March Financial Update: Spending Frozen!

Monthly Update Pin March

We continued our spending freeze in February because January’s freeze didn’t seem so difficult, and our spending was solid ice all month long! I’m pretty proud of what we accomplished. We had two big expenditures that were predicted, and other than that we had no unexpected spending, not even takeout.

How did the Spending Freeze Go?

The first big expense was our house deposit and associated purchase fees, to the tune of over $30,000. This huge expense motivated us to keep our spending frozen.

The second big expense was Little Stapler’s birthday party. He wanted to invite more than the seven friends he had over last year and our home is in upheaval right now, so we agreed to rent a local gymnastics center. We spent $286 on that party:

  • Party space: $150
  • Invitations: $12
  • Favors: $45 (but they’re really cool!?)
  • Pizza: $58
  • Cake supplies: $21 (frosting color, LEGO baseplate [it’s a LEGO cake], and 72 mini dinosaurs to run around on the LEGO cake)

We didn’t spend any money on Little Stapler’s gifts because we already had them in our stockpile, from the various clearance sales. This was a pricey birthday party, but wow did everyone have a blast! Including half the parents, who jumped into the foam pit with the kids. We mitigated as many expenses as we could — except the favors, which aren’t a necessary expense but I love to say “thanks for coming” to guests by giving good favors.

Otherwise, we literally spent no other money on anything other than recurring bills, TurboTax, and the $6 I spent to send a certified letter to our property management company, telling them we are moving out. No takeout. No coffee. No nothing!

On the Plus Side …

First, we got over $4,400 back in taxes. The bad news of course is that my gross overestimation of our tax liability resulted in an interest-free loan to the government. But Yay! Money!

Second, Mr. Stapler continues to plug away at his $15,000 side hustle. Somehow, some way, we have been able to carve out about 16 hours a week to allow him to finish this project before we close on the house. Unfortunately, we don’t think he will be paid before we close. So, we still had to withdraw another set of funds from our IRA’s for the down payment. If we get the money by April 15, we might be able to use it towards our 2014 and 2015 contributions.

Third, I got another freelance litigation job. The timing is perfect, because litigation at my current freelance job has slowed down. It’s great to diversify my income with another firm client, in addition to the individual clients I have. Like my current job, this is not the job I envisioned for myself when I went to law school, but it’s litigation and I do like using my litigation skills. As a wise woman once said,

You can have it all. Just not at the same time.”

I have had jobs where I’m serving the public interest, but only one of them really held my attention from day to day. That one had me in the courtroom, the conference room, and working with clients directly. The other jobs had me in front of a computer most of the time. These days, I’m representing small businesses in litigation; it has nothing to do with serving the public’s interest! Yet, I love what I do because I’m in court a few times a month, deposing witnesses, negotiating settlements, and generally strategizing next steps on a case.

March Net Worth Update:

March 2015 Financial UpdateCash: + $21,101.  This number is pretty meaningless because our finances are in flux with the home purchase. Some of this is from cashing out our IRA contributions, and some of it is from some increased productivity on my parent. To read a little bit more about that, check out my post about eating frogs.

Credit Cards: – $945. Our second month of freezing our spending has been better than the first!

Loans: – $290. Mint is having trouble connecting to one of our loan accounts, so this number is not correct.

Investments: – $41,626. We withdrew from our Roth IRA’s for our deposit. The funds are exempt from tax penalty because $30,000 of those funds were contributions and the remaining $10,000 are being used to purchase our first home. Additionally, they’re not taxable because they were post-tax contributions to a Roth IRA. If you’re curious about the IRS rules on these issues, check out IRS Publication 590 if you’re having trouble sleeping at night. 😉 No, but seriously — it is very helpful. My favorite is this graph: 

How to Determine if a Roth IRA Distribution is Taxable

Although I am very sad about seeing out retirement accounts go from close to $100,000 to half that amount, I found some consolation in the process.

I saw the first sign of how powerful investing early can be when I cashed out $10,000 in earnings from an account that only had $15,000 in contributions. Over 5 years, $15,000 earned almost half of it’s value. Pretty awesome.

Second, when I cashed out the second account, I saw that our initial $5,500 contribution bought 224 shares, but cashing out $5,500 sold only 95 shares. In the time that we owned the shares, they more than doubled in value! Not only does that mean that we bought low and sold high, but that we still have the entire value of our initial contributions remaining in that account.

Net Worth: – $19,281.  Our finances are really messy this month, so it’s hard to make sense of all the little pieces. But when I look at this number, I realize that our net worth dropped $19,000 (temporarily — because soon we will add a house to our net worth), but our house deposit was almost $30,000. That means that our net worth sort of increased $10,000 in one month. We managed that by decreasing our spending by $1,000, getting a $4,400 tax refund (Oops!), and I increased my earnings. 

February Goals:

  • Survive: SUCCESS! Emerging from February unscathed really was a feat. We had countless blizzards and snow days (honestly, I stopped counting), ice dams leaking water into Little Stapler’s bedroom and our laundry room, the “four month wakefuls” (a month early), and unending house-purchase-shenanigans. 
  • Spending Freeze: SUCCESS!  
  • Save for a House Down Payment: N/A. The big news here is that we are under agreement for a house. So, the time to save for that down payment has ended. We anticipate not being able to save money until Little Stapler goes to kindergarten in September. And then … and THEN! … it’s on.

March Goals:

    • Survive: The next month will be hectic, with me juggling two freelancing gigs and Mr. Stapler working full time while also finishing up his side project. Added to that is the stress of packing and coordinating a move. Up until now, I have been diligent about packing at least one box each day. For this month, I’ll have to step it up and pack more than that, but it’s good to know that I’m on my way already.
    • Coordinate Finances for a Smooth Closing and Moving: We have applied for our mortgage, but there are a lot of loose ends we need to tie up, like getting homeowner’s insurance, finding new daycare, setting up a moving truck and movers, getting a good deal on internet service, getting free boxes, and switching utilities.
    • Spending Freeze: I am daring to continue the freeze during a hectic month. I need to carve out a moving budget, a budget for blinds and a few rugs, and set aside some funds for lead remediation. By establishing those spending priorities at the beginning of the month, I will hopefully avoid opening the floodgates of spending by either shopping at Bed Bath and Beyond or IKEA. I’ll leave that for the month of April, after identifying all the house things we need in the next month (lamps come to mind, but I’m sure there will be more). I plan to be deliberate about the “nice to have” spending on our new home. More about that plan to come …

How were your first two months of the year — are you on track to meet your annual goals?

4 thoughts on “March Financial Update: Spending Frozen!

    • Thanks! For freelancers, it can be really challenging to estimate our taxes — I can’t predict my income and expenses with complete accuracy, and I would prefer not to get dinged with a penalty for failure to pay estimated taxes.

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