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Archive for July, 2020

Retirement goal update--first advance since January!

July 31st, 2020 at 06:10 pm

Finally, some progress on the retirement goal!

Goal: \$814,292 by March 2024

Current retirement balance: \$565,234

January 2020 balance: \$542,038

Progress since last update: \$23,196

Still needed: \$249,058

This interim goal is based on getting my and NT's retirement to 4x our salaries (currently \$82,500 and \$64,118) by the time we turn 50 and AS's retirement values to 3x her annual income (\$75,940 in 2018) by the time she turns 45.
\$82,500 x 4 = \$330,000
\$64,118 x 4 = \$256,472
\$75,940 x 3 = \$227,820

It will shift anytime our salary/annual income changes. (The only exception is I won't lower AS's if she has a lower-income year, because her income fluctuates. So I'm keeping it at the 2018 level because her 2019 income was a little less.)

NOTE: I'm in a weird position because I got a 10% raise in February but a 10% "temporary" paycut in May. I decided to base this on my new salary of \$82,500 instead of my old (and current "temporary") \$75,120 salary. But that may change. I don't know. I'm still thinking about it. But that of course puts us farther behind because our goal is now that much more ambitious. (NT has also taken a "temporary" 20% paycut but we hope that will end in September, so I'm keeping him at his stated salary.)

There are 44 months to go before March 2024, so that means we need to gain \$5660 per month on average to meet our goal.

The ultimate goal we're working toward is 8x our annual income by the time we retire at 65.

July 2020 net worth update

July 31st, 2020 at 05:55 pm

Assets:
NT's UK pensions:
AV: 22,397 pounds (\$27,996)
SW: 29,047 pounds (\$36,309)
FL: 6,462 pounds (\$8,078)
NT's 401(k): \$92,548
NT's Roth IRA: \$46,606
AS's Roth IRA: \$68,610
AS's SEP IRA: \$47,913
CJ's 401(k): \$163,988
CJ's Roth IRA: \$51,208
NT's flat: \$212,500 (200,000 pounds value x1.25 -15%)
CJ/NT/AS house: \$592,200 (\$630,000 value -6%)
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TOTAL ASSETS: \$1,369,934

Debts:
US Mortgage \$368,807
Loan from friends (duplex) \$9,000
UK Mortgage 1 \$27,929
UK Mortgage 2 \$5,888
UK Mortgage 3 \$6,200
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TOTAL DEBT \$417,824

Current Estimated Net Worth: \$952,110

June 2020 estimate: \$758,303

Change in net worth: +\$193,807

Summary: Wow, thanks to the higher-than-expected home appraisal, we're suddenly nearing net-worth-millionaire status! Our retirement accounts were all up a fair bit too--maybe \$20K? So that helped too!

If our refi goes through we'll add about \$5K to our debt next month, so I don't expect to keep at this level. I'm also thinking the stock markets can't hold out against the recession forever, so those could tank at any time. Still, this is a nice number to see!

Notes on the numbers above: House value estimates are usually approximate. UK pension values updated about once a year. UK asset values and debt amounts are calculated figuring \$1.25 for every British pound.

Refi status

July 24th, 2020 at 08:15 pm

We're still in the refi process, but it does appear to be moving toward completion. AIMloan is a much more orderly broker than the person we worked with for our last two big mortgage actions (buying our current home and refinancing it).

I don't claim to understand everything about how refis work, but despite having to bring a lot more to the table than expected, it still feels like we're getting a good deal. Here's what's happened:

- They noted we'd have to bring over \$13K to closing (or is it \$14K or \$15K? I have such trouble understanding the magic math of mortgages), despite having quoted closing costs of \$2400. Say it's partly to prepay 4 months of interest, insurance and taxes into the escrow, and partly because our annual insurance bill is coming due. We have the cash on hand but since we still want to do a kitchen reno at some point, I asked them to roll \$5K of it into the loan.

- In addition to rolling \$5K into the loan, I believe we'll get \$3700 returned to us from the existing mortgage's escrow account, and I have \$3500 set aside for the refi. The very highest closing number I'm seeing (I can't tell if that's what we'll actually need) is \$15,619. So that means the most we'd have to come up with, net, is \$3419.

- Our home appraised for \$630K (vs the \$500K I estimated)! This means even with the additional \$5K, our LTV is 59%. Our agent says this means a \$937 drop in closing costs. So maybe the most we'll have to come up with is \$2482?

- AIM also says there's a \$1473 "aggregate adjustment" coming our way but I can't tell if that's already factored into the numbers. It also seems like the loan is based on a higher principal amount than what we owe, but maybe I'm reading things wrong. It's all so confusing! It does appear that the closing costs they're charging are staying the same and that the other fluctuations are due to escrow, insurance etc., so I'm just trusting the process at this point. Luckily we have plenty of money in savings.

- Right now it seems like we're just throwing tons of money at the refi, but in the long run, we should get a monthly payment that's \$300 less than what we pay now, for the same payoff period we had before, so if that happens, I'm happy. Anyway, we do have expensive homeowner insurance and property taxes, so it kind of just is what it is I guess.

- I let our neighbors know about the appraised value and they said they're meeting with an accountant to get all their tax stuff worked out! If that happens, we'll start to explore the possibility of co-owning the home again. I had all but dismissed that idea forever because I thought they'd never clear out their unfiled tax returns. My neighbor said he's thinking we should do a trust where the home is owned among us but goes to our kids. (They don't have kids and they're our kids' godfathers so they want to leave their portion to them.) So we'll see how that all pans out. Definitely will be making sure there are no unfiled taxes and also will get a second opinion from another lawyer to make sure there aren't any pitfalls we're not considering.

July 2020 debt payments

July 2nd, 2020 at 03:52 pm

Mortgage payments hit:
US: \$776 to principal
UK1: \$191
UK2: \$40
UK3: \$43

That's a total of \$1,050 of debt paid.

New household debt totals:

US Mortgage \$368,807
Loan from friends (duplex) \$9,000
UK Mortgage 1 \$27,929
UK Mortgage 2 \$5,888
UK Mortgage 3 \$6,200
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TOTAL DEBT \$417,824