New budget/master plan.....Numbers #59 mini update #95

[Rukh O'Rorke]

Ok so with new benefits and maxing 401k my take home pay is
$2,970 every two weeks.

This is a bit less than expected [img src="http://syonidv.hodginsmedia.com/vsmileys/sad.png" src="//storage.proboards.com/forum/images/smiley/sad.png" alt="" class="smile"] I was hoping for 3200ish

So big question is: can I really afford to max the 401k?

Mortgage is 2470, student loan payments expected to be about 1400 when everything is in repayment.


So starting to put together a budget for 5940 income and ballparking everything and it looks like I'd have about 4-500 left over each month. Currently, I'm only required to pay about 610 on the sls until August, but doing so does not quite cover interest. So if I did do minimums, I could have 12-1300 excess per month.

That isn't really going to go very far with all the maintenance/updating I want on the house. So I'm really thinking that I need to do a refinance and pull all the cash I can out for that.

My goal on the house is it is ready to be put on market and in condition for selling quickly. Need a few larger ticket upgrades for that but I'm ok with a 2-3 year timeline.

I'm re painting all interior walls, and in spring will do porches repair and paint.

What other relatively low ticket items would be good to do before going for a refi?

[Deleted]

Rukh O'Rorke, remember that decreasing your 401k contribution doesn't add $ for $ back to your take home.  The few times I did that to improve cash flow I was so disappointed at the results that I just changed it back.  I imagine you are in an even higher tax bracket, federal and state, than I am.

Isn't there a happy medium for the SLS for a while?  If $610 doesn't cover interest, would $1000 help your cash flow enough?  That would give you $900 - $1000 left over each month.  Can you make it on that?

Also, would a cash-out refi increase your mortgage payment by much?  Will you recoup the closing costs enough before you sell?  Or does that not matter?  

I'd crunch some more numbers before I decreased the 401k.  

[laterbloomer]

She was talking about doing the minimum Student Loan payments, not the 401k

[laterbloomer]

That isn't really going to go very far with all the maintenance/updating I want on the house. So I'm really thinking that I need to do a refinance and pull all the cash I can out for that.

I'd need more details on this. I think you have a fair amount of equity in your house? Are you talking about using some of it for your upgrades? Or extending the mortgage for lower monthly payments? Are you going to get the money back for the renos when you sell? (I'm guessing yes, but I want details )

[Deleted]

Jan 10, 2019 16:56:25 GMT -5 laterbloomer said:

She was talking about doing the minimum Student Loan payments, not the 401k

No, she asked if she could really afford to max out her 401k.

[Rukh O'Rorke]

I'm not planning on selling, but before securing the new job it stressed me to think about the amount of work that would be needed to sell the house quickly if something went wrong.

I don't need an immediate resale return on things, but am prioritizing those easy items that would work for resale. Just in case!

I've identified the biggest threat to my financial stability and peace of mind to be a house that is not in ready-to-sell condition.

But I also want to max my 401k too!

To Susanna's point, my net would be about 3500 without the 401k deduction...paying about 300 more per month in taxes.

On the other hand, I have no real emergency fund/plan for bigger ticket emergencies and want to build something up there too.

I definitely need to work on both the master plan and the budget. Think things through and prioritize and economize where I can.

[Deleted]

Jan 10, 2019 17:48:01 GMT -5 Rukh O'Rorke said:

I'm not planning on selling, but before securing the new job it stressed me to think about the amount of work that would be needed to sell the house quickly if something went wrong.

I don't need an immediate resale return on things, but am prioritizing those easy items that would work for resale. Just in case!

I've identified the biggest threat to my financial stability and peace of mind to be a house that is not in ready-to-sell condition.

But I also want to max my 401k too!

To Susanna's point, my net would be about 3500 without the 401k deduction...paying about 300 more per month in taxes.

On the other hand, I have no real emergency fund/plan for bigger ticket emergencies and want to build something up there too.

I definitely need to work on both the master plan and the budget. Think things through and prioritize and economize where I can.

Do you mean without any 401k deduction or without contributing any more than the match?

To answer your question about "little" things, spruce up your front door with paint and add a new porch light.  There is a feature every month in HGTV that shows the difference that can make.  Get a new welcome mat, too. 

ETA:  I don't make much money, which you know.  60k, but it was a lot less in the past.  I don't have a huge emergency fund, etc.  Sometimes I have to save up for stuff.  We are currently doing without some upgrades.  

That said, I have never regretted maxing my Roth each year.  Or any of the other retirement savings I do.  And now I am coming up to needing those $$$ since I am retiring in May.  Not only am I grateful for every $$$ that I saved, but I wish I had stretched even more.

So make reducing the 401k max a last resort if you can stand it.

[Deleted]

Definitely agree the way to go is a master plan and budget, when I was in a similar spot I only contributed to the employer match and then increased when all debt was paid and the emergency fund was built up, I'm not sure where I would place home upgrades on the pecking order.

So if it were me, I would say today I wouldn't be in a position to contribute more than the employer match until I had my debt/emergency fund/short term goals funded and then you can build a budget spreadsheet in excel to forecast when you do think you could max it.

[laterbloomer]

So if you refinance are you looking to take money out to pay for the upgrades or extended the mortgage to lower the monthly payments?

[Tiny]

Are the upgrades/improvements that you will do - things you will get full use of/enjoy/like?

I swear every house I look at on realtor.com is painted in shades of gray. If the flooring or backsplash has been "upgraded" it's gray too. - sometimes even the exterior of the house has been painted/sided in grey, midnight blue or black. ::shudder:: Apparently cold depressing grey interiors/exteriors sell houses... I could NOT live in a gray house (and I'm a goth girl at my very core).

I guess I'm asking are you doing "maintenance" - like replacing the 20 yo water heater, the 25yo roof, painting the peeling, weathered exterior of your house, improving your overgrown landscaping -- or are you "decorating" by replacing perfectly good working but 'dated' things in your house with trending stuff?

your house will sell no matter what condition it is in if it is priced ok. Everything that is super trendy now will look dated and old in 5 years. Doing 30K or 50K of work might not get you the return you want... as in your current dated 350K house will sell for 350K - if you sink 50K into it, it will sell for 400K and it might not sell any faster.

[Deleted]

20 year old water heater?  

Daym, I am on #5 in 18 years...  Ah, the fun of crappy volcanic water...

[phil5185]

Ok so with new benefits and maxing 401k my take home pay is
$2,970 every two weeks.

So starting to put together a budget for 5940 income

Actually, you have a bit more than $5940 - $2970 x 26 pay periods / 12 months = $6435/m

your house will sell no matter what condition it is in if it is priced ok. Everything that is super trendy now will look dated and old in 5 years. Doing 30K or 50K of work might not get you the return you want... as in your current dated 350K house will sell for 350K - if you sink 50K into it, it will sell for 400K and it might not sell any faster.

Usually, upgrading a house for sellong is a "loss". Using the above eg - "current dated 350K house will sell for 350K - if you sink 50K into it, it will sell for 400K" - no, usually if you spend $50k it will add only $25K to the value, ie, you are better off financially to sell the house "as is". Except for inexpensive appearance items - new paint, fix the steps, mow the grass, straighten/paint the fence.

[bobosensei]

My realtor told me that upgrades usually just help the home sell faster instead of getting you more money.  But personally I'd rather enjoy them than do a bunch of work right before selling. 

[Rukh O'Rorke]

Jan 10, 2019 18:13:34 GMT -5 laterbloomer said:

So if you refinance are you looking to take money out to pay for the upgrades or extended the mortgage to lower the monthly payments?

Upgrades and hopefully extend at around the same payment. I think I'm about 10 years in on a 30.

[Rukh O'Rorke]

Jan 10, 2019 18:16:43 GMT -5 Tiny said:

Are the upgrades/improvements that you will do - things you will get full use of/enjoy/like?

I swear every house I look at on realtor.com is painted in shades of gray. If the flooring or backsplash has been "upgraded" it's gray too. - sometimes even the exterior of the house has been painted/sided in grey, midnight blue or black. ::shudder:: Apparently cold depressing grey interiors/exteriors sell houses... I could NOT live in a gray house (and I'm a goth girl at my very core).

I guess I'm asking are you doing "maintenance" - like replacing the 20 yo water heater, the 25yo roof, painting the peeling, weathered exterior of your house, improving your overgrown landscaping -- or are you "decorating" by replacing perfectly good working but 'dated' things in your house with trending stuff?

your house will sell no matter what condition it is in if it is priced ok. Everything that is super trendy now will look dated and old in 5 years. Doing 30K or 50K of work might not get you the return you want... as in your current dated 350K house will sell for 350K - if you sink 50K into it, it will sell for 400K and it might not sell any faster.

Yes, we plan to enjoy!

[Rukh O'Rorke]

Jan 10, 2019 18:51:57 GMT -5 phil5185 said:

Ok so with new benefits and maxing 401k my take home pay is
$2,970 every two weeks.

So starting to put together a budget for 5940 income

Actually, you have a bit more than $5940 - $2970 x 26 pay periods / 12 months = $6435/m

your house will sell no matter what condition it is in if it is priced ok. Everything that is super trendy now will look dated and old in 5 years. Doing 30K or 50K of work might not get you the return you want... as in your current dated 350K house will sell for 350K - if you sink 50K into it, it will sell for 400K and it might not sell any faster.

Usually, upgrading a house for sellong is a "loss". Using the above eg - "current dated 350K house will sell for 350K - if you sink 50K into it, it will sell for 400K" - no, usually if you spend $50k it will add only $25K to the value, ie, you are better off financially to sell the house "as is". Except for inexpensive appearance items - new paint, fix the steps, mow the grass, straighten/paint the fence.

#1- yes but I don't want to budget based on 26 pay checks. You only get more than two 2 out of 12 months. And I love those months!

#2 - that isn't an issue for me. Im ok with not breaking even and don't expect to. My primary concern is reduced stress via no/reduced todo list, enjoying the home, and not thinking a sudden change of fortune would have me needing to sell quickly as a fixer upper.

[Deleted]

Jan 10, 2019 18:34:37 GMT -5 @rockhounder said:

20 year old water heater?  

Daym, I am on #5 in 18 years...  Ah, the fun of crappy volcanic water...

Volcanic water?

My water heater turned 20 this year.  Actually, everything in my house except the washer and dryer turned 20.  Furnace, AC, all the kitchen appliances.  Which one will go first?  The guessing has begun.  Tick Tock...Tick Tock.... 

[TheOtherMe]

Found some of the paperwork for the mechanical parts of the house last week.  My 6 year water heater is in year 10.  Dryer is in year 15.  Furnace, AC and everything else is in year 10.  

Furnace is supposedly good for 10 years.  

I also hear the tick tocks

[Deleted]

Jan 11, 2019 10:41:29 GMT -5 TheOtherMe said:

Found some of the paperwork for the mechanical parts of the house last week.  My 6 year water heater is in year 10.  Dryer is in year 15.  Furnace, AC and everything else is in year 10.  

Furnace is supposedly good for 10 years.  

I also hear the tick tocks

Warranted for 10 years or it's expected to die in 10?  That's crazy if it only has a 10 year life expectancy. 

[TheOtherMe]

It's under warranty for 10 years.  Even though it says Amana on the furnace, I've been told it's the cheapest brand of Amana furnace there is and that it won't last like an Amana.  

I know some of the houses around here have replaced water heaters.  I have not noticed any replacing furnaces.

[Tiny]

Jan 10, 2019 18:34:37 GMT -5 @rockhounder said:

20 year old water heater?  

Daym, I am on #5 in 18 years...  Ah, the fun of crappy volcanic water...

LOL.  My current water heater is over 20yo...  I am proactively having it replaced this spring.   I'm hoping to avoid the unscheduled chaos of "OMG! It's an Emergency!!! and so inconvenient I have to rework/can't enjoy my planned out life"      and replace it with Scheduled/Planned Chaos.      I've gotten a solid 20 years of hot water from it... and I'd like to get some service out of the new water heater (versus installing a new one for the out in the future buyer of my house - not selling now - but could see it happening in 5 to 10 years when I FIRE/actually retire). 
 
I am apparently not the norm... other people in my area experience water heater (a middle of the road, good water heater)  failure between 12 and 15 years.     I have a middle of the road, good water heater.  But, I'm single.  I think that's the difference. 

[TheOtherMe]

Jan 11, 2019 11:12:00 GMT -5 Tiny said:

 
I am apparently not the norm... other people in my area experience water heater (a middle of the road, good water heater)  failure between 12 and 15 years.     I have a middle of the road, good water heater.  But, I'm single.  I think that's the difference. 

I also think being single helps.  Next door neighbor's each had a bunch of roommates and each have had to replace water heaters.

I proactively replaced the sump pump and will eventually do the same with the water heater.  

[Cookies Galore]

The gas furnace in the house we bought was 23 years old. We got one winter out of it before replacing last November. Right before it got cold, so perfect timing!

[wvugurl26]

We replaced our furnace and AC last summer. They were 17 years old. The AC had really needed it for a few years prior. It's so much nicer now.

The rest of our stuff is original to the house. It was built in 2001.

We briefly shopped for a new dishwasher and stove when our Sears was closing but the clearance prices were a joke.

[Deleted]

Hey, Rukh O'Rorke, isn't this the point where you are supposed to post your entire budget so that we can "help" you by pointing out that you spend too much at Starbucks and the drycleaners?

Brave enough to do that?

[The Walk of the Penguin Mich]

Jan 11, 2019 10:41:29 GMT -5 TheOtherMe said:

Found some of the paperwork for the mechanical parts of the house last week.  My 6 year water heater is in year 10.  Dryer is in year 15.  Furnace, AC and everything else is in year 10.  

Furnace is supposedly good for 10 years.  

I also hear the tick tocks

This house was built in 1992, so the tick ticks have been going on the last few years.  We are on our third water heater, dishwasher croaked, furnace croaked, garage door motor croaked all in the last few years. 

We still have the rest of the original appliances.  Washer and dryer are the ones I bought, so they are about 7 years.

[Deleted]

My opinion is the upgrades/improvements wait until you save up for them.   You'll never get a dollar for dollar return on the investment anyhow.  I know you said it's partially for your own enjoyment, not resale, but you've kinda dug yourself a hole with the student loans, and while you make really good money, it's not enough to max the retirement, pay all the debt, AND cash flow a lot on the house.   I mean, go for it on the low cost stuff like painting, but you'll still be able to sell a house that needs a couple major things, you just sell it for less or include an allowance for those things at  the closing. 

[Deleted]

I've done a few repairs on things.  I know the fridge had a $260 repair that I was hesitant about having done on a 15 year old fridge, but that bought me 5 years so far. 

The water heater is my guess for the first to go.  It had to get a new blower motor that was $400, but that's been about 10 years.  A couple years ago it started where the pilot light wouldn't stay lit and it would quit working a couple times a week.  After messing with it a lot, I figured out if I left the little door open at the bottom it kept working.  Now it has a leaky overflow valve.  I'm contemplating having that replaced, but for now I just keep a bucket under the pipe so it's not dripping water on the floor...not that it really matters as it's right by the drain, but I don't like stepping in a wet area when I'm going through to the storage room. Other than that, it still works great, we have super hot water that never runs out no matter what we're doing it seems. 

[bookkeeper]

Jan 11, 2019 11:54:07 GMT -5 minnesotapaintlady said:

My opinion is the upgrades/improvements wait until you save up for them.   You'll never get a dollar for dollar return on the investment anyhow.  I know you said it's partially for your own enjoyment, not resale, but you've kinda dug yourself a hole with the student loans, and while you make really good money, it's not enough to max the retirement, pay all the debt, AND cash flow a lot on the house.   I mean, go for it on the low cost stuff like painting, but you'll still be able to sell a house that needs a couple major things, you just sell it for less or include an allowance for those things at  the closing. 

This is good advice.  You are wrangling a lot of debt.  You should try to save a few hundred a month for a few months, just to make sure you can handle everything coming your way.  If regular cash savings is easy for you to do every month, then the refinance and more house debt make a little more sense.

One of the best low/no cost ways to maximize the value of your home is to clean and declutter it.  When you are ready to sell, buyers will get excited about a house that is spotless clean and organized.  DH and I moved out of the home we raised our sons in after 16 years.  Wowee was there a lot of crap that had to be thrown away or donated.  And when you move all that stuff out of the way, there is usually something that needs cleaning.  This can easily be accomplished slowly.  My brother in law gifted his time to his mother in law at her home.  He helped her empty one room at a time, repaint, and only put back the objects she chose.  What an awesome thing to do.  So many times, we just cram one more thing into the closet, only to forget about it.

[Rukh O'Rorke]

Jan 11, 2019 11:43:12 GMT -5 @bamafan1954 said:

Hey, Rukh O'Rorke, isn't this the point where you are supposed to post your entire budget so that we can "help" you by pointing out that you spend too much at Starbucks and the drycleaners?

Brave enough to do that?

This was kinda that? Am I too vague ?

It's a start

I really have been winging it for so long I've not got a lot of concrete numbers.

Been spending too much on lunches, need to redo my Internet plan/pricing, pushback on property taxes, can relook at various insurance program/rates, maybe give up chocolate?

That all that's on the table really.