April Mortgage update: And more musings on where to put extra money

Last month (March):
Balance: $61,508.58
Years left:4.75
P =$962.48, I =$251.92, Escrow = 613.58

This month (April):
Balance: $58,365.65
Years left:4.5
P =$970.93, I =$243.47, Escrow = 613.58

One month’s prepayment savings: $8.60

So we still haven’t really adjusted to DH going from 0 salary to 2 times his previous salary (this is a great problem to have).  I’m (mostly) not letting those $200/week grocery bills get to me (though to be honest, grocery spending was still down at the beginning of March– oddly, spending money on cheap stuff last month meant our pantry was stuffed by the time the challenge finished… and we’ve got prepared leftover soups in the freezer and plenty more lentils), but as was noted last month, I still feel a twinge of guilt for a $73 restaurant bill.

On top of that, now that DH has an industry job instead of a state government job, his ability to save for retirement in a tax-advantaged fashion has been dramatically reduced.  He no longer has access to a 457, and his 401(k) access is only worth contributing to up to the employer match (and the match is only 50% instead of 100%).  Still, with my 457 and 403(b) and mandatory retirement, we’re socking quite a bit away.  And the 529 plans are growing at a nice clip.

What these two factors together mean is that our savings account is starting to accumulate.  Before DH got his job, we had to have a big emergency fund for emergencies and we had to have enough money to cover the unpaid summer.  We didn’t spend that lump down before DH’s new revenue source started coming in.  In fact, there is now enough in savings to almost exactly cover the mortgage.  Now, if we paid off the mortgage, there would be no emergency money left or extra summer money and we wouldn’t be able to pay DC1′s tuition for next year, so obviously we’re not going to do that (plus, what would we post on the first of every month if the mortgage suddenly disappeared?).

But, that is a ridiculous amount of money to have just sitting in savings.  In fact, if DH lost his job tomorrow (which we hope he doesn’t!) we’d still have more money than we needed to get us through the unpaid summer + tuition + emergency fund.  (Though I’d have to go back to being mindful about expenditures again.)

I have opted not to put 11K away in the IRA this year.  We’d have to do a back-door Roth and even though it wouldn’t cost extra for us to convert it (we only have ~$33.00 in our traditional IRAs because something spit out a cash dividend into the traditional account instead of DRIPping into the new Roths during the conversion process and I didn’t bother to ask them to fix it).  It is true that we could draw contributions out of the Roth whenever, so maybe I should reconsider (in the remaining 15 days), I dunno.

DH is leaning towards putting more into the mortgage.  I’m not ready to commit yet to putting 10s of Ks in there, but I did up the pre-payment this month another 1K.  We’ll see what happens going forward.

I think we should make some of those expenditures we’ve been putting off.  We’re going to replace the a/c for $5K [update:  3.5K], and buy DC1 a digital piano for something under $1.5K.  But calling the a/c people takes time and effort, and shopping even more so.  DH wants to get a yard person to take care of mowing and mulching and weeding and bush trimming.  I agree.  Also I really want to take a sabbatical, something that will cut into my pay and increase our expenses because I’ll want to sabbatical in a different state.

Of course, DH might not keep this job forever.   It’s not an enormous company and it may someday go out of business or be bought and changed or they may give up on the telecommuting aspect.  That means we may not have his big income forever.  I haven’t been getting even cost of living raises every year that I’ve been here, and although the current administration seems committed to trying to get my salary up to that of our assistant professor hires, that doesn’t mean that future administrators will feel the same way.  We’ve tried living on just my income with the two kids and it kind of sucks.  It’ll suck more when my income is worth even less.  Tenure is nice, but it doesn’t guarantee even keeping the same real income over time, much less increasing income over time.

When thinking about what to do with extra income, it is important to think about the long term consequences of those decisions.  Some decisions are really obvious.  Putting money towards debt is going to make life much better off later even if something terrible happens.  Having a smaller required bill makes life easier down the road if inflation erodes your earning power or you suffer a job loss.

Similarly, putting money into investments, while more risky, also has the potential to ease things down the road.  Either you won’t have to save as much for your retirement, or you may even be able to turn those investments into an income stream, such as with dividends.

Spending money can go three ways.

There’s spending that decreases your expenses down the road. We’re hoping that replacing the a/c will decrease our needs for a/c repairs, and lower our monthly energy costs in the long term.

There’s spending that increases it.  Switching to smart phones (something we haven’t done yet) would potentially increase our spending over time, unless we found Ting or a similar company to be a good match for us.  It would be difficult to go back to flip phone plans after getting used to having a smart phone.  Our colleagues, faced with similar situations post-tenure, have opted to buy new houses and fancier cars– when these are financed, they can trap you into needing your higher income (and higher insurance and/or tax expenses even if not financed).  Some of our colleagues who have done this complain about not being able to afford to pay college tuition for their kids, or say that their kids have to go to state schools.  Different priorities.

There’s also one-time spending that isn’t going to make much of a difference (except, of course, through lost opportunity costs).  For example, one-time spending on things like vacations or the piano is unlikely to either increase or decrease our future expenses.  They just happen.  And you can always stop paying for housecleaning or yard-work if times get tough.

A goal then for the risk averse is to turn the kinds of expenditures that will be liabilities if your income drops into the kinds where your future expenditures aren’t increased.  Paying in-full helps reduce future monthly drag, but it doesn’t work completely because there’s usually still higher operating costs –you might have to buy more expensive insurance or your property taxes might increase.  That’s where that first kind of money placement comes in–putting as much as feasible into debt pay-down and investments can make those lifestyle inflation increases less risky because it offers a cushion in case of a job loss or other emergency.

So you can’t do too much of the liability increasing spending without a bunch of the liability decreasing kind to off-set.  If you’re going to do some of column B, you really ought to do some of column A too.  And if there’s money leftover, maybe some column C.

How do you decide if you can put money into something that’s going to cost you more later?  How do you allocate between investment expenditures, extra-cost expenditures, and ephemeral expenditures?  Do you think about the future costs of a purchase?

Ask the grumpies: Basic mortgage advice

Green hills asks:

I am wondering if you can give your opinion on the best loan types for first time home buyers. Is an adjustable rate better over time than a fixed rate? And what is the difference between the loan interest rate and the APR? We’ve done a bunch of reading and really, have just confused ourselves more.

There are very few instances in which you would want an adjustable rate rather than a fixed rate.  (Leightpf is one of the rare exceptions.)  The very fact you are asking this question means that the best loan for you is a 20% down fixed interest rate, either for 15 years or for 30 years.  Whether you choose 15 vs. 30 will depend on the difference in the interest rates and what you would do if one of you had a job-loss or other emergency.  (30 year loans are safer– you can pre-pay them as if they were 15 year loans and then when an emergency hits, lower your payments, but a 15 year loan can save a lot of money.  You have to look at the numbers to see which is best for your situation.)

In general for loans, the APR includes compounding.  Different loans compound at different times.  APY doesn’t take into account compounding.  For mortgages, APR also includes a bunch of junk that mortgages try to confuse you with like “points” and “rolling fees into the principal” (a quick google search says it doesn’t include the paperwork fees, so you will compare those separately).  The APY is jiggered so that they can make it seem like they’re offering you a low rate but then they hit you with a bunch of upfront fees. You should be comparing APR and ignoring APY when you’re trying to decide between mortgage lenders.  Get the APR in writing.

So:  quick bottom line:  Use APR.  Save at least 20% for a downpayment.  Get a fixed rate mortgage for either 15 or 30 years.  Don’t buy more house than you can afford!

Ok, now for unusual situations that do not apply to you.  If you have a lot of cash and are in no danger of ever defaulting on your mortgage or being unable to make your monthly payments, then you may be interested in an ARM if 1.  The difference in interest rates between the ARM and the fixed rate is high and 2.  There’s no way that you’re going to end up with the rate being reset at the end of the ARM into something that you can’t pay back.  So, if you’re flush enough that you can definitely pay back the mortgage before the rate resets, or the limitations on how high the rate resets that make it so it can’t reset to something you can’t afford, then you may want to consider an ARM.  The argument that people usually make when choosing an ARM is that they’re going to resell the house before the end of the term anyway so it doesn’t matter what the rate resets to– but you have to be sure that you won’t need to short-sell that house or keep it on the market longer than expected (another reason to have cash on  hand to make up the difference if the market drops) and that your plans aren’t going to change.  So be careful.

March Mortgage Update: And a challenge update

Last month (February):
Balance: $63,643.06
Years left:4.916666667
P =$954.07, I = $260.34, Escrow = 613.58

This month (March):
Balance: $61,508.58
Years left:4.75
P =$962.48, I =$251.92, Escrow = 613.58

One month’s prepayment savings: $4.64

So how did we do with the challenge month?  As predicted, it’s more fun to do a saving money challenge when you don’t have to than when you sorta do have to.  Especially when you can “cheat” by going out for lunch a few times (or dinner when there’s a speaker or job candidate!)

The first week our grocery bill was crazy low (for us), something like $70.  But then the second week it was more like $200 (which is average/high for us since DC2 started us with hir no wheat thing).  Third week, $90.65.  Fourth week we went into the city and that doesn’t count.  :)  So eating nothing but cheap meals does seem to have an impact on our bottom line.

Other than the arepas and the fresh spring rolls, most of what we made was stuff we ate a lot in graduate school– and most of that was stuff my parents taught me how to make as a kid.  If we had to permanently lower our food budget, I think I’d get bored of mostly the same American/Mexican fare.  For a month, it’s comfy-cozy, but after that I’d need to do a better job with our quick and easy ethnic cookbooks.  There’s a lot of cheap quick healthy ethnic food out there, it just needs to get worked into our repertoire.

I was also reminded how important it is to know what’s in season and to have flexibility at the grocery store when you’re eating on a budget if you want fresh veggies.  I didn’t exercise this option because we’re pressed for time more than we’re pressed for money, but I would be much more careful about the kinds of soups and stirfries and so on that I do make.

And, of course, it’s seriously difficult to eat cheap food when you’re trying to balance not eating refined carbs (because of the PCOS) with trying to avoid gluten (because of the diaper rash).  Mostly we’ve been going the refined carbs route (as you’ve seen), but as DC2 weans (and my metabolism returns to sucking), we’ll probably go the other extreme.  Fruits and veggies, of course, are always good, and it’s nice to be price insensitive to them.

[Update:  On Saturday we hit a sushi place and dropped $73 for comfortably full with no leftovers.  I am reminded that even when we eat out on the cheap, ~$30, the price of one meal is generally about the price of 4 meals from scratch from the grocery store.  I'm still not used to having enough money to drop $73 on a meal out with the kids, but we do have enough and it was really good!  I don't think we'll be making sushi-from-the-good-sushi-place a weekly thing though.]

Most of all, I’m reminded that it’s nice to not spend time thinking about the price of things, and focusing on what looks fun, interesting, and quick and easy to make.  Being semi-mindful cuts our grocery budget a third to a half, but we’re willing to spend more to just not have to think about the monetary aspects of our eating, and to occasionally splurge without guilt.  (Plus, free reign at the grocery store may cut down on our restaurant expenditures!)

How do you balance money and time with food?

February Mortgage Update: And February is Challenge Month!

This month (January):
Balance: $65,769.13
Years left: 5.16666667
P =$945.68, I = $268.72, Escrow = 613.58

This month (February):
Balance: $63,643.06
Years left:4.916666667
P =$954.07, I = $260.34, Escrow = 613.58

One month’s prepayment savings: $4.64

Forget January New Years Resolutions.  February is the best month for challenges because it is the shortest month!

#1 is doing a Cheap Eats Challenge.  She was going to do it because it would have given her more wiggle room in her budget, but now that DH is re-employed, she’s just going to do it for fun.  Because she can.  And because she’d already done half the planning.  So each Monday this month we’re going to have food-related money posts.

For simplicity’s sake, any menu planning is going to be for dinners only.  Breakfasts you can assume are rolled oats, heated in the microwave with raisins or whatever other fruit bits we have available.  Snacks will be pieces of fruit (not cheap, but also not too expensive, particularly the banana portion).  Lunches will either be dinner the night before or you can pretend it will be a sandwich (which it would have been if I weren’t off the wheat thing… perhaps something tortilla-based instead).

Exceptions to the cheap eats rule:  If we go into the city, we can eat out.  If my colleagues are doing a working lunch out, I can eat out.  If there’s catering for an event, I’m totally going to eat that.  This is an intellectual challenge, not a necessary or moral challenge.  No deprivation, just thinking about which meals we eat are healthy but less expensive than others and what makes meals healthy and cheap.  Playing at frugality.

You will also see some wheat-based meals that I will only be partaking in slightly and DC2 won’t be eating at all.  For those, you can assume we’re having leftovers from a previous meal or something corn-based or quinoa-based instead.  If we do a direct substitution, I’ll make a note of it and the additional costs to make it less wheaty.  If I don’t, you can assume we ate something else.  (We won’t be completely gluten-free because DC2 has a mild wheat allergy and can totally handle the wheat in say, Worcestershire sauce, whereas someone with celiac wouldn’t necessarily be able to.)

Split pea soup.  One package of peas ~$1.50, give or take.  You can add carrots, onions, or leftover veggies, and ham or poultry bits, and spices, which will increase the price.  But one package of peas still makes a meal for an entire family of four.  Whenever I’m feeling broke, I buy a bag of split peas and feel virtuous after making it.  (It’s also a comfort food for me, as are black bean soup and mac and cheese.)

Macaroni and cheese with tuna and peas.  Mac and cheese comes in various prices.  If you shop sales you can get a box for under 50 cents.  The gluten-free variety comes in somewhere around $2.00 for a package.  Cans of tuna vary, around $2.00.  A bag of frozen peas, $1.50, double that if organic.  You will use only a portion of the peas, and one or two boxes of macaroni, depending on your family composition.  Cheapest:  50 + 200 + 75 = $3.25.  Fanciest:  $4 + 2 + 1.50 = $7.50.  Organic and gluten free can get expensive!  (Fortunately we’re still in the one box family size.)

Meat Chili.  We’ll have veggie chili later.  Ground beef prices vary, but it’s pretty cheap where we live.  Let’s say $2 for regular and $6 for organic.  I’ll take a pound.  Beans also vary quite a bit in price.  You can get a bag of dried beans for under $1, or a couple of cans of cooked beans for under $2.  You’ll also need a can or two of tomatoes, and these are a little over a dollar each.  And then there’s spices.  Spices can get expensive, but you usually buy a package and only use a small portion.  It’s hard to know how to price it.  We use Penzy’s, which looks like it is going for $4/oz for its smallest size.  But we don’t use an oz when making chili and we buy bigger bags.  Let’s round up and say we use $1 of chili powder when making chili.  Onions are optional, let’s put a big one in for ~$1.  So cheap version:  $2 + 1 + 1 + 1 =$5.  Expensive:  $6 + 2 + 2 + 1 +1 = $12.

Nachos.  These use leftover chili from the night before.  With store-brand shredded cheese from bulk shredded cheese over chips.  Cheap chips are $1/bag.  Expensive ones are $3.49.  Cheese will depend a lot on how much you use and what brand you get and how much you buy.  We get the big bags and stick it in the freezer and only use what we need.  But let’s say you use a dollar of cheese.  If you already have the chili leftover, then we’re talking a $2 meal, give or take.

Stirfry sweet and sour chicken with veggies and rice.  This will be more expensive and the prices will vary tremendously.  A simple sweet and sour sauce is just sugar and vinegar.  Let’s go with $3 for chicken, $1 for the sauce, $2 for veggies (frozen mixed is about that), and $1 for rice (more if using fancy brown rice).  ~$7.

Omelete.  Eggs and frozen veggies.  We’re talking $2, depending on what you put in.

What are your favorite cheap meals?  Anything you recommend that we try?

January Mortgage Update: And the amazingness of making more money than you ever have before

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

This month (January):
Balance: $65,769.13
Years left: 5.16666667
P =$945.68, I = $268.72, Escrow = 613.58

One month’s prepayment savings: $4.64

Man, look how low that mortgage is getting.  Still 5 years out if we just pay the required amount, but if we keep up the prepayments, it’ll be half that time or less.  But we’ll see what happens.  (Especially if we keep spaying/neutering/testing/vaccinating cats at $300/pop.)

Anyhow… it is SO nice having more money than you need.  The lack of needing to think about money is just amazing.  A huge stress is gone now that DH is working again and the mental load is also gone.

There’s still a lot of stuff that we don’t do, but just knowing that we could do it is relaxing.  One of these days we’ll hire someone to mow the lawn.  We could totally hire someone to clean if we wanted to.  If things don’t work out in one way or another, we can throw money at the problems again.  Even if those problems never actually happen, the possibility of them happening is stressful when money is tight.  You can just forget about a potential problem until it happens when you have enough money to solve it.

This is not to say that you should spend your entire paycheck each month.  Our baseline expenses are still set from my paycheck alone.  We still have pretty frugal habits, even at the grocery store.  DH still has his allowance for his fun stuff.  We’re still limited by time.  We’re automatically saving as much, if not more, than ever.

And at some point with additional spending, it isn’t the additional lattes that get you (DH is thinking of re-upping his TONX subscription rather than continuing to roast his own from Sweet Maria’s).  It’s the big stuff.  The housing.  Replacing fancy cars.  My colleagues have traded up their “starter house” for enormous mansions or estates, sometimes building it themselves.  Then they complain about money being tight and have to take on more consulting.  It takes more lattes than a person can drink to make up for an additional 200K or 300K in debt on a house.

We have no intention of buying a fancier bigger house, and hopefully our cars still have a lot of wear in them.  And when we do replace them it’ll be with something at the level of a Civic Hybrid at the fanciest.  No BMW in this family.  So another $300 to neuter, vaccinate, and deworm yet another kitty isn’t worth thinking about.  We can spay/neuter several kitties a month and still be ok now that DH is working again, even if it means slower mortgage payoff or less money to a different charity.

Don’t worry, by next month we’ll probably be used to earning this amount, even though we never did get used to living on only half this amount, and we’ll stop talking about it.  It’s a lot easier to get used to having too much money than it is to get used to having just enough.  And, of course, one never gets used to having not enough.

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?

November Mortgage Update

Last month (October):
Balance: $73,085.37
Years left: 5.75
P =$920.78, I = $293.62, Escrow = 613.58

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

One month’s prepayment savings: $0.68

I should be talking a bit about our housing prices (thus property taxes) going up, so pre-payment will be going down (though that hasn’t been reflected in the escrow yet), but here’s an update on DH instead and some wonderings…

DH has been unemployed for a few months now.  He’s been diligently networking and taking care of things and has thankfully been there during the great daycare scramble of 2013.

He had one “client” a month or two back for a small thing who never did get around to signing his contract and thus got some work from DH for nothing (we know we know) and then the deadline passed without having DH complete the work because the project manager put everything off to the last minute and then did it all hirself because it was too late for anyone else to do anything.  So that was a bust, but it was only 1-3 days of work that he missed out on doing and only 3 hours that he wasted without pay.  UPDATE:  They just emailed– the project manager’s attempt was a failure.  Sounds like it is too late to fix.  But they want him to invoice for the time he worked on the project.

Right now he’s got 3 promising leads, all of them from people he has worked with in the past.  One of them is talking about offering him a full-time job.  He’d actually done an informational interview with them back this summer, but they wanted someone local instead of someone telecommuting.  They haven’t been able to fill the position so they gave him a call.  He’s got a second round interview next week that includes a programming test.  They seem to think this will happen.

One of the questions was whether DH wanted to work as a contractor or full-time.  DH said it would depend on the packages offered.  (He didn’t say DUH of course there’s a $ value that would push him towards one or the other; most people don’t think like economists.)

He knows his consulting rate/range.  But he doesn’t know what sort of salary to ask for as his bottom-line.  I don’t know either.

We looked up the salaries on Glassdoor for this company and they’re kind of on the low end, between 75K and 100K, mostly in the 85K range, but there are only 8 salaries listed so who knows how representative they are.   It also doesn’t say much about what the benefits are, though the health insurance package will be a lot nicer than the one I get because the company’s in a blue state.

The company would allow him to work mostly from home, but it would also require him to fly in once a month or once every two months.   The work would be fulfilling and meaningful and he’d be able to work directly with someone he works with very well.  He also fits exactly what they want and can do things that the company needs but didn’t advertise for in this position.  But full-time work is less flexible than contract work and it’s harder to change the terms of a contract when you’re not constantly rewriting it.

So assuming he passes their second-round interview and they give him an offer, he’d like to have an idea of what kind of salary should be his walk-away point for a full-time position.  We don’t need his income (or rather, we don’t need more than 20K), and I have to say that flexibility is really nice to have.  85K seems kind of low to me (though truthfully that’s more than his previous 9-month salary), but is it low enough to walk away from?  I dunno.

Oh, as for the other leads, one of them is sort of iffy– it’s a remote half-time SBIR kind of thing that he’s about 2/3 qualified for (he’d be picking up a new skill that’s not his core competency).   The other is a standard SF/Bay area start-up with funding, similarly offering either full-time or consulting, and DH knows more about some of the technology behind the project than his friend who founded the company, though it isn’t exactly a perfect match for his skill-set.  It’s a new company so no info on glassdoor, just that they offer “a competitive start-up package for the bay area,” whatever that means.  We don’t know as much about this option yet, and he’s set to talk about it more in a week or two.

So anyway, that’s our update.  I’m hopeful that we’ll get a little more income so I can stop worrying about things like losing 4.5K on a daycare prepayment and so on.  But we’ll be ok.  It’s hard to complain when you’re in a situation that 85K sounds like a small salary.

October Mortgage Update: Perspectives on $500

This month (September):
Balance: $74,178.15
Years left: 5.9167
P =$916.47, I = $297.93, Escrow = 613.58

This month (October):
Balance: $73,085.37
Years left: 5.75
P =$920.78, I = $293.62, Escrow = 613.58

One month’s prepayment savings: $0.68

$500 this month on new carseats.  DC1′s old ones expired just as DC2 outgrew hir infant seat.

$500 for plane tickets to include the family on a conference trip this month, though we spent that in August (and it was more like $600).

$500 to each kid’s 529.  $500 tuition at the community college after financial aid (for the non-new-mom daughter of the relative), but the relative paid for it out of the 529 we set up earlier, so we didn’t write a check this time around.   He can do that because of the three years in the past that we put in $500 for each of the girls.  We used to pay an additional $500 into the mortgage each month, but no more.

This time last year, $500/month here or there didn’t seem like a big deal.  Now it does.  Last year, if it was under $500 we could do it without thinking about it.  Last year we had a few extra $500s each month from DH’s take-home pay.  This year we have to think about things like eating out.  Maybe.

I still don’t have a handle on our spending.  We spend about what I take home.  I’d rather spend less than what I currently take home or make more money each month.  But the things we spend money on are either important or very enjoyable, and thus difficult to cut out.  Eventually we’ll figure things out.

Does $500 seem like a lot or a little to you these days?  What level of spending is small enough to not have to worry about, or is there such a level?

September Mortgage Update and I hate budgeting

Last month (August):
Balance: $75,266.62
Years left: 6
P =$912.18, I = $302.22, Escrow = 613.58

This month (September):
Balance: $74,178.15
Years left: 5.9167
P =$916.47, I = $297.93, Escrow = 613.58

One month’s prepayment savings: $0.68

Many of the pf bloggers we read talk about their budgets on a regular basis.

I hate budgeting.  I hate sitting down before the month starts and trying to figure out how much we’re going to spend at the grocery store or wherever.  I never remember everything and that always irritates me when I have to pay the bill of the unexpected thing that costs me that month.  These days, those emergency or forgotten fixed expenses tend to even out and are about the same amount every month, or at least are about the same amount averaged over 3 months.  I don’t need to put a name to each dollar so long as the dollar amounts are predictable.

The worst thing about budgeting is that it makes me think about spending money and that makes me want to spend money.  Suddenly I feel like I must make purchases I’d been putting off for sometime in the future, or wouldn’t it be nice someday.  Which means either I spend money that I wouldn’t have spent otherwise, or I feel trapped and poor because I can’t spend that money.  Even if it’s for things I wouldn’t have thought about normally.

Technically we’ve never really budgeted. At first we didn’t spend anything that wasn’t fixed or necessary, so no need to budget. I kept mental track of how much every purchase and kept a sharp eye on how much was left in savings to make sure we didn’t go over.  We never spent more than we had, so there was sort of a budget, but only in a very loose sense.

Then when we had more money, any time I wanted to spend on something optional I’d look at how much we had in savings compared to how much we’d need before we got paid next (plus a month cushion) and if we had more than we needed, I’d feel fine about the spending. If we didn’t have enough we wouldn’t buy anything.

Then we had so much extra money (60%+ take-home pay saving rate, dropping to 40% after baby #2) that I could just buy whatever and not worry about it.

Now, with DH no longer bringing in a large paycheck, we’re back to our spending being similar to our earning so I’m still trying to figure out how to deal with budgets going forward. We’re in flux and, as you may have noticed, I keep changing my mind about what to do.

I’ve been playing with Mint, but it is unsatisfactory.  I don’t like the way many of our expenditures don’t show up until days later, so even if we end the month “under-budget” it often turns out a few days later we’re over-budget in one category or another, and we can’t go back after the month is over to rejigger categories.

Most likely we’ll move to a look-back approach, “did we overspend last month”, or we’ll use a “is there enough in savings” approach. I dunno. Last time our earnings were this close to our spending, I’d keep stuff in savings and every time our savings got over a certain amount I’d put that money into the stock market, either into IRAs or taxable.  That way I never felt rich enough to go on a spending spree.  And I could do that again if I un-automated my extra 403(b) and the kids’ 529s, because that would allow an extra monthly income cushion in case of accidental overspending.  But it’s harder to re-automate those accounts than it was to buy an IRA.

Right now I’ve calculated how much money we need in savings by next May (because of the unpaid summer and next year’s tuition) and I’ve set-up stop-losses.  Once we drop below a certain number, I undo the 403b, then the 529.  Then below another number I undrip taxable stocks for their income flow.  It isn’t straight budgeting, but I hope it will do.

I don’t have the mental power to guess what we’re going to need on the first of the month or to research how much it will cost, especially with DH doing most of the grocery shopping.

[Breaking news update:  I got a COL raise this year !  Woooo!]

Do you budget?  How do you keep your spending below your income?  How do you decide what you can afford?

August monthly update: Month two of DH’s self-employment

Last month (July):
Balance: $76,350.80
Years left: 6.08333
P =$905.93, I = $308.47, Escrow = 613.58

This month (August):
Balance: $75,266.62
Years left: 6
P =$912.18, I = $302.22, Escrow = 613.58

One month’s prepayment savings: $0.68

Ah, what a dinky mortgage pre-payment savings.  What a difference $500 makes.  But we need that $500 for peace of mind and stuff.  *Sigh.*

What up in the land of self-employment?  So far just paperwork.

Week 1:  DH bought a website address.  He worked up an operating agreement.  I discovered that paying for his health insurance is $1,700/year on top of what we were paying before with him on his own insurance and the kids on mine.  We’ll be paying $4,200/year.  Realized he no longer has a long term disability option.  Took us off dental since our dentist doesn’t take it.  DH worked more on his game and his website.  DC2 got sick again (stomach bug).  Then DH and I got sick again.  Then DC1 got sick.  It’s amazing we survived the week.

Week 2:  DH did lots of programming.  Cleaned the bathrooms.  Fixed up more webpage stuff.  Got his LLC paperwork.  Went to another networking happy hour– he really enjoys those.   Sent some emails.  Met with DC1′s school’s finance committee.

Week 3:  Finalized the webpage, got an email address, made business cards.  DC2 got sick again (fever).  Scrambled to see if we could find a sitter so DH and I could both network at the same time in week 4.

Week 4:  We were out of town and DH took care of the kids.  He networked a little, including an informal interview for a job whose description hasn’t been written yet.

I’m curious to what next month is going to hold.

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