I’m sure your life is looking a little different than it did a month ago (I know ours certainly is), but I hope you are well and adjusting to this new (albeit temporary) normal.
I haven’t heard from any you whose health has been directly affected by COVID-19, but I have heard from many of you whose finances have been affected.
In the past few weeks as we’ve considered our own financial situation, we’ve decided to make some major changes. Let me start by giving a little background, then I’ll explain the upcoming changes, both the good and the bad.
Our Income Situation
We feel grateful that Mike’s job with the state of California is secure and not affected at all by the pandemic. He has been completely working from for two and a half weeks now and will continue to do so for as long as is necessary. Since he normally commutes an hour each way to work (and more if traffic is bad), this will save us hundreds of dollars each month on fuel.
I continue to earn income from my blog, though blogging revenue fluctuates. Ads are currently my largest stream of blogging income, but as companies may be drastically altering their spending on advertising in the next quarter, my income could take a big hit. We’ll just have to wait and see.
Our Airbnb income is likely to be almost non-existent for as long as the shelter-in-place order remains. While we ended up with a pretty standard income for our rental in March ($1,600), our April calendar is bare. All of our bookings for April either cancelled or we had to cancel ourselves since our county is restricting short term rentals to only house essential employees, not normal visitors or travelers.
We totally overpaid in taxes last year, so we just got a hefty tax refund.
A Look at Our Current Goals
In addition to meeting all of our regular expenses, putting money into our designated sinking funds, and staying one month ahead, we set a big 5-year goal back in November of 2018. That big goal was to pay off our mortgage (which was then $363,171) in five years. As you have seen in our monthly budget updates, we’ve been slowly falling behind.
Still, we weren’t deterred. We planned to put our tax refund directly toward our mortgage as well as some money that had trickled in from a few final clients in Mike’s private practice.
Those two moves alone would get us a lot closer to where we needed to be to stay on target for our goals.
But the more we thought about it the more we didn’t feel right about it.
Our New Financial Plan
There are three parts to our new financial plan.
1- Hold on to the big chunk of money that we were going to throw at our mortgage principal. With times being as uncertain as they are we want to just sit on this money for a little while. When we make extra mortgage principal payments, there’s no going back and changing our mind if something more pressing comes up. While we do have a six-month emergency fund, in the current economy we would prefer keeping some extra money accessible.
2- After the COVID-19 outbreak passes, our first big financial move will be to use that chunk of money to buy season passes to Disneyland. We’re definitely going for the Signature Plus Passes which include free parking. The kids have been asking us for years why we’ve never gone to Disneyland, and we’re going to surprise them by going every month next year. The passes are $1,449 per person, which brings us to $8,694. That’s kind of a lot, but between our tax refund and a few of Mike’s long-awaited private practice matters ending, we can pay cash and avoid any financing charges. If we waited until the next year, our two-year-old would need his own pass, so we’re actually saving money by buying them this year and getting him in free.
3- Our really big news, though, is that instead of paying off our mortgage early we will just pay the regular payment from here on out. We will be saving our surplus money each month (the money that we previously would have gone to the mortgage) and putting it in a special fund. We’ve had a lot of fun sheltering in place, and we want to save money all year so that we can shelter in place together for at least a couple of months each year. The money saved would cover our expenses during that time because in the future we don’t want Mike to have to work during our voluntary shelter in place months. We’ll be taking the kids out of school and we want him to be able to take the time off work too so we can make the most of our sheltering time together.
One More Thing
Have you checked the calendar today?
Yep, it’s April 1st. Happy April Fools Day!
Did you really believe me?
The first one is true. We are going to wait to put that big chunk of money toward our (real) big goal until after everything with COVID-19 has settled down. We may pay a little more interest by delaying a few extra principal payments, but having extra cash on hand seems prudent right now.
The second one is a complete lie. Do you think we would drop a ton of money on Disney season passes on a whim? Not a chance. I am the only one of the eight of us who has ever even been to Disneyland. No offense to the Disney fanatics out there–personal finance is personal and should reflect your priorities. Disneyland just isn’t on our priority list. The kids do ask about it every time one of their friends goes. If we do ever decide to go, it won’t be on season passes.
And the third one? We DO enjoy spending time together, but we probably won’t schedule time specifically to shelter in place. Maybe we’ll shelter in Costa Rica or something someday, but that won’t be anytime soon.
Thanks for playing along. I enjoy doing this each year. If you’re in the mood for some serious silliness, check some of my April Fools posts from years past (and feel free to share them with your friends or on social media– everyone likes a good joke!):
2015- 5 Genius Ways to Save Money on Toilet Paper (I almost republished this one today as it’s especially relevant this year)
2016- How to Get Meat Free or Cheap
2017- How to Make Money With Your Random Talents
2019- 6 Hacks for Storing Food in Small Spaces
I would love to hear what other April Fools jokes you played or fell for today! Please share so we can all get a good laugh and get some more ideas!
The post Big Changes to Our Financial Goals (post COVID-19) appeared first on Six Figures Under.
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