Let’s take a look at the goals that I wrote at the beginning of this year and see how I’m doing. I anticipate having about $17,000 in further savings for the year that are currently not yet allocated.
1) another $20k-ish in my 401(k).
As of 12/31, my 401(k) had $44,000 in it, so a $20,000 increase would be $64,000. Thanks to the contributions I have made so far this year, my employer’s contributions, and investment gains, it was sitting just above $65,000 as of 9/30. I was originally planning on maxing it out with my December paycheck, but I’ve changed my mind and will finish maxing it out with my October paycheck. I expect my 401(k) to be worth just above $71,000 by the end of the year, which would actually be a $27,000 increase from 12/31/2012.
2) to have a full 12 months of expenses in an account that is accessible within 3-5 days, at the prior year’s spending level.
If you add up the money in my online savings accounts, my Series I Savings Bonds, and 50% of my taxable stock investments, that gives me about 11.5 months of accessible money. When you look at the fact that my checking account will cover all expenses until the end of the month, that makes that an okay number.
3) to put the maximum I can into the Roth IRA through the front door.
I put in the maximum contribution for 2012 using the backdoor in March. I plan on doing the same for 2013 in November.
4) to put every purchase on a credit card. This may result in me moving my primary checking account (since it’s currently a dividend rewards account and only by making enough debit purchases do I get free ATM transactions).
This has been going great! It’s definitely cut down on how often I check up on my bank accounts. I’m really loving the Fidelity American Express 2% cashback card. I don’t find that many places that don’t take it, but if they don’t, I have my Chase Amazon.com visa or my credit union 1% visa to back me up.
5) to pay down the mortgage. I would like to get it under $200,000 if possible. A stretch would be paying it down to 50% loan-to-value (LTV) or to my 2013 gross income including RSUs.
As of 10/1, I have paid down $14,800 more than I need to to be on track with the five year payoff plan at the close of 2013. The balance is currently sitting just above $201,100. If I continued to make paying down the mortgage my highest priority after tax-advantaged retirement accounts, I should get the balance down to about $182,000 by the end of the year. If I don’t make any further extra payments, the balance will go down to $199,500 by the end of the year.
6) to save 50% of my net income each month, ignoring RSUs. That seems like more than a reasonable spending level, so I’m going to try to stick to that.
Through September, I’ve averaged about 64% of my regular net pay saved. I’m estimating that number will stay the same through the end of the year. In 2012, that number was “only” 54%.
7) to save 100% of my RSUs. Why? I don’t want to rely on these. 2013 could be an anomaly income year and I want to take advantage of that to increase my net worth by leaps and bounds. I think that I could increase my net worth by $100,000 without a lot of effort this year and I would love to do that!
I’ve saved 100% of the first 3 of my 4 RSU vests for the year. I think I’ll increase my net worth by closer to $130,000 this year when all is said and done.
8) to close the gap between debt and assets. There is a gap of ~$150,000 between my mortgage and my non-property assets (checking, savings, CDs, stock and bond investments). That is a huge gap. I don’t think that I can eliminate it entirely in 2013 (perhaps in 2014!), but I would like to narrow it pretty significantly. I think that I can get it down to ~$50,000 by the end of 2013, which is much more manageable and making it possible to reverse the gap (assets > debt) in 2014.
The gap between debts and assets was just above $50,000 at the end of September, which is where I thought I would get it by the end of 2013. I’m anticipating lowering it to just under $20,000 by the end of this year.
An update on what my financial structure will look like at the end of 2013:
|2012 EOY||1/1 Estimate||10/8 Estimate|
|Investments||$74,000 (1.46yrs)||$100,000 (2yrs)||$128,000 (3yrs)|
|Liquid funds||$38,600 (9mos)||$48,000 (12mos)||$47,900 (13.5mos)|
|Mortgage debt||$259,600||$200,000||$184,000 to
|Assets – debts||-$146,700||-$50,000||-$20,000|
So it looks like I am yet again on track to surpass my estimates by about $30,000. I’m also on track to decrease my expenses for the year by about $10,000 year-over-year, which is why I estimate that I could live off of savings/investments for longer than originally calculated.
I’m trying to figure out where to allocate that last $17,000 of savings for the year. My savings plan this year wasn’t super clear on what to do with excess funds.
I am $14,800 ahead of the mortgage payoff plan so far, but I’ve been throwing money there as I was unsure what else to do with it and I would like to pay off the mortgage. I could also add to my taxable investments, which I have done occasionally this year. I could set aside some money to buy $10,000 in Series I Savings Bonds at the beginning of 2014 and make my 2014 Roth IRA contribution at the beginning of the year.
Or I could come up with something life-wise to do with the money. I don’t have much in the way of travel plans in the near future and I’ve given up sports for a bit due to my injury. So maybe this would be a good opportunity to take one course towards that Master’s degree that I’ve been eyeing for years. I could take one course starting in January at a cost of just under $4,000 including textbooks. That’s a pretty serious commitment, but I could do it without noticing it being gone all that much. My current estimate is that the entire degree would cost somewhere just south of $30,000. I could set aside my extra cash flow between now and the end of April and have that amount saved up in full. But it’s not about the money! I’m not ready, life-wise, to commit to that for three years of my life. I’d rather take one course first and then see. Plus, the next course I would take would be in September 2014 if I was to take a second course. So, I think I will set aside $4,000 in a savings account labelled Tuition in November and then see from there. If I decide to not actually take the course in January, then I can throw the money at the mortgage or into investments. If after the course in January, I want to take more, then I can set aside money starting then. Yep, that seems like a good plan!
So that means:
- $4,000 to Tuition fund
- $13,000 to the mortgage (last of the $17,000)
- $4,200 to finish maxing out my 401(k) for the year
- $5,500 for my 2013 Roth IRA contribution
- = about $26,700 more in savings for the year