Retirement Plans

Who has plans for their retirement?

Me, Me!  *raises hand*

Who has recently revised them to be more reasonable?

Ooo, Ooo!  *raises hand higher*  *jumping in seat*

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Yes, well, I really didn’t do all that jumping around and hand raising, but I have recently revised our retirement plans to make them more reasonable for us.

Right now what you see on my sidebar is a line that shows “Retirement Funds” and a $1,000,000 goal.  But the more I thought about it, the more I realized that was totally unreasonable.  We’re not going to be able to save $1,000,000 cash!  If we do great(!!!!), but we really don’t need that much in cash.  We don’t even use all of our income now and we have debt!  Our living expenses are going to be very minor by the time we retire.

Before my husband got his most recent job, we learned what we could actually live on due to a job layoff at his old workplace late last year.  We would be able to survive on $1,600/month or $19,200/year.  That’s just the bare minimum…paying minimums on debt, mortgage, utilities, groceries…no extras.  It wouldn’t always be comfortable, but we could essentially survive on a poverty income.

Of course, we don’t want to do that! Nothing will ever get paid off and we’d never have any extras, new clothes, the occasional night out, etc.

With his new job we make slightly less than three times that amount.  It’s way more than we need, but it’s perfect right now because we use all the extra to save and pay off debt.  Plus we don’t have to feel guilty if we want to go do something…such as the mini-vacation we took on the spur of the moment!  Though currently we seem to be broke all the time anyway because all the extra is going towards savings or debt!

At retirement, it will be way too much! I figure we’ll need about double the amount when laid off, or half the amount we make now.

WHY?

My hope is that everything will be paid off or nearly paid off!  Our children will be out on their own and will not be given any more money or have necessities bought for them!  Any big items we need/want will be bought prior to retiring.  For example, I would love to buy an RV so we can travel whenever we want to…I’m not going to wait to buy it when we retire, instead we’ll buy and pay it off before we retire!

So here is my new retirement plan:

• Save $300,000 or more in retirement funds.  This should give us about $544.63/month income.  We will adjust this amount as needed prior to retirement with inflation, if needed, though this amount is already considering an amount of inflation and the number of years until retirement.
• We’re not counting on Social Security, but even if we only get $500/month each, that will increase our monthly income to $1,544.63/month, though I won’t be able to collect until almost 10 years after my husband retires. Again we will adjust the needed retirement funds if we see Social Security is totally going away or who knows…maybe we’ll be lucky enough and they’ll find a way to fix it!  (I won’t bet on that though!)
• Pay off all debt including mortgage so our home is free and clear other than taxes, insurance, utilities, and maintenance.  Purchase any vehicles, RV, big-ticket items and pay them off prior to retiring.
• Buy properties prior to retiring that can be used as rental income.  The hope is to make at least an additional $1,000/month in rental income while retired, which will bring our total income to $2,544.63/month or $30,535.56/year.  In addition, properties can be sold off if extra income is needed in case of heavy expenses such as long-term hospitalization.  We will make sure at least one of the rental properties is a condo in an area we would wish to live with adequate public transportation for when we have to stop driving and can no longer take care of the home’s exterior maintenance.  We will then either rent or sell the current home.  The plan is to have as many of the properties as possible paid in full prior to retirement so the only expenses, if there are no tenants, are taxes, insurance, and the property management company fees.

With a majority of our debts already paid in full by retirement, we should be able to survive on much less than we did while my husband was laid off.  Plus there will only be two of us rather than supporting four people.  With double the amount needed to survive, we should be able to travel as we want without feeling too stretched financially.

I’m figuring we have 18-20 years to do all of this, which will put my husband in his mid-to-late 60′s and I’ll be in my mid-to-late 50′s.  If needed, my husband can retire in that time period and I can work for another 10 years, though I’m hoping I won’t need to with the rental properties.

What are your retirement plans?

Made $$ on Something Free!

This past weekend we switched our satellite service from Dish Network to DirecTV.

Reasons for the change:

• Our receiver was very old…so old that we own it!  And our remote stopped working a long time ago!  In order to get a new HD receiver to go along with our HDTV, we would have had to pay a bunch of money for it, and it would be leased!
• They just raised the price for our package.  While DirecTV is a bit more expensive, they are having a deal right now where we’d save $29 a month for 12 months.
• More channels we would potentially watch on DirecTV than on Dish Network.  After taking away all the fluff channels, we actually get 27 more channels on DirecTV than on Dish Network and for only $9.00 more a month (after the 1 year discount).

The total installation, receiver, and dishes were free and we did not have to pay a deposit either.  Also, when I signed up, I decided to go through InboxDollars to do it.

Today I earned a $25.00 rebate for signing up with DirecTV through InboxDollars!

So I made $25 on something we initially got for free, plus we’ll be saving $336 with DirecTV compared to what we’d be paying for Dish Network due to the 12 month discount.

Anyone else come up with some good deals lately?

Almost There!

We only have $2,727.81 left to reach our emergency fund goal of $10,000!  So I’m going to spend the next 2 months throwing everything extra at it so we can relax knowing whatever happens we have a great emergency back-up.  I figure I can put in at least $1,390 this month and the remaining $1337.81 next month, though those figures don’t include interest earned or the automatic monthly savings.  From there I’ll take all the money, other than what’s already been set up to automatically go into the emergency fund account, and throw it at the debt.

That’s about $1390 per month extra over the regular payments made!

• That means the credit card will be paid off in 2 1/2 months.  September 2010-November 2010
  
• Next I can start paying down the Heloc.  I should be able to get it down to around $32,600 (estimating) before my student loans become due.  December 2010-September 2011
• Then I’ll throw everything at the student loans (after I consolidate them) before returning to the Heloc.   October 2011-January 2013

Hopefully those dates are an overstatement. I’d love to be down to a Heloc and Mortgage payment only before 2013!  I’m not including that I’ll actually have more money to put towards the debt as I pay things off.  The regular credit card payment will be gone and added to the Heloc.  As the Heloc gets paid down, the interest payment will lower and so I’ll actually have more to put towards the student loans when they become due.

Of course this is still all wishful thinking assuming nothing major happens over this time period to negate these plans.  Though I could also find more money here and there, which may reduce the payoff times.  It all depends on the “What If’s”! *sigh*

Regardless, the emergency fund is the quickest and easiest item to take care of first!  I think I’ll go see if I can come up with some more money!

Good Money Day!

And I didn’t even make any!  But I’ve been moving money all over the place today, and did so good at the grocery store that I’ll have to go back and buy some more!

Grocery shopping went so well that I bought 71 items and was $43.58 below my $200 budget!  I also saved $52.85 in store savings and $6.58 in coupons.  So I’m ready to go back to the store this weekend to pick up some additional food for the pantry and freezer.  I already bought some of these today, but we go through them a lot.  Tomorrow I’ll pick up:

• 4 bags of shredded cheese on sale 2/$4.00 — I bought 4 of them today and put 3 in the freezer.  These 4 will also go in the freezer.
• 2 bags of frozen tenderloins on sale for $5.99 — I bought 4 bags today and I already had 2 bags left from the last shopping trip.  These extra 2 bags will be a nice addition to the freezer!
• 1 bag of 80 frozen meatballs $6.99 — I bought 1 today and another will give me 2.
• 2 jars salsa $1.99 each — I bought 2 jars today.  Great for spicing up a meal!
• 1 bag of rice — I bought a 5 lb. bag today on sale for $2.59…another 5 lb. bag would be terrific!  We go through a lot of rice!
• 1 canister of stuffing — I bought 1 today and will add another.
• 4 bags frozen veggies $1.29-$1.69 each –  I bought 7 bags of frozen veggies today.  Some are used for cooking in meals and others are used for sides…good to have some extras.

After this trip I’d like to see how long everything I bought and have on hand will last.  I’m going to make up as many menu plans as I can and stretch the food we have other than quick trips for milk, bread, fresh veggies, etc.

In addition to the shopping trip, I also transferred some money around.  I paid $400 extra towards our credit card debt and I transferred $400 extra into our emergency fund.  In 4-5 months we should have our emergency fund up to the $10,000 goal and our credit card paid in full.  We’ll still be using our credit card (I’m not opposed to them, but the balance was too high at this time), though the need for it other than “use, then pay off” will be lessening now that I’m almost done with school (only 2 more terms!).  In regards to the emergency fund, we should be over $7,000 before the next pay period!

Financial Info in Sidebar!

I’ve added some financial info in the sidebar! Here are some of the things I have and have not put in it.

I have included:

• the initial amount owed, the current amount owed, the goal, and the percentage of completion for our mortgage, truck loan, student loans, and heloc;
• the actual amount saved, the goal, and the percentage saved to reach the goal for our emergency fund and retirement accounts;
• the amount I have in our “Loan Payoff” account to use towards paying off debt;
• the initial net worth (beginning 4/22/2010), the current net worth, and the percentage of change either up or down.

I have not included:

• the credit card information (note: while we do have to pay it off, we won’t be canceling it…the total will never be above $5,000 and most likely will begin to be paid off each month once the card is initially paid off);
• our actual paycheck amounts;
• any other savings and checking account information (I may talk about them from time to time, but won’t actually disclose exactly how much we have or don’t have in them…if I create a new one to use for a specific purpose, then I may or may not disclose that at a later time).

I hope to encourage others to pay down their debt along with increasing their savings by showing our progress.  We’re not the worst off there is, but at the same time it could always be better!  We’ve always been very careful with our lending and spending practices.  We are frugal where we need to be without being cheap and depriving ourselves.  We don’t mind spending a little more money on something if we know it’s better quality and will last, but we’re also looking for a bargain when we can.

Because of this I’d say we are now comfortable, though we’ve had to go through some uncomfortable times to get here.  We never would have survived my husband losing his job twice in 3 years if we didn’t properly plan and manage both our savings and debt.  Especially since I quit working in 2004 and have no plans to go back to work for quite a few more years!

Questions are welcome, though I may reply with a “too personal!” response, if needed.

Hubby Got Paid!

Hubby finally got his first paycheck!  It was direct deposited today and I was so happy with how much it was!

It was $866.87 more than his last job!  And we’ll get one of these twice a month!

How exciting is that!

I don’t have a statement yet so I can’t really do anything in my MoneyDance program.  I have figured out that I only need a portion of the check each pay period to take care of the bills and other incidentals.  That leaves $974.36 left over to pay off debt and put into savings ($487.18 each) every pay period!

As soon as I get the statement and update my financial data, I’ll be making 9 payments towards the truck loan.  I estimate I’ll be able to pay off the truck within the next month with these paychecks!  Then I’ll be working on the credit card and Heloc!

The credit card can be paid off in less than 4 months and the Heloc in less than 4 years!  Though I will have to stop to pay off the student loans, which will probably take 2 years, so it will be about 6 years from now for the Heloc.  That’s not including the extra amounts I was paying on the debts before hubby lost his job that will be coming out of the portion I’ve put aside to pay the bills.

I should probably put a little chart or something on my blog to track the debt payoffs!  I’ll work on it!

I’m so excited that we got a paycheck and can start saving and paying things off again!

Debt Repayment and Savings Plans

As we get closer to my husband’s start date for his new job, I’ve been getting ready to deal with the finances once again.  More specifically paying off the debt and saving more money–something I’ve had to essentially put off while he was out of work.

Now I have almost $20,000 more to work with and I’m really excited about it!

First, here’s a rundown of what we owe:

• Hubby’s truck loan: $3, 311.07 (we actually have this paid through June)
• Credit card: $4,708.21 (yes, we only have one!)
• Heloc: $46,579.21
• Mortgage: $106,982.24
• TOTAL = $161,580.73

I am also going to have student loans added to this, but they will be deferred until about November 2011.  So I will not be adding them until then.  As you’ll soon see in my plan, they are already included, though I don’t know the amount as yet.  I will also be consolidating them right after I graduate.

Our net worth is currently $163,361.08 with $56,895.43 of it in combined retirement accounts.  The new 401k will be added after the probation period in three months.  I’m hoping to save 10% from his paychecks so with the 5% match we’ll be saving 15%!  We’ll have to see in three months how that will work out, but my goal is to not go below 7-8%.

Even though we’ll be making $20,000 more than his last job, I know we won’t actually see all of that money.  I based my plan on $15,000 extra a year, or $1250 per month, until I actually see the checks and can make a more precise plan.

The Plan (subject to change based on actual paychecks):

• I’ll be splitting the extra in half so $625/month or $7500/year per half.  Half will go directly into savings and the other half will go towards paying extra debt.
• I will continue to use the old paycheck amount (with a small increase) to pay the bills as I normally did and then use this as extra.  For example, at one time I was paying $300 on the Heloc.  When the rates came down I continued to pay the $300, but I’d pay an evened out amount to the heloc (if payment was $105.89, then I’d pay $110) and use the rest ($190) to pay down the truck loan (in addition to its regular payment).  I’ll continue to do that, but also add this extra money to paying the debt off.
• I still have extra money from hubby being out of work that I normally would not keep in the account I have it in.  As soon as he gets his first paycheck, I’ll be taking that entire amount I have left and pay off the truck loan! Then I can change the auto insurance on his truck to match my car (paid off prior to buying the truck), which will save us more money!
• I’ll then start my plan with the debt & savings money on his 2nd check (the first will only be for 2 days).  Half will go directly to the emergency fund and half will go towards the credit card until the card is paid off.
• After the credit card is paid in full, then I’ll switch to the Heloc and pay down as much as I can until my student loans begin.  Then I’ll switch to them until they are paid off before going back to the Heloc.
• Eventually I would LOVE to have the mortgage also paid in full!

In addition to this I am still hoping to be able to purchase the lot next door to us.  Crossing fingers it will still be available and at a reasonable price when we are ready to purchase.  Eventually I would like to expand the house, but that will be a long time from now.  The first step would be getting the lot before someone buys it and builds a duplex!  Yikes!

During the first three months, we’ll also be living pretty much as we have while hubby was not working…bare minimum with minor splurges.  That way we can save even more in case something doesn’t work out with the job.  I’d like it if we were in a better position than we were in before if he lost his job again!

Does anyone else have a plan to pay off debt and/or save more money?

Hubby Got a Job!

For anyone that does not know, my husband was laid off from his job in December (he was actually let go in October, but was considered a non-working employee until December).  Thankfully, we are well-prepared people!  We have very little expenses and have saved enough of a buffer to be fine for up to a year with unemployment benefits filling in the gaps.

But we don’t have to worry about that anymore!

And do you know the best part?  He didn’t even apply for this job! He received a call from their HR person asking him if he was still available.  She apparently found his resume on Monster.com and thought he would be a good candidate for the position.  She immediately set up an interview for yesterday morning.  So he went in, talked to the guy, and that afternoon he received a call from the HR person with a job offer!

I am so happy that I’m going to have him out of my house! I mean, I’m so happy for him!  LOL!

This really is a great opportunity for him and our family.  We were doing so well with him out of work that I still have enough to pay off his truck when he gets his first paycheck.  We’ve also increased our emergency fund (I didn’t even touch it)!

He’ll be a programmer with a government contractor and his start date is April 1st, so he has a couple of weeks to just relax or get some errands/chores done.  He will have to do some traveling, but not much, except at first.  We’ll find out the schedule for that later.

The best parts are the pay and the benefits!  He has always been working for way under the median income for his job and the area.  Finally he is going to be paid for what he does!  That’s over a $20,000 a year increase!  We don’t really need all that extra so I’ll be socking it away into savings and paying off debt!  Woohoo!!!!

The benefits are just as awesome!

For health care it’s:

• about $72 per pay period for family coverage
• no copays
• they pay 80%, we pay 20% over deductible, though they do contradict themselves on this because they also say that once the deductible is paid, then we are only responsible for 10% (perhaps one is for in-network and one is for out-of-network…either way works for me!)
• and they pay 100% of deductible!

The dental is:

• about $12 per pay period for family coverage
• they pay 80%, we pay 20% (of course that depends on in-network and out-of-network, and the type of work needed.  Sometimes they pay more!)

There are more benefits, but those are the most important right now.  We still need to find out if the insurance starts immediately or if we need to keep COBRA for a while longer.  The 401K is after 3 months and they match 5%.  The life insurance is paid 100% by them!

I’m anxious for him to go back to work…I know he is, too!  But I’m also anxious to see how much I can pay off and save now that he’s making more money than we need!  I was already paying the debt off early with $20K less so I can only imagine how quickly I can get rid of it now!