Monday, December 30, 2013

Year-end financial review & goals

Well here we are, end of the year. Seems like a natural time to do some financial review.

Current situation:
  • I bought a house! I've been in for almost exactly a year, and have gotten more used to paying a mortgage and all the bills that go with it. My old apartment's rent was $1035.20, and that plus all my bills (electricity, internet, cell phone, car insurance) cost me $1206/month. Now that I'm in a house, my mortgage (including taxes & insurance) runs me just under $1200, but the bills (all of the above and also gas, water, trash, yard guy (which I admit is optional)) bring me to just under $1650/month. In other words, the mortgage was only a 15% jump over my rent, but when I factor in all the bills, I'm paying 37% more per month. It's doable, and I think I can bring it down 5-10% this year by making a couple of tweaks.
  • I'm still saving 16% of my income for retirement, with a 4% match. I'm not Roth-ing though, and I'm not hitting the max allowed in a 401(k) either.
  • I have more in the bank (retirement savings + emergency fund) than I owe (mortgage + loan from my parents toward the down payment) so even with this first year of home ownership I did not tip into negative net worth. I wasn't sure that was going to happen, and it's not a HUGE number in the net worth column, but at least I'm in the black! Note that I'm not counting the house as an asset, just looking at what's in the bank vs what I owe. Note also that just because I have $X in retirement savings doesn't mean that X is available to me - it would be taxed and penalized if I withdrew it. So this metric isn't that solid, but it works for me as a rough thumbnail of my situation.
Immediate future goals:
  • By end of January: pay off credit card. I've been doing a lot of credit card churning to bank airline miles. I'm mostly handling it well but I am currently carrying a small (sub-2k) balance that I will pay off by the end of January (I could pay it now from savings but prefer to feel the pain a bit). Overall I'm happy with my churning - I'm using miles to inexpensively do things like visit my BFF in Toronto, fly to Key West with my parents for my mom's birthday, travel to my brother's wedding in Hawaii, and attend my company's holiday party. I do have to be careful to NOT carry balances, and to remember that cheap flights often come with other travel expenses (namely lodging & food!). After this next card I think I'm going to take a break for a bit. I swear I can go clean at any time!
  • By end of January: set a budget for living room furniture and decide how and when it'll be funded. 
  • By end of February: finish stocking up my emergency fund. I could definitely get by for six months on it, but I have a specific number in mind and $1,000 more will get me there. 
Rest of the year:
  • By end of March: start investing in taxable (non-retirement) accounts. I was going to start paying down my mortgage, but the interest rate on it is 3.35% and it seems like I'd likely get a better return by investing that money. My paycheck should be going up a bit due to a change in the cost of my benefits, so I'm mentally earmarking that increase to go into my investment accounts. I'll know by mid-January how much money I'll have to work with. 
  • By end of April (probably a lot sooner): see how taxes work out with this house thing going on. Not sure I'll get a refund since I have to offset some contracting work. I usually do my own taxes but I'm a little trepidatious this year.... we'll see how that plays out. 
  • By end of April: if I get a refund, decide how to split it between various options (Roth? non-retirement? living room furniture?).
  • By the end of June: decide if I want ALL my non-emergency savings to be invested, or if I want to create a separate savings account to use for specific house projects such as a new deck. That's not something that would come from an emergency fund, and I'd like to do it in a shortish time frame (1-2 years) if nothing else comes up, so I don't know that paying for it from an investment account makes sense.
  • By the end of June: in a similar vein - decide if my emergency fund (6 months' worth of spending) can also count as a house emergency fund, or if I'd rather have a separate one, and if so, how much should be in it. Should I save enough to replace my fridge (1k), my furnace (5k), or my roof (10k)? Or should I have some percentage of the house value (I read somewhere it's wise to budget to spend 1% of the house value in maintenance every year) in savings instead?
  • By the end of 2014: finally consolidate my two IRAs into one account with Vanguard. 
  • By the end of 2014: Have my finances in maintenance mode. I think once I make all these decisions this year, I'll be able to review my accounts but I won't have to make any major changes to my plans. We'll see though!

Thursday, December 12, 2013

Minor travel

I got to go to the Bay Area for a work party this weekend. I really appreciate getting to go there to visit - living there was never a great fit for me, but I miss seeing my friends down there! I got to admire some of the city lights - and have a hot dog/pretzel dinner with some goofballs,
I went on a road trip north of the city and visited a really great open studio at a pair of potters: 
And I started the nigh-impossible task of furniture shopping, since my sister (with her living room furniture!) is moving out shortly: 
I had a great time, and I'm glad to be home. I don't know if he missed me, but I was thinking about this guy!