Saturday, January 24, 2015

2014 – A Year in Review

Ready for a little snooping into our current finances? We’re kicking off 2015 with a full disclosure on how we did last year. We made some good moves in 2014, but there were a few things that never came to fruition. Budgets are always a work in progress and we feel we are doing a decent job with our funds. The blog was pretty quiet this past year, so here’s a rundown of how we put our money to use. 

Major Promotions

The biggest news was that Mike got promoted this summer! He went from a Program Coordinator to a Program Director, a big step that boosted him from an hourly wage to a salaried position. This utterly changed our finances as he received what amounted to a $10,000 annual increase. The promotion also cemented him with a career path in human services for intellectual disabilities. Even beyond his current company, there are many opportunities at the city, county, and state level available to him, much less the entire country if we felt like moving (which we decidedly do not). After so many years of being unemployed and transitioning out of the military, it is amazing to finally see Mike have a rewarding job that is completely in line with his skills and personality.

Small Raises 

No title upgrades on my end, but I did receive a 4% raise in October. Dare I complain about an extra $80 a month? No, but it wasn’t enough to alter anything really. Just a little extra dough to satisfy groceries and gas.

Cars Paid in Full 

We killed off the Mazda loan!!! Trust me, that thing would NOT die meekly. We threw an extra $2,000 on it in 2013 and were confident we could take out the remaining balance in the first quarter of 2014. What a joke! We had so many car repairs last year that we never put an extra cent on that damn loan. We’ve had this bill since 2011 and have been making payments of $203 a month (original balance $10,000, interest rate 3.49%). We just let the autopayments run their course and the last one came out in November. 

Student Loan Progress  

It’s no secret we have massive student loans. My three loans have been active since I graduated in 2008, but progress has been slow and depressing. 2014 was the first year that we started putting extra on those suckers. Rather than increase monthly payments, I dumped extra money into a savings amount. Why? So I could plunk down one massive payment at the end of the year, having collected interest on it, and get the psychological satisfaction of sticking it to the loan companies. 

I tried to do that 52-week challenge (the one where you put $1 in savings at Week One and work your way up to $52 at Week 52), but I hated it. It would work nicely if we got paid weekly, but it was awkward with our bimonthly checks. I also didn’t like how the amount varied each time. I stopped a few months into this strategy and reassessed – what was it that I really wanted to accomplish in 12 months? The answer was to have $1,000 to put on one of my loans. So I did some quick math and determined that equaled $40 every paycheck. This was much easier to slide over every payday and it was rewarding to see the balance increase so quickly. 


We were also in a position – for the first time EVER – to move one of my teaching paychecks entirely to this account (I get paid $1550 per class after taxes). That income is always a bonus but not dependable as I’m never guaranteed to have more classes (yay adjuncting). In the past, we’ve always used any teaching income as an unexpected windfall, filling up holes that our regular income couldn’t satisfy. With the new safety net of Mike’s promotion, we could “spare” those monies for debt reduction. It is supremely satisfying to be able to take income I earn because I have a Masters and put it on the debt that I had to take out to get the Masters in the first place. We had hoped to do this years ago (I’ve been able to teach college for over 6 years now), but such is life and bad economies.

So, with the boost of the one teaching paycheck and the steadfast monthly savings, I plunked down $2,200 on my biggest loan (which also has the highest interest rate at 6.8%). It only took that loan from $22,000 to $20,000, but it felt SO GOOD. It also kicked my monthly payment down from $165 to $105, which I’m ignoring, of course, and will continue to pay the $165.

Saving for a House Down Payment 

We have been renting since 2006 and I don’t want to think about how much we’ve shelled out in almost a decade. The fact is and remains – our monthly rent could satisfy a mortgage, but not the yearly maintenance that a house requires. Most advice articles say to budget 3-4% of your home’s worth for repairs. Even on a modest house in Iowa of $100,000, that’s $4,000 you need in case the basement floods or the furnace breaks. That’s the part, much less the time needed for home ownership, that we don’t feel we can take on. We’ve also never had the extra funds to set aside from a down payment. Most banks want anywhere from 10% to 20%, which is definitely out of reach based on our yearly income and debt obligations. But we also don’t want to be in a position down the road where we are ready for a house but don’t have a down payment. Even with a VA loan, which doesn’t require a down payment, it’s good to cut any amount off of your loan total. 

We decided that even if it takes us another 5 years to be ready for a home, we want to have a down payment ready to go. We ended up taking the same approach as the student loans and have been reserving $40 a paycheck. Mike also got a little bonus near the holidays so we moved that over too. After 12 months, we have just over $1,500 hanging out. A good foundation to build on.

Healthcare Decisions and the VA

You might know that the VA has been a wreck for some time and recently went through some sweeping reforms. It was so bad that Mike hadn’t been seen for TWO YEARS. His health plan through work is so awful that we didn’t consider it for a moment, but we had begun to seriously talk about adding him to my plan just so he could get some basic care. This was one of the reasons we were trying to work so hard on the Mazda loan, so we could free up that $200 to cover the switch to a family plan. But miraculously, the VA got their shit together, got Mike in for a checkup, and has been ordering a slew of needed tests. All at no cost. As is fucking promised. For right now, we’ve suspended the idea of adding him to my plan as he’s getting the care he earned.

Retirement Savings Never Happened

We are keenly aware that our greatest financial shortcoming is no retirement savings. I hate it but feel like there’s very little we can do about it right now. My company has virtually no match for a 401K and Mike’s is fairly laughable. Despite dismal options, I resolved that we would remedy this situation by my 30th birthday. You know, start a new decade on the right financial foot. Well, April came and went and it didn’t happen. I pushed back the deadline to Mike’s birthday in July and that also passed. Then I waited to see if my raise in October could help out. But nothing in 2014, even Mike’s promotion, made us feel confident about dedicating a portion of our income to retirement. 

I know, we were saving up a total of $160 a month for student loans and a house down payment – we really didn’t have extra to spare? Extra wasn’t and isn’t the problem. If something comes up, I can suspend those savings goals at any time. When you start those 401K contributions, that’s it, there’s no saying “not this month.” You don’t see that money until 65. 

But honestly, it’s not numbers – it’s psychological. I just can’t trust to let go of my money like that and I have a hard time seeing investing as anything but a form of gambling. I know these attitudes are hurting us in the long run and I’m looking into ways to resolve this before we turn into an example of what not to do. I am seeing if my company’s investment firm offers classes or if I can sit down with an advisor who will give me a 101 overview. There are always books at the library, but I’m not so confident this is something I can teach myself with no foundation at all.

Good Things on the Horizon

One of the things I’m proud of is that Mike and I talk about finances each month. I may go in and pay the bills, but we sit down together and go over those credits and withdrawals. We also do this at the end of each year, mainly with student loans. Glasses of wine were definitely had after this last analysis (Mike’s student loan is now active and we will have four payments totaling $750 each month, deep breaths), but we’re still charging ahead with reducing them as much as possible. Can’t wait to share our other goals and strategies for 2015!

What was your biggest financial positive in 2014?