Wednesday, January 20, 2021

Paying off A Loan

We are cosigners on our daughter's car that we bought in May 2019. We paid about half in cash and took out a small loan for $5,700. If memory serves our daughter put about half of the cash down on the car. We honestly didn't have a great plan after that. We had some thought she would take over payments after graduating in May 2020. 

It took her about six months to secure a full time job and here we are two months later. The balance on the loan was under $3,500. We decided to pay it off in full. We know it will help her to not have a car payment, even though small at $133.50 per month. We knew that we had also received $3,600 from the Federal government this year. Money we really didn't need or want. We have always used windfalls to pay off/down debt, so that is what we have done again. 

If you pay close attention to my POP reports, yes, we did save the first stimulus cash ($2,400) towards our savings goal. We will not be reducing that number!

During the last four months of the year all federal employees were exempt from social security deductions. We saved all of these funds, which was eight payments of $258.06, amounting to $2,064.48. With the stimulus money we were pretty close to the payoff amount. There's always some extra cash in various places.

The main point is that we sent a check to pay off this car loan in full today for the amount of $3,497.81. One less payment for me or her to think about! Now we hope she can keep this car for a few years as she gets her financial life on track. 

Monday, January 11, 2021

Pay Has Been Corrected

My husband was promoted on December 1, but they didn't pay the new raise at all in December. It seems his notification to the pay office was received. We now expect that back pay to arrive later this week. 

I adjusted his contributions to his retirement out his pay from 11% to 17% last week. That change is not showing up yet, but the confirmation said it would be complete for the February 1 paycheck. I will be able to see the monthly pay stub a week before. With all the changes, I won't have a handle on the pay amount until February 8. After that, the paycheck amounts will stabilize, which is always very helpful for working on the budget!

The goal is to save, save, save! 

Monday, January 4, 2021

Wrapping Up 2020, Planning and Working 2021

It's the time of the year where I do some year end record keeping. 

As you may have seen from previous posts, I recorded year end retirement balances and our final Pot of Possibilities contributions. 2020 was a great year financially. I know it wasn't for everyone, which is very, very unfortunate particularly if caused by government overreach in response to the virus. 

I also make a point to download any of my husband's monthly pay stubs I may have missed for the year and the year end statements of all of our investment accounts. As of today, I have been able to do all but one account, my husband's Thrift Savings Account statement. 

I did some college financial planning a couple months ago for our daughter. We needed to make a determination on when to start using her Post 911/GI Bill benefits. She has four semesters left. We will pay out of pocket for Spring 2021. We will use the benefits for Fall 2021 and Spring 2022. The final semester, Fall 2022, will be cash out of pocket and a small amount from her the Post 911/GI Bill benefits. I have my plan all mapped out and just need to work the plan at this point. 

The spring 2021 tuition and housing are due January 20. A few months ago I moved her ESA money out of a mutual fund and into a cash account. Today, I transferred the money we needed to our bank account so we have it ready to pay next week. Another semester student loan free for our youngest daughter! (Our older daughter did five years of college for two degrees and only ended up with $5,500 in loans) 

The planning continues with figuring out my husband's new paycheck. He was promoted in December, and we are waiting for the pay to show up. It's one thing to have a new pay to adjust to and work with, but it feels much more complicated when you know there is back pay coming. Overall, more cash is coming our way!

I have decided to lower our tax liability further this year by increasing my husband's deferred retirement contributions from 11% to 17% of his basic pay. For now, I am putting his Roth contributions on hold until the pay situation corrects itself. I expect we will ultimately max out both of our Roth IRAs again in 2021. 

What record keeping are you competing for 2020? Are you making adjustments with your finances for 2021? 

Saturday, January 2, 2021

2020 Retirement Report

I track our retirement account balance on a basic spreadsheet that I started in May 2003! Nearly 17 years later I am still tracking. I don't track with any specificity. Sometimes I skip a whole month or two of recording, often when I know the market is down. In some months, I have five or six days of balances recorded. I do prefer to record when the balance is higher then the previous time I recorded. 

In May 2003, our retirement balance was $25,741.51. My husband had already been saving for many years at this point, and I think I had a little from when I worked as well. 

We wrapped up 2020 with a retirement balance of $834,124.84!! 

I'm nearly speechless by that number. 

The work and effort all of these years is working!

The balance of those accounts was $660,822.27 at the end of 2019. We contributed the maximum to our Roth IRA accounts, $6000 for me, and $7,000 for my husband since he is now over 50. We also contributed to his TSP (Thrift Savings Plan) in the amount of $10,987.80. 

The increase for the year was $173,302.57. The contributions were $23,987.80, the growth portion was $149,314.77. Amazing!!

Our contributions are 18.3% of our gross income. We also saved another $20K towards our Pot of Possibilities this year, for a total savings rate of 33.6% of income. 

When calculating our gross income I did include our housing allowance from the military. The full housing allowance goes to pay our rent on base housing. It's tempting to leave it out, but everyone has some type of housing expense to pay or cover out of income. 

My husband was promoted in December. We are still waiting for the increased pay to hit our bank account. At this point we are owed money for December, which we will save! We have plans to increase retirement and other savings significantly in 2021. Because we can live on 2/3 of 2020 income, there is no reason to not save all of my husbands raise. I will write more on that once we are actually getting paid! 

Did you successfully meet your retirement goals? Do you save automatically? (Hint, that is what helps make it so easy to do!)