The personal finance blog for Life Balance

It’s been over a month since my last entry and what a month it’s been. I’m currently down south helping care for my dad as he deals with serious health issues. I arrived in time to prepare and then narrowly miss two hurricanes. One of my brothers lives here but Dad’s condition worsened to a point that my brother didn’t know what to do.

The good news is that Dad is somewhat stable now. I monitor his meds and diet and I’m proud to say that I’ve gotten him to enjoy green smoothies. His mental clarity is back but he’s tired and weak all the time. The best-case scenario is that he’ll qualify for a transplant list so his overall condition is still quite serious.

Everything needed attention: his house, his finances, his health, and a couple of relationships. Dad is generous and gullible and he’s been taken advantage of repeatedly. Some things were obvious to us but the more I organize, the more I find out. I am thankful that he’s thinking clearly now so I can ask questions and support by doing things with his approval instead of just taking over.

One of the next tasks on my Dad to-do list is to move his IRA to Vanguard. He has an advisor account with someone he met who is charging thousands of dollars each year in fees. His money is invested in about two dozen funds. It looks needlessly complicated for a modest retirement account. Dad has agreed and he trusts my judgment. Any suggestions for good funds for retirees? (once I get the funds transferred to Vanguard) My own retirement account is more aggressive since I’m not retired and I’m willing to take on some risk. That’s not Dad’s situation.

I’ve made good progress in my time here so far:
++ gotten Dad to retire. He’d been eligible for a healthy pension but enjoyed working.
++ paid off his mortgage
++ given notice to the 30-something woman with toddler that has been living here rent-free for 18 months
++ locked the credit card that was being misused by others
++ reclaimed two bedrooms that had been taken over as storage facilities for others
++ most importantly: improved Dad’s diet and lifestyle

Soon I’ll be making a trip home to get our household up-to-date and to retrieve personal items before returning. I’m not sure how long I’ll need to stay – I’m being flexible. And DH is being really understanding. I’m glad we chose online school for the boys this year. I'm also glad that I have a job that allows me to work anywhere with an internet connection. I saw a photo of a shirt that had ‘2020’ and 1 of 5 stars beneath it with “would not recommend”

I mentioned in a previous post that I have a deadline set for the start of my retirement. And that I have a list of prerequisites to determine whether I’m in a safe-enough-for-me position to retire sooner. Each quarter I evaluate my progress against those prerequisites, and my quarterly check-in for this is aligned with my birthday instead of the standard calendar quarter. That’s because a couple of my prerequisites are based on my 60th birthday so the calculation is simpler.

Result for this check-in: It's not time to retire now, but I’m continuing to make progress!

In order to pull the plug immediately, I’d have to have these things accomplished:
(1) Retirement account on target for 7 figures on 60th birthday
(2) College savings on target for full funding
(3) Mortgage paid off
(4) Savings of basic expenses until 60th birthday set aside
(5) No consumer debt

Currently my progress is:
(1) 100+%
(2) 50%
(3) 39%
(4) 6%
(5) 8%

Assumptions for these calculations: average annual return on investments will be 5%, no further contributions to investments, full funding = 40 semesters (8 x 5 boys), $36,000k annually for basic expenses, starting consumer debt was $10k. (At one time I had negative progress on this! For the record though, it’s at 0% interest.)

The next time I check-in on this progress will be around my birthday.

So here we are just a couple of months after DS2 graduated and flew the coop. Now DS3 starts college this month. A fresh new round of cobbling together funds to pay the semester’s expenses. This is what Fall 2020 looks like financially:

Total bill from the university for housing, food, tuition, & fees - $10,637. It’s slightly less than I expected, maybe because now the semester ends just before Thanksgiving.

This is how it’ll be funded:
$1,000 scholarship
$2,597 balance of 529 account from old state
$4,000 cash set aside
$ 25 scholarship
$3,015 withdrawal from current 529

I wanted to transfer the funds from our old state’s 529 plan to the current plan after we moved just for simplicity’s sake but the old state informed me that I’d lose the ‘earning enhancements’ that had been paid into my account by the state if I transferred it. It’s just 2%, but still, it’s free money. I didn’t want to leave money on the table so I kept the accounts open. We had accounts there for DS1, DS2, and DS3. I’ve always pulled that money out first so I could close the account. This is the last kid with an account there so finally I’ll be able to close it completely.

Our current state doesn’t provide any contributions but it does provide a state tax exemption for money contributed to a 529 account – ANY 529 account – up to the gift tax exclusion which is around $15k per kid. Since I could choose any 529, I did research back then to find a good one. I selected the Utah plan and I’ve not been disappointed. The fund choices are good (Vanguard), the website is easy to use, and it’s easy to make withdrawals. For that withdrawal, I completed the request online on their website and the money was in my account in two days. In contrast, the old state’s plan doesn’t offer online withdrawals. I had to print out forms, including a tax form, then scan and e-mail them in. Now I’m still waiting for a paper check to arrive. I hope it gets here before the tuition is due. Otherwise I’ll have to temporarily transfer money from a savings account. Grrr.

I set aside $4000 cash per year (at least) from my income so that I’ll qualify for the American Opportunity Credit deduction on our taxes. It provides a refund/credit of $2500 if $4000 was spent on college tuition. It doesn’t provide the credit for money spent on college-related things like housing & food but I’m using 529 funds for that. You also can’t get the credit if you used all 529 funds because that would be double-dipping. You also have to have an AGI of $160k or less. As I type this, it sounds complicated but it really isn’t. Like most things financial, you just have to know the rules.

That $25 scholarship? I’ve waited 10 years to use that! DS3 participated in an after-school bowling camp during the winter of third grade. He’s high energy so I just wanted something active for him to do indoors while I worked in the afternoons. It was a neat setup: the bowling alley sent a bus to school to pick up the kids. They gave them homework time, pizza for snack, and then taught them to bowl. At the end of the week (or two? I can’t remember.), there was a bowling tournament for the kids and DS3 won the $25 scholarship as a prize. We laughed about it and told the grandparents that he already had an athletic scholarship for college at age 8. A couple of times over the years I got paperwork about the scholarship and had to create an account online, updating passwords sometimes. The online request to get the money was straight-forward but they won’t send it to me – it must go straight to the school. It makes me chuckle to think of the person in the bursar’s office who will receive that official scholarship check for $25! So really, I probably worked hard for that 25 bucks but again – it’s free money. I reminded DS3 that his bowling performance is helping him now! I don’t know if he’s bowled since then.

We’ll still have books and the costs related to setting up his dorm room. So I expect to spend another $500 or so. Then I’ll start thinking about next semester.

Despite the continuing market volatility, July was a good month for the net worth. It’s up by $39k.

Since I set up my numbers in Excel last month, now I get to see the total picture that reminds me of my overall progress even during months that don’t look so healthy. I like projecting the lines forward on the graph to see when I might expect to hit milestones.


2011-2020

I’ve shared before that I track the principal payments for our house debt each month. Well this month something exciting happened – the debt dropped down to 5 digits. I’ve still got a long way to go, but it’s motivating to see that progress milestone.


5 figures!

It’s also about 2 years into my 5-year plan so hopefully I can stay on course. To do that will require a progressively increasing principal payment.

Yes, I know it’s August! I’ve had a couple of busy weeks and didn’t get around to this.

My 2020 goal #2 is to adopt a permanent health-enhancing habit each month. My new health habit for July was to disconnect one day a week. For me it’ll usually be a Saturday since I work and I’m often getting prepared for the week ahead on Sundays (unfortunately).

On my disconnected day, I will avoid screens. Computer screens, TV screens, ipad mini, and phone.

NEW HEALTH HABIT #7:
Have one disconnected day each week.

BENEFIT:
• Spending more focused time in my relationships
• More likely to spend time outdoors
• Less stress caused by reading ratings-seeking controversial news stories
• Increased productivity since there aren’t distractions
• Less guilt from wasting time on thoughts and activities that really aren’t important
• More time for reflection
• Become more present and authentic.


COST:
Upfront – zero
Ongoing – zero

There might be a cost savings because I can’t order online! 😉

2020 health habits so far:
(1) Fast one day per month
(2) Consume fresh organic juice at least 3 times a week
(3) Stop storing food in plastic containers
(4) Spend at least half an hour outside every day
(5) Drink 32 oz filtered water every day
(6) Do strength training exercises twice a week
(7) Disconnect one day each week.

I remember that CJ once did something similar to this one year for a resolution.

I got a marketing flyer from my credit union for home loans about a month ago. The rate to refinance was lower than my current rate with PNC and there were no fees or closing costs. It seemed like a no-brainer. After seeing Amber’s success in refinancing, I was inspired to follow-up.

I talked with the representative to verify the no costs, including no prepayment penalties, and then gave them to go-ahead to move forward. The paperwork arrived a few days later and I read the fine print. I saw a gotcha. They assumed that the homeowner’s insurance had a low deductible. I deliberately have a high deductible because I figure that’s what EFs are meant to cover. It keeps my premiums lower. I called to see if that requirement was negotiable and unfortunately it wasn’t. I asked them to trash the application. It’s not worth saving money in one place only to spend it in another.

So I did drop DS2 from our auto policy once he moved to his own place and bought himself a car as I planned in an earlier post. And our insurance price increased as a result! I guess the insurance company figures that with DS2 out of the picture, DS3 drives the vehicles more. And that’s true. One of the vehicles is in my name but is actually DS3’s – he paid for it. DS2 was 22 with a good student discount. DS3 is 18 without a good student discount. Ah, that’s what I get. I can only imagine how much it’ll be once DS4 and DS5 join the policy. They’ll be getting permits in the Fall and licenses sometime next year. Then I’ll have 3 teenaged boys on the policy. Eeek!

Our current 6-month premium is now $1070. That covers three drivers using two cars with liability coverage only. The liability coverage is 250-500-100.