Today I made another extra mortgage payment on our big loan. It’s far less than usually because. The reason for that is that we are still waiting to see how much the repairs on the rental property are going to cost and also because we are expecting a bill from the tax authorities for a few thousand dollars any day now.
We decided to split what we would usually put towards the mortgage in two, half of it went towards the principal of the mortgage while the other half went into our emergency savings account. It’s nice to see it swell a bit. This month, we are only paying an extra $1,462 / 182,692 ISK.
In total we saved $2,923 / 365,384 ISK, which is 50% of our income. That’s too slow for my taste, I’d like to see that number at 70%, although according to this early retirement calculator, we just might reach our goal if we play everything correctly before we reach 40.
As usual, we were hit by some unexpected expenses and some expected expenses this month. The expected expense is our trip to the US to visit relatives and also the survey the land we just invested in. We’re going out there to meet with a representative of the Virginia Health Department to get a building permit and also with a well and septic system contractor to lay out the location of the house we’re going to build as well as the well and the septic system. You can read more about our project on our house building blog.
The unexpected expense was a $1,000 / 125,000 ISK bill from the tax authority. Apparently we forgot to include some freelance invoices in our tax return and are now being charged a penalty as well as the missing tax. This was a pure oversight on our half. We really need to get better about organizing invoices and keeping track of tax issues. I’m on that.
Changes in our emphasis
After the latest renting disaster we started thinking that it might be a good idea to diversify. We have very little liquid cash on hand which is not generally very good. We have been thinking really hard about what exactly we can put some of our money in and so far the only other thing we can think of is either Iceland state bonds or the Icelandic stock market. Both of those do not sound very appealing so for the time being, we’re putting it into a high-interest savings account. They are actually quite good (for the time being) with interest rates around 4.6%
Once the capital controls are released (in Iceland, since the financial crisis, you can’t transfer money out of the country). Were were thinking about investing in real estate REITs. These are special financial constructs that invest in real estate only, such as buying office buildings and renting to companies or buying shopping centers and renting to retail companies. We can only start to fully think about how we want to diversify when we see some movement towards the Icelandic government lifting the capital controls.
The current tally
Whenever the last post is in a previous month I’ll include the repayment tally like the one below. I’ve fixed the interest rate at 1 USD = 125 ISK (the average February rate for the last 5 years):
- Assets: $460,477
- Real estate: $455,506 / 56,938,190 ISK
- Cash: $4,867 / 608,394 ISK
- Stocks: $104 / 12,966 ISK
- Debt: -$127,942
- Mortgage: -$127,868 / -15,983,531 ISK
- Credit Cards: -$74 / -9,295 ISK
Sum: $332,535 (Up 1.1%)