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2015 Mortgage Payoff Plan

With my current savings calculations, I’ll have about $2,788.33 leftover if I pay off my mortgage at the end of 2015. My current plan involves making the following extra payments to stay on track:

February 28th: $18,710.71 – net of my signing bonus and savings from February paychecks

March 31st, April 30th, May 31st: $1,873.21 – savings from paychecks

June 30th: $25,873.21 – emptying my savings account down to $20,000 and savings from June paychecks

July 31st, August 31st: $1,873.21 – savings from paychecks

September 30th: $11,461.73 – a small bonus and savings from September paychecks with Social Security tax done with for the year

October 31st, November 30th: $2,542.42 – savings from paychecks

December 31st: $66,906.33 – savings from December paychecks, plus the proceeds of selling all of my ESPP funds (which my honest plan is to sell them as soon as the holding period is up, but I don’t know when that’ll be so for now I’m assuming I’ll just sell them all at the end of the year), emptying my savings account, selling my Series I Savings Bonds, and my taxable investments. I’m not completely sold on the idea of selling the taxable investments since I would then end up re-buying them at a higher cost basis not long after, so it would seem a waste of paying the capital gains taxes. If I don’t sell the taxable investments, then I’ll make a $33,252.89 extra payment in December (also leaving my savings account in place) and make a few more payments early in 2016:

January 31st (2016): $1,873.21 – savings from paychecks

February 29th (2016): $6,377.71 – a small bonus and savings from paychecks

March 31st (2016): $22,182.55 from savings from paychecks and emptying my savings account would leave $321.25 remaining, which I could then just pay off since there is $1,027.32 in the budget for the required mortgage payment :)

 

This is my only real goal for 2015 financially – paying off the mortgage. We’ll see how that ends up going. I’ll make my 2015 Roth IRA contribution in February from my savings account, but I won’t worry about the 2016 contribution until 2016. I’ll also contribute the maximum to my 401(k), contribute a bit to my Health Savings Account (my employer will contribute quite a bit, so I don’t “need” to contribute that much), and contribute to my Employee Stock Purchase Plan with a good discount, which I’ll then sell later to pay down the mortgage. I’ll come up with a more specific investment plan for the year later, but this is my general plan.

Readers, what is your plan for your finances in 2015?

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2015 Spending Plan

I can’t make a savings or investments plan for 2015 yet since I don’t know what the new job’s benefits look like exactly, but I can plan on what my spending will look like!

Housing

My mortgage payment will continue along at the same amount, about $12,300 for the year. My boyfriend is going to pay the HOA dues, which will save me about $3,900 for the year! There is a small assessment though that we are splitting. My assessed value has gone up 20% for the 2015 tax year, so I’m estimating that property taxes will go up 20% from the 2014 amount. At least that means I can deduct more on my taxes, right? My portion of the internet bill is down to $400/year, which is about what I was paying before I increased the speed at the beginning of 2014 for much more internet since my boyfriend is paying half. My Ting referral credits have been conveniently paying my cell phone bill for quite a while now, so I’m budgeting $0 for my cell phone in 2015. I’ve estimated our 2015 electricity costs at $354 for my half, which is down $370 from 2014 since my boyfriend is paying half. (I did estimate the usage will go down a bit, which is partially offset by the increased rates.) Lastly, there is condo insurance and then household goods like toilet paper and cleaning supplies.

Total estimated housing costs for the year: $17,600

Transportation – This covers car insurance, umbrella insurance, vehicle tab renewal, renewing my driver’s license, fuel for my car, and car maintenance (oil changes and replacing the windshield wipers). My estimate for these costs in 2015 is: $2,500

Entertainment – This covers hanging out with friends and date nights with my boyfriend, as well as my LastPass and Pandora subscriptions. I switched from Dropbox to OneDrive, which should save me $99/year. Estimate: $2,200

Food - This includes lazy eating out, groceries, and work lunches. Estimate: $4,300 I’m targetting work lunches for a reduction in spending as a) its the sixth largest line item on my 2015 budget after: mortgage, travel, property taxes, groceries, and entertainment and b) it doesn’t provide much value in my life. Once I start the new job, my goal is to eat in the cafeteria every day for lunch and see how much that costs, then re-evaluate this line item.

Personal care – Monthly eyebrow waxes, toiletries, the occasional spa visit, and my annual hair cut. Estimate: $800.00

Recreation – In 2014, I spent about $1,000 in this category. I’m estimating $600 thanks to work benefits.

Shopping – There will also probably be some furniture purchases with my boyfriend moving in, though I have no idea how much those will add up to. I’m estimating $500.

Clothing – I’m never very good at predicting how much I’ll spend on clothing or holding myself to a dollar amount. I’m going to estimate this at $900.

Gifts and Donations – I will continue to donate 1% of my gross income. Once the mortgage is paid off, I plan to increase this amount to 2%. I will also continue to be generous with my immediate family’s Christmas presents and give nice presents for friends’ weddings. This should amount to around $2,300 in 2015.

Travel – Save the best for last, right? Between an overseas trip in Q1, two weddings to attend, Christmas flights, and renewing my passport, I’ve budgeted $7,100 for 2015, my largest line item after the mortgage.

Total estimate: $38,800

If you take out the mortgage and travel, my spending for 2015 would only be $19,400. That’s pretty good! My goal is to get my spending under $24,000 per year without the mortgage at some point. I’m about estimating to be about 10% above that in 2015, which is much better than previous years. *cough* 39% over that in 2014 *cough* We’ll see how this goes though considering that I forecasted spending $38,500 in 2014 and wound up spending $45,700, a 19% increase. Woops!

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Officially living together!

My boyfriend has moved in! I started writing this post back in August, at which point we had mostly decided this was happening, but kept waiting to publish it since I didn’t want to jinx it! He moved his furniture in this past week and we’ve been working on rearranging things. We have a ton of duplicates (even some triples and quadruples…): some of which we’ll keep, some we’ll donate, and some we’ll sell. It is super exciting and scary all at the same time. He’s been unofficially living at my place for months now, so we’re just making it official now and saving some money (mostly him, but me too). My fixed expenses are going from $2,000/month down to $1,600/month (only $600/month once the mortgage is paid off!).

We’ve been splitting groceries all year, so we’ve got that down pat. We have our checking accounts linked so we can transfer money to each other super easily (free and instantly from the website or app for our credit union!), without seeing the other’s balances, and we’ve also opened a joint checking account that we’re slowly figuring out what we’re going to use it for (currently: groceries and travel). We’re on the same page with savings and investment strategies and what we do with bonuses and other extra money and we know how much money the other has and makes and such.

The big question though is what to do about housing expenses. If we were renting apartments, it would be easy. We would look for a new apartment, probably a two bedroom + den, move into it together, and split everything 50/50. But we’re not renting apartments. Also, ew are those types of apartments expensive at $3,200/month! I own my condo (well 2/3 of my condo) and it is a good size for the two of us, while my boyfriend was renting an apartment.

What I’ve seen some people do is just split everything down the middle when they move in together, even though one person owns the place. I don’t want to do that because of the amount of equity I have. I also don’t want my boyfriend to pay me rent or for him to see me as a landlord. Everyone assumes he will pay me rent and are super confused when I say that he’s not. This is a serious, long-term relationship. Plus, my HOA rules don’t allow for only renting out part of my unit.

So what we’ve agreed to do is to split all of the outgoing expenses other than the mortgage 50/50. Logistically, this means taking a look at all of the expenses, adding them up, and then arranging the puzzle pieces so that we each pay for unique line items that add up to the same amount. This means me paying the property taxes, him paying the HOA dues, and then us splitting the utilities (electricity and internet) evenly. I look at it that the mortgage payment is mostly principal at this point, so it is part of my savings strategy, just like my boyfriend’s rent savings will go to his savings strategy.

It’s been pretty fun him slowly moving in over the last few months and decorating the condo together :) It’s shifting from my place to our place as we move more and more of his stuff in and rearrange the furniture and as we buy artwork and new furniture together. I look forward to years of this!

If you have any questions about how we decided to split expenses or how we’re doing it, go for it! We’re still figuring this out as we’re going and nothing is really set in stone yet.

P.S. I finally told him about my blog a couple of months ago and he seemed to think it was kind of cool! I’m trying to convince him now that he should write a post sometime ;)

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November 2014 net worth update (+4.8%)

31-Dec-2013 31-Oct-2014 30-Nov-2014 MoM YTD
cash $13,500 $6,600 $8,200 +$1,600 -$5,300
savings $27,400 $31,400 $52,100 +$20,700 +$24,700
investments $134,600 $165,200 $166,600 +$1,400
+0.8%
+$32,000
+23.8%
mortgage $187,600 $148,400 $147,700 +$700
+0.5%
+$39,900
+21.3%
net worth $345,900 $504,800 $529,200 +$24,400
+4.8%
+$183,300
+53.0%
taxable assets – debts $121,700 $85,600 $62,200 +$23,400
+27.3%
+$59,500
+48.9%
$ until FI $823,900 $825,500 $845,000 +$19,500
+2.4%
+$21,100
+2.6%

I got a bonus this month and tossed it into my savings account. My taxable assets are now worth only $70,400 less than my mortgage, which does make it sound like it’s possible to pay off the mortgage next year :)

This month was a bit expensive. I saved all of my bonus except for the current X% for charitable donations, as well as the principal from the regular mortgage payment. That was it. I’m not forecasting to save anything from December’s paycheck either, but it should cover all expenses until I get a paycheck from my new job (more on this in the upcoming weeks). I’m expecting my December net worth to be +$1,400 and my January net worth to be +$500 from December.

Expenses: I spent $5,221 in November (ignoring work reimbursable expenses) after the mortgage or $4,194 without it. So far, my total spending for 2014 is $43,625, which is $47,590 annualized. I estimate spending $2,280 in December, for an overall 2014 spending estimate of $45,905, which would be an increase of $1,135 from 2013 or an average of $95/month.

Some of my controllable expenses broke down as follows:

  • $256 Entertainment/Social [average this year: $210, last year: $224]
  • $16 Eating out by myself [average this year: $16, last year: $25]
  • $235 Groceries [average this year: $194, last year: $152]
  • $119 Work lunches [average this year: $146, last year: $77]
  • $389 Presents – about half of my Christmas shopping [$733 so far this year, $379 last year]
  • $40 Internet – yay for split internet :)
  • $0 Household goods [average this year: $18, last year: $29]
  • $426 Medical and vision bills (took these out of my HSA)
  • $20 Eyebrows
  • $25 Make-up
  • $42 Toiletries – shaving cream, delicate washing soap, migraine pills, hand lotion [average this year: $26, last year: $31]
  • $82 Accessories – two hats and a scarf
  • $196 Furnishings – a speaker for the spare bedroom
  • $37 Electronics – some more rechargeable AAs and AAAs
  • $57 Fuel [$212 so far this year, $354 last year]
  • $19 Taxis
  • ~$1,900 Flights for an upcoming overseas trip :)

Cash: $8,200 (up $1,600)

There is a small (well not that small today, but small compared to my overall net worth) amount of money in a joint checking account now and I’m choosing for now to not count it in my net worth at all. Some items I’m counting as spent when I transfer the money to the joint account and some items I’ll tally up at the end of the month and sort of virtually count in my own spending? I’m (we’re) still figuring that out. It’s in progress.

Savings: $52,100 (up $20,700)

  • These funds are spread across a Chase savings account, a general online savings account, a checking account that gets free ATM fees anywhere in the world, my health savings account, and a savings account at my credit union.

This month, I closed the Chase savings account and consolidated all of my savings accounts at my credit union for simplicity. (And a small bonus!) Savings is much larger than I usually keep it. I’m going to adjust this once I start my new job, evaluate its benefits fully, and make a 2015 savings plan.

Investments: $166,600 (up $1,400 or +0.8%)

This includes my Roth and Traditional 401(k), my 401(k) employer matching (fully vested!), my Roth IRA, my taxable investments including stock index funds and Series I Savings Bonds.

The change here comes from:

  1. Small stock market gains
  2. No contributions (status quo for the rest of 2014)

Mortgage: $147,700 (down $700 or -0.5%)

Some statistics here:

  • 2.5%: the interest rate on my 5/1 ARM
  • January 2018: when the interest rate on my mortgage is set to reset, possibly to 7.5%
  • 0: months of payments eliminated with this month’s pre-payments
  • $0: extra payments made on the mortgage this month
  • $0: interest this month’s extra payments will save me on the next regular payment
  • 30.1%: portion of my regular payment went to interest (originally was 59%; down 0.1 percentage points)
  • 58.7%: amount of equity in my condo, assuming purchase price (up 0.2 percentage points)
  • 48.4%: amount of the mortgage I’ve paid down (up 0.3 percentage points)

This was a pretty boring month for the mortgage as I just made the automatic required payment. I’m already scheduled to be about $15,400 ahead of where I need to be at the end of 2014 to pay the mortgage off before the rate resets in 2018! I’m reasonably confident that I won’t hit my stretch goal of $91,284.28 for the end of 2014, so at least I am comfortably on track to pay it off before the rate resets.

TOTAL: $529,200 (up $24,400 or +4.8%)

I ended 2013 with a net worth of $345,900, so I’ve seen a change of +$183,300 or +53.0% so far this year. I’ve set the y-axis on this graph to $465,000 so we can see how my net worth grows towards that throughout the year. I have now surpassed my original y-axis of $465,000 (!), so I’ve increased it to $550,000, which is my new estimate for the year.

November 2014 Net Worth Graph

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Can I pay my mortgage off in 2015?

I’m going to be a bit slow in setting my 2015 goals with some job stuff out in the air. Last year, I set a goal to pay off my mortgage by the end of 2015. I’ve also doubted this plan occasionally. Now that we’re a year in on that plan, how am I doing?

After making my November mortgage payment, the balance is sitting at $147,700. I will make no additional payments until I start a new job so my mortgage balance will sit at $147,000 after the regular December mortgage payment is made. That post from last November calculated that I would need to have a balance of $91,284.28 at the end of this year in order to pay the mortgage off at the end of 2015.

I still think it’s possible. Or so my spreadsheets say. I’ve been following a more irregular repayment plan the last few months than I was. My income in 2014 turned out to be a bit under my optimistic projections. I will likely end up with an unpaid break between jobs. I still don’t have an accurate picture of my 2015 savings plan. But I’m still optimistic that I can pay off my mortgage in 2015, based on my current income predictions.

My plan all along has been to empty my savings account and possibly other non-retirement investments in order to pay off the mortgage entirely. My calculations show that with the mortgage paid off, I’ll be able to save $4,500/month after maxing out my 401(k). All of my past “emergencies” have cost under that amount: my car getting broken into, needing to move on short notice, and non-emergencies such as last-minute trips. Plus, any medical issues should be covered my Health Savings Account funds. Future emergencies could include replacing any number of the 10+ year old appliances in my condo, but unless they all break at once, $4,500 should suffice to replace the dead one(s). That means that emptying my emergency fund to pay off the mortgage isn’t that scary, especially considering that I will be saving just over 2 months’ expenses each month with the mortgage gone.

I’m still going to make my 2015 Roth IRA contribution at the beginning of the year and max out my 401(k) for the year, especially since it’s looking like the mortgage will be paid off very cautiously in December if it is paid off in 2015. I’ll hold off on making my 2016 Roth IRA contribution though until the mortgage is paid off in full.

Here’s to ending 2015 with no mortgage!

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October 2014 net worth update (+1.1%)

31-Dec-2013 30-Sep-2014 31-Oct-2014 MoM YTD
cash $13,500 $6,900 $6,600 +$900 -$6,600
savings $27,400 $28,100 $31,400 +$3,300 +$4,000
investments $134,600 $163,400 $165,200 +$1,700
+1.0%
+$30,600
+22.7%
mortgage $187,600 $149,100 $148,400 +$700
+0.5%
+$39,200
+20.9%
net worth $345,900 $499,300 $504,800 +$5,400
+1.1%
+$158,900
+45.93%
taxable assets – debts $121,700 $89,300 $85,600 +$3,700
+4.1%
+$36,100
+29.7%
$ until FI $823,900 $833,500 $825,500 -$8,000
-1.0%
+$1,600
+0.2%

I finished paying Social Security tax this month, which was a nice little bump in my paycheck and will give me a few extra hundred dollars to save from my paycheck in the remaining months of the year. I’m still just putting the savings from my paychecks into a savings account until I’ve sorted out the job situation fully. All in all, I saved 58% of my net pay this month.

It appears that I am now a half millionaire! It seems pretty crazy, though I don’t really feel any different than I did before pay day which pushed me over the marker. It’s pretty cool what a few years of saving a large portion of a high income can do.

Expenses: I spent $3,947 in October after the mortgage or $2,920 without it. So far, my total spending for 2014 is $38,404, which is $46,085 annualized. My current spending estimate is $42,675 for 2014, which would be a decrease of $2,132 from 2013 or about $178/month.

Some of my controllable expenses broke down as follows:

  • $26 Hemming some pants
  • $50 Jewelry – three cute necklaces
  • $109 Shoes – replacing my worn out pair of running shoes.
  • Total: $185 Clothing/shoes
  • $208 Entertainment/Social [average this year: $206, last year: $224]
  • $12 Eating out by myself [average this year: $16, last year: $25]
  • $32 Groceries – mostly fancy chocolate [average this year: $190, last year: $152]
  • $135 Work lunches [average this year: $149, last year: $77]
  • $4 Presents – card for a friend’s wedding [$344 so far this year, $280 last year]
  • $19 Internet – yay for split internet :)
  • $0 Household goods [average this year: $20, last year: $29]
  • $67 Electricity – August/September [$681 so far this year, $603 last year – rates went up about 7% year-over-year]
  • Property taxes – second half
  • $22 Medical bills
  • $20 Eyebrows
  • $39 Toiletries – cold medicine and vitamins [average this year: $24, last year: $31]
  • $22 Furnishings – a small desk for rearranging furniture
  • $26 Fuel [$155 so far this year, $302 last year]
  • $13 Taxis – from working late a few days
  • $107 Vehicle tabs renewal (annual cost, $20 less than last year)
  • $45 Travel – some books to research for future trips

Savings: $30,100 (up $3,300)

These funds are spread across a Chase savings account, a general online savings account, a checking account that gets free ATM fees anywhere in the world, my health savings account, and a savings account at my credit union.

I’ve decided to keep the Chase savings account open even though I could now close it with no penalty as it has come in handy a few times, for example to get a deposit rather than a statement credit for credit card rewards and then immediately send them to the mortgage. Plus, it is only the opportunity cost on $300, which at the Ally online savings account rates loses me $2.55/year.

Investments: $165,200 (up $1,700 or +1.0%)

This includes my Roth and Traditional 401(k), my 401(k) employer matching (fully vested!), my Roth IRA, my taxable investments including stock index funds and Series I Savings Bonds.

The change here comes from:

  1. Small stock market gains
  2. No contributions (status quo for the rest of 2014)

Mortgage: $148,400 (down $700 or -0.5%)

Some statistics here:

  • 2.5%: the interest rate on my 5/1 ARM
  • February 2018: when the interest rate on my mortgage is set to reset, possibly to 7.5%
  • 0: months of payments eliminated with this month’s pre-payments
  • $0: extra payments made on the mortgage this month
  • $0: interest this month’s extra payments will save me on the next regular payment
  • 30.2%: portion of my regular payment went to interest (originally was 59%; down 0.2 percentage points)
  • 58.5%: amount of equity in my condo, assuming purchase price (up 0.2 percentage points)
  • 48.1%: amount of the mortgage I’ve paid down (up 0.2 percentage points)

This was a pretty boring month for the mortgage as I just made the automatic required payment. I’m already scheduled to be about $15,400 ahead of where I need to be at the end of 2014 to pay the mortgage off before the rate resets in 2018! I’m reasonably confident that I won’t hit my stretch goal of $91,284.28 for the end of 2014, so at least I am comfortably on track to pay it off before the rate resets.

TOTAL: $504,800 (up $5,400 or +1.1%)

I ended 2013 with a net worth of $345,900, so I’ve seen a change of +$153,400 or +44.3% so far this year. I’ve set the y-axis on this graph to $465,000 so we can see how my net worth grows towards that throughout the year. I have now surpassed my original y-axis of $465,000 (!), so I’ve increased it to $550,000, which is my new estimate for the year.

October 2014 Net Worth Graph

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Q3 Update

Income

I don’t have any bonuses in first quarter this year, so income chugged along as expected this quarter. I also saw expected amounts of interest (~$100), credit card rewards (~$1,000), and dividends on my index fund investments (~$700!). The credit card rewards was mostly redeeming the Chase Sapphire Preferred and Chase Freedom bonuses

Saving

In Q2, I saved 71% of my total net pay.

I finished contributing the maximum to my 401(k) in July and it surpassed $100,000 in total value…until the stock market took a huge hit in September.

I only made one extra mortgage payment in Q3, of about $900, for a total of about $3,000 paying down the mortgage balance or about 1% of the original balance.

I also set aside $4,600.00 in cash once you take out the August spending which was done out of savings since I saw a very small paycheck in July.

Sometimes, I don’t think I’m saving very much monthly, but looking at the fact that I saved just over $15,000 in Q3 makes me realize that I am saving a pretty good amount of money :) I’ve missed watching the mortgage balance go down as I’ve been stockpiling cash the last few months with a potential job change on the horizon. I have a feeling I’ll end up stockpiling more cash than I need and then making a large mortgage payment once things have settled a bit more. I’m now quite far off from my stretch goal of paying off the mortgage by the end of 2015, but I’m still over $20,000 ahead of where I need to be to have the mortgage paid off before the rate resets in 2018.

What does my savings plan look like for the rest of the year? I will put all of my savings for the rest of the year into my savings account. Quite simple, really. Once I’ve sorted out the job situation, then I’ll probably earmark some of the savings account money for my 2015 Roth IRA and make a large mortgage payment. The mortgage should see about another $2,000 in regular payments and then my savings account about $30,000.

Giving

I made a small number of donations in Q3 compared to Q1 and Q2, but I at last have positive budget space in this category, which is nice. I’ve been really happy with my increase here this year and will consider increasing it higher next year. I’m also trying to leave some room here because I have an annual donation coming up in January and I don’t want to be overbudget for the first 5 months next year like I was this year.

Spending

I was actually underbudget this quarter, by $34! That’s pretty good. Total spending came in at $11,549.34 and I’m on track to spend about $42,203.80 total this year, which would be a decrease of $2,603.95 from last year (2013) or about $217/month.

  • $271.30 Clothing – much better than the rest of the year so far :) I’ve spent $1,557.94 on clothing so far this year. In Q3, I hemmed a pair of pants, bought one new bra, paid for some dry cleaning, bought three dresses, and fixed up a pair of leather boots.
  • $616.86 Entertainment – slightly under budget. $1,878.56 total so far this year. This category includes cash, books, date nights / meals out with my boyfriend, meals out with friends, movie rentals, and music.
  • $1,135.50 Food – somehow a bit under budget, though marginally overbudget for the year at $3,431.70 total. This category includes groceries, eating out by myself, and work lunches.
  • Charitable donations – right on budget now. I’ll probably finish out the year a bit under budget, to leave some more working room for next year.
  • $4,487.62 Housing – this includes my mortgage payments, internet and electricity bills, HOA dues, household goods (e.g. toilet paper, paper towels, and cleaning supplies), mortgage loan fees, and property taxes. I’m about $300 overbudget for the year ($15,149.37 total so far this year) due to the internet going up, condo insurance going up, and property taxes going up more than expected (14% instead of 3%). I’ve estimated a 20% increase in property taxes next year to make things a bit smoother. The internet cost will go down in Q4 and next year since my boyfriend and I are now splitting it.
  • Medical bills – nothing surprising here. Just paid my normal premiums for dental, medical, and vision insurance. I’m going to have some costs here in Q4 though.
  • $77.56 Personal care – this includes eyebrows, hair cuts, make-up, and toiletries. Pretty cheap this quarter.
  • $555.00 Recreation – some yoga classes and annual fees for another sport
  • $156.61 Shopping – bought some artwork and a hat
  • $1,733.10 Transportation – a bit more fuel than the other quarters, but also some bus fares, taxis, and insurance (mostly insurance really). This includes my $2 million umbrella insurance policy. The car insurance went up 20%, but I’m so underbudget on gas that that covered the insurance increase.
  • $2,153.41 Travel – That puts the year at $4,412.06 and I’m now done with traveling for the year, woohoo!

Readers, how was your Q3?

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