Goals

Review of 2011 Financial Goals:

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Below are the 5 goals that we set for ourselves 12 months ago and the results of our efforts to achieve them. Reaching 4 of our 5 goals in this economy feels great. The game changer for us in 2011 was my wife’s new job. She already had a good paying job, but was recruited away in April and given a $20,000 higher annual salary and an opportunity to make larger bonuses each quarter. I am so proud of the success she has enjoyed in her career and feel that her new position was pivotal in reaching our goals this year. I’ll be posting our 2012 goals shortly.

1) Increase net worth to $138,100 SUCCESS
Thanks to a good head start on our 2011 net worth goal (we passed our 2010 goal by $9,600.07), this was relatively easy. In fact, we passed our 2011 net worth goal in April and by July our net worth was over $150,000. Shortly after, however, the stock market began to fluctuate wildly and our net worth took a dive, but we still finished the year with a net worth of $164,821.70, $26,721.70 over our goal of $138,100.

2) Increase savings account balance to $20,000 SUCCESS
We started 2011 with $9,215.82 in savings, but we pulled $3,000 out to pay off our student loan and another $3,000 out to open a 529 Plan for my son. That being said, we still CRUSHED this goal, ending the year with $107,722.13 in savings ($52,696.37 + $51,000 pulled from retirement accounts). The biggest boost to our savings came from selling our recreational 4×4 for $14,995. While it was nice to hit this goal, we will be depleting most of our savings account in the next 30 days to fund our 20% home down payment and to purchase furniture.

3) $100,000 total balance in retirement accounts FAIL
In July 2011, we had over $95,000 in our retirement accounts and it looked like we would surely reach this goal by the end of the year. However, with the market correction, our balance dropped to ~$92,000 by the early December 2011. It was at this time that we raided our retirement accounts ($21,000 loan from 401k and $30,000 withdrawal from Roth IRAs) to help fund our 20% ($97,800) home down payment. So, we ended 2011 with retirement account balances totaling $41,944.70. We contributed $14,280.72 total to our retirement accounts in 2011.

4) Decrease debt by $1,000 SUCCESS
We started 2011 with only $3,041.81 in student loan debt. I’m happy to report that we ended the year with no debt ($0.00)! It is such a great feeling to finally be completely DEBT FREE.

5) Start a family SUCCESS
Accomplishing this goal was the biggest blessing of all. After dealing with some fertility issues, my wife and I were shocked to find out that she was pregnant. In September, after a challenging labor, our healthy baby boy was born and we couldn’t be more happy.

Income Statement

December 2011 Income Statement

December was a big expense month and our largest income month EVER (click on spreadsheet below).

Our total income for December was $25,449.19, by far the best that we have ever had. Most of the money came from selling our recreational 4×4 for $14,995. Even if you subtract out the vehicle sale, we’re still at $10,454.19. With the birth of our baby and our home purchase, I changed my filing status from M1 to M3. As a result, my take home pay increased $59.51 per check. In addition to my two regular paychecks, my wife received $4,683.14 in Paid Family Leave (had a baby via C-section). We also received $131.13 from her PTO payout, $1,638 from selling items on craigslist, $220 in cash for our son’s 529 Plan, and $75 in credit card rewards. We earned $25.76 in interest income from our online savings account.

We spent a total of $7,394.91 in December. Some of the larger expenditures include $210 co-pay cord blood banking, $950 security camera system, $400 for home appraisal and $300 for a home inspection.

January is going to be a busy month as we prepare to move from our rental unit to our new home. There should be a huge spike in our expenses and we fill the home with furniture. In terms of income, January should be a pretty normal month as my wife goes back to work. With my wife heading back to work in January, we will be paying a nanny $900 a month to care for our baby.

401(k), Roth IRA

Poaching Retirement Accounts For Down Payment

We are currently in escrow on a beautiful 5 bed/3 bath home that should fit our needs for many, many years to come. To keep our monthly mortgage payment low and to avoid PMI, we have elected to raid our retirement accounts for some of the down payment. I know, I know, hear me out..

The 2 bedroom condo that we are renting is $1,550/month and, with our growing family, it is a tight squeeze. After finding our dream home, we quickly realized that the ~$47,000 in our savings was not enough for a 20% down payment. The home was $489,000, so 20% down is $97,800, meaning that we needed to come up with another $51,000.

We poached $51,000 from our almost $100,000 in retirement savings. $30,000 came from Roth IRA contributions and $21,000 was borrowed from my 401(k). You can withdraw Roth IRA contributions at any time without penalty or taxes. The 401(k) loan has a 5 year payment schedule at $179.44/check. If I were to leave my company for any reason before the loan is paid back, the balance would be due, or I would have to pay a 10% penalty and income tax on the money.

If the deal goes through, our interest rate will be 3.75%, resulting in a monthly mortgage payment of $1,811 on a mortgage of $391,200. Add $600/month for tax and insurance and we are up to $2,411/month. This is a very comfortable number for us, especially when you consider the tax benefits of owning a home.

Our gross annual income is $150,460, not including my wife’s quarterly bonuses. Using the rule of thumb to spend no more than 35% of our gross income on housing, we can “afford” $4,388/month. Frankly, we had no intentions of spending anywhere close to that. We simply want a nice home with payments that we can still afford if one of us lost our job.

Net Worth

December 2011 Net Worth Update (+$8,349.58)

December was an exciting month for us. We have been renting a condo for 2+ years and have been looking for a home as we saved money. After a lot of searching and savings, we found a beautiful 5 bed/3 bath with a pool in a great part of town. Our offer of $489,000, with 3% back towards closing costs, was accepted and escrow is scheduled to close 1/23. Anyways, on to our net worth. We had another great net worth increase of $8,349.58 from last month, to a total of $164,821.70 (click on spreadsheet below).

What Worked
We sold Car 3, our recreational 4×4, for $14,995 in order to provide an influx of cash to furnish our new home. For now this is going into savings, but it will start to flow out of savings once we move in to the new place in January. We were able to deposit $17,095 into savings, plus an addition to $51,000 from our retirement accounts for the down payment.

What Didn’t Work
We contributed a total of $893.96 our retirement accounts, but they decreased $49,649.99 because we raided our retirement accounts for $51,000 to help fund our 20% down payment ($97,800) on our new home.

Next Month
January will be a huge month for us. We’re scheduled to move into our new home and will be spending copious amounts of money to furnish and decorate it. My wife also goes back to work on January 2, so we will begin paying a nanny $225/week to care for our baby boy.

I will be posting a review of our 2011 Financial Goals in a few days.

Goals

Net Worth Milestone – $160,000

Today we passed the $160,000 net worth milestone! Our net worth is currently $163,973.37.

With the market ups and downs, it took us longer than expected to reach this milestone. We passed our last milestone of $140K in July and thought that we would hit $160K in October. That being said, we’re still way ahead of our $138,100 net worth goal for 2011. Based on my forecasts, we should hit the next net worth milestone of $170K by March or April.

I will update our net worth meter (on the left side of the screen) at the end of the month.

Income Statement

November 2011 Income Statement

November was a reasonable expense month and very, very good income month (click on spreadsheet below).

Our total income for November was $12,479.03; our 3rd highest income month since we began tracking our finances in 2007. I received my two regular paychecks and a 3rd “extra” paycheck. My wife received one regular paycheck and $2,404.85 from SDI (just had a baby via C-section). We also received a $50 gift from my parents (deposited to our baby’s 529 Plan), $71.38 in credit card rewards, $75 insurance reimbursement, $20 from a craigslist sale, $18.04 from a credit card settlement, and earned $28.23 in interest income from our online savings account.

We spent a total of $6,831.93 in December, not too bad considering that we earned nearly double that. Some of the larger expenditures include a(nother) $500 co-pay from the hospital for our baby’s delivery and $300.51 in gifts.

December should a decent income month as my wife shifts from SDI to PFL and my filing status is being changed from M1 to M3 to increase my paychecks. Since we completed most of our Christmas shopping done in November, our expenses in December should be very reasonable.

Net Worth

November 2011 Net Worth Update (+$8,068.61)

With the ups and downs of the market, it was tough to tell where November would land. Thankfully, it landed up and our net worth increased $8,068.61 from last month, to a total of $156,472.12 (click on spreadsheet below).

What Worked
The biggest impact to our net worth this month was a $3,425 gross ($2,701.37 net) bonus that my wife earned. On top of that, this was an “extra” check month for me. So, we were able to deposit $4,891.17 into savings.

What Didn’t Work
We also contributed a total of $1,834.88 to our retirement accounts. but they only increased $1,633.64.

Next Month
December may be a tricky month as my wife switches from SDI (not taxed) to PFL (taxed). That being said, I am changing my filing status from M1 to M3, which should help our cash flow. It is also obviously the end of the year, so I’ll be reviewing our 2011 goals and posting our goals for 2012.

Income Statement

October 2011 Income Statement

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October was a reasonable expense month and an above average income month (click on spreadsheet below).

Our total income for October was $8,252.44. In addition to our regular paychecks, we received $1,050 for our new baby. We also sold some items on craigslist for $30, a $50 Chase credit card cash back reward, and earned $26.40 in interest income from our online savings account.

We spent a total of $7,346.87 in October. We actually spent close to budget, if you subtract out $1,845 for cord blood banking and a final $400 payment to our doula. After deducting these one-time expenses, our total expenses were only $5,101.87. This makes me feel a little better about keeping our regular expenses down in October.

November should be another good income month since I receive a 3rd “extra” paycheck. We’ll try to get most of our Christmas shopping done in November, which will inflate our expenses somewhat, but no other large expenses are planned in November.

Net Worth

October 2011 Net Worth Update (+$9,000.12)

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I’m posting this a few days early because I will be away on business. After a $6K+ drop in our net worth last month, I was happy to see it recover nicely this month. Our net worth increased $9,000.12 from last month, to a total of $148,403.51 (click on spreadsheet below).

What Worked
My wife’s 10% 401(k) contributions began this month. We contributed a total of $1,428.38 to our retirement accounts and saw them increase a massive $8,477.30. We also opened a Vanguard 529 Plan for our baby, funding it with $3,000 from our savings.

What Didn’t Work
Our savings balance dropped, but only to fund our son’s new 529 Plan.

Next Month
November looks to be shaping up as another strong month. I receive a 3rd “extra” paycheck that we should be able to bank 100% of.

college

Upromise.com

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Our path to financial independence and retiring early.