2014 Tax Returns

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I managed to get our 2014 federal and state returns done last week. I then had a couple bad dreams about them, thinking I left something out. I still need to print and mail in the city return and the partnership return for our real estate LLC. And then pay estimated federal and city taxes. Also, I need to contribute $1,500 more to my SEP-IRA for 2014; a couple of my clients paid their bills via credit card last week, so I should have that done by Tuesday.

Our federal return ended up being a mere 17 pages this year. Our state return has been awesome the last two years since Ohio began providing tax incentives for small businesses. The city counts more income than the federal government when figuring taxes and doesn’t really care about deductions.

2015 taxes should be similar, but after that, all bets are off!

2014 Year End Review

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Hello Everyone and Happy New Year!!! May 2015 be as good or better than 2014 for all of you…

As I have mentioned in the past, I am a huge fan of personal finance management software. My personal choice is an application called MoneyDance and I love it. One of the features I love most is the customized reports and detailed graphs that I can create. I have so many customized reports I can break down our finances in dozens of different ways. One of my favorites is taking a look at year end to see how things went.

So, without further ado, here is a look at our 2014. The table below shows a break down of our account balances on 1/1/2014 vs. 1/1/2015 with the gain/loss listed in the right column. I have grouped these into the various assets/liabilities that I track on our Net Worth Tracker page.
Some observations:

  • Nice to see the Pension Plan add $5000 to the kitty. I’ve mentioned it before, but this is a nice little benefit of working for the corporate machine. Now that I have 10 years of service time, my pay credits has increased to 4%. Long story short, this has slowly built up to the point where I now get over $5000 added each year. I can cash this in once I leave either as a lump sum (with higher taxes) or over some period of time (with lower taxes). Let’s worry about that later and for now we’ll just watch it do it’s thing.
  • My Roth IRA has made almost all of it’s gains ($11k) since 10/2 based on my reports. I noticed that when I updated the Net Worth Tracker page today that it was at $58k on 10/2 and now at $70k. This is due to a speculative buy I made on a bio/pharma stock that has returned something like 325%. I bought 650 shares at something like $7 and it took off to over $35. I sold off enough to get back my initial $5k investment and still have 500 shares in my portfolio. Fun times when it works…
  • My Work 401k, which I consider to be the bedrock of our portfolio, is performing quite nicely. I’ve cut back my contributions this year which was EXTREMELY odd for me. I have MAXED my 401k contributions from day ONE. I fell in love with compound math the summer before my first real job and that changed everything (I remember it like yesterday). I was amazed at how much of a difference it made if you started investing at 20 vs. 30 or 40 or, heaven forbid, 50. At that moment I decided I would do all I could to max out my 401k contributions from the start. This year we decided to divert some of that cash to other interests as our 401k is pretty hefty now. Even with that, the total increased nearly $50k which is fantastic in my book.
  • Mrs. PFL did good work with her SEP and Roth IRA’s. We complement the aforementioned “bedrock” with our IRA’s and between the two of us we have a tidy little sum. I let her manage it but we try to make sure it fills in a need such as an International Fund or Small Cap. Just enough to try and keep us diversified.
  • Overall we were able to reduce our debts (credit cards, HELOC, Mortgages) by $30k. We did a bit of repair on our primary house that really prohibited us from knocking this down even more (and why our HELOC increased). I expect in 2015 we should be able to really take a good chunk of this out as it’s our primary focus. We use the rental incomes and any left over cash to knock this down. The one thing about compound math is that it also applies to interest and thus can work against you. Plus I really really really dislike debt (Ala Dave Ramsey).
  • The value of our assets, which is primarily our house and our rental units, can be a bit subjective. I try to update these based on various metrics. For our primary residence we use tax assessments and we review real estate transactions within our area and I tweak it once or twice a year. For the condo, the neighbors sold their unit this year so we have a good baseline for that. The new rental unit is the biggest gainer as we put a lot of time (and 2013 debt) to fix these up and get them rented. Ultimately the goal is to eliminate the debt on these and have them generate monthly income allowing us to truly achieve Paycheck-Free Living!!

So what do you think? Not a bad 2014 if I do say so myself. This is why I am trying to stick it out at my corporate job as long as I can. If we can grease this wheel a little bit more and eliminate our bigger debts, our dream may become true. The nice thing right now is that we are able to do all these cool things (Sugar Bowl, Hawaii) and still make progress.

Account As of: 01/01/2014 As of: 01/01/2015 Gain/Loss
Bank Accounts Total $20,471.06 $18,435.69 ($2,035.37)
Pension Plan $32,411.36 $37,466.43 $5,055.07
Investments - Total $632,741.43 $715,236.79 $82,495.36
E*TRADE Investment $32,805.07 $32,928.74 $123.67
Roth IRA (Mr PFL) $58,832.98 $70,037.96 $11,204.98
ESPP (Mr PFL) $8,878.08 $9,692.91 $814.83
Work 401k (Mr PFL) $392,069.09 $440,856.19 $48,787.10
529 Plan $2,565.06 $2,730.86 $165.80
Roth IRA (Mrs PFL) $34,563.59 $39,789.36 $5,225.77
SEP IRA (Mrs PFL) $59,004.20 $70,326.34 $11,322.14
Precious Metal - Total $11,612.00 $11,408.00 ($204.00)
Assets - Total $894,422.96 $1,001,675.00 $107,252.04
Primary Residence $480,000.00 $500,000.00 $20,000.00
Condo – Rental 1 $331,000.00 $338,000.00 $7,000.00
BD – Rental 2-7 $61,833.00 $126,000.00 $64,167.00
Auto/Misc Assets $8,000.00 $8,000.00 $0.00
Other Rental 8 $13,589.96 $29,675.00 $16,085.04
Credit Cards - Total ($110,780.98) ($109,016.02) $1,764.96
Business Credit Cards ($16,960.11) ($11,034.20) $5,925.91
Personal Credit Cards ($4,965.24) ($4,942.88) $22.36
HELOC Loan ($58,855.63) ($62,486.84) ($3,631.21)
HELOC Loan ($30,000.00) ($30,000.00) $0.00
Loans - Total ($545,256.99) ($518,218.46) $27,038.53
Primary Mortgage ($329,332.36) ($321,183.64) $8,148.72
Condo Mortgage ($99,999.99) ($89,039.57) $10,960.42
Personal Loan ($26,833.28) ($24,195.25) $2,638.03
Student Loan ($89,091.36) ($83,800.00) $5,291.36

Total

$891,597.48

$1,108,113.00

$216,515.52

Investment Diversity

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With the recent ups and downs of the stock market, I got to wondering how the performance of our investments compare to the overall market. I track all of our finances using an application called MoneyDance and I am a huge fan of personal finance management software in general. I have kept track of my own finances since 2002 and added Mrs. PFL along the way. The best part of MoneyDance is the ability to run reports and with the time I have put into managing the data I can easily do comparisons. So this morning I decided to take a look how the DJIA (Dow Jones Industrial Average) performed as compared to our various stock investments for 2014.

First a couple (randomish) thoughts…

  • The DJIA in just the last month has been CRAZY!! By my quick analysis.. the DJIA closed at a high of 17,280 on Sept. 19th, dropped to 16,117 at the close on Oct. 16th and then peaked again just this week by closing at 17,391 on Oct. 31. That is some volatility.
  • Our stock investments are comprised of several different portfolio’s. I basically manage these and more can be found on my Assets Explained post. For a quick recap, our investments consist of my 401k, my Roth IRA, my ESPP (employee stock purchases), my personal brokerage account, Mrs. PFL Roth IRA, her SEP IRA, and her 529 account.
  • Because I use MoneyDance I can easily see how all of my assets are split across all of these. I can tell my market cap size (large cap, small cap, etc), by type (individual stocks, mutual funds, ETF’s), by portfolio (401k, SEP, Roth) and I can look at all of this by individual accounts.
  • Any graph that involves my 401k tend to have big jumps and big drops. The reason for this is due to the fact that those assets are only purchased the 1st and 15th of each month when I get my paycheck. That means the prices for those assets are only updated when these transactions occur and because my 401k is by far the biggest piece of the investment pie, when the market drops/rises over two weeks it looks more like one big drop/jump on the 401k.

So here are the results as shown in graph form. I find this to be pretty interesting myself but I am a nerd. It looks like we are fairly well diversified if I do say so myself. I also like to see that even with those big dips it seems to continue trudging it’s way forward.