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It’s the beginning of the month, which means it’s time to examine last month’s finances. It's an especially fun one as 2010 ended – so many changes with our finances! I'm happy with how the year ended and I'm excited to see what happens this year as we tackle our finances as a couple.
Our Spending Habits in December
Our biggest unusual expense this month has been our anniversary trip, but since we already had taken care hotel and airfare, it wasn't a big dent in our budget. We ate out and only got a few things on the trip. It was all about relaxing, so our expenses were pretty reasonable.
Our recurring expenses broke down in typical order:
- Cars (Insurance, gas, and stuff from AutoZone)
Checking & Savings
Our checking and savings is up mainly due to a yearly bonus coming in last month. With bonuses, we try to forget about them in a sense of not including them into our budget until it shows up in the bank. I know that sounds elementary, but sometimes you just assume a bonus will come and it doesn't. If you were counting on the money and something happens, it can throw off your budget.
We're planning on saving a portion of it, but as for the rest, we're debating on what to do next. If you have any ideas or suggestions, please leave them in the comments. I'd love to get some feedback to discuss with my husband.
The cars are doing well overall. No repairs again this past month, but I’m noticing that the little VW needs to be taken to the shop. I'll take it to the shop today to hopefully get a diagnosis on what's going on. In case you’re wondering how I got the vehicles’ values, I used Kelly Blue Book. We no longer have car loans, so they are just assets on our family’s little spreadsheet. Every quarter I’ll update the values to account for depreciation.
The car replacement fund is doing well. We make car payments to ourselves to be free of a car loan for our next car. I’m hoping to slowly increase the deposits in 2011, but I’m looking at some of our other financial goals to see if that’s the best move.
House and Mortgage
Here’s where we stand today with the mortgage:
- Total Loan Amount: $112,695.40
- Interest Rate: 5.00%
- Loan Term: 30 years, fixed rate
If we continue to pay an additional $150/month, we’re looking at paying off the 30 year mortgage off in 18 years and 2 months! That’s for a total savings of $60,768.76 in interest!
If you don’t qualify for a 401(k) at work, though, you can still open an IRA. Opening an IRA isn’t hard at all and it can be a huge benefit for you. In fact, you can start investing with less than $1,000.
If you’re not sure how much you can contribute to your retirement accounts, here are the current annual limits:
- 401K – $16,500
- Roth IRA – $5,000
- Traditional IRA – $5,000
The main difference between the two IRAs has to do with when you’ll be taxed:
- Roth IRA – contributions are made with after-tax assets, all transactions within the IRA have no tax impact, and withdrawals are usually tax-free.
- Traditional IRA – contributions are often tax-deductible (often simplified as “money is deposited before tax” or “contributions are made with pre-tax assets”), all transactions and earnings within the IRA have no tax impact, and withdrawals at retirement are taxed as income.
Sources: IRS Publication 590 and Wikipedia
Nothing exciting or new, we’re just chugging along with the student loan payments. Payments have been automated so it’s been relatively easy to keep up with them; we just confirm payments have been made each month. I’m really happy that I consolidating my student loans earlier this year to take advantage of the lower rates.
If you’re interested in consolidating your federal student loans, there are 3 ways to do it:
- Online: You quickly and easily file and submit your application online with Direct Loan Servicing.
- Phone: You can also call Direct Loan Servicing and have someone walk you through the process at 1-800-557-7392.
- Paper: The slowest to complete if you’re a procrastinator like me.
It’s easy to do and you get can help on completing the application.
After tallying up all the accounts, I’m happy to report we’re growing our net worth.It’s a nice little jump and I hope we finish out the year with a net worth of $50,000. We’ll see.
Net Worth (as of December 31, 2010): $45,845.43 (+$2,549.64)
Your Net Worth Update
Now that the year is over, I'd love to hear how it went for you and your financial goals. Were you able to meet all of them?