We’ve both had our final paychecks for 2007, so I have total numbers available for income and savings. Our pretax income was $70,106. We paid a total of $15,618 in taxes – not sure if we might get some of that back or not (this was our first year of being W2 employees of our corporation, and taxes are different that when we were just strictly self-employed). We put $5650 into our HSA (maxxed out – whoo hoo!). We put $3793 into my 457 retirement plan at the library. We put a total of $3700 into our IRAs (hoping to do a lot better in 2008 with the IRAs). And we put $1200 into our emergency fund, which is all still there, in an ING account. Between those four savings areas, we saved a total of $14,343 this year, just over 20% of our pre-tax income.
In addition to savings, we also paid off $4260 in mortgage principal, and about $5000 in business debt (which was on personal credit cards) that we still had at the start of the year. We paid off the last of that debt in August.
If you start with $70,103 and subtract taxes and savings and debt repayments, we lived on $35,142 this year, or just under $3000/month. About $1250 of that is our mortgage, so everything else comes to $1750/month. This gives me a pretty accurate gauge of how we spend our money and how much we need to bring in if we want to keep living below our means. We could get by on less than $3000, because we do have some splurges now and then that could be eliminated if we needed to.
We obviously don’t have anywhere near enough money in our emergency fund. It currently has $1200, and we add $100 each month. In order to have three months of living expenses in that account, we need another $7800, which at our current rate of contribution, will take us until 2013. On the plus side, we do have medical expenses covered, since our worst-case scenario with our health insurance is $3000 out of pocket per year, and we have more than that amount in the HSA. So we wouldn’t need to dip into the emergency fund for unexpected medical expenses. We have two cars but could get by with one, since my husband works exclusively from home and I work at home and at the library, which is only a mile away and I usually get there by walking or riding my bike. But still, I’d feel more comfortable with more money in the emergency fund. I’m tempted to increase the monthly amount that we put into our ING account, but I also want to focus on the IRAs and the HSA in 2008. We’re still debating how we want to prioritize our savings for the coming year. It’s nice to be starting 2008 without debt – the first year we’ve been able to say that since 2003. And overall, I’m really happy with how we did in 2007.