Income Taxes

Our W-2's, 1099's, 1098's, and all the other tax forms have been arriving in the mailbox. We've finally received all of the major items, I think, and are just waiting on smaller stuff (like 1099 from last year's state refund & bank interest statements).

The good news, we made $110k last year.

The bad news, not all of that was actual income. Some of it was taxable fringe benefits, like tuition reimbursements. Some of it was from self-employment, which means that we have to pay an additional 15.3% tax PLUS our normal tax bracket.

I ran though some very rough numbers, and I think we will end up owing money this year. The State of Michigan has some pretty hefty penalties and interest, so we always deliberately over-pay them... I think we will get around $400 back from them. We will almost certainly end up owing the IRS though. I've been doing our taxes for several years now, so I have a pretty good handle on what our expenses & deductions are, and I'm estimating we will owe around $700. So much for getting a few hundred dollars back.

In all my estimating, I also realized that our charitable contributions are way less than we should probably be giving. Last year we gave only $100 in cash donations (with receipts). That's less than 1/10th of 1%. We've never tithed, and neither of us grew up in households that tithed... so we've discussed it and both don't feel comfortable giving away 10% of our income. Especially not now, when we have so much in debt (and such a lengthy & expensive wish list for things we'd eventually like to do, like buy a larger house with a basement, travel, save for kids' college). But I think we need to try a little harder... maybe get it up to at least 0.5% or 1%.

The SwagBucks Bandwagon

I've finally jumped on the SwagBucks bandwagon.

Basically, you sign up with them (just name, email address, and mailing address) and then use their site as a search engine (instead of Google or wherever else). Every few searches, they award you a SwagBuck. Once you earn enough, you redeem the SwagBucks for gift cards (to Amazon, Target, restaurants, etc.). They have various redemption limits, but for a typical month you can earn anywhere from $10-25 dollars in rewards.

They have a variety of offers that will earn you additional SwagBucks (sign up for Netflix, open a credit card, buy stuff from their partners, etc.), but just using the search engine feature earns plenty and is the easiest.

Upside: It's free money. It's an easy way to make a little bit for doing what I already do.

Downside: The first few search hits are often sponsored links. Although they clearly say, "sponsored by..." next to the link, you do have to scroll past some of their paid advertisers. It doesn't bother me though.

For any readers who use SwagBucks, I'd love to hear more about your experiences (good or bad), and any suggestions you might have. And if any of you don't, consider checking it out. The link below has my referral (I get bonus bucks when someone signs up using the referral link).

Bad News from work

My boss called me into his office today, telling me that he had some bad news. He didn't shut the office door, so I knew it wasn't going to be too serious...

But he told me that the VP of the company has denied my reimbursement request for the $469 review course I'm taking. It was previously approved by my immediate supervisor (after he double-checked with our Human Resources director about company protocol), and two other supervisors (each with a slightly higher level of authority) - and then when it went to the VP it was denied.

I had been checking the mailbox daily for the $469 check, so now I need to redo our budget and figure out how to cover the shortage. Most likely, I will carry a balance on the credit card that the class was charged, and will hopefully pay it off in late February or March instead.

Saturday Shopping

Went out to dinner, $20.

Picked up snacks at the store, $26.

Bought stand for the new flat-panel TV, $320.

For dinner, we used a coupon to save $4. Unfortunately, we already had dinner thawing in the fridge at home, but Hubby had a craving for something else. I probably should have insisted on eating at home (my dinner didn't taste very good, and was rather unhealthy).

We went way overboard on snacks. In fact, we went out shopping to buy some, then we went BACK to the store to buy more. Popcorn, candy, brownies, cake, frosting, sodas. About the only thing we bought that we actually needed was cat food.

The TV stand was more than I had wanted to spend (my original limit was $250), and was something we didn't really need either. We already have one that is in good condition and is plenty big/sturdy, but it's a modern style with glass shelves and it's difficult to keep clean. I wanted something a bit more traditional, made of wood and with doors, and I wasn't able to find much that I liked.

Extra Money

Lately I've been inspired to try and earn a little extra money. Our side business (which only takes in a couple thousand each year) has been slow, and there haven't been any promising leads for the upcoming months. Hubby's contract jobs are also all over, and he's been wanting a break so that he can spend more time relaxing.

We don't have a lot of junk laying around, so I can't really do a garage sale or sell much on Craigslist... and I don't want to be tied down to a set schedule at another job making minimum wage... and I can't take on any freelance work myself... so I've spent hours pondering what I might like to do. I was originally thinking of making handmade goods and selling them on Etsy, but now I'm leaning towards resale.

I've been reading books and listening to podcasts about it, and there's definitely the opportunity to make some extra money picking up used things and reselling them. It's time-consuming, and there's a bit of a learning curve with figuring out what to buy that could be resold with a reasonable profit margin (especially after buying packaging materials and shipping), but it's completely flexible. I wouldn't be able to even come close to replacing my current income, but I could at least earn a little extra to pay for a vacation or something.

I'm thinking, best case, I might be able to net $5000 this year. Anyone else have experience with this sort of thing?

After Credit Cards

Lately I've been spending some time thinking about what we'll do with the "extra" money each month, once all of our credit cards are fully paid off. Assuming no major catastrophes (job loss, medical emergency, etc.), we will be able to pay off the remaining ~$20,000 in just over a year.

We'll definitely increase our discretionary spending, so that we can go out together (movies, dinners, concerts, weekend trips) and to lunch with coworkers a bit more often. We'll also spend more on clothing and sporting gear.

We'll have to start saving for auto repairs & a new vehicle, as the one that will be paid off at the end of 2010 will be five years old but will have well over 100k miles. It should last for at least a couple years, but it will likely need a couple thousand dollars in maintenance and repairs to stretch the life out longer. We will probably set aside the monthly payment amount ($442) to use for repairs and eventually a down payment on a new car.

The biggest thing that I'd like to tackle is paying off our second mortgage. If we can pay an additional $1000/month on it (which should be possible, with no credit cards), it'll take only two years to pay that off entirely.

Progress Tracking Bars

Made some changes to the blog this weekend, namely:

1.) Getting rid of ads. I was curious if I'd be able to make any money from ad-revenue, and it turns out the answer is pretty much no. Over six months, I've earned less than $20... not even enough to make it worth my time to jump through Google AdSense's paperwork (since they count it as income, they need your social security number, banking info, etc. so that they can verify identities and send paperwork for tax purposes). I might put them back at some point in the future, but they are gone for now.

2.) Added progress bars on the right-hand side. Although I'm tracking each individual debt separately (e.g., mine & Hubby), the bars just show the total by category. We also have our mortgage debt that isn't shown.

Goals for 2010

I've written two separate lists of financial goals for 2010, and I've been debating which list to post to this blog. One list contains goals that are realistic and attainable, and offer a substantial bit of wiggle room for any splurges and unexpected expenses. The other list would be a stretch, and would rely on strict budgeting throughout the year, and earning extra money to offset any unexpected expenses, vacations, etc.

We have a few major planned expenses for 2010, but we aren't sure of the cost. I have to buy a bridesmaid dress (plus alterations & accessories), buy a bridal shower gift, host a bachelorette party, and a nice wedding gift. We have a major renovation project planned (kitchen remodel). Hubby will be attending grad school during the summer and fall terms. There may also be some health-related expenses this year (there are a few specific items of concern, and it will be another month or two until we can find out more). So with that, I'll err on the conservative side for goals.

1. Pay off my credit card completely (currently $4k).
2. Pay down Hubby's credit cards to <$5000 (currently $15,300).
3. Pay off Hubby's Perkins student loan (currently $995).
4. Pay off Hubby's car (currently $4334, payoff scheduled Nov '10).
5. Pay down my car loan to <$6k (currently $9669, per payment plan).
6. Complete master bathroom & kitchen remodel, paying in cash (estimated $10k).
7. Splurge on a nice vacation, paying in cash (estimated $2-3k).
8. Maintain at least $5000 in emergency fund (currently $5025).

My "stretch" goal would be to set aside another $5000 by the end of the year, using it to either beef up our emergency fund, to pay off Hubby's credit cards completely, or to reduce my auto loan balance or our second mortgage balance.

New TV

Yesterday evening, while we were out for a nice New Years Eve dinner, I mentioned to my husband that I would be okay buying a new big-screen TV immediately if it were under $1000.

We've been talking about replacing our 42" flat-panel plasma TV (which is four years old, and doesn't have high-def), but the TVs that he'd been looking at were all 55" and with prices around $1700. I'm not quite ready to spend that much money yet, and I had wanted to be able to pay for it immediately (with cash).

Ideally I'd wait another couple years, until all of our credit cards are completely paid off - but Hubby doesn't quite share my enthusiasm & intensity towards becoming debt-free. I can convince him to delay major purchases, but have to carefully weigh that against the very-real possibility of him just going out and buying what he wants using "his" credit cards. Realistically, I could have postponed the purchase until the second half of 2010.

After dinner, we went out for a short shopping trip. He found an acceptable 46" LCD-TV (with decent reviews) for $899, so we decided to go ahead and buy it. Including an HDMI cable and sales tax, the total was just under my magical $1000 limit.

The entire purchase went on my daily-use credit card (which I typically pay off at the end of every month), and will be paid off sometime this month. My other credit card (currently with a balance of $4000) will be paid off a bit slower... perhaps in March now?

2009 Goals - In Review

I had set out five financial goals for 2009 back at the beginning of the year:

1. Contribute $200/month to emergency fund (Met, but only by averaging over the year)
2. Achieve balance of $5000 in emergency fund by end of 2009 (Met! Current balance = $5031)
3. Eliminate credit card debt by end of 2009 (Fell Short! Year-end balance = $4000)
4. Pay off Perkins student loan (Met! Current balance = $0!)
5. Pay down Stafford student loan to <$25k (Met! Year-end balance = $24,160)

I had really hoped to be out of credit card debt by the end of the year, but we've had a number of setbacks that I hadn't anticipated when I established the goals. A $1700 home repair back in January. Chase increased my husband's minimum credit card payments by over $500/mo in August (which means his credit card balances are going down quicker, but mine are decreasing slower). We had some unexpected income tax liability for employer-provided tuition assistance, which reduced my husband's take-home pay for the past 3 months. His salary was also frozen for this year, which meant about $600-750 less in take-home pay than originally projected.

We also made a few purchases that I hadn't really budgeted for when the goals were established. Although we've continued to make improvements to the house, it seems like we consistently run into a problem every time we start a project, increasing the total cost (often substantially!). We bought a new iPhone, went on a few mini-vacations, and bought a new big-screen TV.