Friday, September 28, 2012

Side hustle and how/where to allocate the pay

I've been working some side jobs for almost the last 2 years and it has made a world of difference to our bottom line.  My work requires a lot of weekend travel, early mornings and long drives.  That said, my biggest expenses, apart from the time away from the family, is gas, car maintenance, and food (which is relatively minor in comparison).

I've been fortunate in that I've been able to save up a nice chunk of change in my "work" savings account.  I don't really have plans for the money at this point, but figure once my car dies (it's a 1997, paid-for 2-door with 171,000 miles) that's probably where I'll take money for a newer one.

So, I've got a round number in my head that is my goal for the account balance.  I don't think I'll hit that mark this year, but hopefully I will by the Spring or Summer of next year.  Once I have that met, while I'll keep saving some in it, I want to spread around the extra income.  I've identified five things to fund on a monthly (when I can) basis.  They are:
  1. My ROTH IRA - I just started this, this year and am contributing a minor $100/month now.
  2. 529 Plans for our boys - We've been funding these, but with only minimum contributions.  I want to bump these up.
  3. Car replacement fund - This is a dedicated car-replacement fund.  My wife is also contributing since her part-time work requires a 40-mile round trip.
  4. Mortgage principle payment - This is above and beyond what we're already doing and would help get that paid off sooner
  5. A taxable investment account - I've been thinking about this for a little while, but am not sure I want to further diversify...
Ideally, I'd like to contribute $100/month for each fund.  But, that means I'll need to bring in as much, or more, gross part-time income than I do now and really, I'd like to cut back some.  I think the order I have them listed is the order of importance for funding.  So, my first $100/month goes towards the IRA, second $100 will get split in half and $50 put in each of their 529 funds.  Then, #3 and #4 may each get partially funded with the third and fourth $100 with whatever else I make going towards either investing or saving.

What do you think?

Aggressive Mortgage Plan Payment 1

We recently refinanced our house, from a 30-year fixed APR of 5.625% that had about 25 years left, down to a 15-year fixed APR of 3.75%.  That closed on August 17th and it took them another week to get the old loan closed out and this one active.  So, the first payment was/is due on October 1st.

Well, I just made the first payment and included an additional $1,000 towards principle.  See, we have a plan to cut this mortgage down, paying it off in exactly 100 payments.  Why 100?  Well, it's not that scientific.  I was using a mortgage amortization schedule that included a column for extra principle payments. I was going through that, adding the standard "extra" we cay pay:

  • twice yearly half mortgage payments when I get paid three times in a month
  • once a year we throw some of our tax refund at it
  • once a year I get a longevity bonus that will go toward it
  • once a year I put some from my part time work that I've saved throughout the year
  • additional principle from rounding up (from $1,056 to $1,100)
  • my wife's part-time job 
  • some regular contribution from my part-time job

Once I got done with that, I noticed that a large (~$5,000) payment on month 100 would end it.  So, that was that!  Month 1 was easy.  It was, more-or-less, the refund of our escrow account from our old loan, since we pre-paid that same balance into our new loan.  [I don't know why they did that, rationally, but it's irrelevant at this point.]  

My plan is to keep the extra principle in our savings account and build it up throughout the month, then when it's time to make the payment, simply move that extra principle into the checking account.  

The thing I can't get out of my head now is: "100 months of mortgage payments on the wall....100 months of mortgage payments on the wall..."  It will be a long journey, but hey, there's only 99 left!  And then, we'll be completely DEBT FREE.