Home > Archive: January, 2022
Archive for January, 2022
January 23rd, 2022 at 07:24 pm
We had a San Francisco weekend planned with 5 shows, this weekend. This was canceled a while ago. Seemed overkill at the time, but now I am not sure I would have gone. COVID has been rampant in our zip code and circles.
Instead I am working and tending to long put off chores. What a slog. This is the complete polar opposite of what I thought I would be doing this weekend!
We had made the decision to put more breathing room into our budget and to do some more going out. Between "crazy busy" at work and COVID and everything, all of that is on hold. Will see how things feel in another week or two.
MH is off work for a couple of weeks. It's his usual winter break, but seems later this time. I asked him if he thought he'd even be going back in two weeks. He actually thinks so, said nothing had been canceled. Will see...
DL(16) is starting to get college mailings. How is that even possible!?
January 22nd, 2022 at 03:36 pm
I've heard that it's virtually impossible to get life insurance after a brain tumor. It's not cancer and it's not life threatening (while being watched/treated). But the underwriters just lump all brain tumors basically under the worst category.
Anyway, the standard question is if you have had treatment for a tumor the past 5 years. Since MH's tumor is *finally* shrinking and it's been 5+ years since he has any treatment. We tried...
Just got the denial back. Not particularly surprised.
So thankful we had our ducks in a row so young and we have had more than ample insurance. Like many things, we will survive and work through it. The insurance we do have expires in 3 more years. & we've got probably 5 more years to get kids through college. I was just concerned about that 2-year gap, but wanted to get insurance while things were actually going well.
Considering we lived without MH having an income at all for 13 years, I think we will survive. 😉
The reason we had life insurance in our early 20s? Well I think a lot of it was because we had kids in our early 20s. (Wouldn't have seen the point of life insurance when we both worked full-time and lived on only one of our incomes). But I think probably more to the point my mom was always taking care of her sick friends. So my childhood was skewed where I feel like everyone's parents were always dying. & some of them did not prepare at all and really financially struggled. Between that and crazy cheap term life insurance in our young 20s...
I cringe how much the average person puts this off. But I have the double whammy of the skewed childhood and a spouse who has been uninsureable since early 30s. I just wanted to share the news/update, but now that I type it out, this is also my PSA to go buy some freaking life insurance. (Specifically, if you have kids or people who rely on you financially).
For us personally, we can re-evaluate in another 3 years. When we hit that gap, we can try one more time. I know some with this condition have gotten insurance. I just don't know if it matters enough. We went the easy route and it didn't work. Will have to evaluate if we want to put more time/effort/energy into this. Weighing the cost/benefit, etc.
January 17th, 2022 at 03:49 am
I am memorializing goals in my sidebar. Unfortunately, this site is not allowing me to just cut and paste my sidebar goals. So whatever, will just put some in another format and type it out.
Pay cash for college ✔
In the end, MM(18) followed in his parents' footsteps and chose a public college that is impossible to beat from a cost/benefit standpoint. I always say that about my alma mater but MM(18) has chosen a similar degree/route (at a different CA State college).
I suppose we didn't have any idea where he would end up last January, but we never considered any colleges that we'd have to go into debt over.
$12K to Savings ✔
Final tally was $16,000. The plan was to use this money to pay cash for college. At the end of 2021 we had -$0- cash plus emergency funds. So that's about how it sorted out. That we had just enough to cash flow college (without tapping any prior years' savings/investments).
We probably would have fared better on this goal (with unexpected unemployment funds and stimulus, etc.) but it was a really expensive medical year. We basically saved $25,000 but spent $9,000 on medical, which nets out to $16K saved.
I hope this makes this our worst college year. For future years we have all of MM(18)'s college costs saved (already) and this was a really one-off medical year.
$2K to Investments ✔
Funded with snowflakes.
I had been feeling very "meh" about this goal. Probably stopped throwing our snowflakes into investments once college started. But I do count dividends and it was a really big dividend year. That was enough to encourage me and I threw something like $250 of our windfall to top off this goal.
$1,200 to Mortgage ✔
I hit this goal with a lump sum at the beginning of the year.
We then threw an extra $12,615 with the cash gift we received end of December.
Why $12,615? It was an even $20K mortgage paydown for the year and left just enough windfall to cover college expenses for the next 18 months.
The $12,615 extra payment shaved off 2 years of payments and $9,500 interest.
9% Income to Work Retirement Plans ✔
MH and I both contribute the minimum for 401k match. The 9% includes employer contributions.
$12,000 to IRAs 2021 ❌❓
Not sure on this one. We sent $12K to mortgage instead.
I was very happy to get a redo. We ended up doing 33% of my income to retirement in 2020 due to a nasty tax cliff. Then unemployment was made tax-free retroactively and we didn't need this tax break at all. No way I ever would have tied up so much money in 401K if I had known! So I appreciate the redo. Will average 21% to retirement both years, which is what is important. Anything more than that... Meh. We are way too retirement heavy.
We also don't need the tax break for 2021. Taxes ended up going way the other way in 2021.
To be re-evaluated in April. I left it as a question mark because I just don't know. Will see how things shake out the next 3 months. We have until April 15th to lock in this decision. (We are saving a lot, but MH's job is also very iffy re: pandemic surge).
Edited to add:
Also hit two longer term goals this year. What a year!
**$500K+ in retirement funds (by age 45) ✔
**$1 Mil+ Net Worth ✔
Note: I didn't have a timeline for the net worth goal, it's just a nice milestone. Retirement goal was extremely aggressive when made. I swear that "thinking it" is 99% of the battle when it comes to goals. Not to underscore the planning and hard work, but the aggressive goals seem to work in the subconscious background and find a way to work.
January 16th, 2022 at 03:53 pm
I am going through updating the kids' Quicken accounts and so can do a snapshot of where they are at.
Firstly, DL(16) is done with his allowance. I turned it off January 1, same as I did for his brother (when he turned 16.5). & the only reason it took that long was some miscommunication between MH and I. Probably should have just turned it off at 15 when they had their first jobs.
Our attitude about "allowance" is it was a tool for the kids to learn about money when they had no source of income, but we don't see the point at all in our high minimum wage state, once the kids are of working age. We'd maybe reevaluate with this whole pandemic situation (not sure if either of my kids will be working this summer). But... The other part of the allowance equation is that my kids don't spend money so we basically never increased their allowance from when we started (age 5). At the end of the day, is this $150 per year ($3 per week) going to make any difference in the grand scheme of things? Nope! Makes it easy to just move on.
DL(16) earned $34 interest (7% interest rate savings account)
+$156 Allowance $$
+$216 Gift Money (Birthday/Christmas)
+$1,024 Salary (very small summer job, something like 10 hours x 6 weeks)
- $90 Payroll Taxes
-$78 Clothing Purchases
Net Saved: $1,252
Current Job Situation: ?????? Weird re: Pandemic
Driving Situation: ?????? Weird re: Pandemic
DL(16) has always been the tortoise to MM(18)'s hare personality. So I am not surprised at all he didn't get his driver's license the second he turned 16. Mostly though he has a mental block about online school (is emotionally scarred from 2020) and he just can't deal with the online driving courses. & absolutely no one is teaching in person (which I think may become a permanent change). Will see... Last we discussed, he would do the online course next summer if it's still his only option. & we will have to lean on him pretty hard since his college plan is to go to community college in the Bay Area. He will need a car and we will never be comfortable with that unless he has more driving experience under his belt. That might be what motivates him, if we insist he stays at home the first year if he doesn't get some months of licensed driving experience first.
If he's not driving, he doesn't have any financial motivation to work. Once he does get his license, he will need to pay for the insurance on the kids' car. Insurance and tags and everything. Fuel and oil changes. But with the "free car" (not having to buy a car on top of that) he's well set up to cover those expenses for a while. He needs something like $1,000/year to drive and he does have $2,500+ saved up. I know this is a lot of our *shrugs* about just rolling with things (if we don't feel safe with him working this summer). Both my kids are learning great/early lessons about the flexibility and benefit of all those savings.
$ 500 Super High Yield Savings
+$26,000 Gifted College Money
I did end up just adding DL to my Target credit card because doing so had bumped up MM(18) to something like a 780 credit score. Which I didn't know until he turned 18 and we could pull his credit report. (The card I actually gave MM full control over and he used for all of his automobile expenses, did nothing for his credit score. That figures!)
In this case, the Target card is actully in my wallet. Will work on DL(16) getting some credit and learning how to manage a credit card when he has any expenses. Which probably won't happen until he gets his driver's license.
January 9th, 2022 at 03:55 pm
I am just going to mix in current commentary with prior year commentary.
2021: +$215,000 🤯
2020: We paid down the mortgage by $10,000, purchased a newer vehicle, and the rest was stock market contributions and gains.
2021: We paid down the mortgage by $20,000, cash/investments up $75,000, and the rest is real estate gains. I mentioned in a recent post that real estate values have been pretty stagnant since the recession but skyrocketed this year. My housing estimate is conservative and will probably bump up more next year.
We were helped along with a $20,000 cash gift this year. Thus the large mortgage payment.
2019: Today we could pay off our mortgage and still have $340,000 cash/investments. For the first time, we could do this with only cashing out about 1/2 our ROTH IRA and all of our taxable investments. It's the first time we could leave everything else intact (emergency fund, kids' college, rest of retirement, etc.). I am not tempted yet, but honestly, if I had an additional $50k in investments, we could pay off our mortgage AND leave six figures in our ROTH IRA. At that point, I would probably be tempted. Especially with just cashing out at a peak. Taking the money and running. I've always said there is a tipping point. I just have never been so close to the tipping point. If my stocks go up $100k next year, I wouldn't rule it out.
2020: Today we could pay off our mortgage and still have $430,000 cash/investments.
My stocks did not go up $100K, and we have college to figure out. If not for college literally starting this year, and being so close to our $500K retirement goal... I don't think the tipping point will be until the mortgage is under $100K; we just aren't quite there yet.
2021: Today we could pay off our mortgage and still have $530,000 cash/investments. (Roughly $515K retirement funds + $15K cash would remain).
We discussed at length due to potential windfall (and the stock market being so high). But college is the bigger priority at the moment. We have lots of dollars earmarked for college "just in case". Will hang on to that money for a few more years. (MM's college situation is pretty clear, but we still need to sort out DL's college situation. No idea...)
Again, the tipping point won't be until somewhere below $100K.
2020: We need our net worth to continue to increase (on average) $50k per year to reach our Financial Independence goal at age 50.
Estimate Net Worth Change for 2021:
Mortgage: Paydown $8,500
Retirement: Contribute $8,500
Home Appreciation: $45,000
TOTAL INCREASE: $62,000
Our net worth changes never look anything like our estimate (it's rare any asset class actually has an average year). But, I go through this exercise just to make sure my goal is realistic and doable.
Estimate Net Worth Change for 2022:
Mortgage: Paydown $15,000
Retirement: Contribute $20,000
Investment Gains: $20,000
TOTAL INCREASE: $55,000
More 2020 Commentary: We have 6 years left on our "financial independence" goal. We've started out so strong, that we have 6 years left to come up with $270,000. That is $45,000 per year net worth growth that we are aiming for. I think it's nice how it has worked out. We expect to be saving less and possibly drawing down assets as we pay for college over the next 6 years. $45,000 is a lower bar than we had been aiming for initially. I expect a major push of working hard and getting college done without any debt. But... I am also feeling a lot of, "exceeded goals in recent years, so can chill as we get through the next few years." The plan is to rely on our assets to do most of the work re: retirement and longer-term future. That will be the "chill" part.
2021: We did it!! We hit $1 Mil net worth. 🥳🙌🎉
According to the bottom of my sidebar, we've hit $545K of our $600K financial independence goal. This was a 10-year goal that we have almost hit in 5 years. (The goal was to add $600K to our net worth, doubling from $600K to $1.2 Mil).
It will be realistic to get there in 2022. Will see if the stock market and real estate market cooperates.
I am personally kind of happy that we didn't fully make that goal because I can just leave my sidebar as is. Basically, I am not going to mess with it. The new goal I am formulating in my mind (to memorialize next year) is probably going to be $800K total cash/investments, to hit financial independence goal. This presumes that we pull $200K equity from our home when we downsize. The old goal was $1 Mil + paid-for home. Which will basically remain our goal. But presuming that we pull $200K home equity to get there, will make this easier to measure while the real estate market is crazy.
Of course, if we did hit that "+$600K financial independence" goal this year or if we hit it next year, it is meaningless at this point. Our spending isn't going to be realistically $40K per year until our kids are self sufficient and our mortgage is paid off. Those are the two other hurdles we have to get past for financial independence. So I am personally not in any huge rush. Also, to be clear, it's just about not *having to* work and that independence. I have my absolute dream job at this point and MH misses more meaningful work and the identity that comes with that (but is still very held back by our needier child who has yet to get his driver's license yet). I am always kind of bemused how often people finish paying for college, get their house paid off, hit these big goals and then have big career gains. But I can see how that is probably how it is going to play out for MH and I. That seems to be the track we are ending up on.
January 9th, 2022 at 03:42 pm
Feeling productive today. Got our taxes mostly done. Is generally how I handle it. Just get everything entered and then double check that tax forms match my records, as those forms come in. Try to file before February.
I really miss the professional work software and how much time it saved me. I've just been throwing tax projections into last year's software and then mentally tweaking what I know is different for the next year. It's not great but it's the most cost effective (and fast) way I can figure out how to do tax projections.
I had to share because when throwing all my numbers into tax software I was coming up with some large tax due at first. Was kind of ignoring and figuring it would sort out as I entered more data. Oh yeah, that extra $6K in medical expenses this year, ended up putting us massively over the standard deduction. That did help.
Towards the end though I still had $2,000 shown due. At the very end it was $2,001. Did I mess thing up that bad? Nope, I figured it out pretty quickly. That last $2,000 was college tax credits. Did I literally get our taxes down to the penny? Er, down to $1?! Holy cow!
I told MH to give me a gold star. 😁
In the end, I refined a couple of more deductions and so the taxes went down a bit. The only estimate that remains is I threw in some investment dividends as 'taxable' and I know a lot of that will sort out to non-taxable (qualified dividends at 0% tax rate). So that's the one thing I have to wait for to finalize. Should get investment tax forms in 1-2 weeks.
January 3rd, 2022 at 03:29 pm
I am happy how 2021 shook our financially and have done some tax projections and updated my sidebar for 2022 goals (basically same as always).
I will delve deeper when I have some time.
Just popped on the computer this morning to execute some rebalancing trades. The *one* thing I had to get done before today was I usually just do a Morningstar X ray to get a snapshot of our investments and returns for the year. I mean, it take a couple of minutes for tons of data. But it's the only thing I really had the time and energy for, and that had to be done this weekend.
I guess fair enough, it was also driving me crazy and I sat down to figure out my 2022 taxes so I could update my 2022 budget. That is also what I got done.
Now that we have the electric car back at 100%, I think it would be interesting to do a daily spending snapshot. As we no longer have mega grocery expenses (MM) and no longer have auto gas expenses. But I know I won't have the time for it. February might be a better month for that.
That reminds me of our one frugal "fail". Electrify America (EA) was entirely free during the long Holiday week. We took advantage and got 60 free miles on Christmas Day. & then MH drove MM(18) and his friends back to school yesterday. I am guessing we got 400 free miles. It would cost approximately $10 total to fill up the car at home, both before and after. $5 per charge at home. I don't know how often we will be driving MM(18) to/from school (not as much in the future) but it's nice to have the electric option. Even better when it's free!
Oh yeah, the fail part...
MH chose to stop at a place at a restaurant and he had three teenagers to feed. When talking to him later he mentioned I might have seen the $90 restaurant bill. 😲 (Nope, I had not seen that!) But oh well. I am trying to go through the math in my head and that would have been a $75 drive in the gas car anyway. Nice to be able to give everyone a ride with that kind of money, treat all the kids, and then throw a tip on top of that. (In return, MM had also gotten a free ride home at the beginning of break).
We usually never travel at all on busy/holiday weekends. Obviously that is changing with the "kid away at college" thing. The chargers were really crowded this weekend, versus usually no one really there. ??? I don't know how much is people making the extra effort for free. MH was willing to wait 10 minutes for a charger, if it was free. I would say we only stuck to the EA chargers because they were free. It was crowded but there was always at least one open charger when MH reached each EA station.