fine. But I have a $1073 credit card bill coming due. I may not pay the balance off in whole this month, but I'm going to try. I've started selling some of my belongings that don't "pay rent".

So far, I've netted $160 for a desk, and $79 for a 3G iPod touch. This will leave me with $2,032 to pay the bills.

I've paid the following bills:
mortgage $874
condo fee $297
condo special assessment $104
gas and electric $62
credit card $71
HO-6 insurance $18
Paypal shipping $5
overdraft fee $25

This will leave me with $622 to pay remaining bills. Hopefully, I sell more stuff by Sept. 15, the date that my $1,002 credit card bill comes due. Updates to come.

[pemulis]

I'm doing something similar. I raised my 401 K contribution rate to 40% to push to me into a reduced spending lifestyle. I was hoping to reduce the tax bill at the same time.

But wow those condo fees are rough! You are cutting it pretty close, I will be interested in hearing how it goes! Good luck.

[Barlotti]

Thanks Pemulis! Good luck to you.

Folks, I decided to dip into my emergency fund to pay off my $1,002 credit card bill. I guess that's what the emergency fund is for.

Here's a summary of my assets (i.e. est. home value - $180,000; est. car value - $5,000; emergency fund - $4,370, retirement accounts; and investments) and liabilities (i.e. mortgage). I paid myself first this month. I'm on track to max out 403b and Roth IRA, and contributed $400 to investments).

Assets: $228,589
Liabilities: $157,666
Net worth: $70,753

And how's my monthly spending looking? Here's what I've spent in the last 30 days:

Mortgage and taxes $875
Household expenses (including two months condo fee) $704
Utilities $122
Auto $111
Home repair $74
Health & fitness $73
Misc. $72
Credit card $71
Groceries $67
Dining $50
Cash $24
Entertainment $21
Bank fee $20
Insurance $18

This adds up to $2,300. I'd like to get my monthly spending down to $1,500.

To summarize, my net worth went up by about $3,330. That's good. My spending was a bit high, but includes two months' of condo fees and a special assessment (I'm looking at an atypical 30 day period). I've cut (or put on hold) some subscriptions including massage and Netflix.

What's keeping me up at nights?
Where I describe my subject of rumination du jour.
Right now, I'm watching a lot of youtube videos on tiny houses and living in small spaces. I really like Kirsten Dirksen's channel. Here's a link to a documentary she made http://www.youtube.com/watch?v=lDcVrVA4bSQ.

[Barlotti]

Wow, I just read "Barlotti in Boston", my first attempt at journaling on ERE. Talk about a blast from the past. I see a few ways in which I've changed since those entries.

I was thinking of selling my car way back when but justified not selling it due to vague plans to buy a condo in the 'burbs. I ended up buying a condo in the 'burbs, but I live within a 5 minute walk of the red line "T", which gets me to work in 40 minutes. I also live within walking distance of a supermarket, farmers' market, drug store, dollar store, library, and post office.

Considering I don't need a car, let's take a gander at what my car costs me.

2013 to date $3,429
2012 $1,369
2011 $8,900 (the year I made a lump sum payment of $6,000 to pay off my car)

OK, so not counting the amount I paid towards my car loan, I've spent about $7,700 on my car these past 2 years and 8 months.

I keep my car for emotional reasons. My car makes me feel secure and free. Also, I enjoy my car. I like to go for drives in the country. I like to drive to Costco to stock up on Annie's mac and cheese. I like to drive to Bloomie's in Chestnut Hill to stare at Chanel suits I can't afford.

I get into trouble when I start driving my car to work because I have to pay for parking. This is how I've spent close to $3,500 this year on my car.

I don't feel that removing the temptation to drive to work is a good reason to sell my car. I feel that the emotional rewards are worth some of my money, just not $3,500 in an 8 month period.

I don't know what to do, really. The Kelley Blue Book value for my car in a private sale is somewhere between $8,000 and $8,300. I've noticed the value's gone down a couple thousand dollars in the past couple years. Maybe because it's a hybrid and the battery is about to go kaput.

What do I do?

[George the original one]

$8k (car resale value) can go a long way towards car rentals for the times you want the freedom...

[Barlotti]

Hi George, that's true. Still mulling over selling my car. I've driven it a few times this month: supermarket, Home Depot, my favorite Chinese restaurant.

[anomie]

heya Barlotti -

mid-30's, we rationalized an extra $5k motorcycle and and extra '71 pickup truck (old, but still another $1k /year insurance and upkeep) --- just 'because'. the truck we 'might drive to get mulch for the garden' one time/ year.

sentimentality can be expensive!

best of luck to you.

[Barlotti]

Here's a summary of my assets (i.e. est. home value - $180,000; est. car value - $5,000; emergency fund - $4,377, retirement accounts; and investments) and liabilities (i.e. mortgage and credit card debt).

Assets: $235,699
Liabilities: $158,852
Net worth: $76,847

My net worth has gone up by $5,924 since my last check in. What a pleasant surprise! I'm still maxing out my 403B and Roth IRA contributions, and adding to my *other* investments.

Also, my property value seems to have gone up by about $20K in the past year (although I'm not counting it here). Egad, that's more than 10% gain in property value in a year.

[Barlotti]

Here's a summary of my assets (i.e. est. home value - $180,000; est. car value - $5,000; emergency fund - $4,300, retirement accounts; and investments) and liabilities (i.e. mortgage and credit card debt).

Assets: $239,338
Liabilities: $157,952
Net worth: $81,386
(investment accounts): $50,110

My net worth has gone up by $4,539 since my last check in. I'm still maxing out my 403B and Roth IRA contributions, and adding to my *other* investments.

[Barlotti]

I'm OCD about looking at the numbers. Nothing changes, but I fall into the vortex.

I've been saving about 52% of my monthly gross since July, but at the end of 2013, I will have saved about 33% off my annual gross income.

My goal for 2014 is to save 40% of my gross income.

[Barlotti]

Well, I'm looking at the numbers again. There's a subconscious drive towards the new year, I suppose.

I think by the end of 2013, I will have spent about $35,000. In 2014, I should be able to cut spending by $10,000 at least.

When I look at the numbers all added up, it hurts a little. I've spent about $4,200 on my car. Mostly on parking. I've spent about $2,200 cash. What did I spend this money on? I've also spent about $2,600 eating out and about $2,200 in the cryptic "credit card" category. For now, I'll guess that most of the cc spending was dining out, parking my car, and a wedding trip.

[leeholsen]

youre' doing really great. do you know that the average us citizen only has $3000 in retirement savings and you're blowing past that every month ?

give yourself a break if you miss some goals or spend more every once in a while, no one is perfect.

[Barlotti]

Hi leeholsen, thanks for putting things in perspective.

[leeholsen]

i think thats a good idea, i'm planning on doing the same but i'm going to try and do a cash out refi.

i know that goes against many here in minimizing your costs, but same as you; mine is dated and i dont plan on living there until i die; so it is going have to be updated for when i do want to sell it.

also, rates are still 4%. i figure if i cant beat 4%; then i really should not try to become FI and have to manage my own money w/out a paycheck.

[Barlotti]

Hi leeholsen, I agree that it's hard to beat rates at 4%. I believe there is such a thing as good debt. If my equity grows with inflation, let's say at a rate of 3% a year, that should offset the interest rate on the HELOC, right?

I was advised by my credit union to finish painting my walls before applying for the loan. I'm hoping to make progress this weekend.

Here's a summary of my assets (i.e. est. home value - $180,000; est. car value - $5,000; emergency fund - $4,300, retirement accounts; and investments) and liabilities (i.e. mortgage and credit card debt).

Assets: $245,117
Liabilities: $159,206
Net worth: $85,911
(investment accounts): $54,817

My net worth has gone up by $4,525 since my last check in. I'm still maxing out my 403B and Roth IRA contributions, and adding to my *other* investments.

[Barlotti]

Assets: $244,957
Liabilities: $157,551
Net worth: $87,406
(investment accounts): $57,451

My net worth has gone up by $1,495 since my last check in. I maxed out my 403B and Roth IRA contributions this year!

In the way of reviewing my progress, since I started journaling in August, my net worth has gone up from $67,423 to $87,406. My net worth includes home equity based on the purchase price of my condo. According to real estate websites, my condo has appreciated 17% in value since I bought it in August 2012. It's clear to me that my condo won't continue to appreciate like this. I'd like to tap my home equity for capital before interest rates rise further. I've applied for a home equity loan at 3.75% The loan's being processed now.

Here are my financial resolutions for 2014.
1. Max out my contributions to 403b and Roth IRA.
2. Save at least 50% of my gross annual salary.
3. Renovate my bathroom.

I've opened my first brokerage account, and am learning more about buying and selling via limits, and dividend investing.

All this financial reordering is having an effect on the rest of my life. I've started exercising and trying to eat better. I have much more energy! Also, I've joined a writing workshop and am writing a novel.

[Barlotti]

I feel really sorry for my cat, who is asthmatic.

I'm doing some home repairs, and I'm doing a lot of sanding and painting.

Today, I bought a Ridgid 12 gallon shop vac. I figured I could hook it up to my DeWalt random orbital sander to minimize dust. The shop vac doesn't join with my sander. Grah. If you have any advice, I'd appreciate it.

[George the original one]

If there's a vaccuum port on the sander and it doesn't match your vaccuum hose/attachments, just duct tape the hose in place.

[Barlotti]

Why didn't I think of that?!! That's a great idea. It'll make the rest of my sanding more pleasant.