Monday, January 2, 2012

2011 Final Financial Progress Report

I hope you all had a wonderful holiday.

I started writing a rant about how my idiot lender failed to step up to the plate to fund my mortgage by 12/30/2011, the deadline of the short sale consent. But I also hated the thought of starting the New Year on a negative tone. I guess I'll just do a 2011 financial progress report wrap up first and then go on my rant.


Starting Debt (6/08)

Last MonthThis MonthDIFFERENCE
Private SL$49,528.99$0.00$0.00$(0.00)
Fed'l SL$55,852.68$50,486.69$50,334.47$(152.22)
Car Loan

I'm really proud of the fact that I had reduced my debt by 61% over the past 3.5 years. Although I still have a big student loan balance (>$50k), looking at this chart always makes me happy because it shows how far I've come.

I was planning to snowball my remaining student loan debts and pay it off by 2014. I instead got impatient and antsy about plunging into the real estate market because both the housing market and interest rates are really low right now. I realize that both the housing market and interest rates could go lower in the upcoming year(s), but it probably won't matter. Unless the housing market suffers another catastrophic drop and the other unit owners default en masse, the price of my unit is irrelevant. I intend too live in my condo for a long time, possibly for the rest of my life.

Next month, I will be incurring significant debt. My additional debt will include a $274,000 mortgage (@ 3.825% interest) and a $68,500 "personal loan" from mom (@ 0% interest). If all goes to plan, I will pay off my student loans by 9/2019, Bank of Mom by 2/2022 and my mortgage by 2/2030. I suspect neither Suze Orman nor David Ramsey will approve my recent financial moves but c'est la vie.

Note: A commenter made a good point that the IRS will impose an imputed interest upon the lender in a 0% loan. I call it a "loan" but my mom will actually be on the deed to the home. When my mom quit claim deeds or passes away (and her interest gets transferred to me), there will be tax implications.





The savings I report here is with respect to my emergency fund only and does not include my future spending earmarks. My unreported earmarked savings (i.e., spending fund) balance is currently $5,343. This money is earmarked for expected expenditures like car repair, insurance premiums, etc. I have another $5,450 set up towards the repair costs of my condo. I suspect that amount is woefully inadequate.





Long story short, I'm pretending to pay myself an additional $55/month for a "hypothetical" return of premium (ROP) term life insurance policy. I'm basically trying to "earn" back the term life insurance premiums through savings and investments.

I guess my investments were flat this year because I deposited $660 and my balance increased only by $644 since last December. This is a 30-year experiment so I won't be too discouraged by this.



Oof. The big reason for this drop is because I recently withdrew $14,314.07 to pay for points ($5,822.50 for 2.125 pts) and closing costs ($8,491.57) on the new condo. As noted above, I also set aside another $5,450 for immediate repairs I'll need to do on the condo.

The breakdown and the history of my net worth can be seen here.


ej2akind said...

You may want to review the loan arrangement with your mom. The IRS doesn't believe in 0% interest loans. You can find out more by looking up imputed interest. I hope you close soon and get settled quickly.

Shtinkykat said...

Yep. I call it a "loan" but my mom will be on the deed to the home. I will eventually pay the tax man, but not now.