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Year End (late recap)

January 3rd, 2019 at 03:46 pm

12/31/2018 Net Worth: $515,242. Down about 20k from last year due to market losses.

Debt on 12/31/2018: $91,282. Of this, $55,975 was mortgage debt.

As of the new year, of course there's been another mortgage payment, getting the balance to $55,600 (I always throw a little extra at it to get the balance to an even number). I'm going to throw another $600 at it from savings this week to get to $55k. I'm still confident that I can pay this off by the beginning of 2026, when I'll be 65, paying it off in just about 20 years.

I also took some savings to pay down my HELOC balance, and I'll make some more payments over the next couple of days to get the debt to 85k (55k mortgage and 30 non-mortgage), which will be the lowest debt total since I bought my house in 2005. I hate having the non-mortgage debt, but with the HELOC paid off, the highest interest rate on any of it is a bit over 4%, so the interest is not horrendous, and the large majority of it is on 0% credit card balance transfers. Much of this stems from the 7 months I was unemployed during 2014. That's when I racked up the additional debt (as well as accruing some in 2010-2012 when I was changing careers and working very low-wage jobs while my mother was dying on the opposite coast, so I had lots of cross-country travel.)

I'll update my goals for 2019 this weekend.

Brief recap on goal progress for 2018:
1. I completed two more of the CFP courses; 3 more still to go. 2019 will be the year, I pray!
2. Health: ate pretty well except too much eating out at restaurants; did not exercise consistently, meditated consistently for the first 2/3s of the year, then fell off the bandwagon.
3. Home: had one session with an organizer and organized part of my kitchen; other than that, no progress.
4. Debt progress--once I get it to 85k, I'll be just shy of my 10k goal.
5. Social life: maintained plus joined a community orchestra so expanded as well.
6. Vacations: Two overnight trips away from home, and I only have two PTO days from last year to use up this month (before they are lost, although I may lose them to medical issues rather than vacation--thyroid saga is outstanding and I have a surgical consult tomorrow, though I am wavering--will write about this separately and later).

7 Responses to “Year End (late recap)”

  1. PatientSaver Says:

    Great job, all the way around.

  2. AnotherReader Says:

    In my book a HELOC is just another mortgage. It's a lien on your house. If you don't pay your credit cards, your creditors get a judgement. If you don't pay the HELOC, the lender gets the house. It's all debt secured by your house.

    It's not clear to me why you are not making much progress on your debt. You have had steady employment since late 2014. Presumably you make a decent income as a financial adviser. In January 2018, you got the amount down to $89k, per your sidebar. Although you show $95,571 at the end of December last year, so it's not really clear. In October, you were at $88,194. At the end of the year, you were at $91,282. Not only did you not make progress, you went backwards. In your 2018 goals recap, you omitted listing the debt. Was it because you made no progress?

    I don't see a concrete plan to pay off debt this year. It certainly helps to throw some money at the mortgage and the HELOC in January, but what's the plan for the rest of the year? In your shoes, I would start taking the debt more seriously. I would try the "hair on fire debt emergency" approach. If the HELOC is at a higher interest rate than the 4 percent unsecured loans, make it a priority. From here, it looks like you could be one job loss away from losing your house. Too much risk for me.

  3. Dido Says:

    Thanks for your thoughts, AR. The HELOC *is* paid off as of today. Zero balance.

    The debt is currently elevated awaiting reimbursement of professional expenses--that's a large part of why it went backward. As I said, I'll get the debt to 85k by the weekend. You will see that I typically track from January to January because I typically get a bonus payout at the beginning of the year that I use to reduce the debt. The sidebar with the January to January comparisons will be updated this weekend.

    While I do work in the financial advisory industry, I'm a CPA who works *for* a financial advisor, not yet an advisor myself. I earn about 60k annually in my current role, so a decent income but not what you would expect of a full-fledged advisor.

    At this point, I'm focused more on increasing savings. Between my HSA and my 401k, I have 24% of my salary going into tax-deferred accounts. The debt is uncomfortable but at this point, if I were to lose my job, I would pay off the non-mortgage debt from an inherited IRA and just leave the 55k mortgage, which I should be able to cover with whatever work I could get--the base mortgage + escrow is $762/month, which is half of what it would cost me to rent an apartment in my area. Given that I'm feeling reasonably comfortable at my position, I'm preferring to put more money into retirement savings and less into debt reduction at this juncture. There's an opportunity cost to paying off debt early. As long as I continue to work, I'm confident that I'll be debt-free by the time I hit retirement age.

  4. AnotherReader Says:

    Why take money out of an inherited IRA, pay taxes, and permanently reduce that income source in the case of a job loss? I would not not put myself at that risk. In your shoes, I would reduce spending substantially and put that money to the debt.

    You don't share complete numbers, especially the amounts and types of the debt. It's difficult to follow your plan without that information. With low housing costs and no need to buy a new car soon, I would assume a decent amount of disposable income. Reducing spending is probably the easiest way to make progress on the debt in that situation.

  5. Dido Says:

    AR, you are right that I would benefit from reducing spending.

    Debt as of today:
    Mortgage (4% rate) $55,600
    0% balance transfer CC #1 15,000
    0% balance transfer CC #2, 7,500
    403b loan (4.44% rate) 5,050
    Misc CC to be pd late Jan 2,570
    TOTAL $85,720

    and I expect to be able to get it to 83K after another paycheck and a transfer from savings.

    And no, I don't have a lot of disposable income--I contribute a high percentage to my 401k, max out my HSA, and leave myself with less than 3k take-home a month (2,900, rounded). Of this, about 1,160 goes to mortgage/property taxes/home insurance/utilities, 640 to debt (190 on the 403b loan and 450 on the 0% balance transfers), 300 each to food, insurances (life, disability, long-term care, and umbrella) pet needs (my pets are seniors and my greatest source of joy), and 200 to auto. That's basically my entire takehome pay (2,900/month). To the extent I have discretionary income, it's really going to the retirement accounts at the moment, and the pets, which are non-negotiable.

  6. AnotherReader Says:

    It looks like you have optimized your debt situation.

    You are too sophisticated for the Dave Ramsey approach, but in your shoes, I would be looking to shave some of that spending to throw at the debt. I could live well on a food budget of $100 a month by cooking at home and bringing my lunch to work. I would not eat out or stop for coffee unless it was required for work.

    I would NOT pay an extra $600 to the mortgage. That money would go instead to the earlier expiring 0 percent card. I would get that balance down before the rate expires. Pay extra on the mortgage later once the other debt is cleared.

    I assume you have cash savings to cover some level of emergencies. With pets you need more than average. Vet prices follow human medical prices, so I would want $2,000 to $3,000 as a minimum for that alone today. You can't add a lot to savings right now, which puts your existing emergency fund at risk.

    You have $22,500 of debt on zero percent cards now. The remaining term on these two loans is probably less than a year. Balance transfer offers are meager these days, and the fees are higher. The effective interest rate is nowhere near zero if you have to balance transfer and pay the fee every year.

    You have a tough job ahead to get through this. Even with discipline and sacrifice, it will take some time. However, that $640 a month would allow you to build a cash buffer and some savings. Paying off that debt would be my top priority now.

  7. Dido Says:

    Thanks for your thoughts, AR! I appreciate your time and effort in responding.

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