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Short-term looking a LITTLE brighter

March 26th, 2012 at 06:11 am

I am in the countdown phase of my dwindling unemployment benefits and am uber-concerned about making ends meet once that's gone.

My immediate goal has been to prolong unemployment benefits for as long as possible (by doing more freelance work, which reduces your unemployment benefit proportionately) so that I would have a lower mortgage balance left when I run out of benefits.

My strategy will be to then cash out my one remaining taxable mutual fund (see my balances in my sidebar) to pay off whatever the mortgage balance is at the time I run out of unemployment benefits. I figure at that point, it doesn't make sense to keep paying 6% interest on my mortgage when I can just pay it of with savings. But I don't want to do the big lump sum payoff if I don't have to because the fund I would use to pay it off (the only taxable fund I have left) happens to be an international stock fund, which has lost a lot of money over the whole European banking crisis thing.

So...I checked my "balance" with the Dept. of Labor and my remaining benefits stand at $3,245. I calculated that the three days a week I work at my part-time job represents 60% of the maximum weekly benefit, so I'm able to figure out that I have roughly 10.6 weeks of unemployment benefits I can count on, assuming I don't have any more freelance income.

I have about $750 of freelance income pending in the form of already-billed work, and it's unlikely I'd do NO freelance work in April, May or June. So I figure the $750 is good for prolonging unemployment benefits for two more weeks, which takes me to 3rd week of June, and I should be able to do SOME additional freelance work in 2nd quarter, so I think, conservatively, I should be able to make it to July 1 without running out of unemployment. (I originally forecast I'd run out in March/April so I'm thrilled with this.)

So what does this mean, exactly? It means that I know I have at least 4 more mortgage payments I can make (March thru June), which means my mortgage balance should be down to $5,000 or less when I'm cut off from unemployment benefits.

If ONLY I could string this out a FEW more months, it might not be necessary at all to dig into personal savings to pay off my mortgage.

That would be great, because that $72,000 I have left in my one taxable account is what I may be living on, supplemented by part-time work and freelance, for a while.

I mean, I remember Dido said she had 5 interviews in the past month. I stopped keeping track of interviews I've had becus it's too depressing to think about.

Of course, my $6500 annual property taxes aren't going away, and I can expect my COBRA to increase this June from the $468/month I'm currently paying, so it WON'T be a cakewalk. But once the mortgage is gone, it will mean that's $700 a month less I have to worry about paying., and my bare minimum monthly expenses will fall from the current $2,374 to about $1,800. My monthly net from my part-time job is $1,438, so after the mortgage is gone, that would leave just $400 I'd have to come up with monthly through freelance writing to meet bare minimum expenses.

Of course, come June 2013, the cards get shuffled again, because that's when my ability to buy COBRA insurance disappears. Without a job, bumped from COBRA and with a pre-existing condition, it could be difficult to get health insurance. I'm not sure I want to take the risk of going 6 months with no insurance so that I would then be eligible for the state's pool of i don't know what they call it, but it's an affordable plan but you have to go 6 months with no insurance. Anyway, if i get a f/t job with benefits before June 2013, it won't be a problem, but I'm 52 now and wondering if my older age is not helping in the job search.

Also, as a homeowner, I know that any one of dozens of things could go at any time. The water heater, the furnace, who knows what. So I'd like to somehow build up my reserves to cover myself in such an event without having to sell off mutual funds.

I guess that's why, as I wrote out my mortgage payment this morning, I resisted the temptation to add an extra $100 to the payment.

I also toyed with the idea of selling some of those taxable mutual funds to fund either my 2011 Roth IRA and/or my 2012 Roth IRA, but it's probably not a good idea given how thin my income/assets are spread right now. I have so many ambitious money plans and it's killin' me not to be able to make any headway toward achieving them.

14 Responses to “Short-term looking a LITTLE brighter ”

  1. Monkey Mama Says:

    I would still put money in the ROTHs. You can take the money out with no penalty/no tax (the contribution) if you ever need it. I wouldn't give up the tax benefits for money that is so easily accessible. I would fund your 2011 ROTH right now and then just hold off on 2012 until next April.

    Hang in there!

  2. PatientSaver Says:

    Even though, on a market value of $71,930, my unrealized loss on the full amount right now is -$9,958.72 ?

    Number of Shares 6,468.
    Share Price $11.12
    Average Cost Per Share $12.66

  3. CB in the City Says:

    So are you saying you can collect some unemployment when you are working part-time? Just curious.

  4. PatientSaver Says:

    Yes, most certainly.

    You can collect for x number of weeks when you're laid off. Now I'm working p/t and i continue to report in how many hours i worked and how much money I grossed. They reduce my weekly unemployment benefit accordingly.

  5. PatientSaver Says:

    If my math is right, and i could be way off, it would appear my loss on $6,000 sold from my fund would be about $800.

    I called t rowe price to see if they could me calculate the exact loss, or whether it would be advisable to do so to fund the roth, but they referred me on to a tax advisor.

    If i take the loss, I can't count on doing any tax loss harvesting because I have no other taxable funds I'd be selling from.

  6. Joan.of.the.Arch Says:

    Oh, I'm feeling anxiety on your behalf.

  7. PatientSaver Says:

    OK, whoops. I didn't realize I already HAVE made my 2011 contribution, $6,000 I contributed in January 2011. It actually came out of a different fund I had at that time, so no loss incurred.

    So i guess i don't have to worry about this til year's end.

  8. ceejay74 Says:

    CB, as long as you don't work full-time, you can work on unemployment and just collect the remainder of what you're due. You have a set amount of money they'll give you, so it helps to stretch the benefit out longer. So if you would get $500 per week but you earn $250, they'll send you $250, and the other $250 you can still collect later.

    AS did this to stretch her unemployment longer and still build her resume while she was laid off.

  9. MonkeyMama Says:

    Yes, I'd say the gain or loss would not matter. Capital gains are tax-free right now for lower tax brackets, and losses are still deductible without gains ($3,000 per year, and carries forward to deducti in future years if you have more than $3k).

    Of course I presume you are just taking it out of the market and putting it right back in. So the tax and investment considerations should be pretty moot. Heck, selling at a loss and moving it to a ROTH where supposedly it will eventually go back up, tax free, seems smart to me. Wink
    I guess it doesn't matter anyway! That is good...

  10. My English Castle Says:

    You are indeed a patient saver; I wonder how many other folks monitor their unemployment as well as you do.

    Spring=more hiring, I think!

  11. LuckyRobin Says:

    I really hope it all works out for you. It seems so odd to worry about someone I've never actually met, but I do. You've worked so hard to make everything work and I really hope you find something full time with benefits soon.

  12. patientsaver Says:

    Aww, big hugs to Lucky Robin and Joan and everyone.

    "I will survive."

  13. snafu Says:

    If you live near a community college or university, you could consider renting a room to a student if you are willing to relinquish a small amount of privacy.

    Students are usually away more than at home, quiet, non demanding and stable

  14. FrugalTexan75 Says:

    PS,
    Would the 6 months you go without insurance include even catastrophic insurance? What I'm wondering is if you could get one of those plans that pay out in case of major accident/illness for those six months. You'd have to pay for medications and any doctor visits ...

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