More income means business to take care of.

I posted yesterday I received a nice bonus. The amount was somewhat unexpected.

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I decided to run my tax numbers again for the year. I was aiming for rather breakeven before the extra income kicked in. I plugged my numbers in our tax planning software and it wasn't good. Not only would we owe over $1k, but I was in AMT! HUH? I knew dh returning to work could push us into AMT, but not a flipping $5k raise. I finally decided that the AMT calcs were wrong - the software had not been updated for more recent tax law changes. I also did not see the Making work pay credit. So I took out the AMT and deducted $800 for the credit. This left us with a $500 refund from the Feds and $500 due to the state, estimated. Good enough for me. I am punishing the state, so that works (hell if I will take a refund from them - they won't pay it anyway).

I was rather pleased with this scenario. I assumed we had no medical expenses this year (beyond insurance/regular checkups) and that we gave nothing to charity, etc., etc. Odds are we will have more deductions. Dh's (ebay) income should be offset by the dependent care credit. So overall, I am happy with this. & we have a little extra cash in the bank if I screwed up my calculations.

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Lest you think I am all work and no play (harldy!), we actually went out on a nice dinner April 15th to celebrate the end of "tax" season and told my parents we would take them out to lunch Sunday. But we can fit this all out of our budget - why we just saved the whole bonus. All this was done and put into motion before the actual bonus arrived.

Reminds me, there is an excellent, albeit a little pricey, Indian cafe in our neighborhood. There is never many people there and it is rather small. We went there Wednesday and it was PACKED. I think that is a wonderful sign. We took dh's friends out to eat on a weeknight when they were here and our other favorite place was just jam packed. IT always is on weekends but it gets so quiet around here during the week any more. I don't know if it's a fluke or what. The food is excellent so I am glad they are doing well.

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It looked like our net worth was up considerably; higher than it has ever been (barely). So I looked at that today. Net worth today was $213k. We hit $212k late in mid 2008. So it's nice to move forward. But barely. Still pretty much at the whim of the stock market. But I do feel like we can make forward progress this year.

Our cash/investment assets are not quite at six figures yet. The rest of our equity is in our house - mostly what we paid off as the value still holds rather steady slightly above what we paid.

Most of that is rather up in the air. (Stock market and home values).

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CASH

We have always saved up a lot of cash. We wanted to put at least 20% down on our home. We wanted to have plenty of cash to supplement my income when dh stopped working, etc. & moving forward we would like to continue to pay cash for everything and to increase our "emergency" cash savings. I think 3 months' expenses suffice for our situation today, but I think this money should always be growing (interest, if nothing else).

Anyway, in the past decade we have mostly been ridiculed as far too conservative (and not investing every spare dime in the stock market). So it's been kind of interesting to read a multitude of articles lately about how cash is IN. Suze no longer thinks you can afford anything until you have 8 months expenses in the bank, etc. Basically, our thinking all along is becoming rather in vogue. & yes, I think it's little more than a trend.

I mentioned briefly in my last post that our goal was $30k cash in the bank. This actually does work out to about 8 months of living expenses. Suze would be pleased. The number mostly comes from the fact that we have hardly ever had less cash as adults. Having our second child changed things a bit. So it's where we want to get back to as kind of a minimum. & of course we would continue to grow our cash savings from there. But 8 months of living expenses is a nice goal. To start. I think our personal goal is more like a year, and growing.

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Finally, as I look at my compensation for the year I realize we are officially back to more of a 2-income level. I never expected to make so much on my income alone, so rapidly. Inflation has eaten at our earnings power over the last few years, but our income taxes have also decreased quite dramatically. I look forward as a result, to rapid savings going forward. In fact, I expect we can possibly do better than before because we are managing our assets better.

I at least know we can get through the next year. Once LM starts school next summer, dh and I will probably sit down and discuss our future more. Right now he is working on some film projects, trying to get them off the ground with his limited spare time. If things continue like this I wouldn't mind him taking a year or 2 to work on that stuff, when he actually has some considerable free time. (& the kids will still need him much). But from there, as the kids get older, he will probably return to school and/or seek employment to help move us along. Though we may be in a spot we won't need his income, it doesn't mean he doesn't want to grow professionally or build up his skills so he has more to fall back on if something happens to me. So yeah, we will have a LOT to figure out.

I am pleased that our current path will probably buy us a little more time to figure this all out. I have the feeling his main job will be staying home the first couple of years LM is in school. Though going back to college during those years may be a wise move. In our current position I don't mind giving him a solid year or 2 to work on his DREAM further. One would argue he has had almost 7 years to do so. But being in full charge of 2 wee little ones, and me making too little to pay for childcare most of that time, has meant I wouldn't exactly see it fair to say, "You had some time and you didn't make it." The elementary school years seem okay for that time - time to try to make it and prove he can make any money with his hobbies. Dh is still young enough that he has time...