Things Are Starting To Settle Down From A Financial Point of View

It’s been no secret that our household has been hemorrhaging money over the last 1.5 years as we built a second home out at our favorite lake.  Now that we have been in it for a few months and have stopped buying both construction materials and basic furnishings etc, our budget is slowly getting back to normal.  How have things changed?

 -We have increased our 401k contributions

When we bought the the place we made quite a few sacrifices.  One of which was to lower my 401k contributions to only 8%.  Why 8%?  It’s pretty simple, really.  My company matches 75 cents on the dollar up to 8% of my income.  No matter what we did, I wasn’t about to miss out on any company matching.  Now that things are getting back to normal, I have bumped the contributions back up and am now maxing out my 401k again.  During construction, the extra money came in very handy for materials.  Our goal was to not take on any debt to complete the place.  We succeeded by cutting down unnecessary expenses, scaling back our investing and pacing the work to our budget.

-We are investing in a ROTH again

Same story on the ROTH.  We stopped contributing to the ROTH temporarily while we finished the construction.  We are now starting to contribute to that again.

-We are increasing contributions to our daughters 529 plan

While we never cut down on contributions to our daughter’s 529 plan, we have decided to increase the contributions now that we have more money in the budget.

-We plan to start paying down the mortgage more aggressively

For a long time we were contributing an extra $150 per month towards the mortgage.  We also stopped that during construction but will now be doing that again.  It’s exciting to see the total mortgage go down extra every month.  I watch that fairly closely because I anticipate hitting a point where we could sell our lake house and use the proceeds to pay off our primary home mortgage.  By doing this, we could end up living mortgage free in our early 40’s.  That fits nicely in to our master plan of retiring early.

Another significant milestone that is coming up for us is that our daughter is going to be starting kindergarten.  It’s an amazingly exciting milestone for our family but it also has financial implications.  We have been paying $800 per month for daycare for the last two years.  That expense is going away which is going to drastically improve our budget surplus.  We’ll definitely take a portion of this and start directing that at our daughter’s 529 plan.