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This and That

April 9th, 2021 at 11:14 pm

I sent in my Federal, State and County taxes as well as the estimates for Quarter 1. I also fully funded my SEP-IRA for last year. This has left my bank account almost completely empty. That money was never really mine to use - I just had it saved up and earmarked for these things. But, seeing about $50k disappear from my bank account is quite heartbreaking. This is one of weird psychological things about self-employment. This year, my estimated taxes will be much closer to the correct number, so I suppose next year I won't have to go through this illogical sadness for the loss of money that was never really mine.

The refinance process is going well. They anticipate closing around mid-May. The loan officer told me what my credit scores that they pulled were: 803, 813, 826. That's the first time that I have been aware of that all three of the scores were over 800. I felt warm and gooey about it. About 8 years ago, my credit score was in the 600s.

My phone started acting up - it arbitrarily depletes its battery only to be full again when I restart, or will crash and turn off at arbitrary times. The screen is a little bit cracked too from me dropping it several times. It's an iPhone 7. I went ahead and ordered a new one - this one an iPhone X.

I got quotes for installing a ductless mini-split with two zones in my home. In my area it's common to have ceiling heat panels. It boggles the mind why someone created this bizzare physics-defying method of heating. It doesn't get too hot where I am except for about a month or so at the height of summer, so many homes including mine also don't have A/C. This new ductless system will solve both problems for me. The quote was for $5650 including a rebate from my local utility board. And I'll also be able to claim a rebate of $300 on this year's taxes for installing it. The quote is quite reasonable for what it is, but coming at the heels of tax depletion, a new phone, and closing costs, this is another thing that makes me feel financially stretched this month. But, I am grateful when I remember how not that long ago, this would have pushed me deeper into debt and cause a sense of loss and despair.

Once the refinance and the heat pump are installed, my only remaining big financial goals for the year are to replenish my savings account, and to fully fund my 401(k). That's doable, I think.

NW: $287,189.40

EOY 2020 Goals

November 9th, 2020 at 05:49 pm

I am a big one for new year's resolutions. And birthday resolutions, sunday resolutions, month beginning resolutions, and so on. It gives me a sense of motivation and excitement. I accomplish some, and don't accomplish some. I somehow seem to be completely devoid of the guilt that comes with failed resolutions. If I don't accomplish it, I feel a bit annoyed, but just turn around and make it again.

Last week, I was in a bit of a funk, and on Friday, started to come out of it. I had a beautiful weekend, and vaguely made up some more resolutions for now till the end of the year. 

1. Make my sleep schedule more regular. I have been up later and sleeping less. My fitbit always gives me a "fair" score, and I need it to at the very least be "good". So, I plan to get in bed by 10pm, at the latest.

2. Lose 7 lbs. That's about a pound a week, and very doable, I think. I have amazingly lost weight since the start of the pandemic. I have not tried to lose weight, I just have. I think it's because the start of the pandemic just happened to coincide with my plan to go into full time self-employment, and I went from working 50-ish hours/week to about 28 hrs/week. The resulting lack of stress is what led to it, I think. I have never before in my life lost weight without trying to. I haven't lost a lot - about 10 lbs over the last 8 months. If I try and lose another 7 lbs by the end of this year, I will be at a weight I have not seen since 2005.

3. Exercise every day. This is unrelated to the weight-loss. I have over the past few years been very much out of the habit of regular exercise. I started to do a 15-min HIIT exercise about a month ago. And this month, I have changed this to alternate days with a 30 min cardio on alternate days. I can tell that the exercises are getting easier as time goes by and that makes me feel good.

All the above seem to be health goals. But, I know that health is inextricable from wealth. If I have health, I incur fewer healthcare costs. I potentially get to live longer and enjoy the fruits of my labor for longer. So, I definitely see this as a financial goal as well.

Other financial goals seem to be on track. I don't know exact numbers yet, but my accountant projects that I can put another $29k pre-tax towards retirement this year, and I think that will leave me with another $21k to to add to my brokerage account. These numbers seem high, but we'll see. I won't actually know until the beginning of February. I always overestimate how much I need to pay in taxes and save more than I need, so it's possible it will work out like this.

In other good news, I read reports this morning that Pfizer thinks their vaccine is about 90% effective. I am hopeful. I can't wait for the pandemic to draw to some sort of an end, and for me to see my parents again.

Business and Retirement Updates

November 4th, 2020 at 09:54 pm

I just had a meeting with my accountant, and it was super helpful and exciting.

Here are the two primary changes that I am going to make:

1. Going to convert my SEP IRA to a 401(k), and that will allow me to put away significantly more this year towards retirement.

2. Starting next year, I am doing an S-election on taxes. This will reduce the amount of tax-deferred money I can put away for retirement in subsequent years, but I will be able to take tax-free distributions that I can then put into the market and can draw upon them sooner than my penalty-free retirement age. I call this an absolute win!

She's going to get the paperwork started to do payroll and other stuff like that.

She mentioned a 401(k) with a Roth component. I need to look into this. I am not quite sure how that works? I put in tax deferred money, and take out tax free money? That just seems too ridiculous to be true. I feel like I have read about Roth Conversion Ladders. Is this the same thing? Does anyone have experience with this?

Hello World

October 14th, 2020 at 03:38 pm

Hello World,

Last year, when several months of blog entries were lost, I lost my blog. All my entries were within the time range of lost entries. I kept waiting for them to be re-instated, but it did not happen, so I am starting again.

I am 41, single, no kids, in the healthcare field, and am newly self-employed.

Here is the gist of my financial situation:

For all my twenties, I was a financial idiot. I saved nothing, spent more than I could afford, did not learn about managing money, and got myself into a giant mess of high-interest consumer debt.

In my early thirties, this started catching up with me, and I started to educate myself about money and how to dig myself out of the hole. Unfortunately, two things were working against me - the high interests made it harder to make a dent in the debt, and I was in an abusive relationship which also included financial abuse and a gambling habit. I divorced when I was 36, and spent the next four years pulling myself together financially. I started working for myself on the side, paid off all my debt (~$58,000), purchased a new-to-me car in cash, saved an emergency fund of $20K, saved 5% for down-payment and purchased my current home, and determined that I will never again carry consumer debt.

I have just started my forties. Earlier this year, I left my salaried job of ten years, and went into full time self-employment. I work 2/3rd as much and make twice as much, and was the best decision I could have made for myself. For the first time in my life, I am not living paycheck to paycheck. For the first time in my life I am not constantly thinking or worrying about money. So, for the first time in my life, both my money and my time actually belong to me. It is a tremendously freeing experience. I am truly happy for the first time in my life.

My current focus is trying to save and catch up on retirement planning and investing as much as I can. Never having had money to invest before, this is new to me and I am learning as I go. I hope to retire at the age of 55. However, it will require consistent and aggressive savings to do since I am starting so much later than I should have. I hope to save 75% of my post-tax income if I can. At my current income level, I think this is doable. Years of living frugally due to necessity also makes it easy to save - it has become habit by now. It also helps that I have no debt and am a single member household. I have a small amount of retirement from my previous job, but apart from that, everything else I have saved in just this year.

My financial strategy is as follows:
1. Save by maxing out tax-deferred retirement contributions. Since I am self-employed, I get to save more than the traditional IRA amounts.
2. Invest in taxed retirement accounts. (Can I have a Roth IRA in addition to the tax-deferred? Need to check up on this)
3. Invest the remainder of what I can save in a brokerage account
4. Pay off my house in 10 years. It is a 30-year mortgage, but I want to prioritize paying this off because I only have one income coming in and want to get this off my back as soon as I can. This provides psychological relief, but also if I don't carry a mortgage into retirement, I need to save less for retirement.
5. As I get closer to paying off my mortgage, purchase some rental property and pay that off by the time I am retired. This should provide passive income for me to live on in addition to savings/dividends until I can draw on retirement and social security income.

Here is where I currently stand. (** I am not going to do exact decimals. I will round debt up and assets down to the nearest hundred)

60,000 - House Equity
27,000 - SEP IRA
52,000 - 457 Account
20,000 - Brokerage
20,000 - Savings(EF)
3,900 - HSA
182,900 - NET WORTH

Edit: Thanks to a comment by Petunia100, my NW jumped $253,000 this morning. I guess I was incorrectly counting my mortgage twice. I have been in positive NW for a while now, but my brain has just caught up with this fact. WTH! How am I so lucky? Petunia - thank you so much!!