Condo Hunting

The hunt is officially on! I’m looking for a condo, albeit much earlier than anticipated.

So why the sudden change of heart?

  1. really want to live in a 1 bedroom place.
    • I hate living in a studio, especially since having a chronic illness means I spend a lot of time at home. I’m convinced that having only one room is not healthy in the long term.
    • The average 1 bedroom in this city rents for $2,100/month in my neighborhood it’s closer to $2,500. A mortgage payment plus HOA fees would lie somewhere in this range.
  2. Housing prices are rising quickly in my city.
    • They’ve risen 10% in the past year. Should this trend continue a $300,000 house would be worth almost $400,000 in 3 years. I am not sure I can afford this  sort of increase in three years.
  3. I came across the perfect mortgage through my local credit union and the interest rate is super low. I am considering other loans now too.

How will I come up with the down payment then?

I’ll be taking out a 401K loan.

I know this is generally ill advised, but I figure I’ll be ahead in the long run. I had been muling over various strategies to save for a 3-10% down payment plus closing costs over the next couple of years.   Realistically saving for a down payment would entail me halving my current 401K contributions in order to save. I plan on taking a loan out for the amount of contributions I would forgo had I decided to wait a couple years to purchase.

How will this change my monthly budget?

I’ve come up with a few scenarios.  The scenarios  are in the chart below and show my post-condo monthly disposable income at various 401k contribution levels (10%, 15% and $18,000). For privacy purposes I don’t disclose my salary so I am going call the various salary possibilities (a) , (b) and  (c), where:

  • (a) – is my current salary;
  • (b) – will be my salary in 2 months;
  • (c) – is my potential salary in 2-3 months if I am promoted; and
  • COLA – represents the  cost of living adjustment (COLA) I’ll receive in January.
  • I round all figures to the nearest $50
Monthly Disposable Income Scenarios  After Buying a Condo and Contributing
10 percent, 15 percent or the Max to my 401K
Scenario Salary Amount Disposable Income Amount
 10 percent  15 percent  Max
#1 (a) $200 $0
#2 (b) $300 $100
#3 (b) + COLA $350 $150
#4 (c) $550 $300
#5 (c) + COLA $600 $400

What do I make of the above chart?

  • If I don’t get promoted, I will likely contribute 10% of my income to my 401K.
  • If I do get promoted, I will max out my 401K.

Alright, I’m off to fantasy hunt online!

August Spending – Week 1

Spending Overview

Food: $18
Shopping: $160
Misc.: $2
Health: $19

My goal is to spend $15 a day, on average, throughoutI the month of August. I am tracking my daily expenses, week by week, for at least the month of August. Technically Day 1 was in July  (as in July 31), but I think it’s simpler to work with a 7-day week from the start. I’m certainly not off to a stellar start, hopefully I can smooth this over in subsequent weeks.

Day 1-4

Beginning Balance: $45
Spending: $0
Ending Balance: $45

I was on a business trip, so all my meals and travel expenses will eventually be reimbursed. I typically don’t include reimbursable expenses in my budget/calculations. Since I was out of town I didn’t make any purchases except for one ($19) at a pharmacy.  This falls into the “health” category.  And since I don’t constrain my medical expenses, I left this out of my budget as well.

Day 5

Beginning Balance: $60
Spending: $49
Ending Balance:  $11

I returned home this evening and did my biweekly online shopping. I don’t have a car, so this is  how things are usually purchased. My purchases included:
(1) a memory card ($10) for my phone; and
(2) home-goods ($39).

Day 6

Beginning Balance: $26
Spend: $18
Ending Balance: $8

I had a low-key day so I mostly stayed at home. I got groceries ($16) and did laundry ($2). The weather was unusually mild so I also went for a walk (as my doctor ordered). I also did some work.

Day 7

Beginning Balance: $26
Spend: $111
Ending Balance: ($85)

I spent most of the day cleaning my apartment and attempting to meet a work deadline. But I also went on an amazon shopping spree, ugh. My purchases included:
(1) a printer ($73); and
(2) more home goods ($38)
All purchases  I had been eyeballing for several months, so they weren’t impulse purchases. I got rid of my old printer because it was too heavy for me.

 

Net Worth Update – July 2017

I haven’t been posting with much regularity due to poor health. Hopefully in August I’ll do more than one post. But at least July treated me well in the financial sense, which wasn’t a surprise given it was a three-paycheck month.  All of my account balances increased:

Liquid Assets Jun-17 Jul-17 Change
Cash & Checking $898 $1,000  +$102
Emergency Fund $3,154 $3,380  +$226
Short Term Savings $850 $1,125  +$275
Vanguard Fund  $300 $500 +$200
Illiquid Assets Jun-17 Jul-17 Change
Brokerage $450  $460 +$10
Savings Bonds $1,904 $2,060  +$156
Retirement Jun-17 Jul-17 Change
Roth IRA $16,117 $17,367  +$1,110
Traditional 401K $23,117  $26,171 +$3,054
Net Worth $46,181 $51,314 +$5,133
% Change 11.1%

I love the months where my net worth increases by 10 percent or more. I know as my net worth increases,  10+ percent increases will be fewer  and farther between.

I’m on track to meet my goals for 2017:

Fund/Goal Contrib. Total  Goal Progress
401K $2,214 $10,636 $18,000 59.1%
Roth IRA $810 $4,000 $5,500 72.7%
Emergency Fund $455 $5,440 $5,500 98.9%
Vanguard
Fund
$200 $500 $3,000 16.7%
Vacation* $275 $1,125 $1,000 112.5%

I’ve now fully funded my vacation fund. And I’m almost done with the goals directed towards my emergency fund and IRA. I still have a ways to go with the vanguard fund, but I don’t plan to finish that in 2017. I’ll be using the $3,000 to invest in one of vanguard’s mutual funds. I’m not sure which fund. I’m also not sure if the investment will be in my brokerage or Roth account.

It also looks like I may need to come up with additional goals.

July Budget

As far as the budget went, I could have done better. I increased the “Everything Else” category by $100 because of gift purchases.

Category Budgeted Actual Remaining
Rent $1,650 $1,650 $0 left
Fixed Expenses $100 $89 $11 under
Medical $- $65
Food $250 $201 $49 under
Everything Else $300 $453 $153 over
Total  $2,300  $2,393 $93 over

I’m consistently going over budget in the “Everything Else” category.  Online shopping continues to be a problem for me. I think a major disconnect lies in my checking account not instantaneously reflecting my credit card purchases. I have a few strategies to at least attempt to meet my budget in August:

  1. Limit online purchases to two days a week
  2. Keep track of daily expenses.
    • I’ll probably publish this “diary”
  3. Utilize a daily budget method
    • This means limiting my spending to $15/day and rolling the left over balance into subsequent days.
    • I will now be setting aside money from my checking accounts at the end of the day so that I can actually see the balance decreasing. I think the visualization should help immensely.