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Archive for December, 2009

Maximizing Tax Savings

December 4th, 2009 at 08:31 am

Between DF and I, our gross incomes combined should be around 85K for 2010. DF will continue to take zero allowances to have the maximum tax withheld from his paycheck. I want to bump my allowances up to five (currently at two) for all of 2010. We don't have any dependents so this could be risky (but nothing we couldn't pay if a tax bill comes due).

I will also have a home office (specifically for work, our other extra room will be our personal office) in our new house so I will be able to deduct mileage to and from my actual office (estimate 9,000 miles over the year), what I could get paid if I rented the room out for the year (estimate 5,000), a portion of all utilities and any additions/maintenance/repairs that we have to do on the house. We will also get to deduct our mortgage interest and property taxes. And I will be going back to school in September 2010 so there may be some deductions associated with that. We also have probably close to 7K worth of things to donate in January after our move is complete. So I think we may be okay if I take such a large number of allowances. Are there any tax professionals that can speak to this or give advice on further deductions to take?

Revised Budget & House News

December 2nd, 2009 at 01:29 pm

So I did get a 'raise' at work and along with that I will need to work an average of 25 hours more per pay period (semimonthly). The raise, if I remember correctly, will be an additional $920 gross/month. This went into affect yesterday.

We are financing our home via a USDA home loan which is taking VERY long to process. Our lock for a mortgage rate of 5 and 3/8% expires tomorrow. Because our home was completed early last week, our real estate agent was able to negotiate USDA paying our relock fee of $700ish as well as lowering and relocking our interest rate at 5%. This lowers our monthly mortgage payment by $70/mo. saving over 25K (just principal) over the life of the loan! We have been given an estimated closing date of mid-December.

DF and his father (general contractors) have also secured work in advance for at least the next year! They have like eight or nine jobs lined up right now which is an extraordinary amount of work for a contractor in this state of economy.

So between these three changes I have revised our 2010 budget as follows [because we will have DF's car paid off in Feb./Mar. these figures will basically be reflecting our budget as if his car is paid off] ...

Income
$3500.oo (me)
$2400.oo (DF)

Expenses
$1290.oo (mortgage)
$220.oo (property taxes)
$22.oo (home insurance)
$290.oo (car insurance)
$210.oo (fuel)
$85.oo (gym)
$250.oo (groceries/paper products)
$150.oo (DF roth IRA)
$150.oo (DF fun money)
$70.oo (copays [don't expect to actually meet this every month but 70X12 = $840.oo which should cover most small procedures])
$35.oo (HOA dues)
$250.oo (utilities [decided not to get cable Smile])
$200.oo (vet/car maintenance/clothes)
$50.oo (office supplies [I will be working from home 2X/wk])
$50.oo (household/cleaning)
$70.oo (DF line of credit)
$200.oo (DF health insurance [mine is deducted pre-tax from paycheck])
$150.oo (me roth IRA)
$19.oo (netflix)
$200.oo (my fun money)
$20.oo (birth control)
$100.oo (gifts/Christmas)

Total Expense
$4081.oo
Total Leftover
$1819.oo

All of the leftover funds will be applied to DF's car until the balance is paid off with the first time homebuyer's tax credit. I'll get the remainder of the tax credit as well as any tax refunds we get back to do with what I want (estimate around 1K). After DF's car is paid off these funds will be spread over our 2010 goals from my last post. We will begin applying $833.oo between our roth's starting in July which will bring our total leftover funds down to about $1286/mo. which will still be spread amongst our goals. So far so good? Any words of wisdom? Happy hump day!