Warning: Money Nerd Stuff Ahead!
As you’ll see below in our projected budget spreadsheet for the month of March, it’s going to be a big month. It will likely be our biggest month of 2018 and it’s coming early. If you’d like a more detailed breakdown of our approach to budgeting please check out our most recent budget post: March 2018 Budget and Income Projections
We are looking at an estimated excess of roughly $7,600 for the month. That is not a sum of money we’re used to handling on a monthly basis, but we’re excited about the opportunity. We always like to figure ahead of time on what we’d like to do with our money based on an early estimation because we don’t like money to sit idle. We largely prescribe to the Dave Ramsey method of “giving every dollar a name” before it walks in the door. We know how hard we work to earn our money, and we want it to work just as hard for us. When I’m tempted to “let off the gas” or “wing it”, I’m always reminded of a quote my grandfather leans on.
“The worst plan you can dream up is better than no plan.”
Based on our projected surplus of $7,644.25 we have a few goals that we can make some solid progress on. We prefer to give ourselves some wiggle room in the budget so we like to figure in some error to the downside on our investable sum numbers. This month we’ll be working from a base of $7,200. So let’s get into it.
Immediately below you’ll find a chart detailing our planned investments for the month of March. If you’d like more detail about how we came to the allocation we chose, below the chart I will go into the nitty gritty of our approach to investing this monthly surplus.
For starters we will take off the top all of our deductions/investments that are on “auto-pilot”
- $55 each Monday/Wednesday/Friday goes into our Ally Bank online savings account or our “slush” fund. It started off as a controlled savings plan with a goal of financing our planned Icelandic vacation over the summer and has taken on a life of its own as a catchall fund for larger expenses that don’t seem like reasonable budget line items that we can finance guilt free… as well as a vacation fund. I plan to possibly do some home improvements this month at an expense of roughly $1,000 but that’s only a possibility, and it will be pulled from this fund. If and when those take place I will update our budget accordingly. A total of $715 this month will go to our Ally account.
- $100/week is automatically contributed to my Wealthfront Roth IRA. Since Wealthfront is purely indexed money I prefer to dollar cost average into that account. I personally feel like it removes a lot of the human error and emotion to simply allow the money to average in and ride the ups and downs of the market. A total of $400 this month will go toward my Wealthfront IRA.
- $10 each weekday is contributed to our M1 Finance account. This account has a “PIE” consisting of only one security, Berkshire Hathaway B. Berkshire is a holding company, really a private equity firm at heart. I personally feel that Warren Buffett and Charlie Munger are currently the best money managers on Earth. While I do choose some single stocks that I consider “value” picks, for the most part I prefer to bet on jockeys, not horses. Meaning I prefer to put my money for the most part with people I consider exceptional at managing it. Berkshire is the only single company stock that I consider worthy of the “dollar cost averaging” approach as I feel it behaves more like its own index rather than a single company. There are 22 weekdays in March, totaling $220 for the month.
Automatically debited contributions total $1,335 for the month of March, leaving us an estimated investable sum of $5,865.
- First, we’ll add on to our mortgage payment. I’ve put a lot of thought into exactly how much extra we want to throw on the mortgage per month vs. prioritizing the assumed higher returns of investments in equities, but months like this test your mettle as to how much you really believe in your plan. As of right now, the plan is to stick to our usual payment of $1050, meaning about $405 of the $5,865 is going toward the mortgage, leaving us $5,460.
- As a matter of discretionary giving out of surplus, which we consider ourselves blessed to be capable of, my wife and I plan to contribute $300 to the Diocesan Lenten Appeal at our church in addition to our usual offering. This leaves us $5,160.
- Another bout of discretionary spending is coming this month as my wife has made it clear to me that we need to step up our floor cleaning equipment to keep up with a 65 pound bulldog. $220 is going toward the Bissell Crosswave. That leaves us $4,940.
- The big kahuna this month is my wife’s Roth IRA. We have $2,000 left for our contribution limit for 2018 and we will be maxing it out this month. The difference in approach between the 2 IRA’s is because my wife’s IRA is with Vanguard. I choose the investments for this account. I’d rather have the lump some pre-contributed, sitting in a money market account ready to be deployed within the IRA than to dollar cost average the money in. That leaves us $2,940.
- At this point in the allocation we have exhausted all of our tax-advantaged options for investing. I have no 401(k) available, and my wife has a terrible 401(k) at work. There is no Roth option, and no match. So, we’re on to taxable investing. For this we usually choose a 50/50 split of a Wealthfront taxable account and a Vanguard money market account. In light of the exceptional month we’re having, there will be $440 going off the top toward our M1 Finance Berkshire account. That leaves us $2,500
- The remaining $2,500 will be split 50/50. $1250 will be deposited into a Vanguard Money Market account until I find a suitable investment, and the remaining $1250 will be deposited into a Wealthfront Taxable account.