Checkup – August 2020

Welcome to another Dr. PayItBack monthly checkup! I use this space to remain accountable to our expenses and goals, track net worth and debt, and muse on what was done well and what can be improved.

This is weird month, and these checkups are going to be a little strange for the foreseeable future. My father passed away at the end of July, and I am currently in the process of executing the estate. I have really appreciated the kind words of love and support from everyone as I get used to this new normal.

I am a direct beneficiary of some of his assets outside of probate, and these have already been passed along to me. As such, my usual numbers on this blog are wildly skewed, to the point where I have been struggling with how to deal with them in this format. It feels a little impure to include inheritance in what has otherwise been a self-built journey out of immense debt, but on the other hand to ignore it would be dishonest and whitewashing a substantial financial privilege.

Ultimately, I decided to just continue presenting my numbers as they are. They will likely fluctuate a good bit over the next few months as I work through my role as executor.

Budget/Cash Flow

So, this is a mess. My inheritance came out to just under $74,000, in the form of a pre-tax IRA. Now that the SECURE Act is law, this money has to be distributed (and taxed) within 10 years or it will be subject to penalty. My plan is to take it all as a distribution in 2020 to fill up the 32% marginal tax bracket, as I will hopefully be in a higher bracket in 2021 and beyond. After a 34% haircut (~average of 32% and 35% brackets), it should end up being about $48,160, which is how I will track it.

Largest expense this month was cremation services. Not entirely unrelated, we also finally ponied up for legal consultation and are drafting estate documents of our own ($1,000).

PayItBack Progress

August 2020 Debt

The slow climb upwards continues. Rates have stayed the same for 3-4 months now, so minimum payments remain.

Net Worth

August 2020 Net Worth

The inheritance now makes up a not insubstantial portion of our investments and overall net worth. I’m also keeping track of various executor-related expenses that I have had to pay out of pocket, and which will ultimately be reimbursed out of the residue of the estate.

Financial Independence

August 2020 FI

Financial Goals for 2020

1) Devote 2/3 (66.7%) of net income to wealth-building: 70.8% running average
2) Max out 403b: $14,690 of $19,500 (75.3% done)
3) Max out backdoor Roth IRAs: $12,000 of $12,000 (100% done)
4) Max out 529s for state tax benefit: $0 of $16,000 (0% done)
5) Pay 2019 tax underpayment: $0 remaining
6) Pay off all carried 0% APR credit card balances: $0 remaining
7) Pay off my car loan: $0 remaining
8) Pay off Mrs. PIB’s car loan: $0 remaining
9) Pay off Mrs. PIB’s student loans: $23,062 remaining

How Far I’ve Come

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