December Mortgage Update: And what are we going to do with all that income?

(You know, assuming DH keeps his new job for at least a year.)

Last month (November):
Balance: $71,988.26
Years left: 5.67
P =$925.11, I = $289.30, Escrow = 613.58

This month (December):
Balance: $67,886.81
Years left: 5.333333333
P =$929.45, I = $284.95, Escrow = 613.58

One month’s prepayment savings: $12.55

OMG, you guys, DH is SO HAPPY with his new job.  He sneaks out of bed at night to work on knotty programming problems.  Weekends too, instead of playing a computer game he’s got his work stuff open.  (Because ze wants to, not because ze has to– generally because of an insight or a thought about a new approach.)

(for the tl:dr folks) The extra income isn’t all going to one place.  I’m also not sure how used to this extra income I want to get… DH’s company isn’t a huge one and may not be around forever.  Putting away a lot of the income will make it easier if he’s ever unemployed/self-employed again.  Plus… deferred maintenance.  And less worry.

As you can see, we’re using a good portion of our expected income this month to make up for the mortgage pre-payment we weren’t doing during the long unemployment/self-employment stretch.  And then some.  We’re going to have to figure out long-term what prepayment number we’re going to be using.  We’re definitely bumping it back up to something, but is it going to be closer to $650/month or closer to $1150/mo (or more), I don’t know.

I sent in the form to request they take out the full amount for my 403(b) (prorated over 9 mo of salary).  We’ll see if I did that correctly or not next pay period.  (Spoiler alert:  They did.)

I also sent in the form to request they take the full amount for my 457 (again, prorated over 9 mo of salary).  I got a confirmation on that in the mail last week so it should be set to go.  (Spoiler alert:  It was.)

We were planning on doing Roth IRAs for the year, but then DH’s company started its match again, so we’ll be doing his 401(k) instead.  (An effective salary increase of >$6K, if they keep it up for the full year.)  (Update:  but they won’t take it out for the first two months… apparently that’s how long they’re waiting for him to “vest” or something.  So maybe one Roth while we’re waiting.)

Unfortunately DH hasn’t built up enough vacation days for us to visit his family, so even though we now have the $, we’re not going to be able to go, even though he wants to show off the kids.  His parents will be coming after Christmas and mine before/during as per their usual.  So no spending on travel.

DC2 has a biting problem that has escalated (the current daycare has too high a student/teacher ratio and DC2 tends to strike back instead of bursting into tears when a kid takes hir toy like DC1 did).  Previously, DH spent some time in there to see what was going on and to help prevent bites.  (“Ze is always provoked,” he reported back.  More on this in a future post…)  We don’t have the time to find new childcare or to provide it ourselves, so we’re going to suggest that we make a directed donation for them to pay for a third care-giver to shadow during the morning biting times.  Either that or they could put DC1 in the 2s room where ze could do pottying too.

Some sort of vent(s) on the roof is/are rusting and need(s) to be replaced.

This summer our a/c developed a leak and we put off maintenance to fix that.

We upped our charitable donations (more on this in other posts).

We spent $350 at the grocery store the first weekend after DH accepted the job (but the previous weekend we’d only spent $70 and the next week $120 and some of that $350 spending was for Thanksgiving… still I accidentally bought an overpriced small hunk of cheese for $10 because I didn’t even look at the price.  Not that there isn’t cheese worth $20/lb, but that cheese isn’t Stilton.)

We went to the fancy sushi place we haven’t been to in forever and spent $80.  We may also start eating out 2x a week instead of 1x.  We’ll see.

Going forward we have a very long list of deferred maintenance projects, should DH’s employment remain stable.

1.  The children’s bathroom carpet needs to be replaced with tile.

2.  The deck needs to be restained (DH usually does this, but we may get someone else to do it instead).

3.  DH has decided he’d rather have someone mow down our bushes and trees again than do the lawnwork himself, so we’re going to revisit that in the Spring.

4.  Wallpaper in the bathroom is falling down.  We’d like it replaced with paint.

5.  Everything needs repainting.

6.  Would love to redo the kitchen so it is a better kitchen.  I’ve been saying this since we bought the place though and who knows if it is ever going to happen or not.

7.  We should get a piano instead of just a keyboard.

8.  It would be nice to replace the dining room floor carpet with wood and then restain and reseal all the hardwood floors.  Again, though, this is something we’ve been saying since we’ve been here and it may just not happen.

Most of all, though, I’m enjoying not worrying about money so much anymore.  No longer counting pennies or even dollars.  Bummed about lost earnings opportunities (it’s been a bad week for grants) or payments for services never rendered (see: daycare fiasco), but no longer freaking out about them.

What would you do if your income suddenly doubled?

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56 Responses to “December Mortgage Update: And what are we going to do with all that income?”

  1. plantingourpennies Says:

    A few years ago Mr PoP went from minimum wage to making more than me and the two “big” changes I remember making were doubling the eating out budget and joining a fancy gym. Stress levels dropped dramatically.

  2. OMDG Says:

    Move to Boston for residency and not freak out about the 20% increase in cost of living. Oh! Or if we stayed here, either redo the kitchen (take out 2 walls and put in a back deck ~70K), or put a full bath in the basement. Have a second kid and not freak out about the cost.

    • M Says:

      Boston isn’t so bad so long as your housing standards aren’t that high…and you live in walking distance to the t or commuter rail (so no car or one car). And hey, the insurance covers IF. You can dramatically reduce your eating expenses by shopping at hay market once a week. If you have kids that makes things a lot more difficult and expensive

      • OMDG Says:

        Yeah, it’s the kid part that is the issue. We currently pay out the nose for childcare and that would only get worse up there. I was quoted $2100-$2800 per month for 8-6 daycare. Oh and we have a dog too. And the fact that as a medical resident I would get paid crap and still require beaucoup childcare. My husband has a good job and we are very lucky but it’s still a bit of a stretch. Honestly, I’m not sure doubling my income would fix this problem. Maybe it we tripled it?

  3. Holly@ClubThrifty Says:

    Sounds like you have a lot of home improvement projects coming up =)
    I think we may up our grocery budget too so that we can eat out a few more times per month. Our new town has a much better selection of restaurants and it’s hard to resist!

    • nicoleandmaggie Says:

      This time of year we’re often kind of tired of the restaurants in our town, so it’s easier to resist eating out (though we have been hitting up the “gourmet burger” place’s 50% off happy hour more than we had before we accidentally discovered it). In August and September though there’s always a lot of new restaurants around coinciding with the start of the school year and we have to try them out. :)

  4. schooze Says:

    Just curious abiut the numbers… did you make an extra $3k payment on the mortgage? How did the balance go down by $4k? The principle portion of your payment shows less than $1k… thanks.

  5. Leah Says:

    Things we did when I got real job and our income doubled (tho not as drastic as yours — I suspect our combined income is the income of one of you):

    - paid off our student loans quite quickly
    - started saving 50% of my paycheck
    - invested more for retirement (though not enough still, I suspect — we need to meet with a financial person)
    - bought a few new items for our house
    - are considering splurging for a vacation to Maui instead of going to Florida for spring break. We’ll see

    Mostly, though, we are saving much faster than we ever have before. It feels good. And I don’t worry about every little cent I spend, so I have had some lifestyle inflation. Trying to rein that back a little bit, but it is fun to be able to buy classes for the niece and nephew or nice presents for family.

  6. What Now? Says:

    So glad that DH is loving his new job!

  7. Thisbe Says:

    Our income is about to not-quite-double. However we already have enough money for pretty much all of our needs, so the biggest difference is that I will not be bored all the time because I will be working. I did preemptively (because I am about to lose the ability to take a long vacation for a while) go on a super fun trip to visit a friend in a faraway country, which I would not have done without the prospect of near-future paychecks. Other than that we will be traveling to one another (because two-body problem) and saving the rest.

    In re: piano vs keyboard – we had this discussion a few years ago and ended up getting an electric piano. I don’t know what kind of keyboard you have or what your piano needs are, but we have been very happy with the electric piano. It has a full-sized set of keys and the option of sounding either like a very nice Yamaha or a Steinway. It takes up minimal space, is easy to move for nomadic me, and we do not have to worry about ambient temperature and humidity or getting it tuned. Growing up, we had an upright piano for our lessons; if the electric piano I have now had been available then, I think it would have been a much better solution in that the sound quality you can get for the same money is much better. None of us were ever serious pianists – we moved on to other instruments and kept the piano around for family fun time – and any kid who is or becomes serious is going to need a real piano eventually, but unless & until, I vote electric piano.

    • nicoleandmaggie Says:

      Wooo! (except for the two body problem part booo) What savings vehicles will you be using?

      We have a relatively cheap keyboard that doesn’t do the louder when you press down thing (the in-laws got it based on what the BIL’s family had picked out… I almost sent it back to get one that has that pressing down makes it forte thing, but in the end I didn’t).

      • Thisbe Says:

        Savings vehicles: Roth IRA, partner’s 403(b), also I believe we’ve got an HSA set up. Sadly I can’t participate in my employer’s 401(k) for the first year. Other than that we will just stick it in the Vanguard pile with the rest of it, because I don’t think there’s any other sexy option. I may do a little advance payment of student loans, though probably not much if at all because in the coldly rational world it doesn’t make much sense. I am open to suggestions, however, as long as they don’t involve me spending very much time fussing with savings vehicles, because odds are I wouldn’t follow through. :)

        I think our digital piano is the lowest-end one Yamaha makes with dynamic range. There are optional foot pedals, too. When our friends who are real musicians play it, it sounds quite nice. (When I play it, it sounds like a dilettante having a good time, which is fine by me.)

        Looking at the bright side of our two-body issue, we will get to have pieds-a-terre in one large northeastern city and one small western city and thus will have the Best of Both Worlds available. Orchestras! Ethiopian food! Wilderness hiking! Rivers and lakes!

      • chacha1 Says:

        Re: piano … look into the new high-quality digital pianos with weighted keyboards. Same experience of playing an “analog” instrument but with many, many added benefits. Not least, if someone in the family really gets into it but everybody else doesn’t, the player can use headphones. :-)

        I had a Yamaha Clavinova and it was wonderful. Gave it to a friend with a little girl who wanted to start playing, about a year after I decided I was through.

      • Leah Says:

        Another vote for the digital piano. I grew up playing both. I enjoy both, but the headphones part of the digital piano is such an amazing benefit. My brother was in several bands, and the pianist for each used our digital piano (he was the drummer, so practice was at our house). In good hands, it sounds awesome.

  8. Cloud Says:

    I’m glad DH is loving the job. That is great!

    On the biting- our first was a biter. Doing some role-playing with stuffed animals (one steals the others toys, the other does something other than bite in response, etc). The book “Teeth Are Not for Biting” also helped. Good luck- it is very frustrating.

    • nicoleandmaggie Says:

      Yeah, ze has been practicing yelling, “no!” very loudly and apparently the kids loved our donated copy of “Teeth are not for biting”. But it’s really a problem of hir needing someone to step in before the bite happens because anger management is going to take longer than prevention. Also ze has gone from 4 teeth to 10 teeth with two more coming in and that makes zir irritable. We’ll have a post on this later.

      • Laura Vanderkam (@lvanderkam) Says:

        Ugh, biting. Our little one is a biter too. Fortunately, her main targets are her brothers. I’m not saying she wouldn’t bite other kids, but she generally has an adult assigned to her in situations where she’s around them (e.g. Gymboree). I just assume she’ll grow out of it by the time she starts preschool next year. With the brothers, it’s not that she doesn’t have the words to describe what she’s upset about or wants. She just wants to hurt them. I look forward to the biting post!

      • nicoleandmaggie Says:

        Fortunately DC2 doesn’t seem mean! Ze just is very protective of hirself and hir stuff. Before the biting ze’d “tell” on DC1 a lot, pointing at hir and babbling angrily, but ze seems to have stopped doing that. :( We’re looking forward to hir being old enough to start the new Montessori.

  9. Laura Vanderkam (@lvanderkam) Says:

    Also, that’s wonderful that he loves his new job. Sneaking away on weekends to work on problems is an excellent sign.

  10. Linda Says:

    If my income suddenly doubled I’d see that as an opportunity to pack up and move to California. Unless the income was dependent on staying in my current location, of course. (Then I may just decide to take a pass and move to California anyway. The winter months are here and I am longing to get away from them!)

    Unfortunately, my income has gone down over the last year. This is mainly because my partner lost his job and is having a heck of a time finding a new one. He’s paying me very little for rent and food now, so I’m picking up the slack. I can afford it, but it means reduced savings. I’m increasing income a bit by finally selling some of the valuable yet unwanted things my ex left years ago, and renting out the spare bedroom on Airbnb, but none of it completely makes up for the lack of rent and food money.

  11. Chelsea Says:

    When DH gets a *real* job this fall we are expecting to see our income at least double (YAY!). Plans include saving most of it to replenish our savings after moving and being poor this last year and new savings for putting a down-payment on a house and buying a second car. I’d also like to up our charitable giving and *maybe* pay for some regular non-work-hours childcare so I could do some outside professional development.

  12. nicoleandmaggie Says:

    #2 suggests that first, top, highest priority is fixing the a/c. Because a/c is LIFE and in the summer you’ll suddenly need it and won’t want to turn it off in order to repair it. Then hire out the bathroom work. Then, pie!

    • nicoleandmaggie Says:

      Yeah, fixing the a/c leak is like #2 on the list after whatever the rusty roof vents thing is (apparently that’s very important for some reason). DH already made pie.

      me: Hey! You made pie!
      And I didn’t have any!
      what happened there?
      DH: I don’t know. I did my part
      it’s still here. I just ate some
      yeah, it’s good
      a good solid apple pie
      me: save me some!

  13. Leigh Says:

    Yay! I’m glad your DH likes his new job :) It must be really awesome watching him be happy with it too :)

    If my income suddenly doubled, I would pay off the mortgage faster and then invest in taxable accounts (since I’m already maxing out all available tax-advantaged room). I’m already spending plenty for my situation/happiness, so more income would go to savings. I could pay the mortgage off in early 2015!

    • nicoleandmaggie Says:

      I suspect you make about what DH and I make combined. Have you thought about doing any charitable giving?

      • Leigh Says:

        I’ve thought about that. I do do some, but a very small amount compared to my income. My goal had been to slowly donate enough that I could itemize my deductions even after I no longer have a mortgage. I should really do some research and make a plan for charitable giving for the year just like I do for spending/saving.

      • Cloud Says:

        We kept finding ourselves at the end of the year having not made nearly the amount of charitable contributions we intended, so we came up with a plan. We pick a set number of charities and plan to give them a set amount, and then schedule those payments in like bills. I remain a soft touch for education-related funding campaigns and the like, but I keep the amount donated for those low compared to our “real” giving, and do it out of my personal account. When we decided to have three accounts (his, mine, ours), I thought I’d use my personal account for buying shoes I don’t really need and other frivolous things, so that my super practical husband wouldn’t roll his eyes at those expenses. Turns out, I buy my frivolous things from our joint account and use my personal account almost exclusively for donating to charity and online funding campaigns that would make him roll his eyes. The only other things I buy from that account are gifts for him!

      • nicoleandmaggie Says:

        Cloud, that’s adorable.

      • Liz Says:

        Thanks for the idea about the charitable giving. I’ve been having the same issue, not treating it like a bill so it never happens.

      • Leigh Says:

        Thanks for the push on this! I’d set a reminder to make some donations to a couple charities to round out the year but I never got around to it and I realized I just wasn’t that interested in those particular charities. I sat down tonight and decided on the $ amount I wanted to contribute overall this year and then came up with additional charities to donate to. I’m also working on a plan for next year.

        I haven’t even been donating 1% of my base pay, which is sad. So I’m going to try to work on that. The one thing I have done though is increase my minimum I donate when someone asks for money generally to $100.

        One note: it wasn’t that I specifically want to donate to get the tax deduction – it was just that the amount needed to donate to be able to itemize was incremental enough from where I am now that it seemed a good marker to aim for.

  14. rented life Says:

    Yay for DH having work he enjoys! That’s huge.
    We’re pay down debt, save for future/retirement, and then once those things were in place I think we’d be considering a number of options: husband opening his own business, building a house (providing I can’t find what I want from looking at already built houses), travel. I’d be able to afford Montessori schooling without second thought. If we could invest or set ourselves up in such a way that one or both of us could cut back on hours to pursue other things, that’d be good. If we had double the income, that could become a reality because we’d pay off debt, and set up some other funds to deal with emergencies, etc and then we could go back to living on less in a way that can’t happen now. I want time/experiences more than anything else.

  15. First Gen American Says:

    Most of my extra income is going to home repairs.

    So, after I paid off my house (but before buying our 2 family), I had a lot of extra monthly income but it wasn’t apparent right away what to do with it, so I just sat on it for a while. Well, now I am back in debt with a bigger house but it also will allow me to take care of my mom better once everyone is under one roof. It wasn’t an obvious or frugal choice to spend the money in that way until my mom was hospitalized twice in 2 months. Cash gives you options. I am glad I could make that decision.

    For charity stuff, I have my donations auto deduct from my paycheck. It’s pretty brainless doing it that way.

    If you are naturally frugal, the money will save itself. It’s not like I suddenly started to love to shop once I had extra income. Once the big repairs are behind us, I am going to go back to paying down my house again with the extra income.

    Ps. It’s awesome that DH loves his job.

  16. chacha1 Says:

    If my income doubled I would:
    1st, hire a monthly cleaning service b/c the housework is pissing me off; and
    2nd, save the rest of it; so that I could
    A) buy a new car (the Accord is great but hey, it’s 18 years old) and
    B) put a big fat down-payment on retirement property …
    in a couple of years vs 8-10.

  17. Rosa Says:

    When I get a job (which won’t come even close to doubling our income, but will raise it) first thing is to bump the charitable donations back up – they’re “my” spending so they got cut back when I quit my job. Then, a whole bunch of home repairs – we just finished the bathroom remodel, but there’s plenty more to do. Then I think I’d hire a lawn/shoveling service to make hubby happy.

  18. Jacq Says:

    That sort of speaks to why some people opt for ER. After a certain number of years in a given career, you’ve BTDT for every situation you run across and it loses the luster of “ooh, shiny new problem!” Best to start solving problems that you’re personally interested in at that point vs. ones that the corp needs solved. That might not occur in academia, but it definitely does in industry. And that’s if you’re into problem solving, which many people aren’t but I assume DH is and I am as well.
    Just look at all the calculators and tutorials that retired math prof Gummy dreamed up:
    http://www.financialwebring.org/gummy-stuff/
    What fun he must have had. Yet even he retired from doing that.

    • nicoleandmaggie Says:

      Maybe he’ll get there. He is on the cutting edge of a specific industry though, so it’s unlikely things will stay the same for too long.

      • Jacq Says:

        Well, if it doesn’t, it probably means that he wasn’t a scanner as much as a frustrated diver that hadn’t found the right environment. It seems that scanners (thinking in terms of multi-potentialites / polymaths here) usually have a broader range of interests that are difficult to fulfill in most jobs. Either way, he’ll have fun learning (and earning!) for awhile anyway and that’s about as good as it can get.

      • nicoleandmaggie Says:

        No, I’m fairly sure he is a scanner. And he did get bored with something recently, but it is set up so he was able to move onto something else. The guy who recruited him is totally a scanner too. But this field changes every year and the tools are constantly changing. The only constant is engineering (and apparently some physics and some math).

        There’s a lot of similarities to an academic position–he charges some his time to grants and he will be writing research grants. They also have industry, so it is a mix.

        Maybe it’s time for you to quit accounting and move into one of these ever changing new fields!

      • Jacq Says:

        Heheh, probably not. My work ambition is dying a slow and pleasant death which feels weird yet kind of peaceful and right. Guess that comes with age.
        Plus I need to finish up these damn novel(s) before I’m 50! (Writing them, not reading.)
        Sounds like DH has a good mix. These kinds of opportunities are a little harder to find but it’s great to know that they’re out there and it’s possible vs. settling and being not so happy (not that you don’t if you have to, but it’s nice not to have to). You just have to be able to hold out until the right thing comes along – money buys that time. :-)

      • nicoleandmaggie Says:

        Yeah, who knows how long the company is going to last.

  19. NoTrustFund Says:

    I’ve been a little out of pocket and am late to the party but- yay! This is so exciting.

    Or second had a bitting issue for awhile which then lead to our older one bitting, too which was not fun. Looking forward to that post.

    If our income doubled I would give more to charity and looking into buying a piano, although we do have an electronic one so based on other comments maybe I should just be happy with that!

  20. M Says:

    One of our financial choices involves living in a low-cost-of-living location and purchasing a low-mortgage house. To some extent we got really luck with the house purchase: it is huge, not new/fully renovated but also not a fixer-upper, and decent location in relation to school/work. There are some big problems with it, but not dealbreakers. We don’t have a huge combined income, but saving so much on the mortgage payment gives us a lot of expendable income left after the bills are paid, which kind of makes it seem like we are rich. The low cost of living definitely helps, but we have many friends who pay twice as much as we do for their homes which are the same size or smaller, just nicer. For a while, we have faced the decision of either (a) looking for a nicer home that might cost $100K more than our house now (for similar square footage), or (b) put $50K or so into our current home to get it closer to the place we would want it to be. (b) would be a great option if we knew that we could recover the money when selling the home, but it is unlikely that we will get the full amount back because the market is just not there. So (a) is probably the wise decision in terms of long-term financial recovery, but (b) is the best option for short-term financial freedom (yay!). We finally decided to commit to (b) and we are finally taking the plunge and putting (a potentially unrecoverable) $20K into a kitchen renovation (biggest problem with the house), and life is going to be awesome.

    What if our income doubled? Honestly, we live so frugally now, that I’d imagine things wouldn’t be all that different. Currently we bank probably half our income. We live frugally in many ways (especially because my husband is Mr. Frugal himself), so we don’t do things like buy fancy furniture and we don’t own expensive vehicles. He spends pretty much nothing on himself. I spend some money on myself, but nothing too crazy. We cut corners all over the place to save money, but also splurge when desired (mostly me). If we earned more money, I’d imagine we would just save more money. One of our eventual goals is to quit our jobs, and use our savings to start our own company and somehow change the world. We have a family, so it’s harder to take that sort of plunge without a good financial safety net. So if we were saving twice as fast, we might be able to make that happen sooner and more easily. A second option would be to seriously consider sending the kids to private school. I suppose we could also save for some insanely expensive college fund. I’d love to hire more help, but my husband is sort of against that – we’ll see if he ends up changing his mind at some point.

  21. sarah (SHU) Says:

    great post! as i wrote on laura’s blog, we have experienced a >2x shift that occurred abruptly about 3 months ago, with both my husband and i leaving behind residency salaries and becoming employed physicians. thus far, we have:
    a) moved to a much more expensive locale, which included buying a house (from NC –> miami beach) to be with family, pursue career opportunities here, and enjoy awesome weather :).
    b) changed our childcare situation from daycare to nanny plus part-time preschool. 3x the cost, but our nanny also cooks and cleans and our mornings/nights are soooooooooooooo much less rushed and stressful.
    c) done some necessary home repairs / minor renovations (like painting and floor refinishing)
    d) increased giving
    e) made extra loan payments

    i also enjoyed not having to scrimp/stress about buying holiday gifts this year. all in all, it has been a pretty happy transition.

    • sarah (SHU) Says:

      oh, and i haven’t really figured out our investment/savings plans yet – i think i need more time to know how the cash flow is going to go before committing. i’m giving us about a year of not worrying about it before we do.

  22. oil_garlic Says:

    If our income doubled and was steady, I would:
    1) buy a house in a neighborhood we like — I don’t mind renting but I always worry that the landlord ups the rent too much or wants to let her kids live in the rental or something like that.
    2) get cleaning help on a weekly basis! also more nanny help…
    3) not stress as much over “frivolous” purchases. I would still be frugal because I hate paying full-price for anything.
    4) give on a regular basis – maybe pick 2 charities and give something every month. by the way, I have never thought much about charitable giving until I kept reading about it on this blog and others who comment on this blog. So you’ve been a good influence!


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