I read the book “Water for Elephants” by Sara Gruen a few years ago. It was a good book and after reading it I realized that my younger two kids have never been to the circus. I’m ambivalent about the circus. It’s a bit of a ripoff, and I am conscientious about animal treatment. On the other hand, it seems like the circus is something every kid should experience at least once. Our oldest, Jaron, has been to the circus. We went when he was 6 years old with some friends, and there’s one enduring memory from that experience. The Tiger Tamer.
We’re at the halfway point, and all systems are go. We’ve got a few slippery items on the budget coming up. Jaron’s tax refundable college expenses, for example, which depend on how much scholarship money he earns. We’ve also got income tax return money and a potential bonus in March. I’ve made conservative estimates for all of them so we’re on the safe side, and we’re still well on target. The budget did get “blowed up” in December, but it worked out fine because we were on top of it. We knew we wanted to spend more on Christmas than we had allocated, so I rigorously updated the budget throughout the month based on our purchases. This allowed us to shift things around on the fly to make sure we weren’t impacting our mortgage payoff plan, but still continue to bless others during the holiday season. I’m not sure how most people follow their budget, but for us the discretionary items are flexible, as long as the bottom line balances out. Continue reading “Paying Off the Mortgage, Month 6 of 12”
Most financial advisors will tell you not to pay off your mortgage. You are paying under 4% interest on the mortgage, plus it is tax deductible, which means the effective rate is even lower. Therefore, it makes a lot of sense to take the extra money you’d put toward the mortgage, and invest it instead. You’ll make 8% to 12% in index funds over the long term, so you pay 4%, you make 8% (at least), and you come out ahead. This is true, and it is why I continue to invest in my retirements funds while also paying down the mortgage. From a pure numbers standpoint, over the long term, barring any major catastrophe, it makes sense to invest rather than pay off the mortgage. So, what am I doing? Here are three reasons why I’m paying off my mortgage. For me, it goes beyond numbers. Continue reading “Is it Smart to Pay Off the Mortgage?”
It’s really an “aging” curve, but I prefer “death” curve because it is more macabre. The sad truth is that life expectancy in the US is stagnant or even declining, in large part because of our poor health habits. My grandmother is 97, and still living on her own. She doesn’t drive, she’s losing her eyesight, but she maintains a reasonable quality of life. She’s on a solid curve. Dad died at 62, but up until the last few months he was extremely active and healthy. It was an excellent curve until cancer reared its ugly head. I’ve been pretty active over the past 2 weeks. I made a comment this morning about how my shoulder was bothering me and Lianne suggested that I take it easy. Dad would always say that the best way to overcome an achy joint or an aggravating injury was to go exercise it. He ended up having surgery on both shoulders, so maybe this isn’t the best medical advice, but I do think it is excellent life advice. I sounded like Dad when I responded to Lianne, “As soon as you quit doing stuff, you’re dying.” Jaron, ever the pragmatist, said, “We’re all dying.” Ok, he has a point, but it is possible to die healthy. That should be our goal. This chart shows the difference between dying healthy, and dying sick.
We were $45 over budget for the month of November. As my Dad would say, “I’m flabbergasted.” I’m not tracking spending every day. I usually update the budget every week or so to see where we’re at, but I think I only updated it once in November. It’s awesome that we still managed to keep things that close. We did spend over $1,000 on groceries, which is high. I think it is due to two things. First, I’m only going by where the money was spent, so I’m putting all Walmart and Sam’s Club spending into groceries. That probably isn’t accurate. We’re going to save those receipts from now on so we can break it down better. Second, Lianne masterfully worked in the kitchen more than usual in November, crafting her exceptional creations for parties, Thanksgiving, church functions, etc. Plus, we’ve turned toward healthier, less carb heavy meals at home. Those factors are probably contributing to higher grocery spending as well. We may need to adjust our budget to take this into consideration. This is an important point. Things change. It is tough to account for every expense ahead of time. We continue to examine the entire budget, and make adjustments as needed. For example, we are dropping Sirius radio, and we’ll probably drop our YMCA membership at the beginning of the year. We are going to shift that money toward lessons and other recreational activities for the kids. Flexibility without compromise is the key to a successful and workable budget.
On the mortgage front, we were able to put a significant amount of money toward the principal in November. I had a small brokerage account that I cashed out as well. It’s a one-off account that I’ve been playing with in the stock market, not too successfully. The election caused it to spike, so I figured it was as good a time as any to pull it out. I’ve been planning to put it toward the mortgage anyway. It is invigorating to see that mortgage balance go down. We’re nearing the halfway point, and we’re still on track.
Lastly, I should mention Christmas. Lianne was concerned that we wouldn’t be able to spend as much as we usually do on gifts. Fortunately, as it turns out, I get paid every two weeks and December is a 3 paycheck month. The budget is built based on 2 paychecks per month, so we’ve simply allocated a portion of that 3rd paycheck to go toward Christmas gifts. Typically, you should set aside Christmas money throughout the year to prevent overspending, particularly credit card spending. We didn’t have to do that in this case because of the 3rd paycheck. It’s a handy trick, and we’ll do it again next year.
We were $7 under our expenses budget for the month of October. That level of accuracy is pretty amazing. Extra education and grocery expenses were offset by lower restaurant and general household expenses. The bottom line is that we’ve curbed our impulsive spending habits. We don’t go out to eat as often, and we don’t make random purchases without thinking. In the past, “Household” was a catch all for buying those things that didn’t really fit anywhere, usually off of Amazon. A new phone case, a drip irrigation system for the garden, toys for the chickens (for real), better ear buds, etc. A few items we needed, like mic stands for the kids’ music gigs, but for the most part it was just random stuff, to the tune of $400 per month. We’ve cut those expenses by 75% and we don’t miss the stuff at all.
We’re still making extra principal payments as part of our regular, monthly mortgage payment, but for September and October, just based on the way the budget worked out, we weren’t able to make the extra-extra payments that will accelerate the payoff. Now that November is here, we should really see the mortgage balance start dropping. It will be psychologically rewarding to see the remaining balance go below some of the milestone amounts. It’s like passing those mile markers during a long race. It provides the motivation we need to keep our eyes on the debt free finish line.
Things were normal. I attended youth group. I led praise and worship and played in a christian punk band. I helped my parents start a church. I was a conservative, evangelical, charismatic christian. There were signs that things would change, however, like in middle school when the biology teacher at my Christian school posited that God could have used the process of evolution to create life. And when I realized in high school that I wasn’t better than my homosexual classmates. And in college when I became friends with a Palestinian and learned that the Middle East was more complex than my limited, religious-republican worldview. The change was gradual, until I graduated college and started working. It was then that I discovered a world of christian thinkers who examined everything carefully (1 Thess 5:12), and for the first time my beliefs were challenged. The year was 1999, and I had an important question to answer. Does God exist?
For the last few years we’ve been automatically doubling our mortgage payment, with the extra going toward the principal. Now, this “gazelle intensity” 12 month plan calls for even more, which we weren’t able to do in September. That was by design, because there were a lot of expenses last month associated with homeschooling and the co-op that the kids are attending. Even though we planned for those expenses they ended up being more than we thought. We are recouping that money with the reduced grocery and car fuel expenses, so that looks OK. I also just noticed that I did NOT include my annual bonus in the budget for early next year. It isn’t a guarantee, so I think it’s a smart move to exclude that potential income. We don’t want to rely on that money so it will literally be a bonus, which is as it should be. Continue reading “Paying Off the Mortgage, Month 3 of 12”
Pope Francis issued a call for action on the environment. He wants to add Care of Creation to the existing acts of mercy, which are traditional Catholic works that include caring for the poor, and essentially living a life of peace, love, and charity. The pope correctly makes the point that environmental changes disproportionately impact the needy and marginalized. Therefore, when we care for the environment we care for the poor and sick. He talked briefly about needed political and economic changes, but he also exhorted individuals to modify their lives in small ways in order to lower wasteful consumption and to care for the earth. This is how I believe we should work toward change in the world. Instead of focusing on the corrupt spheres of politics and big business, let’s focus on our day to day lives. Here are some things we are doing in our household to care for our common home.
Quick monthly update. We just finished our 2nd month of following a strict budget toward the goal of paying off the house by next June. Jaron asked me what we were doing differently, because he couldn’t tell. 🙂 It just shows how we had been spending money on things we didn’t really need, since we don’t miss them.
We had two unexpected expenses in August. The first was Jaron’s summer tuition, which I hadn’t accounted for. His scholarship covers most of his tuition, and a tax credit covers the rest. He’s taking a bit of an accelerated schedule though, so he’s going to pitch in to keep us under budget. The second expense resulted from Lianne dunking her phone. It’s supposed to be water resistant, but the speaker/mic don’t work, so she can’t make or receive calls. I just bought her a used Galaxy S6. That blew our entire “household” budget for the month. We’re still within the budget though, so that’s good!
On the flip side, our grocery expenses are well under the budget. I looked at our previous 6 months of expenses and set it to $1,200 per month, but we’re actually spending around $800 per month. That is an awesome difference, and that “savings” is going straight toward the mortgage.
Two months down. Ten months to go!