Saturday, October 26, 2013

Extra Cash Challenge - September results

Here are my results for September's extra cash challenge:

Advertising: $93.45
ING/Capital One 360: $17.08
Lending Club: $0.83
Part-time job: $72.15

Total: $183.51

Difference from last month: -$23.99

I'm not sure why the Lending Club was consistently getting about $1.03 or so and now it dropped to $.83. It says all my notes are current, so I don't think one the loans went bad. Oh well, it's not that much money to worry about now.

Sunday, October 13, 2013

What are my financial goals now?

I used to write a lot more in this blog back when I was paying down our second mortgage and aggressively contributing to my IRA.

I thought I should write a bit about what my current financial goals are. I'd love to be aggressively paying down our mortgage and saving for retirement. But my first and most important financial goal is to stay out of debt. We have two "big ticket" items to pay for in the next couple years. Our house, which was built in 1987, still has what we believe to be the original windows and siding. We did replace the windows in the basement about a year ago, but the upstairs windows and siding still needs to be replaced. I have not got any bids on this yet, but I'm budgeting about $25,000 to $30,000 and crossing my fingers that it's less!

We also have a 2001 Ford Ranger. It still works, but since it is now about 13 years old, we know it'll come time to replace it soon. I am hoping to get a used vehicle when we do replace it (maybe about 2 years old). When the time comes to replace the truck, my husband wants to get another truck. I'm estimating it'll cost about $20,000 to $25,000 to get a new used truck.

So right now I need to save about $45,000 to $55,000 in cash to pay for this stuff.

As you can see in my last net worth update, I had nearly $34,000 in cash already saved. Some of that is my very tiny emergency fund of $6,000. (Because I am saving a ton of cash now, that money ear marked for these other goals can be reallocated to an emergency if I needed to.) So that leaves about $28,000 already saved towards the first goal (which looks like it'll be the windows and siding as of now). So I just need another $2,000 and I should have that one saved for. I'm slowing myself down a bit though because I just invested $1,000 in my Roth IRA. We won't be able to get the windows and siding anytime soon anyway because it's almost winter.

Throughout this year, I have contributed $2,500 towards my regular IRA (I'm more motivated to put money into that one since I don't have to pay taxes now). So between the two, I will have invested $3,500 for 2013. I can still invest another $2,000, but I haven't decided if I want to do so yet because I want to get these two big purchases saved for ASAP.

Sunday, October 6, 2013

Net Worth Update - End of Third Quarter 2013

Here is the update on my net worth!

Approximate value of our house: $215,015 (+$13,863 since last quarter) (Estimation from Zillow)
Roth IRA: $31,475 (+$2,771 since last quarter)
Simple IRA: $6,482 (+845 since last quarter)
Regular IRA: $3,920 (+$1,264 since last quarter - invested $1,000 since)
Lending Club: $214 (+$3 since last quarter)
Savings (including emergency fund): $33,967 (+$5,436 since last quarter)

Total assets: $291,073 (+$24,182 since last quarter)

Mortgage: $173,369 (-$1,540 since last quarter)

Total net worth including our house: $117,704
Difference since last quarter: +$25,722

This is the net worth calculation not including the value of our house:
Roth IRA: $28,704
Simple IRA: $5,637
Regular IRA: $2,656
Lending Club: $211
Savings (including emergency fund): $28,531

Total assets: $76,058 (+$10,319 since last quarter)

Mortgage: $173,369 (-$1,540 since last quarter)

Total net worth not including the house: -$97,311
Difference of +$11,859

Either way you look at it, it was a good past three months. I am now in the "6-figures" for the net worth including the house and out of the "negative 6-figures" for my net worth not including the value of our house.

Saturday, October 5, 2013

Why paying off our second mortgage was a good thing

I was thinking today how grateful I am that we paid off that second mortgage over 2 years ago now. I thought I'd take a look at just how much that one financial move has made a difference in our financial life.
If we would have kept our original loan of $200,000 at 5.75% we would owe $182,390 on the main mortgage today.

Our monthly payment was $1,133.
Our second loan was $25,000 at 8.65%. If we still had that mortgage our principal balance would still be $23,644.
That monthly payment was $195.

So if we had not paid down that loan, we would still owe a total of $206,034 on the house and our monthly payments between both loans would be $1,328 (not including property taxes). Now our monthly required payment is only $1,018 - a difference of $310 a month.  We currently owe $173,369 on the house. If we sold our house today, we would make an extra $32,665 on it ($206,034 that we would have owed minus $173,369 that we actually owe).

Refinancing our main loan also helped, but I'm fairly confident our mortgage company wouldn't have offered to let us refinance that loan had we not paid off the smaller loan. If we still had both loans we would have been significantly underwater on our house at the time. Ever since we refinanced, we have paid an additional $150 in principal each month, so we are sending them a total $1,168 a month. But, even with that extra contribution we are still saving $160 a month.

So we are saving an extra $310 a month for the next twenty-something years, plus we have increased our net worth by over $32,000 - which will only get better since we are already 7 months ahead of schedule on our current mortgage just by paying an extra $150 per month. We probably won't be paying that extra money towards the mortgage had we not paid off that loan since our minimum payments would have been $310 more. Not bad for paying off a $23,000 loan early!