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2017 Financial Review

January 8, 2018

My nominal 2017 savings goals were listed here, and we mostly followed them.  I think we deviated from them by not increasing cash as much as I indicated, but I’m comfortable with our current cash position.

Here were our 2017 money accomplishments:

  • In various retirement accounts, we saved 32% of our after tax income (though some retirement savings is pretax).
  • We sent in $32k of mortgage prepayments and recast to a lower monthly payment.  We should be able to continue some prepayments in 2018.  This has freed up >$300/mo in cash flow.
  • We paid off  the last of my low-interest student loans.  Woo!  Earnest has been ticking up the rate slowly anyway, so I’m glad to knock these out.  This also frees up cash flow.  The minimum payment was <$100/mo, but I’d been regularly paying about $200/mo.
  • Reduced spending in some key categories, although we overall did spend more than in 2016 due largely to home projects and student loan payoff.

Spending:  

Compared to ~$95k in 2016, we spent about $106k in 2017.  This includes about $16k on major house projects (bathroom) and another $6k in finishing paying off student loans.  Fixed housing costs (mortgage, taxes, insurance) come out to about $53K in this high cost area.  (The property taxes we pre-paid are being “booked” in 2018 for simplicity.)

I don’t think I’m going to breakdown my spending like I did last year, unless there is a specific request from a commenter to do so.  Next year, I project a bit less than $90k in spending, which includes a home project budget of about $9k.

Overall Net Worth:  

Our net worth is up a staggering 33% this year. Still, I’m keeping a bear market in the back of my mind and not getting to attached to the short term numbers that I see.

We moved from ~41% to ~52% FI excluding the mortgage, and are about 30% done with paying off the mortgage.  Our FI number is fuzzy (and optimistic) since we are far enough away that I don’t have estimates for things like health insurance or tax planning.  We also don’t really intend to RE, so health insurance should continue to come through jobs.  Using an optimistic number is more motivating for me, and we aren’t making any decisions based on it, so it doesn’t matter what we use.

We are in the mortgage payoff club – it is just too much of an expense for me to be comfortable with.  I’m not sure it will continue to be a priority long term, but I have a goal to pay more in principal than interest every year.  We’ve hit that out of the park in the first few years, and should be able to maintain that from here on out without much for prepayments (even considering the recast).

What next?

The number one financial priority for 2018 is to fill up all pre-tax retirement savings space and also fill up two backdoor Roth IRAs.  I’m having a hard time holding onto a strategy beyond that – I keep wavering.  We’ll do some amount of mortgage prepayments. Our cash position is pretty high, and I don’t think I’ll increase it without a good reason to.  There is a minimal chance that we’d pursue the mega backdoor Roth, but I’m more likely to favor mortgage prepayment.

As far as spending goes, we should spend a bit less on house projects this year, but most other categories don’t need cuts.  I hope to see pet spending drop a bit. We plan to quit our wine club after the January shipment (~$40/mo).  It is really handy if we entertain, but we aren’t keeping up and can always buy what we need.  Groceries and restaurants will be monitored but aren’t targeted for cuts. Buying whatever I want at the grocery store is my ultimate luxury.

More details on 2018 goals to come!

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7 Comments leave one →
  1. January 8, 2018 1:39 pm

    “Buying whatever I want at the grocery store is my ultimate luxury.”

    Me too!

    Sounds like you’re doing really well!

  2. January 8, 2018 2:41 pm

    We are so very much in the same boat! And being able to buy any food we want and cook anything we’re interested in eating is one of my biggest markers of luxury.

  3. January 8, 2018 3:19 pm

    It sounds like your 2017 was mostly pretty good on the money front! I completely agree with you on the grocery store 🙂

    • January 8, 2018 3:30 pm

      Yes, 2017 finances were all good!

      Grocery freedom helps with both eliminating the wish to go out to eat, and I am enjoying meal planning and cooking again. Cooking is way more fun if you are free to buy oddball ingredients in a new recipe.

      • January 8, 2018 10:58 pm

        It really does! Now that we are done with wedding stuff, we can go back to trying new recipes instead, with some of our wedding presents even 🙂

        Thank you for sharing your total spending figure – ours was pretty close to that, with the wedding included but not the mortgage payment. Without the wedding, I’m forecasting closer to $72k next year though (again, excluding the mortgage payment). If we manage that, it will feel delightful after the last two expensive years.

        Clearly we are in the mortgage payoff club too since I regularly “forget” to include it in spending numbers. Our rate is resetting to 4.125% in February, which means we will pay a lot more interest this year. We will thus likely either refinance to a 10 year fixed rate mortgage or pay it off in 2019, since the interest rate would go up again.

  4. January 10, 2018 6:57 am

    I agree with you that splurging on groceries will limit overall splurging. This is something that I should probably do more in my life so that I don’t spend quite as much on experiences at restaurants.

    • January 10, 2018 8:50 am

      It is especially useful if you enjoy cooking somewhat. If you don’t, then it is a little harder to replace.

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