December Mortgage Update and Trouble in Monetary Paradise

Note:  this post was written before the election results came out.  Now there’s a lot more uncertainty than just DH’s job.

This month (November)
Years left: 0.333333333
P =$1,194.19, I =$20.22, Escrow =$812.79

This month (December)
Years left: 0.25
P =$1,198.91, I =$15.49, Escrow =$812.79

Whenever I start getting used to not worrying about money at all (seriously, I just paid $1.95 processing fee for DC1 to have hot school lunches for a month without trying to optimize not having to pay the processing fee again vs worrying about DC1 deciding zie wants to go back to cold lunch… not to mention not even thinking about the costs of paying for hot lunch!), something happens to add a bit of uncertainty to the mix.

For example, we get an opportunity for unpaid leave or DH decides he hates his job or etc.   So I stop not worrying and start paying attention again.

This time DH’s company has asked him (and everybody else) to take a 10% paycut for the next two months.  The boss and lead programmer are taking larger cuts.

The reason is a cash-flow problem with an underlying cause coming from employee turnover several years ago resulting in too many little starter grants and not enough longer-term big grants right now.  Once this cash-flow problem is resolved, they’ll be ok until April.  Which isn’t exactly a long time either.

We don’t need DH’s salary on top of mine for our regular expenses, but we do in order to not care about money at all.  To eat out whenever, to max out retirement, to fly to see DH’s family over Christmas instead of spending two days driving (something we’ve already committed to), to just donate money where it’s needed, and so on.

So, once again, we’re back to being glad we’ve saved a lot and not increased our expenses to match our income.  I’m not sure how this warning shock will change our spending going forward.  It seems like the 30K emergency fund in cash is still what we will want to have, but I probably ought to start aiming for that now instead of in March when the mortgage is finished.  [Update:  see previous post about how we’re just going to stockpile cash until the US government is sane again.  No 30K limit.]

Have you faced income uncertainty?  How do you deal with it?

20 Responses to “December Mortgage Update and Trouble in Monetary Paradise”

  1. xykademiqz Says:

    It’s great you are almost done with the mortgage! A few more years for us… But I have obliterated much debt since the last kid is no longer in pricey daycare. When DC2 is out (is ze out yet?) and the house paid off, you will feel so rich!

    • nicoleandmaggie Says:

      Yay obliterating debt!

      DC2 is in hir last year of preschool. We may skip kindergarten if zie doesn’t get into bilingual K, which means we may have to do private school.

      Still, daycare is only $750/mo. Not a huge part of our budget, especially since $555 (for 9 mo) of that doesn’t come out of take-home pay (it goes to a DDA) and gets requested back in lump sums from time to time.

      Similarly, while not nothing, the non-escrow part of our mortgage isn’t that much more than the escrow part that we will still have to pay (and that keeps increasing).

      So those two things together are about 2K/mo which isn’t nothing (definitely isn’t nothing on one of our incomes instead of both), but even with those expenses gone we will still have to either cut back on retirement savings or spending or start living off some of our excess non-retirement savings. We spend a lot of money!

      We already feel rich, but if DH’s company goes out of business and we’re back to my salary alone, we will be back to having to make decisions and paying attention to money, even without the mortgage and daycare.

      • oldmdgirl Says:

        $750 per month for daycare is so fantabulously cheap! I am jealous. Some day….

      • nicoleandmaggie Says:

        Yeah, it’s a fraction of what we were paying last year in Paradise.

        It boggles my mind how much we’re still spending even though we’ve moved back where living costs are cheap. We’re no longer paying 4K/mo in rent, but we’ve definitely been doing more discretionary spending (including to charity). And if I’d known about DH’s job situation we would probably be spending two days driving to his parents’ and back instead of spending >$1K on plane tickets. Money makes things so much easier.

      • xykademiqz Says:

        Yeah, $750/mo for daycare is great! The least we ever paid here, which would be for ages 3–5, was $1300/mo. Infant care is is $2500/mo. We have overall paid about $100k per kid for daycare (so $300k total for all three), most of it after tax.

      • nicoleandmaggie Says:

        This is one of the most expensive places in town too. Last year we were paying a lot more.

        (Almost) Everything is less expensive here, but we’re also spending on a lot of things we didn’t spend on last year.

      • Leah Says:

        We pay $155 a week for our toddler ($185 for infant). And I think it’s “expensive” for our town, since we use a center instead of in-home. If we had to pay $1300-2500 per month here, I couldn’t afford to work. I can let daycare take a big chunk of my salary, but taking all or more than my salary isn’t doable. Can’t even imagine paying that much. There are upsides to small-town living.

      • gasstationwithoutpumps Says:

        My child is in college now (costing about $30k a year), which is a bit more than day care. According to
        Santa Cruz County centers average $15k a year for infants and $10.6k a year for preschoolers. Family homecare is cheaper, averaging $9.4k and $8.8k respectively. Of course, those are county-wide numbers, and the area around Watsonville is much cheaper than the area around Santa Cruz. From what I’ve heard, the problem for junior faculty is more one of capacity—there aren’t enough day-care slots at any price within 5 miles of faculty offices.

  2. nicoleandmaggie Says:

    Today’s action item (taken from )

    Request House Oversight Committee Investigation of Russia’s Possible Influence on 2016 presidential election
    I’m — —-. I’m calling to let know that I support Rep. Elijah Cummings’s call for a bipartisan investigation into Russia’s possible interference on the 2016 presidential election. Elections are the foundation of democracy. The American people deserve to know whether the integrity of our election was compromised. Please begin investigating immediately.

    Use this phone # to reach House Oversight Committee: 202-225-5074 & can also call Chaffetz directly, (801) 851-2500.

    I’d also like to do something about protecting Voting rights, but I’m not sure who best to contact for that yet.

  3. chacha1 Says:

    I have never not faced income uncertainty. The longest I’ve ever had a job was eight years, and the last four of those it was a daily coin-toss over “do I quit today or not.”

    The coping strategies I’ve employed are a) don’t cut connections unless you really never want to work with certain people again (the eight-year job? those bridges were burned, no regrets), and b) save money and c) don’t let the lifestyle inflate.

    There is a really, really long list of things I would have liked to do, but chose not to because of income uncertainty.

  4. Revanche @ A Gai Shan Life Says:

    Hoard cash, and fuss about it on the blog like I did this morning. For a while. And then I pick a path and stick to it like glue until either the problem is or feels solved. In this case of uncertainty, that’s not working very quickly but I’ll get there.

    Plus yet another thing happened today that reminded me that we’re still incredibly lucky to not have to think HARD about smaller expenses or health care yet and I really (times ten) don’t want to have to be in that level of uncertainty again.

  5. Shannon Says:

    Given that my husband and I have two tenured jobs that we love and are pretty secure, our income fluctuations tend to be of the upward type. That is – we take on additional work or administration assignments that are one time or not guaranteed forever. Our strategy has always been to avoid incorporating that money into regular, recurring expenses. So we may use it to pay for a house project (just installed solar panels), take an unexpected vacation (going to Iceland over spring break – there has to be some joy that comes from taking on additional work or we wouldn’t do it!), or save/pay down debt over and above what we normally do (just about done with student loans). We could live without all of this, so really there is some life style creep (hello additional vacations!), but not in any way that would make us scramble if this work went away. I see so many of my colleagues get into trouble because they start treating non-recurring revenue as recurring revenue, and then when it dries up, they have problems. This is actually a lesson I learned when I got involved in town politics and served on our Finance Committee – the town had been mixing the two for years, and stuff finally hit the fan several years back – and it’s a lesson that I have been trying to pass on to my kids by talking explicitly to them about these sorts of things.

    • nicoleandmaggie Says:

      That is very wise advice.

      I think we could live on just my salary but only if I stopped contributing so much to retirement. I have to remind myself that maxing out retirement (with the required 12% plus the 403b plus the 457) isn’t necessary, but has been a good place to put extra money when we have it so we don’t lifestyle inflate even more than we have been.

      Yay almost being done with student loans!

  6. Leigh Says:

    I’ve never treated bonuses as money to be spent. This has been very helpful as my income has fluctuated a lot and my spending has always stayed under what I took home in base salary after maxing out my pre-tax 401(k) and my Roth IRA. This means that in an expensive year like 2016, I was still able to max out my pre-tax 401(k), my after-tax 401(k) and Roth IRA, though I didn’t do much saving beyond that. Having previously oversaved for retirement means that in the face of income uncertainty, it’s okay to not save as much for retirement going forward as I have been.

  7. First Gen American Says:

    I am getting Back to being antsy about paying off mortgage. If we do nothing it’ll be paid in 3 years My job is back to being crazy and it would be good to get that expense behind us again so I can more easily deal with bad days. (Just that knowledge that I could quit helps my mental state immensely during crappy times).

    We could get by on 1 income with the mortgage but it would be a piece of cake without it.

    Both jobs in our household always seemed unstable as layoffs are common in my industry. So our disaster preparedness plan was able to live on one income. Try to always have both people working, keep skills, resume and professional network current and healthy. I also dilberately stayed in a job that was home based so that if we had to move, I wouldn’t have to quit to stay employed…which paid off once my employer announced they are moving to TX. It’s good to have a lot of irons in the fire so if one thing goes bust, there is other stuff to fall back on….be it skills or contacts or whatnot.

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