And just like that, the year 2005 is wrapped up! I can hardly believe that our first 6-7 months of working after college have gone so fast. It was a great year for us as we transitioned from studying in college to working full-time. We moved to a new city, in a new state. We purchased our first property, which then brought us into the rental property business. We’re landlords! And we’ve been trying to save like crazy, by continuing to live like college students. I can’t wait to see what the future holds. 2006 should be an exciting year!
A great start to our new life together!
Our final Net Worth Update statement for 2005 continued the positive streak! For the 7th straight month we have been able to record a monthly GAIN to our net worth. As of the end of December 2005, our net worth has increased by $4,563 to a new total of $62,436. Remember that way back in May we started out with a $34,172 net worth. Now here we are, 7 months later and an overall gain of $28,264. I consider that a great start to our new life together!
Noteworthy highlights for the December 2005 update:
- As owners of “property” in our state, we have the obligation of paying yearly property taxes. The good news is that payments are only due once per year. But December is that month, so we had a large $2831 bill to pay (with check/cash) during the middle of the month. And in addition to property taxes on our duplex property, our State also charges property taxes for vehicles. Yikes! But we caught a couple small breaks: (1) since we just moved into the State this year, no taxes are due on vehicles until the following year and (2) the sellers of our duplex had already paid their prorated portion of the property tax bill on the duplex. That mean we only had to pay $1416 this year! Whew!
- We received some very generous Christmas gifts this year. Our parents, grandparents, and great grandparents were all very kind and wanted to give us some monetary gifts as a result of our college graduation, our engagement, and our first year living on our own. One set of grandparents wanted to give an early wedding present of paying for the new carpet in our 1/2 of the duplex, for instance. In total, between everyone we received $4,602 in gift money. No small amount! We were very grateful and very surprised. Most of this money was sent to Vanguard to be invested.
- I contributed extra money (well, more than a typical month) into both Roth IRA accounts in December. I wanted to “max out” how much we put in total for the year. Currently the IRS limits us to $4,000 per person. Technically we have until April 2006 to put money in for the 2005 tax year, but I just wanted to have it all said and done by December 31, 2005 to keep things simple. We were able to achieve this goal and for 2005, we ended up contributing a total of $8,000 into our Roth IRA accounts. Exciting stuff, because this is our first year “maxing out”. We hope to continue the trend.
- We continued to take the money earmarked for paying our credit card bill and instead, put that money into the Vanguard Money Market funds. The credit card we’re using has a 0% interest rate being charged to the monthly balance. We’ll earn interest on the money kept at Vanguard while paying no interest or fees to the credit card companies. I consider it “free money” so we will keep it up as long as they let us! But at any time we can “write a check” and pay it off though. This is the reason for the increase in our credit card liability for the month.
- I paid our January mortgage payment early, on December 30. This will be a small advantage come tax preparation time, because it means more interest was paid in 2005 than would have been otherwise. Interest payments are deductible, so more interest paid will result in a higher deduction, and a slightly lower tax bill. Yay for math! If I just waited until January 1 to make the payment, I would still get the interest deduction……but I would have to wait until the following year to take that deduction. It doesn’t make a huge difference, but I’ll still take lower taxes “sooner” rather than later.
- I made an extra payment on my general loan. No big reason, other than to show good faith around the holidays for the family member that loaned it to us. We still owe a sizable amount in total.