A few weeks ago Single Ma asked us to describe our fabulous financial life. I participated and submitted this review:
I'm glad that you posed this challenge to me. I started my own blog back in July and was really gung-ho about it. Mostly, I wanted to be held accountable for my financial actions and learn how to save and invest my hard-earned money. I found out quickly enough that keeping up a blog is work and at that point in my life, I couldn't keep up the pace. Nevertheless, I read blogs everyday and continually try to improve my financial life. This past year has been fabulous on several accounts: personally, spiritually, and professionally.
I realize that I have a wonderful life, a great family, a beautiful daughter, a great home, plenty of wholesome food, and more than enough money to buy the things that I need and want in life. I love my job, I love my boss, I love my life. It took me a long, long time to be so happy with this fate. I think that is what comes to us in our 30s. We start to appreciate things, people, events, everything. We slow down. We've defined our character and who we are (or what we want to become.) These things are constantly being fine tuned, but deep down my core values and beliefs are defined. I've grown closer to God. I've devoted myself to understanding my faith. I attend my church regularly, I pray, I read inspiring spiritual stories. I've grown tremendously in 2006.
My financial life has exceled as well. I increased my salary by 57.8% this year, that's over $75K. I'm in sales which is a cyclical process. I've worked smart and hard for 3 years and this year has really paid off. I also understand that this number can fluctuate dramatically; this is sales.
I have reviewed my spending patterns for this year and figured out exactly where my money went: 27.23% taxes, including property tax; 22.86% mortgage payments, including investment property; 11.66% 401k, Roth IRA, Traditional IRA, 529, E-fund, and Daughter savings account, explanation detailed below; 4.04% medical insurance, flexible spending, auto deduction, legal insurance (for will and trust), dental, Supplemental AD&D insurance, 34.21% all other.
This was in interesting exercise because I learned several things. We remodeled our kitchen and finished up a bathroom remodel this year which cost approximately $50K. We have about $12K in our HSBC account sitting and collecting interest to pay off a no-interest credit card next April. That's a nice chunk of money working for us! The rest of the remodel has been paid off. No fees for opening an equity line and no outstanding debt. My confession is that I've paid about $500 in credit card interest this year. This was one of the lessons learned (and hopefully this faux-pas won't be repeated.) However, I'm not too upset about it because I got bonus points on my credit cards to be cashed in for free flights, and I got to enjoy my kitchen. I could have done it differently, but I didn't. Lesson learned. To sum up: the 34.21% of all other included this remodel and an ~$10K trip to Italy with my family and in-laws. After these two expenses, our all other category drops to 9.34% of the total. That includes groceries and stuff.
Despite what it seems, I am maxing out my 401k. I contributed approximately $12,500 this year which is about the max I can contribute in my company. I am on the verge on not qualifying for a Roth IRA anymore, so I stopped contributing to it a couple of months ago. We may still qualify after deductions for the year, but it will be close. That's a bitter-sweet pill to swallow. I haven't contributed enough into my husband's traditional IRA, and I only have about $2800 in an e-fund. However, the e-fund is still an improvement as I didn't even have one a few months ago. I realize that I want to increase my total savings to 20% of my total financial picture. I missed that goal this year, but think it should be attainable in 2007 because we won't have such huge expenses. I also realized that my percentage of charitable giving was paltry. It was embarrassing really. I strive to increase it to at least 5% of my net income for next year.
I reviewed financial goals that I made back in August 2006. I gave myself 12 months to complete these goals and I'm happily impressed with my progress.
1) pay off credit cards & debt to electrician. DONE
2) restart automatic contribution to Roth, Trad IRA, 529. Half way done. Roth stopped. Traditional IRA, started and then stopped. 529 started and continues.
12 month plan:
1) $10K in HSBC savings for E-fund. $2838.33 in account. Well on my way.
2) Use credit cards wisely and pay off each month. All paid as of Dec16.
3) Max allowed to Roth and Traditional IRAs. Stopped contributing to talk to accountant. Will put max (or as close to) into Traditional IRA after we talk to our accountant in February.
4) Max 401k. Done.
5) $175 to 529 plan for daughter each month. Done
6) Pay down portion of kitchen remodel that was on credit cards $13K. Entire balance is sitting in HSBC account waiting to pay off the no-interest credit card in May 2007.
7) Extra payments to 2nd mortgage for investment property to pay it down quickly. This is the highest interest mortgage payment that we have at 7.5%, but it's only for ~$20K. I've since changed my mind about a portion of this since I spoke to my mentor. I'm going to try to make a couple of extra payments (they are only $200 a month.) to decrease the 30 year payment schedule, but I'm not going to try to have it paid off in the 5 years or so that I had originally planned.
Well, there you have it. The state of my mental and fiscal affairs. I'm working on goals for 2007. Overall, I'm impressed with what I've done. I have plenty of improvement, but I know I'm taking the right steps to increase my savings and decrease our overall spending.
Stating goals, following through on those goals, and constantly learning has become an unstated motto. I'm doing just that. I'm improving my life, trying to help others, and growing financially, mentally, and spiritually. That is, indeed, why I'm FABULOUS!