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Home > Taxes, friends, work, the house.
 

Taxes, friends, work, the house.

February 14th, 2012 at 01:52 pm

Things have been quiet lately. Not really, I guess, but no major disasters. In January, we had a lot of work on the house done-- ceiling fans installed in the bedrooms, new bath fans in both bathrooms, and we had the entire house insulated --attic and exterior walls. The utility company paid half the tab for the insulation, through a special energy efficiency project. I certainly loved that!

I also decided (someone should stop me next time I try this) to redo the basement. We bought a sweet 1960s vintage bar right before Christmas, so we had to move furniture around to set it up right. And, of course, I was like "while we're moving bookcases, why don't I refinish them and repair them?" Three weeks later, or painting, sawing, etc later it's finally done. It looks fantastic, Don't get me wrong, but boy, how do I get myself into this? It's like I just make up work for myself!

**

I finally started the taxes last night. The W02 and my 1099s are in. Not all the brokerage forms are in, but I didn't want to wait.

I really didn't know what to expect because we adjusted the withholding last year when we bought this house. We wanted to lower the refund amount and free up more cash every month while we got used to paying a mortgage. Still, no wonder I feel broke!

Half of my self-employment income goes to taxes-- SS and medicare taxes, self-employment penalty etc. The rest goes to IRA and daycare so I can work. I paid $3000 last year (more in reality, but on paper through licensed places) for care for one kid, and got a measly $418 childcare tax credit. Boo. It kind of reminds me that I'm not really making anything. Frustrating.

We also paid about 11,000 combined in real estate taxes and mortgage interest. I hate paying mortgage interest. It's such a racket. It's motivating me even more to once again have a paid-off house as fast as possible. I have other uses for $500 a month!

Moving into a not-paid-for-house has really shown me how spendy financing real estate really is, and that I kind of took for granted the sorts of bills we didn't have when we had a paid-for house .Here's to getting this loan paid off by 2016!

That said, looks like we might be getting some sort of refund, and my plan right now is to send 50 percent to the car loan and 50 percent to the mortgage, just to shave a little bit off the balance.

***
The good news is that hubby will be getting a bonus this year. I'm not sure yet when it's coming or how much it will be, but I'm planning to park it all in savings immediately. It's been harder to save big chunks of money now that we have a mortgage. I've been lucky to stash $300 a month, compared to about $1000 a month without a mortgage. I'm trying though, and with all the work on the house, we've had to take money out of savings to pay for some of the repair. I hate that, knowing how slowly it's going back in.

**
I got wild and crazy today and opened a Roth. Hubby has one, and now I have one, in addition to our other retirement accounts (IRA and 401k). I was hesitant because of my self-employment. I like to contribute the max $5000 every year, and due to the aforementioned self-employment tax issues, I need as much tax relief as possible on that income. I never thought I could afford to put some of it into a Roth, considering I can only put $5000 total into both.

I'm thinking we need to take better advantage of hubby's roth. We can contribute up to 5000 a year to his, because he has a 401k. And, a little into mine.

Why the change of heart? Tax free withdrawals in retirement, and I could use the money to pay for the kids college if I needed to, or keep it for myself for retirement. I was thinking of putting some of the extra money we save for the kids money into a roth, instead of just overloading the 529. I want to preserve financial aid, and I want to have the money for retirement if we don't use all of it for the kids' schooling. Just thinking out loud.

***
I've been hitting the coupons lately, trying to get free stuff and stock up on things at a deep discount. I'm making more of an effort, so to speak. I've been getting a few free things a week, which is nice.

In recent months I've gotten 4 packs of bic pens, 3 12- packs of Shick razors, three bars of Olay soap, dental floss, Kotex minipads, toothpaste, 2 Loreal paris lipsticks, and 16 go packs of Teddy Grahams for free.

The list of things I got for less than 50 cents is humongous. That feels good, and I mostly kept a lid on spending these last couple of weeks (after the big house bills died down), so I'm not feeling as out of control of the cash.

Now, if I can just make it two more weeks.

We're going on a long weekend to New Orleans to the wedding of a friend, and it's going to be great!

We're also doing it on the cheap. We're staying with friends all but two nights, so our hotel bill went from $600to $200, and we're driving, so we'll just need to pay for gas, food and fun. Amazingly, I checked our vacation account and it's enough to cover the hotel. I put 10 a check into it, plus any mail-in rebate checks, and it's already more than $200. Those little bits really do add up.

4 Responses to “Taxes, friends, work, the house. ”

  1. Looking Forward Says:

    Your trip to N.O. sounds great! Have a blast. Smile

  2. baselle Says:

    Doesn't hurt to have as much money in as many different buckets as possible. Not sure if you have restrictions in college spending in the 529 - if, say, you can only spend the 529 on tuition then Roth can be very helpful for flexibility.

    Another twist on college savings is to put some in i-bonds. Currently they've been earning about 3% interest. No state tax on them, fed tax deferred until you cash them in, and if you use them for college tuition, no tax at all. (And you can be flexible with them also).

  3. ThriftoRama Says:

    I-bonds. Really? Tell me more. How do you buy them?

  4. baselle Says:

    As of January this year, no more paper savings bonds except if you buy them with your IRS refund - you can buy up to 5K of paper bond. You can buy up to 10K/yr electronically through Treasury Direct. The limits are additive, so if you manage to do both refund and electronic the limit is 15K.

    A little warning, Treasury Direct is not the clearest website out there.

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