There was no significant income outside of the regular paychecks in October unless you count my poker tournament win in Last Vegas last week. It really just paid for slot machines and meals, but it guaranteed that the non-work portion of the trip was completely free. We did receive a $252 escrow refund from Wells Fargo for our mortgage. I think it was because I increased our home insurance deductible significantly a while back. We also cashed an $8 check from the Prosper settlement (I received it a while ago, but forgot to deposit it).
I do expect some significantly higher income in November and December as my tax withholding will be lower for hitting the max for California SUI and Social Security. That is about a 7.2% increase to my paycheck the last couple months of the year! Also, I will get a week’s pay for not using any sick time in the last twelve months (I actually used 4 hours, so I will only get paid 36 hours). Finally, we are changing our vacation policy and I have a chance to cash out some hours in December. That will help with the holiday bills and adding to the retirement accounts.
Our grocery bill was a bit higher than usual at $865, but that was partially because my parents were here for almost 2 weeks. That category includes household goods as well, but our goal is to keep it at $700 or less. We have not been all that good at achieving it lately, however. This is one category that we have had trouble reducing. It’s so easy to stock up at Costco and then buying milk and lots of fresh fruit and veggies for the kids adds up! I am hoping we can start to do some meal planning to better optimize our spending. Coupons have helped, but not as much as I would have hoped.
Maintenance costs for the house and cars were both well under budget. We also kept our cash, personal care spending, and kid’s spending well under budget (stocking up on diapers on sale a few months ago is really paying off). For the categories that sometimes creep up, it was a pretty good month. We did have very high spending in restaurants and gas, but those will be offset by a reimbursement check for the work trip from work in November. Surprisingly, the shopping category did not go crazy with the trip because we spent most of the time walking around people watching and not going into stores.
There were no budget breaker items this month. By that I mean large items like repairs, large purchases, or unexpected spending of any kind. November will be dominated by some large medical bills that I have been waiting to receive. Sadly, my much beloved HSA account will drop down to a $0 balance. I know the MadFientist calls it the ultimate retirement account, but since I can’t contribute to it any longer I have been using it the last 2.5 years for expenses from kid’s births and medical costs in general like dental fees, prescriptions, and co-pays. I wish I would have known about what a great early retirement vehicle an HSA account can be 3 years ago when I had over $4,000 in it!
Impact of Solar Panels
The elimination of the power bill from solar continues to make me smile each time I look at our expenses. For October, we racked up a $79.95 credit with the power company! I did still have to pay $1.89, but my credit will probably build until next summer when the AC use really increases our power consumption. I would like to turn it down, but with 2 small kids and grandma at home, its one of those costs to just accept. The rest of the utilities (trash, water, gas) only added up to $110 for the month.
October Summary for Early Retirement Ahead
In terms of debt, we did not make any extra mortgage payments and don’t plan on any in the near future given the higher return of shielding income by maximizing retirement contributions or investing in Prosper/stocks versus a 2.625% mortgage rate. We did manage to eliminate another ~$1,625 worth of student loans. Its looking like February 2015 to have the loans paid off, especially if we can make large payments in November and December. We also paid about ~$400 towards the solar self-financing payoff. While I would rather pay for something like that with cash, the first 12 months of energy savings amount to about $2,200, so putting it on the credit card at 0% interest was actually the best financial return for the project.
I hope to redirect funds in 2015 from the above student loan and solar payments into more taxable trading account contributions, Prosper loans, and tax deductible 457b plan contributions (auto withhold from paychecks). That will really supercharge the retirement savings for us. I will probably prioritize the 457b deferred compensation contributions over Prosper and taxable trading accounts.
All-in-all it was an okay month for our finances as our spending was a bit higher than I would have liked (mostly due to the extending a work Vegas trip). We managed to put an additional $100 into Prosper loans (in addition to funding new loans from its current cash flow). We also put $400 into an IRA that will help reduce our 2014 tax bill and $760 into our Scottrade Roth IRAs. Those are in addition to the regular 403b/401k deposits that come out of paychecks. Finally, $220 in Coverdell ESA contributions were also made for our youngest son (the older one’s account is already maxed out at $2,000 for 2014).