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Fiscal Updates

April 18th, 2014 at 05:56 am

**I received my overtime for the year (paid as an annual bonus) and was able to fund a chunk of my savings. For the rest of the year all our monthly savings goes to IRAs, and my 2014 raise will go to savings. To top off those goals in my sidebar.

I can't believe how behind I feel still after last year. That said, though I would like to fund 2014 IRAs in 2014, it's not a necessity. That buys us a little buffer if crap happens.

Bonus:

$5,000 to savings
$ 300 to mortgage
$ 100 new kids bike

I was planning to spend more on the bike, but we just happened to find a $100 bike this week. So that worked out perfect.

Great-Grandma insists on giving me $300 for doing her taxes. I asked her not to, but I know her. Will see. This way I figure I already threw $300 to my mortgage so I really don't care either way.

If she insists, I could use $300 for summer classes for older child. I don't sweat that stuff any more. Whether they know it or not, Grandma (MIL) and Great-Grandma pay for that. BM is attending a camp with his school next month and I used Christmas money to pay for that. & I get the feeling Great-Grandma is paying for summer school...

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**My gross check was about what I expected, with extra overtime on a big project last year. BUT, the net did not reflect all that extra work. UGH!! I have said that if spouse worked we wouldn't take anything more home. But, my own income seems to be entering that black hole. It's extra shocking because I am used to literally keeping 90% of my paycheck. You get used to what you get used to.

I ran a tax projection and everything looks fairly breakeven for 2014.

Our tax rate on last $10k - $15k of income is hitting about 25%. So, it looks like we will be doing Traditional IRAs this year. I like the way this works out. Our taxes are even steven if we change our mind. But if we do the Traditional I should be getting about a $2700 refund. Which will go straight back into retirement savings. (This would bring our retirement savings rate up to 18%. But, I don't know if that is all good, as we give up the ROTH contributions to do so. I think it just means we need to save more to pay for future taxes. Saving more doesn't necessarily mean much to our bottom line. Though I suppose I will probably be able to work some tax magic on the back end. When we retire).

I also checked the extra property tax deduction and that would save us about 25% too. For several reasons, will probably do this year. I just want the simplicity of one tax payment per year. But I want to make the extra payment in a year I actually get a tax benefit.

We've been doing ROTHs for so long because we haven't been paying any income taxes of any note, since spouse stopped working. But I am not personally comfortable with paying $2,700 taxes that I don't need to. Circumstances change, so we re-evaluate.

In our young 20s I Was strongly encouraged to fund ROTHs. I kind of understand it more with age. There has just never been any tax break quite like it. So when I entered the tax profession it was, "Are you crazy??? Do the ROTH!!!" BUT, we were young and starting out and paying a crapload of taxes. We chose to fund my 401k and our Traditional IRA. I am sure we could have cashed flowed the ROTHs and whatever, we were saving 50%+ of our income. Not like we NEEDED the tax break. BUT... Absolutely no regrets. When dh stopped working, we converted *everything* over to ROTHs. It was win-win. Get a big tax break up front. Convert over at a lower tax rate. So, I am pretty partial to just taking the tax break. I don't know if we will ever be able to convert again, but we do have $100,000+ working for us in our ROTHs. As Dave Ramsey would say, that will be $5 million or something in 40 years. Wink (I don't think it will ever be near that much, but it will do nothing but grow, and I am happy with that. All our aggressive investments are in the ROTHs, for sure).

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Housing Update:

I guess housing has settled down here. Absolutely nothing has listed in immediate neighborhood for about 12 months. A house went for $400k last spring, which meant a 65%-ish increase over a couple of years. (Nothing new, around here. It's always a roller coaster!). But then, that was it.

SO... I saw 3 houses like ours up for sale this month and that piqued my curiosity. I just saw that one had sold for $400k. It will be interesting to see what the others go for.

Overall, I think this is a good sign. Anything much more than that is getting back into crazy bubble territory. Our house actually peaked at $650,000. Which is crazy insane. At this point, anything much more than $400k is "crazy insane". Especially given the chronic unemployment, regionally. But even in a robust economy, the local wages just don't support these kind of home prices.

So I am kind of marveling at the restraint. No huge bidding war??? Heck, the other two houses have been up a week and are still available. (Not a common sight in these parts, even when the bottom was falling out). I am hoping these are all good signs, overall. That things are settling a bit. A sellers market is good for us, but another market collapse would not be good. I am all for sustainable home prices.

Though, who knows... Bay Area real estate is crazy crazy crazy right now. & that always blows up our housing prices, because then our real estate looks super cheap compared to that. (Which is the only reason anyone ever paid $650k for a house in our own neighborhood). IT will be interesting to see how things play out this summer.

2 Responses to “Fiscal Updates”

  1. Kiki Says:

    I am looking in the area for a house to buy and am shocked at how much the same houses have gone up in one year. Now I am trying to figure out: do I guy a house or not? Condo with no yard to maintain? Large enough to have room mates (friend to rent to 3 nights a week to avoid a 90 minute commute) or just small enough for me? How will the house purchase affect my taxes?

    I need to figure out how the HOA fees impact my taxes? I have never looked to see if the were deductible or anything.

  2. MonkeyMama Says:

    HOA fees are not deductible. The mortgage interest and property taxes are deductible, but only if you are able to itemize.

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