Here are the things we're currently thinking about:
- Reducing mortgage debt. Does this make sense, given the low interest rates? Evaluate the options of how this would impact our tax burden.
- Paying for the kids college. We want to fund some of this. What are the best strategies to do this? We have a bunch of money in a 529, but are considering a different vehicle & want recommendations. We're looking into the very well rated Utah 529 plan.
- Saving for/buying a house in California. We'd love to buy here, but we're now in a neighborhood that our kids love, they are at school, etc. Houses here are in the $2.5M range for what I'd loosely describe as a "fixer upper". Even if we could afford to buy right now, it would pain me greatly to purchase a house like that, and continue to dump money into it.
- Saving for retirement. We've maxed out our 401Ks for years, and have a sizable investment allocation. I assume we'll pass the $1M mark in the next 2-3 years. I feel like we're on track, but it would be good to get a check in on this.
We've also been doing a bunch of thinking about our monthly & yearly cash expenditures.
We have a bit more money to work with (I'm getting a raise). I'm also dividing our budget into two groups of categories: monthly & yearly. Some expenses are just too irregular to track monthly.
Categories that are staying the same for 2015:
- Rent in SFO. Or, so we hope. We renew our lease over the summer, so we'll know more then.
- Vacation house mortgage
- Seattle house mortgage
- Dining out. We went over in 2014, but I allocated a bunch of vacation eating out to this category, & think I should start tracking it in Travel in 2015, to understand the full cost of our travel budget.
- Groceries. We went over slightly, but I think we can continue to look for improvements!
- Cleaning service. This will stay the same. We'll continue to budget for a weekly cleaning service.
- Personal. These are haircuts, and the like. None of us spend much money on this category.
- Entertainment. As the boys got older, it made sense to add this category for the occasional movie/bowling trip, etc. We'll keep the budget as is for 2015.
- Utilities. Across all three houses. We'd like to keep this even. It's still a substantial amount of money, so it's important to continue looking for opportunities to conserve.
- Alcohol. This is wine & hard alcohol. We have most of our "happy hour/date nights" at home, and enjoy making mixed drinks every so often. We count this separately from our grocery bill, as it's something we can easily cut out, if we're over in other categories.
- Taxes. All I can say is, we've hired an accountant. And, the amount we paid in taxes in 2014 is staggering. We tried our best to plan, but our income is a bit varied. *fingers crossed*
Categories that are going up for 2015:
- Childcare. I didn't do a good job forecasting the cost of summer camps, and we opted to go with a nanny this fall, which is more than our previous option.
- Boys activities. With two kids playing lots of soccer, it's expensive. We also want them to be able to try other sports. I'll just say this - the entire area is nuts with the cost of sports.
- Auto. Our cars are getting older, so we need to start allocating more money for repairs. The cost of auto renewals, etc in California is also higher than in Washington, which pushed our budget up last year.
- Charitable contributions. We'd like to funnel more of our income to this, and have a plan to increase our monthly number.
- Boys birthdays. We're likely going to continue our trend of skipping any local parties, but flying to see my family & doing a combined visit/birthday party. The cost is more, but the boys get another chance to see their cousins & my family. Maybe this should go under travel.
- Boys college. We're aiming to increase our savings for this category in 2015.
- Travel. It's important for us to spend time with family and friends, and it's our 10th wedding anniversary in 2015. We will definitely have a fun trip planned. :-)
Categories that are going down for 2015:
- House. We spent quite a bit the year we moved, and significantly less last year. I think we have the ability to reduce this again, as I'm not envisioning any major expenses.
- Christmas. We're moving the cost of attending to travel, and reducing our spending on gifts. Every year, we work to cut our budget on this, and have been pretty successful.
- Gas. We are very close to our work, and we aren't driving a lot like we were in Seattle (skiing, driving to the Oregon coast, etc). Plus, the cost of gas has gone down. :-)
- Clothing. We spent less on clothes for me, plus clothes for M. The boys clothing creeped up a bit, as we replaced things, purchased sports shoes & gear, etc. We're going to combine all clothing into one bucket, and reduce the total number (from mine/M's pool) to offset the increase in the boys spending.
- Toiletries. We spent more than I thought. I pulled this out of our grocery spending a year or so ago, and it was eye opening to see how much we spend in this category. In positive news, we have an enormous stash of toiletries for 2015, and my goal is to really cut this down to size.
- Dry cleaning. This was so small in 2014 that I'm not going to bother tracking it anymore. I'll fold it into "House".
For the revised 2015 budget, here are our monthly categories:
- Cleaning service
- Dining out
- SFO rent
- Combined utilities
- Vacation house mortgage
- Seattle house mortgage
We'll also have the following yearly categories:
- Boys activities/lessons
- Boys (everything else)
- Boys college
- Charitable contributions
- Clothing (all combined)
So, how does that stack up, as compared to the 2014 budget & actual spending? Our 2015 is budgeted at about $3400 higher than our 2014 planned budget, but about $7100 less than we actually spent in 2014. Our goal was to make the budget more realistic, adjust for some of the more expensive budget items, and reduce the categories/spending that are less of a priority for us. All told, we want to spend more in some categories in 2015, but less overall! :-) Now, to make that happen. :-)
Phew! This was a long one. I often use my blog posts to jog my own memory about things, and find financial details to be very exciting. :-) How about you? What's your plan for the 2015 budget? Have you decided which categories to increase vs decrease?