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Raise Achieved

December 22nd, 2019 at 03:06 pm

I did get my raise (two months ago). I received a 10% raise. I did some financial/tax planning and revised the budget. I've just been muddling through in the meantime, keeping our savings goals as our #1 priority. We've had enough side income to make do. Unfortunately, raise is all going to the budget. I increased grocery budget by about $200/month which is more realistic. +$200/month for significant tax increase next year, due to tax law changes (maybe not by dollars, but very significant increase by percentage). $150/month for a couple of years of health insurance increases. I also added +$100/month to short-term savings AKA "non-monthly bills" (a lot of small increases for various bills).

That's about it, except I added $100/month to our mortgage. Last I ran refi numbers, it actually didn't make sense to lose another 1% of interest. Is because we only plan to be in our home another 5-ish years. The savings has always been significant with 1% drop, on a 30-year mortgage. But not on a "5-year" mortgage. Anyway, we have never felt comfortable with a 15-year mortgage in current city with the economic uncertainty, and also because our health insurance is so expensive (far more than our mortgage). But we've paid down enough that a 15-year mortgage will now only add $100/month to our current mortgage payment. That, I can do. Is not a long-term commitment or an extra $400/month, which is what it was in the past. So we will just make an informal commitment to pay down our mortgage in 15 years. While well employed. I am relieved to be able to skip the red tape of another refi.

Even though I had initially lost $1,000/month (salary) with this job, it wasn't apples to apples. I lost $1,000 net salary every month but I gained +$600/month retirement benefit. Which was more what I had posted before, that I only had about $4,000 per year to make up. This raise puts me at -$600/month cash but +$700/month retirement benefit (compared to my salary at prior job). So I am up $100/month and am happy with that. I really did not expect to get up to my old compensation so quickly. My new job is significantly easier than my last job. It feels very win-win.

We will have to fund our IRAs with MH's income. That puts us way too "retirement heavy" or "retirement poor", but makes more sense than adding to taxable investments. I only feel comfortable doing this because we can access ROTHs any time. More win-win.

Since it's so relevant to this post, here is where my 2020 goals will end up. I am pretty much back to where I was in 2017 or 2018. The funding details are just re-arranged a bit (I used to fund IRAs with my salary, but I didn't have a work retirement plan).

2020 Goals

[ ]$7,000 to savings
...($0 @ 1/1/20)
...$550/month, plus interest.
...Topping off with snowballs

[ ]$1,500 to investments
...($0 @ 1/1/20)
...Funded with snowflakes

[ ]$1,200 to mortgage
...($0 @ 1/1/20)
...It was cheaper to just add $100/month (15-year payoff) than to refi down another 1%. We will just commit to the extra $100/month pay off while well-employed. Our plan is otherwise to just pay off when we sell in a few years.
STRETCH GOAL: $3,000 to mortgage
...I am moving 2018 mortgage goal here, to make up in 2020. Will see how I feel in 2020, but right now I feel is doable. It will also depend how college choices start to shake out end of 2020. Definitely a 12/31 kind of decision.

[/]9% of my full-time income to work retirement plan
...This is the minimum for the match; I'd otherwise rather fund IRAs.

[ ]$12,000 to IRAs 2019 (MAX)
...($0 @ 1/1/20)
...Will fund with MH's income

This puts our overall savings rate at 32%; 30%+ is generally what we aim for.

Edited to add: I changed the mortgage goal after cash (bonus/gifts) settled end of 2019. I added the stretch goal.

2 Responses to “Raise Achieved”

  1. rob62521 Says:

    Smart to put more money at the mortgage. You are right -- pay the bulk while you are making a good income. I never understood people who would retire and not be close to having their home paid off, and then wonder why they couldn't afford it.

  2. terri77 Says:

    30-32% is an amazing savings rate!

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