Photo by Cosmic Timetraveler on Unsplash
I was living in a fantasy world where I thought I’d be swimming in cash like Scrooge McDuck after our debts were paid off, saving easily for the next car and family vacations, potentially even with enough to put into the kids’ 529s… Reality has been somewhat different.
The first big hit was to the checking account that we slashed down to bare bones to pay off the mortgage. After we paid the mortgage off mid month last month, we decided to wait 1 pay period to recoup a bit of savings before moving on to the next step. This was the shrinkifying and subsequent unshrinkifying stage of a post-mortgage world.
Next up, it was time to hammer down a more precise withholding to get our taxes as close to 0 as possible at the end of this year. This is somewhat challenging, as Art works a ton of overtime as a delivery driver during his peak season. We can estimate hours but depending on the severity of demand, we might be high or low. Similarly, I can potentially make overtime through a bonus program at work but this has been unpredictable as of late. I’ve been with my company for almost 2 years and for the first year and a half, things were at a break-neck pace, where I chose to work when I could but there was always (tons of) work waiting for me when I returned. I was barely able to keep up with things which was stressful for me but great for our budget. In the last 4 months, things have changed drastically, and I am struggling to meet productivity due to a much lower number of patients. I’m not sure if this is company wide, with my branch of Case Management, or across the industry but it has been quite a struggle to accurately guess how much extra income I will be bringing on top of base salary. As a result, calculating my projected taxable income this year has been a challenge. I opted to estimate high for withholdings and low for our monthly budget. We redid our W4s and state withholding sheets and will see how that impacts our take home pay next period (potentially). Optimizing, check.
On to Maximizing. For the first time ever, we are now maxing out our 401ks. We’ve completed this step as of today, it will take effect on the next pay period or two. This too proved to be a challenge, as my employer plan doesn’t allow for an exact dollar amount. I was only able to enter a percentage of pay so I calculated $903.84 to a percentage of my base gross salary. This works well for normal pay periods but when I receive bonus, more will be taken out. I will have to keep a close eye on my contribution as the end of the year approaches and make adjustments so I don’t overcontribute. Fidelity advised that my employer will automatically stop contributions when I reach my limit but I remain skeptical on this. It’s better to keep an eye on things and be prepared to take action myself. Art has also maxed out the HSA moving forward. This year, we will likely have to use this to cover medical expenses, as Dee and I have had some unexpected MD visits and need for random labs/imaging. I am trying to be thankful we have the funds to cover these expenses rather than be bitter that we can’t invest this portion of our income. Maybe next year, we can graduate to investing. In the meantime, at least we won’t be paying for medical expenses out of take-home pay.
I truly expected that after taking all of these steps, there would be $2,000 left over each month for discretionary spending. DELUSIONS OF GRANDEUR! As previously mentioned, work has been much slower for me in the last quarter, and Art is heading into slow season so his overtime opportunities will wane significantly. This translates to roughly $500 left over rather than $2,000. I’ll be honest, this hurts my feelings! I thought we’d be maxing out our Roth IRA, have money left for a brokerage account, and still have fun money for family shenanigans. I am waiting to see what our take home pay after will look after making these adjustments. But it’s a little disheartening to see that our emergency fund will likely only grow minimally each month and any significant purchase like a car, braces for the kids/Art, etc will create a significant challenge for us. I do get mileage from my field visits, which will help to pad our leftover income each month but I don’t want to count on this in case there is a slow month with minimal work and visits.
I could pout and wallow in my disappointment but instead, I shake myself and remember that we are MAXING OUT 401ks, HSAs, and will be putting around $400-$600 each month into an additional account for retirement. That isn’t something to be sad about, that is a blessing. Work may be a bit slower than normal but we have a paid for roof over our heads. We have money for necessities, a small allowance for Art and myself, we have access to healthcare and fresh air, hobbies, and time to do family activities. There is nothing to be disappointed about in this equation. The $500 unaccounted for budget feels a little restrictive compared to our previous budget, where we were earning more and were able to throw thousands of extra dollars at the mortgage to pay it down quicker. There may be months where we earn more and are able to save significantly more. During those fat months, we can squirrel away a bit extra to cover the leaner months. This is life and it’s ok. It’s better than ok!
Now if only I could watch my retirement accounts grow instead of watching my money go into the pot and disappear into the freaking ether. Hopefully that will eventually change, or else I’ll get VTI at a significant discount and speed up the process.
The next question is whether to contribute to the Roth IRA as planned or open a brokerage account and contribute there so that the money is available whenever we need it with no cap on withdrawals prior to a certain age. We still haven’t figured out what the best course of action is here, I wish there was the option to do both but we don’t have the funds for that. If our goal is to be done with work in 10 years, it would be nice to have a way to access funds while we start the 401k to Roth conversion process. These are the ravings of a mad woman. We aren’t sure what we will do but are pondering this next step as we wait for our first paychecks to roll in post-adjustments. No matter which way we cut it, we are moving forward and setting things up for a good future.
Photo by Venti Views on Unsplash
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