Monday, April 16, 2012

2012 Financial Focus

Our focus for this year is our mortgage.  We worked Dave Ramsey's baby steps last year, paid off all non-mortgage debt and saved 6 months of living expenses in an emergency fund.

At the beginning of this year, I kicked my 401k contribution up to 6%.  In addition, I am required to contribute 6% of my salary into our State Retirement System.  So, that makes 12%.  I also opened a Roth IRA with some money I made from my side work last year.  I plan on contributing 15% of what I make from my side work towards the Roth.  That was baby step 4.

We've been working on step 5 since each of our boys were born, though, truth be told, we're not putting a lot into college savings yet ($25 per boy per month).  When they get birthday or Christmas gifts from family, they go in the 529 account too.  We'll have a lot more to save for college (or even just cash flow it) once our mortgage is paid off.

So, that gets to our 2012 focus.  The $128,700 we owe on our house.  I want to knock $10k off of it this year.  We've made ok progress through the first quarter of the year, but we've only knocked off $1,940 or so. That leaves us a lot of ground to make up.  We're in the process of trying to refinance, but the initial appraisal we got valued the house as "underwater".  Bastards.

In any event, it looks like our mortgage lender is working hard to secure us a much better rate (currently at 5.625%) under the new HARP program.  We should see some progress towards the end of this week/beginning of next.  I'm hoping to get a rate in the 3%'s.  That will help in the long run, but may put us back $3k or so.

On our current loan, about $200 gets knocked off principal with each payment.  The refi will move that up to over $400 a month, effectively doubling our pace.  We're, of course, going with a 15 year, fixed loan, as opposed to the 30 year we have now, but our payment will only increase $150 or so (nearly the equivalent of the extra we're putting towards principal as it is.)

Seems like we've got a lot of irons in the fire, but are trying to narrow our focus to really make up some ground on this one.

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