This is where we didn’t quite accomplish our goal: we haven’t been too prescriptive about saving more for the kids. We kept the 529s the same at $100 per month and did open separate investment accounts, but only put a little money in there. Once we’re out of consumer debt and the HELOC, this will be a focus.
Wins are fun, so I’ll start there. In 2018, all three of our properties have increased in value! According to both RedFin and Zillow, they’re up. That’s a satisfying – and easy – lift in net worth on Personal Capital. But there are some big variations in values between those two and I’m going to look into why. Expect a post on that.
So, the hole. I feel like it’s been slow progress on debt reduction, but looking at the past 18 months since we’ve started down this path, we’ve reduced our debt by $42,901. That comes to $2,383 per month. That’s a lot of money! This includes our consumer debt, home equity line of credit and mortgages. All of our optimizing has really paid off – it truly is the aggregation of marginal gains.
Keeping up the momentum in 2019:
We’ve just consolidated our final two credit cards into one 0%, $0 transfer fee card – it’s under $15k, so we’ll knock that out quickly.
Then ramp up the HELOC payments and transfer some of the balance to a 0% APR to ease the interest being charged (>$200/month – UGH).
The car payments are 1-2%, so we’ll let those loans run their course. These monthly payments will avalanche to …
Increase payments on the lowest of the three mortgages; I will re-map the payment schedule once we’re at this point.
All too often though, we (probably me) fall off the FI wagon and succumb to big spends. Some we plan on, others are not planned. Planned on:
2018 Income Taxes: With the changes in tax laws, we think we’ll be paying around $3k. This wasn’t planned on, but now we know, so I’m calling it planned. This was due to the new property tax deduction cap of $10k.
Summer Camps: we enrolled before November to take advantage of the early bird discount (saves $30 per week; with 2 kids for 8 weeks, that’s a savings of $480)
Finish exterior painting: about $800 remains
Little League: travel team + regular season = >$1000. The payments are spread out, but still, it’s a lot of money for a kids sport and that doesn’t include equipment!
Monthly expenses for after-school childcare and music lessons will remain the same through June.
I wonder what large unplanned spends we had in the past 18 months? I’m sure there are many – look for that post in the near future!
We’re just dipping our toe into the travel optimizing pond here and I was a bit nervous. It required opening AND using a credit card, so if that makes you nervous, don’t do it. We had to be disciplined and used the card for most purchases and a few large purchases, like summer camp, to maximize points earnings.
Here’s what we did, as well as a few mistakes we learned from:
We both opened a Chase Sapphire Preferred card and spent the required $4,000 (each) easily within three months to earn 50,000 bonus points (each). Lesson learned: We forgot to have my husband use my referral code when he applied, missing out on 10,000 bonus points.
We set a goal: get enough points to get our family of four to the Bahamas or any Caribbean island over the week of Thanksgiving. Of the Chase rewards travel partners, Southwest was clearly the best option with the lowest amount of points required: I estimated 140k – 150k points for our family, however November travel dates were not released when we were planning.
Searched for the best deal: Southwest didn’t release their winter travel dates until May 31, so we knew we had to earn the required points by then. When the flights were available, we had 133,775 total points earned. I used Southwest’s low fare calendar to find the best combination of dates that would give us a 5- to 7-day Thanksgiving vacation with our points, but I kept coming up short.
Transferred points from Chase to Southwest: you can’t book Southwest through the Chase portal, so a points transfer is required. This was pretty easy. I transferred 73,000 Chase Rewards points to my Rapid Rewards account and it appeared immediately. I then transferred 60,000 of my husband’s Chase Rewards points to my Rapid Rewards account and when it didn’t appear immediately, I had a minor freak out. When transferring from Chase, you have to enter the cardholders name on the Chase site, plus a Rapid Rewards number. I used my husband’s name with my Rapid Rewards number and when the points didn’t appear, I assumed that using his name with my Rapid Rewards number was a big mistake. The Chase customer service was absolutely great and while we were talking through how to course-correct, the points appeared! I just needed a little patience.
Purchased additional Rapid Rewards: Since we didn’t have enough, I purchased 7,000 rapid rewards points for $134 to give me the points required to book our trip.
Booked it! It was a rather smooth process despite my human errors. Here’s the breakdown:
Earned Rewards: 133,775
Purchased Rewards: 7,000 ($134)
Total Redeemed Rewards: 139,776
Taxes and Fees: $463
Total: $597 = $149.25 each!
Versus Actual Costs: Flights: $3416.16 + Taxes/Fees: $664.16 = $1,020.08 each. We saved $870 each – that’s $3,480! There’s no way we would have or could have spent that. And these prices are already higher than they were when I booked just five days ago.
Another thing I learned from the Marla Tanner interview on ChooseFI is that you can, in fact, redeem British Airways miles through Chase. I tried to figure this out online and couldn’t, so thank you Marla for teaching me that you actually have to call the airline. I will keep that in mind, but I think we’ll stick with Southwest for now because our next travel goal is a rocky mountain ski vacation.
A huge thank you to ChooseFI for teaching us how to travel for less!
A part of the path to FIRE (Financial Independence Retire Early) involves consuming less and this really resonates with me. It’s not being frugal to save money, but it’s being frugal to really think about what you need versus want while considering the true value of each purchase. I haven’t been too great at this lately, but all big purchases get scrutinized for their value.
I’ve written about the every day things we do without – cable, subscriptions, expensive cell phone bills, eating out, etc. – and the big ticket items we’re doing without – kitchen remodel and pretty much any large home remodel that applies to this old house. Obviously none of these things are necessary, so these aren’t tough decisions. We have debt and spending money on anything else seems foolish.
And I can be foolish. This laptop I’m using is physically breaking down with missing parts, dents and dings, and running very slow at times. Couple that with a very persistent, soon to be birthday boy asking for a gaming laptop. And we’re getting one. What’s the value in that? Our family laptop will die and now we have one that the kids won’t complain about. There’s a lot of value in that.
But, I digress. Back to the planet.
Listening to NPR’s Living Green segment yesterday got me thinking there’s more we, as a family, can do. Computers aside, I think we’re pretty good with our environmentally-friendly and frugal and then, sometimes we’re not.
Paper products: We use cotton napkins, but we always have a roll of paper towels. Keeping cotton napkins, cloths and rags handy will help reduce that waste.
Compost: We don’t. We did in Seattle but in our Philly ‘burb, it’s available, but cost prohibitive. We have room in our yard to do something about this. I’ve composted yard waste, but I’d like to get a vessel so we can compost food waste, too.
Food: I’ve been trying to cut out meat during the week, but sometimes the convenience of cooking what we know wins. We can make a more concerted effort on this.
Water: We do wash a lot and we don’t have an efficient machine. We adjust the water levels, but it’ll be interesting to see if we save any water by running full loads only.
Clothes: I need to find a second hand store I like!
Stuff: We have too much! It drives me nuts. I need to purge and minimize. I feel like I’m always doing this, but I’m not making progress. I will start with one room at a time, working from the top (bedrooms) to bottom (basement).
Plastic: Stop buying the ziploc bags and use reusable containers and bees wax wraps.
I’m going to see if my library has All You Need is Less – this book was mentioned in the radio show.
I think the food and clothes will yield the biggest cost savings, but it’s not about the cost, it’s about the planet and, in turn, our health.
I’ve been meaning to calculate my savings rate and finally got down to it: 29%. Eh. I thought it would be more, but I’m maxing my 401k and the kids college will be funded by real estate.
I haven’t yet calculated my husbands, but I anticipate his is about the same but with a few differences, like funding our HSA.
We’re working to pay down debt, so our savings rate will remain flat for the foreseeable future (three mortgages!).
Here’s the breakdown:
401k: 15% (*just reduced to 13% due to bonus)
Employee Stock Purchase Program: 8%
529: 1% – this is just sad
Roth IRA: 1%
I wonder what our debt paying rate is? I’m not sure what that’ll tell me, but it will be interesting to calculate. It also varies based on other household spends like kids activities and household repairs. And skiing.
We’re about 2 months into this journey to financial independence and we had an awesome month in June! We knocked out some serious budgeting, reduced bills where we could and made a serious debt reduction plan.
The fun stuff:
We’re tracking and budgeting with Every Dollar. I can’t say it’s any better than Mint because I haven’t used Mint as heavily. And now I’m too deep into it with Every Dollar to quit. From May to June we spent $7,000 less … WHAT? How is that possible? Home improvements in May: kitchen table, plumber, etc. We’ve only been in this old house a year, so home improvements are definitely a part of the budget for now. (OK. I spent too much on that table, but I love it and we’ll have it forever.) And we had to pay upfront for summer childcare for two kids – this means we won’t have childcare come out of our budget for 3 months. Despite those large expenses, we still came out of June having spent less on “stuff” and more on debt and savings.
Cutting R’s mobile phone data – using wireless where possible (home, office) and not letting the kids use it – cut the bill in half! From $104 to $49 per month! DING DING DING!
Credit card payments – the first one we’re paying off received weekly payments last month. Being our first full month, we weren’t sure what was going to shake out and where. Happily, we were able to make 3 extra payments! That debt pay off schedule is moving on up like … the Jeffersons. (I had to.)
Account consolidation: Definitely a work in progress. We transferred several 401k and IRA accounts from all over the place into Vanguard accounts. Phew. There were some seriously high expenses that I never knew to look for with other institutions.
With that … my fail. July has just begun and already I’m an FI failure! I spent way too much on a frame. That’s right. A frame. It’s a beautiful, old blueprint of our house and it was screaming to get out of the dusty tube and into a frame on the wall. And the architect was the great uncle of a good friend. That same friend who’s married to the person that introduced us. Pretty wild, right? But it’s really big, so … yeah, I’m justifying another big purchase. I promise I’ll be good for the rest of the month. Bring lunch every day, take the train vs drive and park. And perhaps less wine with dinner.