These Weren’t the Broke Joneses

Many of us have heard the famous quote often attributed to Dave Ramsey, “Stop keeping up with the Joneses. They’re broke.” It is supposed to be inspirational  and remind us that often the grass only looks greener on the other side. But what about when it actually is?

One of the biggest struggles I have had for a long time is wanting a new house. Every time I visit a friend or neighbor, I return with “new house fever”.  I am blessed to have many wonderful opportunities to network with individuals with high-salary careers through my various volunteer and charity work. The downside of this is I am constantly fighting of house envy. Normally I find one or two things in each home I visit that isn’t desirable for me (distance from my work, who wants to clean such a large home, etc). Or I tell myself that they probably are the broke Joneses.

Over the Thanksgiving weekend, I was invited to three different homes.The first one was my absolute dream home. If I were to list everything I have ever wanted in a house, it would be that one.  I joked with the host that he should help me convince my husband to move. He laughed and then actually shared solid financial advice on how he was able to purchase this home and two others. Yeah, he wasn’t a broke Mr. Jones.

The next day, my best friend invited us over to her incredible home. I have seen it before but this was the first time my kids were with me. She let them play outside in her spacious backyard as we sat in lawn chairs to make sure they didn’t fall into the pool.She did not have to tell me her financial story. As a single mother, she purchased a modest home when the housing market was at it bottom. She met and married the love of her life a few years later. Together they sold both of their homes and were able to purchase the amazing home they have. Mr and Mrs. Not Broke Jones.

Then on Sunday, I picked up my daughter from a friend’s house. Her family had recently moved and I was given the tour of the new home. Once again, they had an incredible backyard with a beautiful pool. They were able to purchase this new home and are renting out their previous home. Potentially they are the broke Jones, but somehow I don’t think so!

Seeing my kids play and run around in all three backyards has ignited a fierce desire in me. I want them to have daily access to a backyard!  Our backyard is parallel to a main street and I just do not feel it is safe for them out there. Also no matter what we have tired, grass refuses to grow. Literally the grass IS greener (and alive) on the other side. This whole year I have been focused completely on paying of my current mortgage. The honest truth is, I don’t want to live in this house forever. Try as I might, I don’t think I will be content here in the long run. Seeing these three families have wonderful homes makes me feel like it is possible and not a completely crazy dream to have. So I think I am going to go for it.

My crazy dream: 2019 – New House and rent out current home, 2022 Pay of Current home, 2034 Pay of new home. Lets do this!

I am curious what your thoughts are. Any advice for me? Am I crazy? 🙂

 

New Month, New Goals: No Spend November

In order to achieve my scary goal of putting $10,000 towards my mortgage, I have to save at least $1,211 in November. My husband decided to join me on this effort after much convincing. In order to be successful in reaching this goal, I have come up with a set of guidelines to help us save money. 

No Spend November Rules

1. Create a zero-based budget – learn more here. I’ll share my budget in an upcoming post.
2. Use envelope system with cash only – I’ve created 7 envelops and stuffed them with cash for categories we overspend on: food, eating out, kids and charity. I also gave my husband and myself an allowance of spending money.
3. Create a weekly meal plan and grocery shop weekly – I have typically did two week meal plans, but I was overspend. I am going to try weekly and see if I have more success.
4. Eat leftovers and try for a zero wasted food – This is always a goal, but I am going to try to be especially vigilant this month
5. Spending fast: buy only needs – And no, Starbucks is not a need. 🙂
6. Use coupons/discounted gift cards – I am going to try using Raise and other sites to buy discounted cards to places I grocery shop at
7. Buy used or second hand – If I *have* to buy get something.
8. Goal: 15 no spending days – Since I didn’t accomplish this last month, I am trying again.
9. Get invited somewhere for Thanksgiving  – I am half joking about this one, but it would be cheaper to just bring a side and not have create an entire meal.

So that’s it. My eight (or nine) rules for the month of November. What are your goals for November?

My Big Scary Goal

A few days ago, I was still trying to explore how to make a principle only payment on my loan. When I poking around, I received an alert that I was on PayPlan and that an automatic payment was already scheduled. Say what now?! Per the website, PayPlan is a service that allows you to make automatic payments from your checking account. I distinctly recall declining to be placed on any draft plan. After a quick phone call, the customer service rep informed me that I was indeed on a PayPlan and that my first payment would automatically draft on the 4th of December from my savings account. I had so many questions: 1) How am I on a plan I didn’t sign up for? 2) How did the bank get my savings account number and decide to use that account? 3) What would have happened if I didn’t stalk my bank and an automatic payment was drafted even though I already made a December payment? Their response, “So, you changed your mind and want to remove yourself from this plan?” No, I didn’t change my mind. This bank decided that it was going use my personal assets to guarantee they get a monthly payment. And I am sure they would have charged fees if the money wasn’t there! Evil bank strikes again!

So now, I am even more motivated to pay this thing off! In looking at my finances, I think I can my a $10K principle only payment on it by December 1st! I know, that sounds impossible, but here are the numbers:

$1,366.00	December Mortgage – Since I already made a December payment, this should go completely to principle
$5,595.00	My paychecks – I have 5 paychecks between now and 12/31.
$1,190.00	Funds back from closing – I have already received these funds
$32.00	credit card rewards – I should be awarded these by 11/4
$443.00	escrow refund from old loan – I am still waiting on this, but they said I should get it in about 20 days
$1,004.00	Savings from husband’s November paychecks – This is the challenge!! Not sure if I can pull this off.
$370.00	Savings from husband’s December paychecks – Also potentially difficult
$10,000.00	Total

Technically, all I have to do is save $1374.00 from my husband’s paychecks to make this work! Can I do it? I hope so.

My brand new debt!

Refinancing is such a non-glamorous life event. Not that I would, but I cannot show it off like a new car or house. All I can do is stare at the loan and plot how to kill it. (That sounds sinister!) Immediately after I got final notice that the process was complete, I logged onto my bank’s online portal and there it was. Now every time I check my bank account balances (which is about 20x a day), I see the horrible number. Unfortunately with the refinance, I now owed more than $175K which was my first milestone I hit a few weeks back!

I decided to make a principal only payment using the funds dedicated for November mortgage payments. These funds were now “extra” since my first payment isn’t due until December. After spending about an hour trying to figure out how to easily do it, I came to the horrifying conclusion that there is no way to electronically transfer principal only payments to my mortgage. This almost had me in tears! One of the main reasons I refinanced was so I could make snowflake payments ($10-$15) on this loan whenever I wanted. The only option is to mail in a physical check each time! Evil bank strikes again!

Because the balance really bothered me (I know, I’m weird), I decided to go ahead and make December’s payment in October. Not only would I get my balance back under $175K, I could also see how the bank handles online monthly payments with additional principal. Using the online mortgage pay, I sent a payment of $1,940.78. With in 36 hours (which was a bit longer that I thought it should take), my new balance was reflected as: $173,843.98! Much better!

I updated my payoff plan as well. With the new refinance, I have already hit several other milestones due to my lower interest rate. It feels a bit like I am cheating though. At some point, I will redo the whole chart, but for now it looks like I am really making progress!

Happy Friday and happy savings!

October Goals

September is coming to a close and I am excited about a new month. This month I was unable to really hit the goals that I wanted. I am getting myself prepared in advance so that I can hopefully be more successful in October. Here is what I am hoping to accomplish!

Decluttering Goals

1. Declutter my inbox – I have way too many unwanted emails that I am constantly deleting. G0al: Remove myself from 25 email lists.
2. Donate or put away one box of clothing away.
3. Complete a pantry challange – reduce my grocery bill by cooking and eating what we have
4. Organize and declutter the kids’ toys – In addition to always doing laundry, I am always picking up toys! Time to get these organized.

Financial Goals

1. Track daily spending  and have 15 days of no spending – We overspent for September and I have a $500 dental service I need to get done. We need to get caught up by have a very low spending month.
2. Make a decision about refinance my mortgage – more on this soon
3. Create next set of financial goals for 2017 – I am excited that we have hit all of our financial goals for 2016! Time to look to the next year!
4. Track down $25 gift card from phone company – I was promised a giftcard for the crappy service I got and still have not received it!

Health goals

1. Work out 15 days – Got to start using that gym membership I am paying for
2. Complete doctors visits: eye doctor and primiary care – I have been avoiding making these appointments, but I need to make it a priority
3. Give up coffee (again) – I was doing so well but now I am back to drinking it daily.
4. Drink 64 ounces of water a day – I am horrible at drinking water but I really can tell my body needs it!
5. Monitor my blood pressure daily – I need to start focusing on my health and work on lowering my blood pressure naturally or start taking medicine for it
6. Lose 5 lbs – Not only do I want my clothes to fit better, it helps with the high blood pressure. I need to lose about 20 lbs really, but this is a good start.

That’s a lot of goals, I know! But they all are important areas of my life that I need to focus on. What will you be working on for October?

Challenge Over!

 

Have I shared recently how much I dislike my mortgage company? There are only two ways to make extra payments 1) pay $7 each time I want to send funds, have the funds sit in a suspense account and wait until the first of the month when they are applied or 2) update my electronic funds transfer which pulls the funds on the first of the month. I usually do option #2. This month as I found funds to snowflake, I’d update the amount of money that they will pull from my checking account to reflect extra payments. Today my mortgage company will no longer allow me to change my October 1st payment! I expected that to happen at some point, but not when I am 9 days from the 1st! Ugh! Well, that is the anti-climatic end to my snowflaking challenge. Total amount snowflaked: $96.83 (That is a far cry from the $525 I was aiming for!)

Yesterday, I was feeling a bit overwhelmed again and decided to “protaskinate” by cleaning out the garage instead of doing the chores I needed to do (laundry, dishes, cooking, etc). Here’s what I was able to accomplish in the great garage clean out!

1. Bag #1 – One lawnmower that hasn’t been used in over 2 years
2. Bag #2 – Two weedwackers, a bed frame and one of these things that didn’t work!  (I had asked my husband to purchase a ladder for me to change bulbs and he brought that instead! Needless to say, I brought a ladder about a week later)
3. Bags #3, 4 and 5 -A friend left 2 boxes and 1 bag of items in our garage of items when she had to move quickly to another state.  She finally sent me funds to mail it back to her. Yesterday, I consolidated the 3 into one big box and shipped it to her.

Declutter Total: 12 bags/boxes – that’s 21 in reverse! I’m done, Anne! Just kidding.

 

Should I Refinance My Mortgage Again?

As you know, paying off our mortgage is the primary goal I am working on. My dream/stretch goal is to pay it off by December 2020, but currently June 2021 is the more realistic date. I have been toying around with ways to pay it off faster. I was recently approached by the financial institution where we do most of our banking about refinancing my mortgage with them. I told them they probably couldn’t make it worth it for me, but to give me a call anyways.

Well, they called me on Tuesday and presented some numbers to me. Here is the breakdown of the difference:

	Current Loan	New Loan
Balance/Loan Amount	$174,345.21	$180,000.00
Interest Rate	4.25%	2.875%
Years	17 years, 11 months	15 years starting 1/2017
Projected interest I will pay if I don’t make any extra payments	$76,193.77	$41,805.99
Closing Costs	$0.00	$3,333.00
Monthly Payment	$1,171.60	$1,232.25
Interest I will pay with my extra payments	$19,556.22	$12,563.18
Payoff date with extra payments	June 01, 2021	October 01, 2021

From first glance, the new loan has some great positives. 1) Much lower interest rate 2) pay a lot less in interest if I wasn’t making extra principle payments 3) shorter loan term and 4) ~$7,000 saved in interest with extra payments. The negatives are 1) higher monthly payments – about $60 2) five extra months added to when I could pay it off getting further away from my goal of December 2020. 3) Pretty high closing costs! 4) Taking out a higher debt amount that I currently have.

Over all, if I subtract my interest savings from closing costs, I would save about $3,600.00. That’s not a huge amount, but still sizable savings. Also, it would be much easier to snowflake random amounts with the new loan. I was assured that I could make principle payments at any time that would be applied immediately to my loan. My current loan does not allow me to do this and will only apply extra payments once a month. Perhaps I can at least make up the 5 months by making biweekly payments instead of monthly.

So readers, what should I do? Love to hear your advice on this!

The Over-Achiever In Me

Today I updated my 5-year mortgage payoff goal sheet which can be found here. As I was playing with the numbers, I wondered what would it take to pay it off an additional 6 months early. When I alway pictured paying off my mortgage, I always dreamed of doing it in 15 years. September 2020 would be exactly 15 years, but I’ll “settle” for any time within 2020. Because of my desire to pay off this debt asap and general over-achieving nature, I started looking at what it would take to be done with the mortgage once and for all by December 2020. “All” I would need is an extra $369.10 a month to make this new goal a reality. 

I’ve been down this path. I am constantly struggling with whether or not to make my debt-free journey hard or easy. I could sit back and just use the money I am earning to pay it off. Or I could constantly focus on finding extra funds and reduce spending so that I can greater monthly contributions to use towards the mortgage. Some days I am super dedicated to my goal; other days, I just want to enjoy an overpriced drink from Starbucks.

Currently, I think I will just stick to my goal of June 2021. Perhaps as I get closer to the date, the motivation will kick back in. What path are you taking for your financial goals?

August Goals

On the first of each month, I typically list out my goals for the next 30 or 31 days. Somehow I just can’t get myself to do it. With regards to my employment, I am still waiting for an official response. I have received verbal confirmation that I will not be demoted as previously thought, but I still do not know if that is true. Sorry that I can’t be more specific about what’s happening. (I can just see a co-worker coming up to me and saying, “Wait? You are Grace, the CFO mom!” Actually, I am pretty sure the chances of that happening are slim. Sadly my blog hasn’t gone viral yet!)

In the meantime, I have decided to give myself August off from making extra payments on mortgage. I still will be paid through the end of this month, but I will use that to finish saving for the final financial goal I have for this year. I need to update our budget based on this potential new reality, come up with new mortgage payoff goals and continue with low spending. I should challenge every expenses, look for side hustles and make a decision if I want to find a new part-time job. Ugh…I really don’t feel like doing any of those things!

Anyways, here are my mortgage numbers:

• If I abort extra payments today, I’ll pay it off by: 8/01/2034 (as opposed to 3/2036)
• Saved in interest payments so far: $12,149.91
• Current principal balance: $176,479.78

Maybe my goal for August is just to take a break from being obsessed with personal finance.

My Moment of FIRE

While I do not really consider myself in the category of bloggers who are aiming for Financial Independence and Retiring Early (FIRE), I definitely admire those who are. A few months back, I read a great post on how FIRE means very different things to different people. (I wish I could remember the post or I would link it here. Anyone else remember?) My payoff the mortgage goal is motivated mostly by the fact that I would like to pay the least amount of interest on my home loan as possible. Why pay $90K when I could pay $25K with some sacrifice?

Recently however, I have been going through some HR issues at work. Remember that blog post I wrote about potential increase in income? Talk about counting your chickens before they hatch! The situation came to a head on Friday and I was very disappointed and genuinely insulted by the proposed outcome. I thought about the situation all weekend long. My husband suggested that I go ahead and quit. I thought long and hard about my financial and family goals. Could I really just abandon my goal to pay off mortgage? The simple answer was yes. While it would have been more ideal for this situation to have occurred in say 5 years (November 1st, 2021 to be exact), we have set up our lives that we don’t need my job to survive. By keeping our debt minimal and expenses low-ish, we have reached financial flexibility. While not quite independence, it felt good to be able to make a decision about my career based on values and not bills. A comforting peace came over me and after short prayer, I emailed HR rendering my registration unless the issue was addressed in a different manner.

While my husband isn’t interested in early retirement, I really want him to also get to a place of financial flexibility. At some point in the future, I hope to have a deeper discussion with him regarding how we can both be in a place where we can tell our jobs where to shove it if need be. There is incredible power in being able to create your own destiny! In simple terms, this is what FIRE means to me. Maybe I am a FIRE blogger after all!

I am curious if you consider yourself reaching for FIRE? What does that mean to you?