I spent a couple of hours working on my taxes last night on Turbo Tax. I'm not done yet because I'm still waiting on some tax information to come in the mail, but I've got a pretty good idea of my bottom line. I'm getting about $6500 back between Federal and State. I have mixed feelings about this.
First, of all, $6,500 is WAAAAY too much to be getting back from the government. I know, I know...I'm very happy to get any "windfall", but, as my friend Jessica pointed out in her blog Dowell Chronicles, "Why give the government an interest-free loan for the year?" If we adjust how many dependents we claim on our W-4, we can get some of the money back in our paycheck each pay period. This way, that money can be working for my family all year long instead of earning interest for the government. Now, having said that, all of our refund will be going into our money market savings account and will build our emergency fund back up to $10,000. That's only $5,000 short of our goal for the year.
Thanks to Colin, we have another dependent. But, a good chunk of our refund is due to the write-offs that came with buying our new home. Of course, we were able to write off our mortgage interest, as we do every year. But this year, we could also write off the origination fees (points) for our new house. I am VERY upset, however, that we missed the move up/repeat home buyer tax credit by 30 days! GRRRRR!!!!! We donated a lot of belongings that were just cluttering our old house while it was on the market, so we could deduct the value of those items as well. We also donated some cash our favorite charities. The main ones that made the list this year were: The Mommies Network, The Leukemia & Lymphoma Society, and The March of Dimes. I still intend to set aside some money to support the charities that are most important to me. Although the economy makes it hard for many of us, the charities that I care about are getting hit hard. When money gets tight, charitable contributions tend to be the first thing cut out of the budget. Therefore, I will continue to support non-profits that have made a huge difference in the lives of me, my family, and my friends.
Reviewing my tax return so far, I can tell that we need to make a change. Right now, I claim 0 for my small, part-time income, because if I don't, they take almost nothing out of my paycheck. My husband claims 2, but I think we'll increase it to 3 or 4 to try to even things out for next year. I'd rather get that money now and put it into our savings and retirement funds all year long. That way, it will earn interest for me, instead of the government.
What are your thoughts about this tax season? Are there any changes that you need to make for the next tax year?
Sunday, January 31, 2010
Friday, January 29, 2010
2009 in Review
So much has happened for our family this past year that it's been hard for me to get my bearings. But what an awesome year it's been!
We put our old house on the market at the very end of March. We welcomed Colin into our family (by c-section) in July, which was also abdominal surgery for me. If you consider the $3,500 out of pocket AFTER insurance, 1 month unpaid leave for me before Colin was born and 3 months of unpaid maternity leave (about $4,000 of net pay), our cost was approximately $7,500...and that doesn't take into account the shift differential that my husband lost when he took 4 weeks of paid leave. All the while, we kept our house model-like and showed it multiple times.
We went under contract on the old house in August and found our new house and went under contract on it a week later. Our new house originally listed for $309,000, but was on the market for over a year and we got it for $252,500. We then faced the daunting task of packing the entire contents of the house and loading it all into a large U-haul truck and trailer ourselves (with the help of our AWESOME friends!) We closed on both houses and moved into the new house on October 6th...again, with the help of our wonderful friends. Talk about busy! We were so lucky to have bought the old house in 2004 before the prices shot up. We paid $153,100 back then with a 100% mortgage (nothing down) at 5.21% with a 7 year ARM. Even during the worst housing market in recent history, we were able to walk away with $50,000 after paying the realtors' commission. We were very lucky. We ended up putting $50,500 down on our new home...20% down in order to avoid PMI. We also got a 30 year fixed mortgage at 4.875%. Now, we've stepped up from a 1710 sq. ft. house on 0.16 (yes, less than 1/4) acres, to a 2490 sq. ft. house on 0.81 acres...and our mortgage payment is just $300 more per month. We love our new house and we're so happy that we'll be able to give our boys a childhood that has many similarities to our own.
Yesterday morning, I had my biannual meeting with my awesome financial advisor. Even after the beating we've all taken in the market lately, the balance of our accounts is higher than before the recession. Woo hoo! That's a relief. When we met with Stu when we were pregnant with Gavin, we decided that, since we were ahead of the game as far as retirement savings were concerned, we would be able to afford not to contribute while I stayed home with the kids...assuming that when I go back to work full-time, I'll be able to max out contributions to get back on track. Well, since then, we've been able to contribute 4% which is enough to get the company match. This is more than we had planned and it helped us weather the economic downturn, because we continued to buy while the market was low. I just wish that we could have contributed more while the market was low.
In order to avoid layoffs, my employer has temporarily stopped matching our 403b contributions. When I asked Stu what we should do, he suggested that we stop our 403b contributions only while there is no match and instead, contribute the same amount or more (when possible) to our Roth IRA. So, starting yesterday, we're contributing $120/month into a Roth IRA. I wish that we were contributing more, but with only 1 full-time salary and me only working 4 days/month, we are tight right now.
Our plan for the next year is:
We put our old house on the market at the very end of March. We welcomed Colin into our family (by c-section) in July, which was also abdominal surgery for me. If you consider the $3,500 out of pocket AFTER insurance, 1 month unpaid leave for me before Colin was born and 3 months of unpaid maternity leave (about $4,000 of net pay), our cost was approximately $7,500...and that doesn't take into account the shift differential that my husband lost when he took 4 weeks of paid leave. All the while, we kept our house model-like and showed it multiple times.
We went under contract on the old house in August and found our new house and went under contract on it a week later. Our new house originally listed for $309,000, but was on the market for over a year and we got it for $252,500. We then faced the daunting task of packing the entire contents of the house and loading it all into a large U-haul truck and trailer ourselves (with the help of our AWESOME friends!) We closed on both houses and moved into the new house on October 6th...again, with the help of our wonderful friends. Talk about busy! We were so lucky to have bought the old house in 2004 before the prices shot up. We paid $153,100 back then with a 100% mortgage (nothing down) at 5.21% with a 7 year ARM. Even during the worst housing market in recent history, we were able to walk away with $50,000 after paying the realtors' commission. We were very lucky. We ended up putting $50,500 down on our new home...20% down in order to avoid PMI. We also got a 30 year fixed mortgage at 4.875%. Now, we've stepped up from a 1710 sq. ft. house on 0.16 (yes, less than 1/4) acres, to a 2490 sq. ft. house on 0.81 acres...and our mortgage payment is just $300 more per month. We love our new house and we're so happy that we'll be able to give our boys a childhood that has many similarities to our own.
Yesterday morning, I had my biannual meeting with my awesome financial advisor. Even after the beating we've all taken in the market lately, the balance of our accounts is higher than before the recession. Woo hoo! That's a relief. When we met with Stu when we were pregnant with Gavin, we decided that, since we were ahead of the game as far as retirement savings were concerned, we would be able to afford not to contribute while I stayed home with the kids...assuming that when I go back to work full-time, I'll be able to max out contributions to get back on track. Well, since then, we've been able to contribute 4% which is enough to get the company match. This is more than we had planned and it helped us weather the economic downturn, because we continued to buy while the market was low. I just wish that we could have contributed more while the market was low.
In order to avoid layoffs, my employer has temporarily stopped matching our 403b contributions. When I asked Stu what we should do, he suggested that we stop our 403b contributions only while there is no match and instead, contribute the same amount or more (when possible) to our Roth IRA. So, starting yesterday, we're contributing $120/month into a Roth IRA. I wish that we were contributing more, but with only 1 full-time salary and me only working 4 days/month, we are tight right now.
Our plan for the next year is:
- Have our wills drawn up (I keep kicking myself for not doing this sooner!)
- Build our savings account (emergency fund) back up to $15,000. It's at an anemic $3,500 right now. This includes having taken $3,500 out to pay for installing a fence and gutters on the house.
- Any tax return will be deposited into the savings account. I'm expecting $3,000 to $5,000.
- Adjust our w-4's to withhold less for taxes. We're getting WAY too much back!
- Continue to contribute a minimum of $120/month to the Roth IRA.
- Any additional money will get split between the Roth IRA and the savings account.
- We will continue our $350,000 (30) year term life insurance policies (each).
- My additional $150,000 (10) term life insurance policy is up this year and I need to decide whether to get a new term policy or start a universal life policy. This extra amount on me is due to the fact that, when I work full-time (which I intend to do again when the children are both in school), my husband makes 2/3 of the hourly rate that I make.
- Stu is adjusting the allocation for additional contributions made to our Roth IRA.
Thursday, January 28, 2010
Let's Talk Money
Welcome to my life on a budget!
A little bit about me...I am a mother of 2 young boys. My husband works full time and I work as a nurse 1 day/week. I consider myself a stay-at-home mom (SAHM) due to the fact that we don't use childcare, although I still work part-time. I schedule my work based on days that my husband can stay home with the kids. I am 35 years old and, up until I got pregnant with my 2 1/2 year old son, I thought of myself as a career woman. I spent my whole adult life hoping to become a flight nurse on a medical helicopter, but after 4 years of flying, I changed my mind. When I went back to work after my maternity leave, I knew I wanted to be a SAHM. About 5 months later, I was able to go part-time doing ground transport only.
Most people think that money is a taboo subject and that it is an inappropriate subject to share with people. I, on the other hand, feel that the more you talk about money, the more informed and educated you become. It also makes you hold yourself accountable for your financial actions. In my experience, when other people know your plans, you tend to stick to them.
I grew up saving my birthday money in a passbook savings account. I was told early on that if I saved up enough money to pay for my first year of car insurance, then my parents would pay for it the rest of the time I was in college. When I was 16 years old, my mother taught me how to balance a checkbook and at 17 (when preparing to move to college), I opened my first checking account and got my first credit card. My parents had some great advice for me when I moved out. My mother taught me how to budget using a budget book with ledger pages (I still have it and use it) and my father told me his views on retirement. He said that he didn't think that social security would be around when I retired and that the key to saving for retirement would be starting early. He always talked about the power of compounding interest. Amazing advice coming from a union electrician (hello, IBEW local 98!) who doesn't even know how to write a check. :) I opened an annuity at the age of 20. When I was eligible for a 403b in 1998, I stopped contributing to the annuity and contributed enough to the 403b to get the employer match. I got married in 1999...and that's when things started to go down hill.
4 years, a divorce, and about $5000 in credit card debt later, I was starting over. I got my name off of the mortgage that I was pretty sure he would default on. I took my bed, my kitchen table, my vehicle, 1/2 of our credit card debt, and my retirement fund and I left. Luckily, we split amicably, before he had a chance to destroy my credit like he ended up destroying his. The credit card debt meant that, not only was I starting over, but I was in the hole...except that I still had my retirement fund. (Thanks, Daddy!)
Then I met Mr. Right. We moved in together and started getting our finances on track. I started contributing 25% of my income to my 403b and a 457 account combined. Mr. Right was contributing the minimum to get the employer match through his 403b. We bought a house (well, I bought a house and he lived there too...LOL.) We worked a ton of overtime so that we could pay off our credit cards and pay for a wedding in cash, which is exactly what we did. Once we got married, the only debt we had left was our mortgage and our car payments. When it came time to have a baby, we knew that with our work hours, daycare wouldn't be an option. We planned to work opposite shifts so that one of us could always be home. The original plan was for me to work full-time since I made about $9/hr. more than my husband, and he would work part-time. It was after my maternity leave that I realized I wanted it to be ME working part-time and my husband working full-time. We put our heads together and came up with a plan. If we could work as much overtime as possible for a couple of months, and drop my 403b and 457 contributions back to 4%, we could have our vehicles paid off, which would save us almost $1,200 a month. Then I could go part-time.
It took 5 months, but we were able to pay off all of our debt, with the exception of our mortgage. I've been a SAHM working 1 day/week ever since...and I don't regret it for a minute. Somethings ARE more important than money. :)
A little bit about me...I am a mother of 2 young boys. My husband works full time and I work as a nurse 1 day/week. I consider myself a stay-at-home mom (SAHM) due to the fact that we don't use childcare, although I still work part-time. I schedule my work based on days that my husband can stay home with the kids. I am 35 years old and, up until I got pregnant with my 2 1/2 year old son, I thought of myself as a career woman. I spent my whole adult life hoping to become a flight nurse on a medical helicopter, but after 4 years of flying, I changed my mind. When I went back to work after my maternity leave, I knew I wanted to be a SAHM. About 5 months later, I was able to go part-time doing ground transport only.
Most people think that money is a taboo subject and that it is an inappropriate subject to share with people. I, on the other hand, feel that the more you talk about money, the more informed and educated you become. It also makes you hold yourself accountable for your financial actions. In my experience, when other people know your plans, you tend to stick to them.
I grew up saving my birthday money in a passbook savings account. I was told early on that if I saved up enough money to pay for my first year of car insurance, then my parents would pay for it the rest of the time I was in college. When I was 16 years old, my mother taught me how to balance a checkbook and at 17 (when preparing to move to college), I opened my first checking account and got my first credit card. My parents had some great advice for me when I moved out. My mother taught me how to budget using a budget book with ledger pages (I still have it and use it) and my father told me his views on retirement. He said that he didn't think that social security would be around when I retired and that the key to saving for retirement would be starting early. He always talked about the power of compounding interest. Amazing advice coming from a union electrician (hello, IBEW local 98!) who doesn't even know how to write a check. :) I opened an annuity at the age of 20. When I was eligible for a 403b in 1998, I stopped contributing to the annuity and contributed enough to the 403b to get the employer match. I got married in 1999...and that's when things started to go down hill.
4 years, a divorce, and about $5000 in credit card debt later, I was starting over. I got my name off of the mortgage that I was pretty sure he would default on. I took my bed, my kitchen table, my vehicle, 1/2 of our credit card debt, and my retirement fund and I left. Luckily, we split amicably, before he had a chance to destroy my credit like he ended up destroying his. The credit card debt meant that, not only was I starting over, but I was in the hole...except that I still had my retirement fund. (Thanks, Daddy!)
Then I met Mr. Right. We moved in together and started getting our finances on track. I started contributing 25% of my income to my 403b and a 457 account combined. Mr. Right was contributing the minimum to get the employer match through his 403b. We bought a house (well, I bought a house and he lived there too...LOL.) We worked a ton of overtime so that we could pay off our credit cards and pay for a wedding in cash, which is exactly what we did. Once we got married, the only debt we had left was our mortgage and our car payments. When it came time to have a baby, we knew that with our work hours, daycare wouldn't be an option. We planned to work opposite shifts so that one of us could always be home. The original plan was for me to work full-time since I made about $9/hr. more than my husband, and he would work part-time. It was after my maternity leave that I realized I wanted it to be ME working part-time and my husband working full-time. We put our heads together and came up with a plan. If we could work as much overtime as possible for a couple of months, and drop my 403b and 457 contributions back to 4%, we could have our vehicles paid off, which would save us almost $1,200 a month. Then I could go part-time.
It took 5 months, but we were able to pay off all of our debt, with the exception of our mortgage. I've been a SAHM working 1 day/week ever since...and I don't regret it for a minute. Somethings ARE more important than money. :)
Subscribe to:
Posts (Atom)
Posts
