Friday, March 5, 2010

Da Plan

K, here's da plan. Sorry that it has taken me so long to share it. I had planned on putting da plan out there last month but I keep forgetting a few key pieces of info that make the plan Da Plan. We still have no internet access on the homestead (estimated savings of $60 per month/air card).

So here I sit in my favorite coffee shop drinking my addiction, watching the sun come up over a church steeple, an abandoned factory, and a train trestle. Besides me in the booth is a post it note with the numbers. Ready to in part my wisdom. Bring a piece of scratch paper & something to write with. Your gonna wanna take notes.

But first here's the disclaimer - I'm not Dave Ramsey nor Suz Orman. When I glanced in the shop window on my walk over to check my appearance I also wasn't Buffet, Warren Buffet that is. What I'm saying is that Da Plan works for us. You maybe not soo much.

First Stage of Da Plan - Know the Details

  • Part A of the first stage of Da plan can be one of the hardest, in that you really have to know exactly what amount of mulah it takes to support your household. You have to know down to the last nickel the total amount $ is your bottom line. Everything. Like CIA & your Mama knowing how often you change your drawers everything.

  • Part B of the first stage of Da Plan is to know your income, your actual income. All things considered net income. Dead Presidents line up and be counted.

  • Part C is goods manufactured on the homestead, products that you either glean or barter for. Also include skills; house cleaning, doing hair, baking, computer repair. Anything & everything that can translate into maintaining your homestead. File this under Bonus/Bounty/Frosting/Gravy. Put this list aside for now.

Second Stage of Da Plan - Accumulating a Stash

  • Know your tax man intimately. Embrace your tax deductions. Plan your very life around those deductions. An example is this Federal Energy Tax Credit that has been extended for 2010. This tax credit was the final push we needed to install the wood stove, a credit of $800. Another credit blessing that we take full advantage of is charitable contributions. Besides cash, there is clothing & household items be it out of your closet or your neighbors. Yes, I curb shop for charitable donations. I also barter for them. Point is know your tax deductions and use them to the max.

  • Here's a biggy that goes against every you have ever heard about financial planning. In the section on your W2 were you claim the number of dependents consider only claiming one or two. Just enough to give you a paycheck you can survive on. Yes, I know I am giving the Federal Government an interest free loan. Honestly, I have never been able to put aside that money for any length of time. Let alone have it accumulate into a huge wad of cash. Once the Gods know there is money bad things happen. The transmission on the car breaks. The roof needs replacing (guess how we're gonna use this year's energy tax credit).

  • Take advantage of any & all tax advantages that your employer provides - IRA's & Medical savings plans . Consider collecting co-worker's empty soda cans for the deposit money. Yeah laugh laugh long & hard but we all know peeps who drink 5 Cokes a day - 25 cents - $5 a month - $60 a year. That's sixty free dollars that you didn't have to pull an extra shift for.

Third Stage of Da Plan - Decrease your living expenses.

  • Live like your broke. Broke is not poor. Although our annual income is considered poverty level we are not poor just broke. Broke is not being able to afford premium coffee. Poor is having to choose between paying for the gas to heat hot water or paying for the water. Simply put live under your means.

  • No debt. Yeah easier said than done. Currently I owe a mortgage & a home equity loan. Back in the day I also owed on a van, furniture, and a credit card. Try like your life depends on it.

Fourth Stage of Da Plan - Alternative methods of Providing

  • All the homesteady type skills that enable us NOT to buy things like food & clothing. Methods that give us a middle class way of life. Ties in with decreasing living expenses. Skills like scratch cooking, gardening, mending, penny pinching.

Here's how the plan worked out for us.

Last year our combined adjusted gross income was $28,863.00 for 4 people. I claimed 2 dependents for the 3 mos. I worked in 2009. Hubby claimed 1 until he became the sole wage earner then switched to 3. He also utilized a medical expense account to the tune of xxx. Plans are to increase that amount to xxx since we under estimated. Besides claiming the energy tax credit and the max charitable donation credit we also claim the mortgage credit. Our federal tax returned totaled $6,947.00. State was $1,991.00.

DH is taking the state return for the land fund.

The following is how I plan (best laid plans of mice & men ...) spend the federal return; mortgage payments, car insurance, car mainatnance/repair/tags, upgrade or replacement of one household item, one major home improvement, bulk food order, one homesteading item, my half of orthodonitics for a daughter. Her & I are splitting the cost.
Here's what the plan for the retrun looks like today. However since we have had this wad for over two weeks no doubt the Gods have had time to confirm the rumor so this could all change Update: $480 car repair as of last week.

12 mortgage payments @ $347 = $4164.00. Need to see if there is a planned tax reassessment comming up this year. That would affect my overall monthly payment especially once the new roof goes up.

Bulk food which includes a portion of a side of beef, our annual cheese run, staples such as flour. I have a new plan on that but that's for another post.

DH & I have been sleeping on 12 year old mattress & box spring that has long ago taken a header off city hall. Spent $895 yesterday for a custom made set. Our bed is a 100 year old cast iron which isn't exactly a standard 3/4. It was an extra $40 to make a custom fit of 46" by 75". Couldn't have gone with a double because it wouldn't have fit up the stairs. In 1902 beds were smaller with springs & a mattress that you could fold in half. This was the one big household buy.

One major home improvement was gonna be switching out the natural gas water heater with an electric tankless heater. Electric co. is handing out rebates & there is the energry tax credit. However the roof is singing a swan song. When I bought this house in 1999 I knew it would need a new roof soon. Been living on barrowed time. Estimated cost is in the neighboorhood of 9k for a metal roof. Two reasons why I decided on metal; lowers fire insurance preminums, and since our long range plan is to be carried out feet 1st I really don't want to be putting another roof on when I'm 78. This is gonna take some planning.

~~ pelenaka ~~