January 9, 2017

2016: Our year in review

HNY

2016 highlights

EARNING, SPENDING, SAVING

The good

My day job income stayed the same, PiC’s increased a little. My competitive side HATES that mine stayed the same but my realistic side knows that was part of the deal of accepting the job with more risk. With more risk, I should remind myself to be glad the job is still alive and kicking!

We focused on our areas of our side money project which generated the funds to send much needed support to friends who’d hit rough patches: severe illness, loss of loved ones, injuries.

We didn’t splash out on a jumbo loan for a bigger house, nor did we add a second dog to the pack. I wanted to but reined in those currently unsupportable desires. Reminder, I need early retirement more than I need to take on more responsibility and I don’t want the guilt that comes with taking on more dependents than we can truly care for.

1. Debt reduction is saving. We refinanced our mortgage, freeing up our cash flow, halving our interest, and sending more straight to principal. We had the original mortgage for 4 months of the year, and the refinanced mortgage for the remaining 8.

See what a difference the lower interest made:

From January to April, we paid $3,628.05 toward principal and $4,151.61 toward interest. The next 8 months on the same loan would have seen $7,256.10 toward principal and $8,303.22 toward interest for a total of $10,884.15 (P) and $12,454.83 (I), or $23,338.98 spent by year end.

Instead, we paid $6,985.28 (P) plus closing costs, and $3,510.48 (I), totaling $10,613.33 (P) and $7,662.09 (I), for a year end total of $18,275.42.

Savings: $5.063.56. This was one reason we absorbed this year’s financial hits a little more easily than we might have any other year.

2. Automatic savings. We reduced our automatic savings rate to increase our cash-flow once JuggerBaby started going full-time at daycare. Hard to believe we held out for 2/3 of 2016 on a part time schedule but that saved another tidy sum.

We maxed out PiC’s 401(k), my IRA, added $10,000 to JuggerBaby’s 529 plan out of savings, and saved 25% of our income after that.

The bad

We had all manner of unbudgeted expenses this year and had to dig into savings. I HATE touching savings. We absorbed them but this removed $25,000 from our assets. *grouse*

Also, I secretly wanted to bump up our savings rate. Wait, let me rephrase that. I wanted to bump up our savings rate in secret and see if anyone (PiC) noticed a change in our lifestyle. This might be an unethical human case study but c’mon! Never mind, though, that didn’t happen because – see Spending.

1. An unexpected on-paper-only change meant our taxes cost more than $13,000.
2. We had to replace a car earlier than planned which came with a lot of unplanned maintenance: $4,000.
3. PiC has a health thing: $7,000.

BEST OF

  • This was a great travel year: Seattle, Hawaii, SDCC, FinCon! We flew with JuggerBaby and it didn’t kill us.
  • My sewing kit and I bonded this year over torn seams, preloved toddler shirts falling apart, and crafting new pockets for PiC’s pants. I’m 0% crafty so these tiny successes were a big deal for me.
  • I celebrated ten years of blogging and don’t feel like hanging up my keyboard anytime soon.
  • I spent quality time with longtime blog friends, and made new friends, at FinCon. All bonuses in a trip with no clear purpose at the outset.

WORST OF

  • I was sick with one virus or another for ten months of the year. That’s 83% of a full year being sick but not being able to call out sick because you can’t just call out from being mom, wife, or dog-mom. Professionally, I can’t take sick time because I have zero backup. It shouldn’t have been any surprise that I took so long to get better after each infection.
  • We broke the baby. We fixed the baby (yay) after breaking zir (whoops).
  • Coming to terms with Dad.

GETTING THINGS DONE

Plan for 2016

  1. Save 25% of our income. If we stay on track with regular income and barring any catastrophes, we should come within shouting distance of a Major Milestone Net Worth Number in 2016.
    DONE and DONE. We hit our first Major Milestone this year, and saved 30% of our income counting all forms of saving. 
  2. Finish the last steps of our estate planning.
    DONE. Oh my goodness, we FINALLY completed this one. Now we have to finish transferring all our assets to the trust.
  3. Decide on JuggerBaby’s college savings vehicle and set up a savings plan for zir.
    DONE and it was easier than it looked to be, at first.

2016 NUMBERS

  • TOTAL MONEY – Our Net Worth increased by 34%. Exactly half of that was updating our real estate valuations, the other half was saving cash and adding to our investments.
  • DIVIDENDS – Our last dividend payouts for 2016 were later than expected so I didn’t have time to pull together a report before we traveling. I’ll publish our next updates on a April / July / October schedule so I’m not publishing all reports in the first half of January which is BOR-ING. Besides, I shouldn’t have another dividend payment until February so there’s no point in reporting before them. At our last dividend update, we had a grand total of $434.50 in dividend income and I projected a final total of $600. Our final 2016 year end total was: $710.60! Yay, I beat projections!
  • SIDE MONEY – $855 was earned from Swagbucks, Mr. Rebates, and ebates; $2920 was earned from Craigslist sales making a total of $3775 in alternate income.
  • BLOG MONEY – $200 was earned by the blog which goes toward expenses (hosting, FinCon2017, etc). It’s a LONG way from paying me for my time.

Hello 2017!

  1. MONEY – Save 30% of our income, PLUS max out PiC’s 401(k), my IRA, an IRA for him, and
  2. MONEY – Organize our retirement funding for tax and income efficiency.
  3. MONEY – As part of the above, research the backdoor ROTH IRA and decide when would be best for us to do one. I think I’ll need our CPA’s help running some numbers for this.
  4. MONEY – Decide if we’re going to hoard more cash (investing it) or pay down more mortgage, then do it.
  5. LIFE: Mail hand-written letter to one of JuggerBaby’s surrogate grandparents every month. We always send hand-written thank you cards to the loving surrogate aunts and uncles who think of zir or send lovely thoughtful gifts but I’d like to be more proactive in this area, and sharing a bit of life in a more meaningful regular way instead of reacting to their generosity or hoping we can visit.
  6. LIFE: prepare one New Baby Care Package to send to an expectant mother friend per month. The first half of the year is spoken for! This is a hobby though sometimes I think it’d be a fun job.
  7. LIFE: travel will definitely be happening this year, that’s not a question. The open questions are: how much of it can I travel hack and will we enjoy it all? I’ll be setting up a travel calendar to address these questions.

:: What were your bests/worsts of 2016? How’d you do this year with spending and saving your money? Did you remember to make time for life? 

*Part of Financially Savvy Saturdays on brokeGIRLrich, and Racing Towards Retirement*

December 12, 2016

Real Estate Investing: reducing costs

I can’t make a decision on my property manager just yet, I need to run some projections on the potential costs and benefits, so I moved along to do quick research on the other list items.

This turned out to be a great idea.

Refinancing! or not.

I ran some initial numbers with Quicken Loans, they wanted to give me a 30-year-fixed loan with $4899 in closing costs and 2 points for a rate of 3.625. I’d save $238 monthly, but with the closing costs, it’d take 21 months to break even.

My current company offered me a 15 year loan, 4.25 / 4.38 with 2 discount points, and the monthly payment goes up by $247. Not the goal.

They also offered a 20 year loan, 4.375 / 4.25 points with 2 discount points, and the monthly payment goes up by $250. Also not the goal.  These loan costs are before we calculate the other costs of refinancing: an appraisal running somewhere between $575-625, and closing costs.

Overall, it seems like it’s just not the time for refinancing.

New home warranty

My old home warranty company was bought out by American Home Shield who tried to increase the premiums by 20% at the time of renewal. Even if my profit margins weren’t quite slim, that wouldn’t be acceptable.

My property manager found me a second policy with First American Home Buyers Protection Corporation, at a lower rate than I was paying before, for just about the same coverage and lower call-out costs. Savings: $200 for the annual policy, and $10 off each call-out.

New property insurance

I’m usually all about automating bill-paying so I went for holding the property taxes and hazard insurance in escrow. Pay three bills in one, what’s not to love?

Here’s what – I didn’t see the bill, therefore I didn’t think about it much, therefore I didn’t put it on the list of bills to attack. It did catch my attention briefly when the bill went up bit at renewal time, then it slipped back off my plate shortly after.

No more!

In a burst of productivity, I have …

  • gotten a quote from a new insurance company,
  • started a new policy
  • submitted a request to remove the property taxes from escrow,
  • had the new company send a cancellation notice to my old insurance company to avoid having to tell them that I’m dumping them, but we’ll see if they make me talk to them anyway.

The new insurance agent was very responsive by email, exactly how I like doing business, which meant I wrapped the whole process from quote to finish in 9 days.

With any luck, I’ll come to a decision about the property manager soon and then I’ll have shelved a year’s worth of administrative maintenance stuff – woo!

The unfortunate thing is that this stuff always occurs to me at the end of the year. Because what better time is there for sorting out all your paperwork and paying big lump sums like insurance policies then at the end of a long year? The only good thing is that, for the rental at least, I keep all the expenses and income in a separate account so it doesn’t impact our personal finances.

:: When’s the last time you evaluated your insurance, property, auto, renters, life, or otherwise? Do you carry any other than the required auto insurance?

 

October 17, 2016

Real Estate Investing: hiccups and the routine things

Real estate investing: I'm on the hunt for a new property managerHas it really been so long since my last update? Whoops.

Things have mostly been going well, but I’m definitely seeing the downside of hired property management. Not that I have a choice, the property is an unrealistic distance from us so I can’t drive over there and manage it myself. But when your property manager’s responsiveness goes down by 55% despite your specifically calling them out for it, then it’s time for a change.

I’m also in the market for a new home warranty company, and a new loan! If possible, I’m looking to refinance since my original interest rate was not favorable at all and I need to bring our monthly costs down.

But let’s start with one thing at a time since I get that “mountain sitting on my chest” feeling from all the things that feel like they must be done NOW.

  • I contacted my broker, and investing friend, to get recommendations for a new property manager. (Turns out that same friend is also considering a change because we use the same person and it’s not just me, the service has been much less attentive than it should be.)
    • The broker gave us a recommendation for a boutique property manager. The fees are pretty high, in addition to the monthly 10% off the top, so I’m thinking about what it is I want and how much I’m willing to pay. I want the kind of hands-on detailed service this manager provides but I have to consider whether my income will bear it. My monthly profit margins still aren’t high enough to cover more than a little over our expenses by the end of the year.
  • I read through some Yelp reviews and sites, and sent an email asking about services and fees, to the one that seemed to be a possibly good fit.
    • They replied the next morning saying politely they were not taking new clients because they have a full docket. That’s actually a good sign, I think, when a company knows how much they can handle well and sticks to it. Not great for me personally but good to know they’re not the sort to just take in as much business as they can get and damn the consequences.
  • My friend is inquiring after a larger company. He and I both came up with their name independently, I’m guessing because it was because they advertise.
    • My preliminary research turned up mixed results. They have all their information up front, which is great, and they state pretty baldly that if you’re asking about the kinds of restrictions you want to put on who gets to rent from you, you’re very likely trying to screen out people based on discriminatory reasons. This isn’t the first time I’ve been told that screening renters based on certain characteristics is really a racially motivated screener, I’m glad to see this company is speaking plainly about what that’s code for. I like that because of their size, they have easy ways for the renters to pay electronically. But I’m not sure that I want to work with a huge company that only gives you a price break after you own 40 units. For one thing, that’s a hell of a lot more than I intend to take on, so I wouldn’t benefit from adding one or three more properties with them the way I would with the boutique manager. For another, while they have the infrastructure to be more technologically up to date, that also means they may not be motivated or willing to consider updating where they’re lacking.

:: If you were renting, would you prefer to deal with a large somewhat faceless company, or a boutique property manager? If you were hiring a manager, which would appeal to you more?

Read more of our experience with real estate investing!

October 10, 2016

Reaping Dividends: September 2016 report

div-09-16

My brokerage is TradeKing, I’ve been very happy with their low fees and service.

The third quarter of 2016 has been pretty quiet on this Western front. I have about $15,000 in cash from various CDs rolled over to wait for the next purchase but I’m not stalking anything in particular at this point.

  • Dividends income this past quarter: $203.50. If nothing changes, we’ll see about $600 in dividend income this year.
  • I’m considering whether this particular course of investing continues to make sense for us. I like seeing replacement income come in with an eye towards a before age-65 retirement, but I need to do a better future income projection to see if there’s a better way to expand our portfolio.
  • I’m also considering folding this report into my monthly net worth report. It won’t show such dramatic (hah) increases monthly instead of quarterly but perhaps it makes more sense there. Thoughts?

Dividend portfolio as of Sept 30, 2016Year to Date Dividends: $434.50, Fees: $9.90, Net: $424.60

Income Replacement

For perspective, I like to think of the dividends investing project in terms of how much of our income it can replace, or how much of our fixed expenses it can cover.

At a whopping $424.60, this year’s dividends can pay 40% of one mortgage payment. Over the past 6 years, I’ve made a total of $1,146.50.

:: How did your portfolio do this quarter? Would you try to replace income this way, or do you have another preference?

July 6, 2016

Reaping Dividends: June 2016 report

June 2016 brokerage update: our year to date net dividends hit $221!Philosophically speaking

Building up a portfolio that throws off anything like real income in annual dividend income is challenging. We need a lot more capital invested.

To add to that challenge, as I shared at the Jolly Ledger recently, I have some rules.

  • I’m a long position investor, otherwise known as buy and hold.
  • It cannot be built on blood money. Companies need to conduct their businesses in a way that would make me want to work for them. Disclaimer: I aim to invest in ethical companies as far as is practicable – I’m not an expert and don’t have an army of researchers at my fingertips to confirm that all my choices are good but I’m doing my best.
  • I won’t invest in tobacco or gun companies. Even though I do not disapprove of gun ownership in principle, the way this country is unduly influenced by the NRA and gun lobby isn’t acceptable. There’s a difference between short term mistakes and long term wrongdoing or simply being harmful and the gun lobby has long ago crossed over to the dark side.

I wouldn’t feel comfortable working for any of those companies as a direct employee, no matter how nice a salary I could pull down, so I’m not sure how I’d justify owning it in my portfolio. It’s much like how it doesn’t make sense to me that the University of California system was holding stock in the prison system in their portfolio.

And now, the updates!

June 2016 brokerage update: our year to date net dividends hit $221Year to Date Dividends: $231.00, Fees: $9.90, Net: $221.10

My brokerage is TradeKing, I’ve been very happy with their low fees and service.

The first half of 2016 has been all kinds of volatile. The recent Brexit Leave vote made for an extra bad week globally. I wish I’d moved sooner but I was mesmerized by all the bad news and watching the stocks plummet. I can’t decide if it’s worth sharing specifics of my portfolio or if that’s a bad thing, so for now, I’m going to be general. Let me know if you think it does or doesn’t have value to you as a reader. I’m not recommending stocks, mind you, and don’t want to give that impression.

  • My Financial Services Stock #1 dropped more than 10% from my previous purchase price so I bought more. Reminder: dollar cost averaging is a good thing. I have confidence in the company in the long-term and this lowers my average purchase price by $5 per share.
  • In a departure from my usual strategy, I picked up an automaker stock. There was a time I wouldn’t have touched an auto stock, like an airline stock, but this was a spontaneous Buy based on the company’s recent moves to be more flexible with their suppliers, and moving with the times on technology. This surprised PiC, and honestly me too, but I thought I’d see what comes of it in 2 years. We’ll see if my instincts pan out or if the Brexit vote tanked that experiment.

Income Replacement

For perspective, I like to think of the dividends investing project in terms of how much of our income it can replace, or how much of our fixed expenses it can cover.

At a whopping $221.10, this year’s dividends can pay 20% of one month’s mortgage.

:: How do you invest? Have you peered at your portfolio this quarter?

If you liked this post and found value in it, I’d appreciate your pins and shares.

*Part of Financially Savvy Saturdays on brokeGIRLrich, Disease Called Debt and Little House in the Valley

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