I’m not really sure what to expect from 2015. I’m starting it off with some big changes: my boyfriend having just moved in, our big trip, and then a new job. I’m also considering throwing another big change into the mix (see the mystery goal below), so I’m not sure what things will look like.
1) Enjoy living together! Have an awesome trip to NZ!
2) Contribute the maximum to all tax-advantaged accounts available to me. This means $5,500 in a Backdoor Roth IRA, $18,000 in a pre-tax 401(k) and possibly some additional funds to the after-tax 401(k) and possibly my 2016 Roth IRA amount in a savings account ready to deploy in January. This will account for probably about 2/3 of my savings in 2015.
3) Learn the ropes at my new company and have an awesome first year!
4) Exercise for at least 45 minutes per day. My phone is really helpful at tracking this for me!
5) Go to the gym (or run) three times per week.
6) Contribute enough to a Health Savings Account such that Out Of Pocket Maximum ~= Current HSA balance + Employer contribution + my contribution.
7) Succeed at Operation Bayes – I’ll explain this later.
8) Spend under $40,000.
9) Save 70% of my net income monthly…and 100% of my bonuses. (Yay for a big raise that will allow me to save that much of my monthly income!)
10) Contribute the maximum that I can to the Employee Stock Purchase Plan.
11) Pay down the mortgage with any funds that are leftover after 2), including the proceeds of 10).
Even if I make no extra mortgage payments, the mortgage will pay itself down by about $9,000 in 2015. I’m becoming much less concerned about the mortgage with the smaller balance and the likelihood of the interest rate jumping up to 7.5% when it resets seeming less and less likely. Right now, if it were to reset today, it would likely reset to 2.875%, which would actually lower my required payment by ~$400/month and increase the January 2015 interest cost by about $46.
Overall, I’m anticipating a net worth increase of about $100,000 to $120,000 for the year to increase my net worth to $630,000 to $650,000. I expect my gross income to be somewhere between $140,000 and $150,000 in 2015.
I set my 2014 investment allocations back in December 2013 and then left them alone, which went great!
As of 01/02/2015, my investments portfolio was worth ~$164,400. I decided to re-balance my investments now with this Roth IRA contribution and then I’ll re-evaluate things once I start the new job. That will likely be calculating what my new 401(k) contributions should go into and then re-balancing my overall portfolio when I make my 2016 (!) Roth IRA contribution and set my 2016 401(k) contributions.
(Note: when I wrote this post last year, I estimated that my end of year balance would be $156,000. It is $8,400 higher than that! Crazy!)
First, what are the balances in my various accounts?
- $38,900 Roth IRA (with $5,500 new contribution)
- $8,400 Old tax-deferred CDs
- $10,200 Series I Savings Bonds
- $15,300 Taxable account
- $97,100 Now-old 401(k)
- $169,900 Total investments
What is my asset allocation?
My allocation has gotten itself to the following with the markets and contributions in 2014 (a tiny bit out of whack):
- 27% Fixed income
- 34% International stocks
- 39% US stocks
And if I just added my 2015 Roth IRA contribution to total US stocks, my allocation would get a tiny bit more out of whack:
- 25.8% Fixed income
- 32.8% International stocks
- 41.4% US stocks
At which point, US stocks are 4.9 percentage points higher than they should be, which warrants re-balancing in my 401(k) account at the same time. Last year, since I’d just re-balanced in November 2013 to make my 2013 Roth IRA contribution, I didn’t do any when I made my 2014 Roth IRA contribution and instead re-balanced with my 401(k) contributions over the course of the year.
If we follow my ordering from my post on tax-efficient investment placement, what does that ideal portfolio look like?
- (not necessary – all in S&P 500 index fund)
My employer match to the company stock
- Series I Savings Bonds that already exist in taxable
- CDs that are already in my Roth IRA
- The remaining portion of my fixed income allocation to the stable value fund in my 401(k).
- (not necessary)
As much of my remaining fixed income allocation to Total Bond Market in my Roth IRA as possible
- (not necessary)
If my tax-advantaged balances weren’t enough for all the fixed income necessary, added $10,000 in Series I Savings Bonds (possibly early for future-proofing)
- (not necessary)
Any other fixed income went to a tax-exempt bond fund in taxable. As much of my international allocation in taxable as it allowed (in the first few years, my entire taxable balance; in later years, the entire international allocation)
- Next, I added any of the remaining international allocation into my 401(k).
- The remaining 401(k) funds went to the S&P 500 index fund. Call this amount X.
- (X/0.8)-X is how much I put into the Extended Market index fund in my Roth IRA (minimum of $3,000).
- The remaining Roth IRA funds went to Total Stock Market.
- (not necessary)
The remaining taxable funds went to Total Stock Market.
|Taxable||Total international stock index (admiral shares!)||$15,300||$15,300||(same)|
|401(k)||Total international stock index||$40,400||$46,700||+$6,300|
|401(k)||S&P 500 index||$31,400||$23,100||-$8,300|
|Roth IRA||Extended Market index fund||$7,100||$5,800||-$1,300|
|Roth IRA||Total Stock Market index fund (admiral shares!)||$26,300||$33,100||+$6,800|
Note that these numbers are all rounded, so they may be slightly off if you try to make calculations with them, but they should still illustrate my example sufficiently.
My portfolio is pretty simple right now: one taxable account, one 401(k), and one Roth IRA, with one fund in taxable, two in the Roth IRA, and three in the 401(k). My re-balancing here is really just adding new money to the Total Stock Market index fund in my Roth IRA and then adding some money to fixed income and international stocks in my 401(k).
I performed a few transactions to accomplish this:
- Contribute $5,500 to the money market account in my Traditional IRA.
- Convert the $5,500 from my Traditional IRA into the total stock market index fund in my Roth IRA once the funds settle.
- In my Roth IRA, exchange $1,300 from the extended market index fund into the total stock market index fund.
- In my 401(k), exchange $8,300 from the S&P 500 index fund to $2,000 in the stable value fund and $6,300 in the international stock index fund.
D’oh! I did all of these transactions and then realized while writing this post that I needed to set it to only use my Traditional 401(k) portion to do the exchange, so it’s trying to do the re-allocation using all sources (also my Roth 401(k) and employer matching money), which I have conveniently set to only have one fund in those “accounts”. Oops! I called the plan administrator on Monday and they couldn’t do anything to fix the transaction. So my asset allocation is on track, but my accounts are a tiny bit more complicated than I like them to be. Oh well.
Whew! 2014 was a very full year. A lot happened that I didn’t plan on at the beginning of the year: my boyfriend moving in, job hunting, sharing Christmas, finding a new job, about to quit my job, and a big trip happening in early 2015.
This post has been delayed since I finally left my job. I now have a bit of a break until I start the new job next month. I’m really curious as to what will happen with my net worth in January and February!
1) My first priority in 2014 is to continue to develop my relationship with my boyfriend. Things are going great and I want to continue to prioritize that.
SUCCESS! If anyone remembers a haphazardly mentioned Operation Penguin from a monthly goal post this year, that was my boyfriend moving in. He’s moved in officially now, which is awesome. We have a ton of physical stuff to sort through from merging households still, but we’re in one place! We’ve also planned a big trip for early 2015, went on three trips in 2014, attended two weddings, and shared Christmas with my family this year.
2) Rock out at my new job. Without the high-paying job I have, I wouldn’t be able to accomplish any of my financial goals.
FAIL! I’m going to give this one a big red fail. The new job went great for oh, the first five months and then it just fell flat on its face. I couldn’t have predicted how this would go and then I ended up job hunting partway through the year, which was incredibly stressful. I’m really excited about the new job and it’ll be such a change that I’m feeling much more confident about it!
3) Max out all tax-advantaged accounts available to me. This means $17,500 to my 401(k), $5,500 to the Roth IRA on January 2nd from savings and $5,500 to a savings account to fund the 2015 Roth IRA.
SUCCESS! Woo! I accomplished this one 100%. I maxed out my 401(k) in July, thinking I was going to quit my job. I did make my full $5,500 Roth IRA contribution in January 2014. Mentally, $5,500 of my savings account is for my 2015 Roth IRA. It’s possible that my income might drop to the point that I can contribute directly in 2015, so I may end up waiting a bit to do the Roth IRA contribution. I haven’t fully decided yet. I may just wait until February. Who am I kidding, I’ll probably just do it January 2nd like I did last year.
4) Pay down the mortgage. I would like to get it under $91,284.28. That should keep me on track to paying it off by the end of 2015.
SUCCESS! This was a super vague goal and by its vagueness, I succeeded at it! I did pay down the mortgage, yes I did. I did not get it anywhere near $91,284.28, hah! It is currently sitting at $143,000, which represents it being half paid off. My savings account has about $20,000 extra in it, which will possibly go to the mortgage once I start the new job, so that would have put the mortgage at $123,000. If we weren’t taking this unplanned awesome trip, it would be down another $6,000 to $117,000. My bonuses were less than anticipated, accounting for another $7,000 in a higher mortgage balance, so $110,000 in the ideal scenario. That’s still ~$20,000 above my “goal”, but I was expecting to hit closer to $110,000 anyway.
5) Spend less than $39,000 for the year. If I can accomplish this, it would be my cheapest year since graduating from college! This would map out to 4.4 years of expenses saved up, which is about 17.6% of the way to FI if you count it as having 25x annual expenses saved up.
FAIL! Flat out fail. When all was said and done, I spent $48,000 this year, $9,000 or 23% above my spending goal. I’ll go into this in more detail in another post, but I definitely didn’t plan on all of this spending.
6) Overall, I’m anticipating a net worth increase of about $115,000 for the year to increase my net worth to about $465,000. (For reference, I expect my gross income in 2014 to be between $160,000 and $190,000.)
PASS! If you take out the increase in my condo’s value, my net worth went up by about $93,700 this year, $21,300 short of the above guess. My gross income ended up being just under $170,000, in the lower end of the range I listed above, which contributed to most of the lower net worth increase. The other contributing factor was of course the unexpected spending.
2014 by the numbers
- My gross W-2 income was just under $170,000, a drop of about $30,000 from 2013.
- I churned three credit cards, which gave me $1,940.42 in credit card rewards including the regular 2-5% cash back and taking out the $89 Barclaycard annual fee.
- My gross income was about 353% of my spending for the year (my average since college is 317%).
- I paid down the mortgage from $187,552.40 to $143,000, a difference of just under $45,000. That’s about 16% of the original mortgage balance, putting it at 50% paid off, and giving me just over 60% in equity.
- Adjusted the value of my condo in my net worth by about 26% based on how similar units are selling around me.
- Increased my net worth by $185,700 over the course of the year to $531,600.
- I spent about $48,000, an increase of about $3,270 from last year.
- I saved about $86,700, for an overall savings rate of about 68% and about 54% of my regular income.
- My investments were up about $5,200 for the year, which was a return of 3.42% according to XIRR.
- Increased my assets and paid down my mortgage such that my assets were I to liquidate all of my retirement accounts are worth more than the mortgage and I am only about $70,600 in already liquid funds away from being able to pay off the mortgage, a $64,600 improvement from 2013.
- Decreased the amount needed to save to be FI by $12,600 to $811,300, though I possibly added 2.56 years to my FI date? (Clearly this is still very much a moving target.)
- Buying my place is now only $2,307.96 more expensive than continuing to rent would have been, ignoring the increase in value of my condo. It will break even assuming purchase price in February 2015.
2014 in charts
My savings were split this year mostly between my Traditional 401(k), extra mortgage payments, and some cash savings in anticipation of changing jobs. Most of that cash savings will go to the mortgage in 2015.
I also had my highest net worth increase yet of $185,700, settling in at $531,600 at the end of the year. Things are moving along well! I really like the “Where in the world could I retire today?” game that Planting our Pennies have been playing. If I were to sell my condo and retire today, I could retire in Sofia, Bulgaria. I’m no longer stuck in India, which is pretty cool. I’m guessing that by some time in 2016, I should be able to retire in the lowest cost of living city in the United States or Canada on the Expatisan listing. I also have about 11 years of expenses saved at 2014 spending levels if you include my condo value or about 3.7 if you take the liquidated value of everything except the condo. This year, my expenses were about 9% of my end of year net worth. I’ve been noticing that the more money I have saved, the less motivated I am at work when I don’t like my job since that job looks more and more unnecessary as time goes on and my nest egg accumulates.
I finally paid the mortgage down to the 50% marker! I’m pretty excited for that one. I didn’t make nearly as much in extra payments as I did in 2013 (see $30,000 gross income drop). But I did manage to lower my monthly interest cost from $400 in December 2013 to $307 in December 2014 by paying down about $45,000 of the mortgage.
My investments had a lot more ups and downs in 2014 than ever before. My employer and I contributed just under $25,000. My 401(k) was over $100,000 at some point this year and my Roth IRA is definitely over $30,000 now. I also saw just over $3,000 in dividends across all of my accounts and I’m estimating to get close to $4,000 in 2015. My largest one month gain was $5,235 and my largest one month loss was $4,373.
|taxable assets – debts||$135,200||$70,400||$70,600||-$200
|$ until FI||$823,900||$845,000||$811,300||-$33,700
This is the last net worth update of 2014!
You might notice that the ‘taxable assets – debts’ numbers look a bit different than they did last month. This is because I decided to start calculating them ignoring the “cash” numbers since I would not ever empty my checking account in order to pay off the mortgage.
I, ahem, have used the money that normally goes to savings from my November and December paychecks to pay for our awesome trip that is coming up soon, so I saved a lousy 2% of my paycheck this month and 4% last month. As you would expect, that has pretty significantly dropped my overall savings rate for the year, which I’ll talk about when I look at the year in review over the next week.
I’m not doing very well with keeping such a larger savings account buffer. I tend to like to move money somewhere useful as soon as possible. I made an extra payment on the mortgage near the end of December to lower the balance a bit. I’ll probably also use $5,500 from savings to make my 2015 Roth IRA contribution before I start the new job and then hopefully I’ll be able to leave the rest of the money alone until I start the job since I will have about 4-6 weeks unpaid and possibly 1-1.5 months between paychecks. But in reality, I don’t need to have a $50,000 emergency fund.
The $ until FI is a huge moving target since even a $200 increase in average monthly spending requires an additional $60,000 saved or for example, my estimated savings from my boyfriend moving in lowers the target by about $100,000. Here are the past numbers on this:
- EOY 2010: $1,027,400 (average monthly spending $3,600)
- EOY 2011: $856,500 (average monthly spending $3,300)
- EOY 2012: $1,104,800 (average monthly spending: $4,220)
- EOY 2013: $823,900 (average monthly spending: $3,730)
- EOY 2014: $811,300 (average monthly spending: $4,000)
It is in general going in the right direction (down), but it is pretty variable. If things go according to plan in 2015, this number should drop down under $500,000!
Expenses: I spent $4,369 in December (ignoring work reimbursable expenses) after the mortgage or $3,342 without it. My total spending for 2014 was $47,994.
Some of my controllable expenses broke down as follows:
- $151 Clothing/Shoes – bought two white tank tops and a pair of warm black flats
- $207 Entertainment/Social [average this year: $211, last year: $224]
- $40 Eating out by myself [average this year: $18, last year: $25] – this was increased a bit from the moving
- $89 Groceries [average this year: $185, last year: $152] – this is my half and I’m not really sure what happened here. We were gone for a few days for Christmas and we ate out a bit more than usual, but this is abnormally low grocery spending.
- $161 Work lunches [average this year: $147, last year: $77]
- $495 Presents [$1,228 so far this year, $627 last year] – I had a lot more people to buy presents for this year and I also bought more expensive gifts than I did last year.
- $33 Internet – yay for split internet :)
- $0 Household goods [average this year: $17, last year: $29] – a lot of this has gotten rolled up into groceries and I’m not concerned about that since it’s easier to split things this way.
- $38 Electricity – October/November [$719 so far this year, $699 last year – rates went up about 7% year-over-year and my boyfriend and I are now splitting this]
- $57 Hair cut
- $110 Toiletries [average this year: $33, last year: $31] – new shampoo, conditioner, and a couple other hair products. I decided to splurge on less cheap shampoo, conditioner, etc. and my hair is feeling so much better already!
- $77 Accessories – my cost of a bigger purse after Christmas money
- $77 Furnishings – some wood swatches to look for a new piece of furniture for the kitchen/dining room (these will be returned for a full refund once we’ve decided what to buy!)
- $354 New camera, 64 GB memory card, and some filters – my point and shoot was from 2008, so we decided to buy a new camera before we go on our trip
- $5 Transit fares – took some transit while visiting my family over Christmas
- $7 Car maintenance – bought a tire pressure gauge
- $37 Electronics – some more rechargeable AAs and AAAs
- $12 Fuel [$224 so far this year, $393 last year]
- $30 Tolls – filled up my tolls account again
- $900 More flights and one of the hotels (we accidentally prepaid for the hotel) for our overseas trip
- No more HOA dues to pay :)
Cash: $12,300 (up $4,200)
This is mostly up because I’ve set aside all of the money to pay for our trip and the funds are just hanging out in my checking account until we pay for more stuff.
Savings: $47,800 (down $4,300)
These funds are spread across a checking account that gets free ATM fees anywhere in the world, my health savings account, a savings account at my credit union, and a bit of a buffer in my credit union checking account.
This is down because I made an extra payment on the mortgage and I needed to borrow a bit from savings to cover the gap from my December paycheck in my checking account.
Investments: $164,500 (down $2,100 or -1.3%)
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:
- Stock market losses
- No contributions (status quo for the rest of 2014)
- Almost $1,000 in dividends (maybe next year I’ll surpass $1,000 one quarter!)
Mortgage: $143,000 (down $4,700 or -3.2%)
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%
- 6: months of payments eliminated with this month’s pre-payments
- $4,000: extra payments made on the mortgage this month
- $8: interest this month’s extra payments will save me on the next regular payment
- 30.0%: portion of my regular payment went to interest (originally was 59%; down 0.1 percentage points)
- 60.0%: amount of equity in my condo, assuming purchase price (up 1.3 percentage points)
- 50.0%: amount of the mortgage I’ve paid down (up 1.6 percentage points)
I made my first extra payment since August! That was awesome. I’m looking forward to getting back to making extra payments soon, although how much extra I’ll pay the mortgage down in 2015 depends on whether I have access to the Mega Backdoor Roth IRA or not with my new employer. I’m about $19,400 ahead of where I needed to be at the end of 2014 to pay the mortgage off before the rate resets in 2018!
TOTAL: $531,600 (up $2,500 or +0.5%)
I ended 2013 with a net worth of $345,900, so I’ve seen a change of +$185,700 or +53.7% 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. I didn’t quite meet my $550,000 estimate for the year.
My plan has always been to pay off the mortgage after maxing out all tax-advantaged investment accounts available to me. When I first made the mortgage payoff plan, I only had access to an employee-contribution 401(k) of $18,000 and a Roth IRA of $5,500 in 2015 dollars. It is possible (I don’t know yet) that with my new employer, I’ll have access to the Mega Backdoor Roth IRA. This is where the employee contributes after-tax up to the total 401(k) annual maximum of $53,000 in 2015 and then you use in-service distribution to transfer the contributions to a Roth IRA and the earnings to a Traditional IRA (and then convert the small bit of earnings to the Roth IRA to keep things clean).
Since I don’t know whether or not I’ll have access to the Mega Backdoor Roth IRA at my new job, I made a plan for 2015 assuming I don’t and then this is my plan for if I do. I’ll go with whichever plan pans out.
The 401(k) maximum is $53,000 in 2015. The maximum employee contribution is $18,000, which I will contribute pre-tax, leaving $35,000 for my employer’s contributions and after-tax contributions. This will leave me approximately $31,425 to contribute after-tax, which is about $2,856/month averaged over 11 months or $2,618.75/month averaged over 12 months. This is clearly going to put a dent in my mortgage payoff plan, but I think it’s worthwhile.
I project my total net pay in 2015 to be $118,142.85. I also expect to have $24,000 extra in my savings account at the end of 2014, after the $5,500 for my 2015 Roth IRA.
The first $18,000 of this goes towards maxing out my 401(k). Then $34,611.43 for monthly spending plans (this includes the mortgage payment). My current plan is $550.00 to my Health Savings Account.
This leaves $88,981.42 of money to work with, including the extra savings account money. Some portion of this money will be funneled into the ESPP with a good discount, but I only see that as a cash flow annoyance since I plan to sell the ESPP funds once their holding period is up.
Next, I’ll fill up the after-tax 401(k), leaving me with another $57,556.42. I’ll throw all of that at the mortgage. I had planned on throwing $73,806.93 at it from savings in 2015, so that’s only $16,250.51 less than planned, which isn’t so bad. This would leave me with the following financial structure at the end of 2015:
- $20,000 general savings
- $2,800 Health Savings Account
- $119,400 Traditional 401(k)s
- $6,800 Roth 401(k)
- $73,500 Roth IRA
- $26,800 taxable investments
- $75,500 mortgage balance
- $659,000 net worth
I would then be able to pay about $25,746.63 extra on the mortgage in 2016 and in 2017, which should erase it save for $1,902.56, which I would take out of my $20,000 general savings account. Even if I don’t quite pay it off before the rate resets in January 2018, it will not reset high enough that I can’t afford the payment and I think that is worth it for taking advantage of the Mega Backdoor Roth IRA. I mean, an extra $30,000/year in a Roth IRA in my late twenties is too amazing of an opportunity to pass up. So then in 2018, once the mortgage is fully paid off, I’ll be able to save approximately $38,074.47 outside of tax-advantaged accounts. Note that all of these calculations also assume no raises, no appliances dying, and expenses in general not going up.
The only annoying thing about the Mega Backdoor Roth IRA is that it’ll make my checking account cash flow negative most months since gross pay – taxes – pre-tax 401(k) – ESPP – after-tax 401(k) is less than my monthly spending plan. That’s okay – I can use my signing bonus and savings account to smooth out my cash flow, plus the ESPP funds will be able to be cashed in at various intervals.
Readers, do you take advantage of a Mega Backdoor Roth IRA? How does it impact your cash flow? Would you if you had access to one?
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?
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!
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!