Financial Update -- May 2011

A little financial update for everyone since I just got around to moving some money here and there. 

Hubby got paid today (a bit early because of the holiday on Monday) so I decided to get the ball rolling on some transfers. 

Some of the money I already had set aside and the rest was added with this paycheck.

• Transferred $450.00 to our mortgage savings for 1/2 of the monthly mortgage payment (it's actually more than 1/2 our regular payment, but I like to have the account padded a little in case homeowner's insurance or property taxes go up)
• Transferred $501.07 to our credit card
• Transferred $240.82 to my college loan savings (loans not due until end of 2011/beginning of 2012, but starting to make "payments" to get a head start)
• Transferred $501.08 to our emergency fund
• Transferred $534.00 to our vacation savings (have to keep up with it if we want to go to Italy next year)
• Transferred $50.00 into my IRA (automatically deducted every month)

All of our bills are paid until the middle of June.  The emergency fund is almost back to the pre-layoff amount, which we'll finish next month.

Project Savings/Payoff

As I mentioned in my last post, I put together a spreadsheet listing our debts, a quickie budget, grocery expenses, and a debt payoff plan.  It is in no way a done deal because I'm working on preliminary income figures. 

Also, I used the minimum payoff amount available so the payoff dates may be better than the spreadsheet indicates.  As a matter of fact, I've already knocked off 1 month from my entire savings/payoff plan! 

We started out owing $177,273.30 (credit card, student loans, heloc, and mortgage) and we need to re-save $1,097.22 of our emergency fund.  We are on track for the emergency fund and should have that completed by the middle of April.  We had some extra money come in that we didn't need so I put it towards the credit card lowering our total owed to about $177,023.70 (it's actually less, but I rounded the credit card up for minor use).

My plan is to re-save the emergency fund first, then move on to the credit card.  That should take us through October 2011.  I'm starting out with $697.48 per month as the extra debt payoff.

My student loans do not become due until November so I'll be saving up the payment through the summer.  By the time they are due, I should be able to pay off the smallest 2 of the 8 student loans.  I'll consolidate the remaining 6 loans and that total should be paid off by July 2013 depending on the monthly payment.  I calculated the payment to be about $240.82 per month, then added in the extra $697.48 for a total monthly payment of $938.30.  The original monthly payment could be more or less and that could change how long it takes to pay it off. 

The next item on my payoff plan is the heloc.  That's where I've reduced the payoff time by one month with a complete payoff by July 2016.  This may depend on some other things we could be doing with our house and mortgage so we'll have to see how that goes to determine how the heloc payoff will really go.  But for now I will continue to pay an additional $190 a month, which reduces the amount by $5,510, then in July 2013 I will add the $938.30 extra I've been using towards the other debts to pay this one down for a total of $1128.30 per month. 

The mortgage is part of the total balance, but is not on the payoff plan as yet.  We have to wait and see how that will work out with our other plan that I'll talk about another day.

The other variables in this plan are my husband's income, any income I may make, the extra money showing in my budget, and other incidentals.  Right now I'm working with what I think we will be getting from my husband's income.  So far we've only received one 1/2 check with the w-4 showing single, zero.  The next check will include a completed w-4, but no deductions other than taxes.  By May we should have a normal check with insurance, 401K deductions, and taxes taken out.  That will be when I can finalize things a bit more.

I may start substituting next school year, which could bring in some extra money to go towards our debt payoff.  Since I don't know how many days I'll be working, or whether the school district will still be accepting new substitutes, I haven't included this into the payoff plan yet.

I also have $704.23 left over after my quickie budget plan.  I've subtracted out bills, savings, groceries, and extra debt payoff.  The rest is what we will use for all the other things we buy, need, want, use, etc.  Any thing left over by the next month will go to pay down the debt even more.  I don't want to say it's our spending money because I bet we usually won't use that much extra in a month.  Only if we have some sort of extra expense.  So I expect most of it will go towards debt.

Any number of things could happen to mess up my plan...or make it better!  Those are my incidentals.  Couldn't say what they'll be yet, but I can guarantee something will show up one way or another!

Attempt to Get Back on Track...

...Or at least I'm going to try.  

I've updated everything on the sidebar now as well as NetWorthIQ.  It's not looking good, but I didn't expect it to what with the student loans being added to it all.

I made several payments to the truck loan.  We are now down to $7,131.24 left on it and I don't owe them another payment until January.  Of course, I'll continue to send them in because I want it gone!  My extra loan payment "savings" is up to $145.69 so I'll only need $87.07 to send in another extra payment along with my regular payment.

I received my homeowner's insurance statement.  The payment is due in December and is paid through my mortgage escrow account.  I would love to not have a mortgage escrow account, but they are required on VA loans.  As usual the policy covers some pretty stupid things like volcanic eruption, which may be needed if I lived in Hawaii, but I live in a flat state with barely a hill; and grave markers (is there something I don't know about?).  The good thing is that it looks like it will be going down $14.97 from last year's premium.  It's not much, but it'll still lower my monthly mortgage payment.  That's $1.25 a month that I can put towards something else.  

I have all my monthly bills paid for the rest of the month and we still have another payday to go this month!  The next bill is not due until the 7th of next month and it's the only one for the next two pay periods!  I've already made sure I did a big grocery shopping.  We are set for food other than refrigerated items we go through quickly.  I spent over $215 so it better last!  So I think this is a good time for auto maintenance.  I need an oil change and new battery and DH needs an oil change, some other routine maintenance yet to be determined, and a couple of new tires.  We'll have to do some pricing.  For tires we like to check them out on Tire Rack to get reviews and pricing.  We bought my new ones on there earlier this year.  We had them delivered to a local shop to be put on and we couldn't be happier with them.

I believe that may bring me up to date for now.  If I think of anything else, I'll add another post later.

Does More Income Actually Mean More Money?

I want to thank Fabulously Broke In The City for giving me something to talk about on these slow three days (personal finance wise anyways).  She wrote a post on July 4th entitled High Income doesn't necessarily mean Financial Smarts that set off a topic I like to talk about--basically people that have a lot of income (or what should be a lot of income), but still don't have any money and lots of debt.

One point that wasn't brought up was that income and how much is high really depends on where you live.  Other factors such as whether you are single or married, or have children or not could also determine what is considered a low or high income to someone.

For instance my husband's salary would barely pay the mortgage/rent if we lived up north.  Because we live in the south and have stayed out of the larger cities, then his income allows us to pay the bills plus some and I can stay home with the children now.  Five to ten years ago we were only making in the $25K-$35K range and managed to build two houses (not at the same time) and have two kids (again not at the same time).  My husband was able to stay home for a while during that time period to take care of our youngest son who was born with a birth defect and needed extra care, and go to school.  Now with DH working post-degree (and his student loans paid off early) we are making in the $50K range, living more comfortably, and I get to go back to school.  Imagine what we'll be able to save and pay off when we are both working!

At the same time I've known people that make more than we do, but still don't have a life as comfortable as ours.  Oh on the surface it looks comfortable!  One job layoff though and it'll be all over...no more house, no more cars, debts sent to collections, trying to figure out how to pay for food.  Yeah that could be bad!  

I don't believe that income has anything to do with whether you can pay off your debt and live comfortably or not.  Yes, more income does make it easier, but the real key is living below your means.  I'm pretty sure I've mentioned how we live below our means here.  Has it always been easy?  No, and more income would have been nice, but we managed and we still do.  

I do believe that there are people out there that try very hard, budget their money well, and due to situations out of their control still don't have enough to make it.  Just living below your means and budgeting doesn't always cut it for everyone.  But I think there are also a lot of people out there that would benefit if they would just live below their means and budget and the amount of income really wouldn't have anything to do with it.