2012 was a very good year! We managed to pay off all of our debt, except for the mortgage, in nine months. 2013 is off to a great start as we will be able to max out all of our retirement accounts for the first time and boost our savings rate significantly.
4th Quarter, 2012 Budget Update
Even though we paid off a car loan and several student loans, our spending budget will remain the same. Anything that we were spending on debt payments is now reallocated towards savings.
- During the last quarter, we managed to remain under budget during October and December.
- In November, we splurged on iPhone 5 upgrades, which blew our budget by $75. Our old iPhone 3GS phone batteries were not holding a charge and were becoming aggravatingly slow.
- Analysis of the budget shows that we can still put more effort into reducing our dining expenses. We’re doing pretty well on everything else.
- We’ve saved a significant amount of money by delaying our home improvement projects. Now that we’re debt free, we plan on resuming work in the Spring.
- We put a lot of thought into Christmas gifts this year. My wife did an incredible job bargain shopping for gifts and I gave out cash to those whom I felt it would serve a better purpose.
Mortgage
- We closed our second refinance deal with Quicken Loans for a 30 year term at 3.5%.
- I set up the auto-pay to include $246.06 in extra principal a month which will shorten our mortgage term by 4 years and 1 month.
- When we complete our emergency savings goal, I plan to increase the extra principal payments to meet my goal of paying off the mortgage in 20 years.
Retirement Savings
- I set our 401k and 457 contributions to max out contributions in 2013. The maximum contribution for 2013 in these types of accounts is $17,500.
- I started the process to move my wife’s Roth IRA from USAA to Vanguard. The move reflects my belief that retirement investing should be based on low-cost index funds.
- My goal is to max out our Roth IRA’s by the end of January as a lump-sum investment. We will be contributing to a Traditional IRA and then converting to a Roth IRA for the fourth year. The maximum contribution for an IRA in 2013 is $5,500.
Emergency Savings
- The automated withdrawal every two weeks from our checking account into our Sallie Mae online savings account is still in effect.
- The fund is almost at three months expenses. The immediate goal is six months worth of expenses.
- When the goal is reached, I will continue the automatic withdrawal, but at a reduced amount. The secondary goal is twelve months expenses.
Saving For College
- My daughter received $220 in cash from relatives during Christmas. All of it was invested in her 529 plan.
Planning For Life
- As part of my New Years resolutions, my goal is to review and update our beneficiary settings for financial accounts and life insurance policies by the end of February.
- I’ve been talking about this for along time, but it’s time that we get our own term life insurance policies. My wife and I both have the group term life policies through work for now.
- We were supposed to get a will and/or trust done soon after our daughter was born, so we need to do that in 2013.
Short Term Goals for 2013
- Save $2,500 to invest in a Fidelity taxable investment account. Read more about my new favorite cash back rewards card here and here.
- Save extra money for my all-cash, brand new minivan fund.
- Improve my writing skills and write more often.
- Spend more time outdoors, especially with my family and dogs.
Talk to me, Goose.