Goals 2017 – Accountability and Chutzpah!

Gentle Readers,

I am not typically into resolutions, but I think that financial ones could be helpful in focusing me and so I will try them this year. Last year at this time, I did not have this blog or the goals the blog has led me to pursuing. I was ignoring my money and figuring that student debt would constrain my choices for life.  That’s unpleasant to consider.

In April of 2016 I began this blog, and I was in debt to the tune of -$151,728. Focusing on my money had my debt diminish to -$146,049 by year end. That’s an increase of 3.74%. I had hoped to do better than that, but was not anticipating so many medical expenses. Explicit goals are said to be helpful. Let’s give it a go.

2017 Achievable Financial Goals for ZJ Thorne

  1. Pay myself from my business at least a nominal amount every month. If I get one client a month to cash-flow properly, I could pay myself $500/m before taxes.
  2. Finish contributing to my 2016 IRA ($1340 to go)
  3. Increase my Emergency Fund to $1000. ($691 to go)
  4. Pay off Credit Cards ($5785).
  5. Fully fund 2017 IRA ($5500 to go)

This is $13,316.  That is $256.07 a week or $1109 a month for all of these goals. I have until April 15 to finish contributing to my 2016 IRA. It and the emergency fund will be my first priority. Then I will shift to paying down my credit card. The 0% balance transfer ends in July. If I cease spending on my credit cards and pay them off in 6 months, that would be $964.17 monthly. Perhaps this is attainable. If July through December is dedicated to funding my 2017 IRA, that is $916.67 a month in contributions.

My current gig is scheduled to last until mid-February, and we are supposed to continue with unlimited overtime until then. It is possible they will extend beyond February. We won’t know for some time. Our industry shifts rapidly. It is not uncommon to be told at 2 pm that your gig ends that day. Staying gainfully employed is helpful to achieving these goals.

The big goals are even grander and dependent upon finding a gig utilizing the skill I’ve been mastering. If I do that, I can double my pay for some gigs. If I do that, my goals can become enormous depending on how long a gig at that rate could last. These goals are too big for one year, but they are in my mind. Luring me.

2017 Stretch Goals for ZJ Thorne

  1. Get my Emergency Fund up to $5000-$10000 ($4691-$9691 to go).
  2. Save up a down-payment of $15000-$30000 ($14981-$29981 to go).
  3. Spend $5000 on my brokerage account.
  4. Pay off the smaller student loan in a fell-swoop $45000.

What are your goals for 2017?

Net Worth Week 37 – Happy Holidays!

Gentle Readers,

Travel begins tomorrow and will mark the first time I will actually get to be in the same state as my lovely girlfriend on Christmas Day. I’m not thrilled by the area of the country we’ll be in, but she’ll be with me and that’s a lot of joy for one woman.

There’ll be limited time with my family and away from my jobs, but I will get to hug someone I have not seen for a few years due to how far away they live. I’m so excited. Definitely worth the cost of our tickets. All of my siblings in the same space happens once every 2 or 3 years. It is not easy.

12/9/16 12/16/16 12/23/16
Joy 1102 1102 1102
Travel 324 324 324
Down Payment 19 19 19
Retirement 21 21 21
Health 45 45 45
Moving 284 284 284
EF 309 309 309
Business 1 1 1
Bed 0.29 0.29 0.29
Life 445 636  1912
IRA 10988 10883  10718
Brokerage 664 661  661
CC (largest) -4341 -4341  -4256
CC (longest) 0 0 0
Rewards Card -988 -510  -1274
SL 1 -103334 -103449  -103565
SL 2 -45501 -45553  -45606
Earnest -6915 -6927  -6942
Net Worth -146880 -146494  -146246
Percentage Change .27% .26% .16%

Have you traveled this holiday season?

Net Worth Week 35 – You Better Work Edition

11/25/16 12/2/16 12/9/16
Joy 1102 1102 1102
Travel 324 324 324
Down Payment 19 19 19
Retirement 21 21 21
Health 45 45 45
Moving 284 284 284
EF 309 309 309
Business 1 1 1
Bed 0.29 0.29 0.29
Life 1632 2617  445
IRA 10170 10124  10988
Brokerage 406 399  664
CC (largest) -4332 -4341  -4341
CC (longest) 0 -98 0
Rewards Card -1443 -1683  -988
SL 1 -103378 -103477  -103334
SL 2 -45521 -45566  -45501
Earnest -7351 -7364  -6915
Net Worth -147712 -147283  -146880
Percentage Change -1.12% .29% .27%

Have you ever had the option of Unlimited Overtime? How much would you work if you could?

Net Worth Week 30 – Don’t Sleep on the Job

10/21/16 10/28/16 11/4/16
Joy 1101 1101 1102
Travel 323 323 324
Down Payment 19 19 19
Retirement 21 21 21
Health 45 45 45
Moving 284 284 284
EF 1005 105 105
Business 1 1 1
Bed 0.29 0.29 0.29
Life 1942 2145  2256
IRA 10011 9917  9773
Brokerage 399 391  377
CC (largest) -4559 -4499  -4479
CC (longest) -62 0 0
Rewards Card -383 -647  -199
SL 1 -103044 -103159  -103275
SL 2 -45368 -45421  -45474
Earnest -7736 -7752  -7768
Net Worth -146000 -147122  -146887
Percentage Change .31% -.76% .15%

Have you picked out your Election Day outfit?

Net Worth Week 25 – Mentor Edition

9/16/16 9/23/16 9/23/16
Joy 1100 1100 1100
Travel 323 323 323
Down Payment 19 19 19
Retirement 21 21 21
Health 45 45 45
Moving 283 283 283
EF 1004 1004 1004
Business 1 1 1
Bed 0.29 0.29 0.29
Life 871 1732  1596
IRA 9854 10079  10033
Brokerage 395 402  400
CC (largest) -4699 -4693  -4660
CC (longest) 0 0 0
Rewards Card 0 0  -701
SL 1 -102726 -102858  -102957
SL 2 -45223 -45283  -45328
Earnest -8126 -8143  -8160
Net Worth -146867 -145967  -146981
Percentage Change -.22% .60%  -.69%

Any recommendations for paying your employment and quarterly taxes as an LLC?

Net Worth Week 20

My pain keeps circling itself. I think that the steps I’m taking are having long-term effects, but they are shorter lived than I hoped.

Date 8/5/16 8/12/2016 8/19/2016 8/26/2016
Joy 1100 1100 1100  1100
Travel 323 323 323  323
Down Payment  19 19 19 19
retirement  21 21 21 21
health  45 45 45 45
Moving  31 31 31 31
EF  2003 2003 2003 2003
Business  1 1 1 1
Bed  .29 0.29 0.29 0.29
Life  1444 769 1844  2127
IRA  9984 10087 10127  10058
Brokerage  409 410 402  401
CC (largest)  -4791 -4791 -4791  -4791
CC (longest)  -273 -295 -319  -437
Rewards Card  0 -273 -564  -1022
SL 1  -102713  -102489 -102604 -102719
SL 2  -45217  -45115 -45167 -45220
Earnest  -8486 -8404 -8522 -8540
-$146099 -$146657 -$146050 -$146599
  .56% change -.38% change .41% change -.37% change

Have you seen growth in other areas of your lives lately? Have the hustles been paying off?

Net Worth Week 18 – IRA Milestone Edition

My IRA made it to the $10,000 mark for the first time this week! My net worth is slightly more negative than last week due to a plane ticket purchase, but important growth is happening. It definitely makes me feel good. I am supposed to be mentally preparing for a big correction, which I do think will happen, that will drastically change the current value of my portfolio. However, these little victories feel like a balm nevertheless. I’ll take them.

My business included two client meetings and word of a potential client on the horizon. I hope it comes to fruition soon. There are really big expenses due at the end of the month, and I don’t want to pay from my own emergency fund.

My pain is still present, but it is altered. Reflexology and massage are helping a lot. The former is doing the most for my bones, and is cheaper than the latter. I’m still trying to get to maintenance mode and out of What the Devil Is Wrong mode, but this is looking up.

I still love Earnest and credit them with my ability to conquer some of this debt.

Date 7/22/16 7/29/2016 8/5/2016 8/12/2016
Joy 1099 1099 1100  1100
Travel 323 323 323  323
Down Payment  19 19 19 19
retirement  21 21 21 21
health  45 45 45 45
Moving  31 31 31 31
EF  2002 2002 2003 2003
Business  1 1 1 1
Bed  .29 0.29 0.29 0.29
Life  897 1796 1444 769
IRA  9908 9920 9984  10087
Brokerage  337 407 409  410
CC (largest)  -4791 -4791 -4791  -4791
CC (longest)  -529 -1095 -273  -295
Rewards Card  0 0 0  -273
SL 1  -102489  -102604 -102713 -102489
SL 2  -45115  -45168 -45217 -45115
Earnest  -8915 -8934 -8486 -8504
-$147156 -$146927 -$146099 -$146657
  -.32% change .15% change .56% change -.38% change

How are your retirements doing?

Net Worth Week 16

Gentle Readers,

I’m still spending a lot of money attempting to get a handle on my pain, but there has been some improvement and the hope for much more. It will take more money and will definitely impact my timing, but not as much as the new FHA mortgage guidance. I am getting lessons in patience and working harder towards goals.

I’ve been interested in dividend growth investing, but I find it intimidating. To see in more stark terms what it can be like, I bought one stock. That’s right, one. I’ve been reading a lot at http://www.suredividend.com/ and http://bamfmoney.com/. They’ve both taught me a lot, but there is so much value in seeing for yourself. Financially, it was silly to buy one. The fee will take a long time to pay for itself, but I think the opportunity to learn is worth it.

I was bummed to learn that I did not win the contest to make it to FinCon this year. I’ll keep learning and growing with y’all and we can see what next year is like.

I still love Earnest and credit them with my ability to conquer some of this debt.

Date 7/8/16 7/15/2016 7/22/2016 7/29/2016
Joy 1099 1099 1099  1099
Travel 323 323 323 323
Down Payment  19 19 19 19
retirement  21 21 21 21
health  45 45 45 45
Moving  31 31 31 31
EF  2002 2002 2002 2002
Business  1 1 1 1
Bed  .29 0.29 0.29 0.29
Life  863 746 897  1796
IRA  9653 9894 9908  9920
Brokerage  329 335 337  407
CC (largest)  0 0 -4791  -4791
CC (longest)  0 0 -529  -1095
Rewards Card  -5247 -4862 0  0
SL 1  -102258  -102374 -102489 -102604
SL 2  -45010  -450062 -45115 -45168
Earnest  -8878 -8897 -8915 -8934
-$147006 -$146678 -$147156 -$146927
  .14% change .22% change -.32% change  .15% change

Do you stick to one type of investment (indexing) or have more variety in your portfolios?

New FHA Mortgage Guidance Will Impact Borrowers With High Student Loan Debt

Gentle Readers,

I was having dinner with Mabel recently and she had some bad news for me. The federal government has issued new guidance for FHA loans. This guidance will make it far more difficult for people with high student loan debt to qualify for a mortgage. Me. It will make it far more difficult for me to qualify for a mortgage.

The Federal Housing Administration insures mortgage lenders as a way to encourage home ownership in the US. The FHA does not issue mortgages, but mortgage lenders use the insurance to stay in business in case too many people enter foreclosure. The FHA has guidance for the type of qualifications a person must meet when applying for a loan. If you are eligible for an FHA approved loan, your down payment can be as low as 3.5% which is far more attainable than the standard 20% necessary to avoid PMI. Not all mortgages meet the qualifications for an FHA loan.

Part of what the FHA measures when determining your loan eligibility is your debt-to-income (DTI) ratio.  Naturally, student debt counts as debt. However, it can be difficult to know exactly how to count this debt. Borrowers are allowed to pay back under a number of different terms and conditions. You may have a 10, 20, or 30 year schedule with or without some forgiveness of the debt itself. It’s complicated.

What concerns me today is the new rules for those of us who are paying back our student loans on an Income Based Repayment (IBR) Schedule. In IBR, you pay a percentage of your income towards your debt each month. This is not an amortizing payment. It is not intended to efficiently wipe out your debt. It is intended to give financial breathing room to people with student loan debt that is high in proportion to their income. I pay roughly $500 a month toward my student loan debt because of IBR. If I was paying an amortizing payment, I would pay closer to $1500 a month.

The FHA has new guidance for mortgages for people under IBR. If I want to use an FHA Loan, they will calculate my monthly debt obligation in a new way now. They no longer consider what my IBR obligation will be each month, which makes sense as the IBR changes yearly based on last year’s income.

The pertinent changes:

FHA 4000.1 Section II. A. 4. B. (H)

(4)  Calculation of Monthly Obligation
Regardless of the payment status, the Mortgagee must use either:

  • the greater of:
    • 1 percent of the outstanding balance on the loan; or
    • the monthly payment reported on the Borrower’s credit report; or
    • the actual documented payment, provided the payment will fully amortize the loan over its term.

What this means for me personally at my current student loan debt levels is that I will likely be ineligible for an FHA loan.

  • If my student debt obligation was calculated as it is now incurred, it would be $500/ month.
  • If my student debt obligation was calculated at 1% of the loan balance it would be $1450/month.
  • If my student debt obligation was calculated as if I were in the process of fully amortizing my loan over a 30 year term, it would be $936/month.

These are very different debt calculations and will absolutely impact my ability to get a loan. The difference between $500 and nearly $1500 will be a killer on my DTI ratio, which must be under 43% in order to qualify for any loan.

If I make $4000 a month, and have a $1500 a month student debt payment and $650 in other obligations, I would have a DTI of 2150:4000. Over 43%.

If I make $4000 a month, and have $500/m student debt payment and $650 in other obligations, my DTI would be 1150:4000. Under 43%

This change is literally the difference between getting a home and not.

With an income of $4000 per month, the highest my debt obligation could be and still leave me eligible for a mortgage is $1720.  After subtracting my other obligations, I would need my other student loan obligation to be less than $1070/m.

To get to $1000 a month in student loan debt obligation, I would need to reduce my student loans to $100,000 from their current high of roughly $145,000.  Alternatively, I could attempt to  increase my earnings to $5000/m and then my 2150:5000 DTI would be 43%.

So, plans must change. I have to kill my student debt.

Previously, my plan of action for when my income doubles was to increase my investment payments at a far greater rate than paying down my student loan debt since I wanted to get the magic of compounding going. My new plan must be to reduce my debt obligation significantly.

When the income doubles, if I make $8000/m, at least $5000 needs to go towards student debt. I have two student loans. One of them is roughly $45000 currently. I will focus all extra payments on that one. In nine months of focused payments, that debt will be almost wiped out.

I would still be left with a student loan obligation that is roughly $100K. 1% of 100,000 is $1000. If I had that $1000 plus $650 in other obligations against an income of $8000/m, my DTI would be 1650:8000. I would be eligible for a loan. With a doubled income, the highest DTI I could have and still be eligible for a loan would be 3440:8000.

Has governmental guidance ever changed your plans in a major way?

 

 

Net Worth Week 12 – A Glimmer of Progress

Gentle Reader,

This summer and year have been about volatility in unexpected places. We all watched the markets dip and rebound after the initial Brexit vote. I personally had some shenanigans at my gig, but was really encouraged by the community’s response to my attempt to get to FinCon. Y’all are wonderful and supportive. Thank you.

I am an hourly employee at my temp gig, and I had the misfortune of being sent home after a half day unexpectedly. I did nothing wrong, but they could not get their systems to work, which meant that I couldn’t work either. This will definitely impact next week’s paycheck and comes at an unfortunate time since I had worked a half-day on Monday as well. You are guaranteed nothing as a contingent employee. This week reminds me that I need to pursue FIRE to rid myself of the vicissitudes of laboring for others.

Brexit definitely impacted my retirement accounts. I’m personally on the right track, but am worried for the world in the next few years. Increased volatility hits financial markets definitely, but it absolutely increases violence in the world. I’m watching Venezuela and worrying what other countries will respond to market conditions in a similar vein.

I still love Earnest and credit them with my ability to conquer some of this debt.

Date 6/10/16 6/17/2016 6/25/2016 7/1/2016
Joy 1098 1098 1098  1099
Travel 322 323 323 323
Down Payment  19 19 19 19
retirement  21 21 21 21
health  45 45 45 45
Moving  31 31 31 31
EF  2597 2597 2597 2002
Business  1 1 1 1
Bed  .29 0.29 0.29 0.29
Life  1729 1839 1140  1929
IRA  8516 8285 8765  9580
Brokerage  226 221 315 324
CC (largest)  0 0 0 0
CC (longest)  0 0 0 0
Rewards Card  -5434 -5300 -5347  -5675
SL 1  -102120  -102268 -102284 -102482
SL 2  -44971  -45017 -45067 -45112
Earnest  -9258 -9286 -9306 -9328
-$147176 -$147390 -$147748 -$147222
  -1.0% change -1.0% change -.24% change  .35% change

How did your week go? Have your accounts already recovered from Brexit?