The Age Old Question: Paying Off The Mortgage or Investing

Credit: Plume Ploume

I've read a lot of interesting articles about this topic.  Some people advocate paying off their mortgage with extra money and others advocate investing the money.  Where do you stand on this topic?  I am totally on board with paying off the mortgage.  This is for a few reasons: (1) I hate having debt, (2) I hate having a mortgage, (3) If something bad happens (like job loss) I would prefer not to have a mortgage payment to make, (4) I don't plan to make this house my forever home and I would like to have as much equity as possible when I sell so I have more money to put down on my forever home, (5) I want to make sure that even if the house market drops again that I will not be underwater on my house in the event that I am forced to sell and (6)I have PMI on my mortgage and I am trying to pay down the balance of the mortgage so that PMI is no longer required (maybe by early next year!).  If any of these scenarios occur, I think paying extra on the mortgage now is the best option for me.

Just for informational purposes my mortgage balance is $206,466 and the interest rate is 3.375%. I have a 30 year mortgage. The payments (without extra principal) are $1,481 (that's principal, interest, insurance and property taxes). 

Now, to be clear, I set annual goals for investing  (See previous post here).  I don't completely ignore my retirement or investing needs, I do plan to add $10,500 to my retirement accounts for the year.  I just budget $400 extra for my mortgage payment. Other people would use that money for investing. After all of my yearly financial goals are accomplished I hope be able to add a large lump sum to my mortgage payment at the end of the year. 

 So what do you do?  Pay off the mortgage early or invest?

Retirement Savings Update

 Credit: Maklay62

 
This week has gone by so fast!! I haven't had a chance to post.  Work is crazy busy and I just can't keep up right now. My boss, however, strolls in about noon a few days each week.  He's always sure to tell me how he's going to start helping out because he knows I am so busy.  Yet somehow when the partner in the South Florida office asked him to help out with 2 appeals, a pre-suit mediation and a trial...he dropped them all on me.  So much for help.

Anyways, on to the point of this post...

My goal this year to contribute $10,500 to my retirement savings. I plan to contribute $5,500 to my Roth and $5,000 to my taxable brokerage account. 

For April I only contributed $765 to my retirement account (due to my very expensive car repair). That brings my total contributions for 2018 to $4,035 Only $1,465 more to go to fully fund my Roth for the year.  I hope to be max it out no later than May of this year (but probably June).  Once those contributions are complete I will contribute $5,000 to my taxable brokerage account.

In case you were wondering (and I would because I am a nerd ), I have been tracking my retirement contributions for the year.  They are as follows:


1/15/18    $1,390
2/15/18    $610
3/15/18    $1,270
4/16/18    $765


 How are you doing with your retirement contributions for the year?  Frankly, I feel pretty blessed to be able to put any money towards retirement.

Privilege and How My Mom Called Me Out on Mine.

Privilege has been a hot topic in the media. The terms "white privilege" and "male privilege" have been tossed around a lot. I didn't really buy into the whole privilege argument.   I thought it was silly to state that someone was privileged because of their race or sex, especially when so many people struggle regardless of race, sex  or socioeconomic status.  The more traction that the theory gained, the more types of privilege were bandied about in the media and in the personal finance community on twitter ("American privilege", etc) 

And then, just a few weeks ago, my Mom called me out on my privilege. Mom told me that  I was privileged. I was shocked.  How could I be privileged?  We were not a wealthy family when I was child.  I'm not wealthy now.  All of the money that I have saved and the assets that I have accumulated are based on my own hard work.  I went into debt for law school and paid back all of my student loans.  I had debt because my parents could not afford to pay for law school for me.  I studied and fretted and cried about passing the bar exam and becoming a lawyer.  But I did it.  I did it because I worked hard enough to succeed.  Nothing in life was made easy for me.

The reason for her statement was simple.  My Mom said I was privileged was because I told her a story about how my boss was rudely criticizing a youngish/new-ish attorney male attorney for coming to a deposition in a wrinkled, worn dress shirt, no tie and no jacket.  Her comment to me was maybe that was the only shirt he had.  I said, "well he choose to be an attorney so he does need to dress appropriately.   I had to spend a lot of money on suits after I graduated law school and I didn't have any money."  My mom laughed and said "You had us to support and help you.  You are so privileged and don't even know it.  When I turned 19 my Father made me leave the house and I couldn't go back.  He gave me money for bus fare and bought me a suitcase.  That was it. I took a bus to New York to live with my older sister, her husband and kids. No job, no money, nothing. I had to make things work because I couldn't live with them rent free forever. My Father did not have a spare dollar to give me and neither did my sister.  I didn't have a credit card and didn't know how to get one.  If I needed a shirt I was out of luck."  I was quiet for a moment.

Her comment made me think.  To her I was privileged.  To me I was not.  Privilege is relative.  The fact that I was easily  able to get into law school as a African American female was shocking to my mother born in the 1940s.  Her ability to help me if I needed it was a privilege that she did not enjoy any stage in her life.  Someone whose parents could afford to pay for law school for them would be  privileged in my eyes.  It was hard graduating from law school with over $60,000 in debt, making only $46,000 a year.  To not have that burden would have been so freeing. 

I realize now that privilege is relative and it does not mean that your life was easy or that you didn't work hard.  It does mean that maybe you had it slightly easier than someone else.  There's nothing wrong with being privileged.  I am grateful for my parents' help. 

*By the way I don't think the lack of a tie or jacket for a deposition is improper or inappropriate in most cases.

Secrets and Lies

I don't know about everyone else, but throughout my life I often seem to be in opportune (or inopportune) places to hear sensitive, scandalous or private information.  No, I'm not eavesdropping, sometimes people will voluntarily reveal information to me- maybe because I'm the only other person around.  Sometimes it is said in such a place that I am unable to avoid overhearing the information.  

Due to the nature of the information I have been made privy to I cannot disclose it to those close to me as it would ruin friendships, working relationships or simply be construed as gossip.  I'm not the type to want to cause drama in the lives of my friends, family or work relationships. So, your beautiful ears (or eyes rather) will get to hear the random secrets and lies that I hear. I figure my blog can act as my stress relief/venting place for all of the craziness I hear. 

First up--a girl that I work with who I have previously referred to as "Michelle".  "Michelle" is my boss's assistant. She used to live up north, I believe in Illinois.  When I first started working with "Michelle" she shared with me her reasons for moving to Florida.  Apparently, she was working 2 jobs to make ends meet because she had gotten kicked out of the College she was attending due to her poor grades.  Well, shortly thereafter, she got fired from both jobs.  One for stealing money (she was a cashier) and the other for stealing a company laptop and surreptitiously accessing confidential email (regarding plans for the company, payroll and pay raises, etc.).   After getting fired from both jobs she moved down to Florida for a "fresh start". 

Once she got to Florida she began applying for jobs, however, she was not having much luck so she lied on her application about having a college degree (remember she got kicked out of College).  After she made that change she was able to get a job and worked there for about 3 or 4 years.  Well her boss, suddenly, retired and she was out of work again.  She started looking for another job and, again, decided to lie on her resume and put that she had graduated from College.  One of the companies that she applied to actually checked to see if she had graduated from College and found that she did not.  The company wrote her a letter advising her to never apply for a job with them again due to her dishonesty.  I just wasn't sure how to react when she told me this information.  I kinda stared at her with my mouth open.  I have never revealed this information to anyone else because I was worried that it could get her fired from this job. I can't be responsible for affecting the financial well-being of another. 

I could go on and on about her secrets and lies, but that is enough for now.  Maybe, I will another series on this topic later.  Have  you ever had someone tell you private or scandalous information?  How did you react?  What did you do?

Car Repairs and Maintenance $$$$$$

I had to take my 12 year old car in for maintenance this weekend and boy it was expensive, to the tune of $1,302.  I had an oil change, new spark plugs, rotation, all sorts of fluids flushed, etc.  Don't let anyone ever tell you that aging cars are not expensive to maintain.  Vehicles are costly little buggers.  However, I looked through my old service records and I don't think I've ever had the spark plugs replaced on that vehicle (which now has over 120,000 miles on it).

I plan to pay for the maintenance/repair work out my 4/1518 paycheck which means less will go towards retirement than planned.  I'm okay with that though, because I'd rather have one expensive car repair/maintenance bill  a year over $6,000 in new car payments for the year.  I'm off to work.  Have a great Tuesday!

First Quarter Update

 At the beginning of the year, I set some goals for myself.  Let's see how I am doing.

1. Add $10,500 to retirement savings with the goal of having $35,000 saved for retirement by the end of the year.  $5,500 will go into my roth ira and $5,000 will go into a taxable account. Come on stock market growth and no recession! Last year I contributed $9,500 so this will be an  increase of $1,000.  So Far I have contributed $3,270 towards retirement this year.  All of that went into my Roth IRA.  I still have $7,230 left to contribute towards retirement. 

2.Increase EF to $18,500. I have not added anything to my EF fund yet.  It is still sitting around $17,000. 

3. Pay an extra $290/month toward principal on the mortgage.  My easily reachable goal is to have the mortgage paid down to $200,000 by the end of the year.  The ultimate goal is to have the balance paid down to $197,500 by the end of the year so that the PMI will drop off the mortgage. So far so good,  I have been paying $397 extra on the mortgage since the tax cuts starting showing up in my paycheck. 

4. Save an additional $5,000 for my car replacement fund with the goal of having $10,000 in my car replacement fund by the end of the year.  I will be aiming to purchase a new car in 2019.  I hope with a trade in and any money saved in 2019 to have $20,000 to put down for a new car. My car replacement fund is sitting at $5,757 as of the time of this entry.


5.  Read 15 books. I have completed 2 books this year. 

6. Lose 20lbs. I plan to try to lose about 3lbs a month which should place me at 36lbs for the year.  However, I know I struggle with weight loss so I think 20lbs is a good goal.  I also want to commit to exercising 30 minutes a day for 4 days a week and eating more vegetables.  I haven't weighed myself, but I have been getting in 4 days a week of exercise most weeks (Except when traveling). 

7. Donate $300 to charity.  This is up $100 from last year, I hope to be able to donate more than $300, but let's see how the year rolls.  I plan to increase this amount each year. I have contributed $76 to charity so far this year. 

8. Build medical fund up to $1,000. I have not added any money to this fund. 

9. Continue to build car repair fund up to $1,000. I have not added any money to this fund. 

10. Get more life insurance. No progress here either. 

11.  Try to figure out a happy medium for the travel reimbursement fight.  I want them reimbursed in 30 days and the firm will wait 60 -90 days to reimburse me.  I think I will argue for 45 day reimbursement and all outstanding travel vouchers to be paid at year end.  Right now I have $600 outstanding from 2017.  I haven't had a chance to even begin to address this. 

12. Find a new primary care doctor and receive treatment for anxiety and depression. No progress.

13. Make a decision about my career and job. No progress.

14. Try something new (or outside of my comfort zone) each month (restaurant, activity or social event). So far so good.  I started MTurking, went to South Florida for the first time, left a tip for the cleaning staff at a hotel and made $9 in interest on my savings account (way to go passive income!!).

15. Increase net worth by $25,000. I just did a net worth post and my net worth is increasing.  I failed to do a net worth post at the beginning of the year.  So I'm not sure how much my net worth has increased. 


How are you guys doing on your yearly goals?  Are you on track or falling behind?  I feel like tracking my yearly goals helps keep me accountable and making progress. 

Net Worth

Here's where the numbers stand.

Savings-
 $11,985 Emergency Fund
 $10,913 Online Savings Account/$5,757 of that amount is for my Car Replacement Fund
 $22,794 Retirement- Roth IRA
  $2,006 Taxable Brokerage (Retirement)


$497 Travel Fund (Work)
$653 pet fund 
$57 medical fund
$1,801 furniture fund
$169 Slush fund


Home-
$299,378-per zillow

                  Total (not including home): $50,875
                  Total (including home): $350,253

Liabilities-
Mortgage $206,466

             
                   Total (not including mortgage): 0
                    Total (including mortgage): -$206,466
 


                                     Total Net Worth(not including mortgage): $50,875                                               Total Net Worth(including mortgage): $143,787

Net worth, not including mortgage, increased by $11,122 from August(last net worth update)
Net worth, including mortgage, increased by $23,924 from August(last net worth update)

My only thought is that it's nice to see my assets over $50,000.  I'm truly shocked to see that number.