December 2011 Income Statement

December was a big expense month and our largest income month EVER (click on spreadsheet below).

Our total income for December was $25,449.19, by far the best that we have ever had. Most of the money came from selling our recreational 4x4 for $14,995. Even if you subtract out the vehicle sale, we’re still at $10,454.19. With the birth of our baby and our home purchase, I changed my filing status from M1 to M3. As a result, my take home pay increased $59.51 per check. In addition to my two regular paychecks, my wife received $4,683.14 in Paid Family Leave (had a baby via C-section). We also received $131.13 from her PTO payout, $1,638 from selling items on craigslist, $220 in cash for our son’s 529 Plan, and $75 in credit card rewards. We earned $25.76 in interest income from our online savings account.

We spent a total of $7,394.91 in December. Some of the larger expenditures include $210 co-pay cord blood banking, $950 security camera system, $400 for home appraisal and $300 for a home inspection.

January is going to be a busy month as we prepare to move from our rental unit to our new home. There should be a huge spike in our expenses and we fill the home with furniture. In terms of income, January should be a pretty normal month as my wife goes back to work. With my wife heading back to work in January, we will be paying a nanny $900 a month to care for our baby.

Poaching Retirement Accounts For Down Payment

We are currently in escrow on a beautiful 5 bed/3 bath home that should fit our needs for many, many years to come. To keep our monthly mortgage payment low and to avoid PMI, we have elected to raid our retirement accounts for some of the down payment. I know, I know, hear me out..

The 2 bedroom condo that we are renting is $1,550/month and, with our growing family, it is a tight squeeze. After finding our dream home, we quickly realized that the ~$47,000 in our savings was not enough for a 20% down payment. The home was $489,000, so 20% down is $97,800, meaning that we needed to come up with another $51,000.

We poached $51,000 from our almost $100,000 in retirement savings. $30,000 came from Roth IRA contributions and $21,000 was borrowed from my 401(k). You can withdraw Roth IRA contributions at any time without penalty or taxes. The 401(k) loan has a 5 year payment schedule at $179.44/check. If I were to leave my company for any reason before the loan is paid back, the balance would be due, or I would have to pay a 10% penalty and income tax on the money.

If the deal goes through, our interest rate will be 3.75%, resulting in a monthly mortgage payment of $1,811 on a mortgage of $391,200. Add $600/month for tax and insurance and we are up to $2,411/month. This is a very comfortable number for us, especially when you consider the tax benefits of owning a home.

Our gross annual income is $150,460, not including my wife’s quarterly bonuses. Using the rule of thumb to spend no more than 35% of our gross income on housing, we can “afford” $4,388/month. Frankly, we had no intentions of spending anywhere close to that. We simply want a nice home with payments that we can still afford if one of us lost our job.

December 2011 Net Worth Update (+$8,349.58)

December was an exciting month for us. We have been renting a condo for 2+ years and have been looking for a home as we saved money. After a lot of searching and savings, we found a beautiful 5 bed/3 bath with a pool in a great part of town. Our offer of $489,000, with 3% back towards closing costs, was accepted and escrow is scheduled to close 1/23. Anyways, on to our net worth. We had another great net worth increase of $8,349.58 from last month, to a total of $164,821.70 (click on spreadsheet below).

What Worked
We sold Car 3, our recreational 4x4, for $14,995 in order to provide an influx of cash to furnish our new home. For now this is going into savings, but it will start to flow out of savings once we move in to the new place in January. We were able to deposit $17,095 into savings, plus an addition to $51,000 from our retirement accounts for the down payment.

What Didn’t Work
We contributed a total of $893.96 our retirement accounts, but they decreased $49,649.99 because we raided our retirement accounts for $51,000 to help fund our 20% down payment ($97,800) on our new home.

Next Month
January will be a huge month for us. We’re scheduled to move into our new home and will be spending copious amounts of money to furnish and decorate it. My wife also goes back to work on January 2, so we will begin paying a nanny $225/week to care for our baby boy.

I will be posting a review of our 2011 Financial Goals in a few days.

Net Worth Milestone - $160,000

Today we passed the $160,000 net worth milestone! Our net worth is currently $163,973.37.

With the market ups and downs, it took us longer than expected to reach this milestone. We passed our last milestone of $140K in July and thought that we would hit $160K in October. That being said, we’re still way ahead of our $138,100 net worth goal for 2011. Based on my forecasts, we should hit the next net worth milestone of $170K by March or April.

I will update our net worth meter (on the left side of the screen) at the end of the month.

November 2011 Income Statement

November was a reasonable expense month and very, very good income month (click on spreadsheet below).

Our total income for November was $12,479.03; our 3rd highest income month since we began tracking our finances in 2007. I received my two regular paychecks and a 3rd “extra” paycheck. My wife received one regular paycheck and $2,404.85 from SDI (just had a baby via C-section). We also received a $50 gift from my parents (deposited to our baby’s 529 Plan), $71.38 in credit card rewards, $75 insurance reimbursement, $20 from a craigslist sale, $18.04 from a credit card settlement, and earned $28.23 in interest income from our online savings account.

We spent a total of $6,831.93 in December, not too bad considering that we earned nearly double that. Some of the larger expenditures include a(nother) $500 co-pay from the hospital for our baby’s delivery and $300.51 in gifts.

December should a decent income month as my wife shifts from SDI to PFL and my filing status is being changed from M1 to M3 to increase my paychecks. Since we completed most of our Christmas shopping done in November, our expenses in December should be very reasonable.

November 2011 Net Worth Update (+$8,068.61)

With the ups and downs of the market, it was tough to tell where November would land. Thankfully, it landed up and our net worth increased $8,068.61 from last month, to a total of $156,472.12 (click on spreadsheet below).

What Worked
The biggest impact to our net worth this month was a $3,425 gross ($2,701.37 net) bonus that my wife earned. On top of that, this was an “extra” check month for me. So, we were able to deposit $4,891.17 into savings.

What Didn’t Work
We also contributed a total of $1,834.88 to our retirement accounts. but they only increased $1,633.64.

Next Month
December may be a tricky month as my wife switches from SDI (not taxed) to PFL (taxed). That being said, I am changing my filing status from M1 to M3, which should help our cash flow. It is also obviously the end of the year, so I'll be reviewing our 2011 goals and posting our goals for 2012.