2020 Year in Review

Karen Stein

Well-Known Member
My first look at this year's numbers:

Gross income $30,000
Expenses: $5000
Mileage Deduction: $42000

Looks like a good year. I'll claim only a part of my mileage, just enough to show a profit. That means I'll only pay a small self employment tax -- about $400. Add in the earned income credit, and my net tax will be about $150.

During this year I've been able to pay down my loans. I'm a year ahead in my car payments.

Goals for 2020? Pay off the credit card($3000) and home improvement loan ($6000). Continue to pay down the remaining $15000 car loan. Replace my homes furnace and build a storage shed as well.
 

Fuzzyelvis

Well-Known Member
My first look at this year's numbers:

Gross income $30,000
Expenses: $5000
Mileage Deduction: $42000

Looks like a good year. I'll claim only a part of my mileage, just enough to show a profit. That means I'll only pay a small self employment tax -- about $400. Add in the earned income credit, and my net tax will be about $150.

During this year I've been able to pay down my loans. I'm a year ahead in my car payments.

Goals for 2020? Pay off the credit card($3000) and home improvement loan ($6000). Continue to pay down the remaining $15000 car loan. Replace my homes furnace and build a storage shed as well.
Why would you pay off your car before your credit cards? Isn't the car interest rate less?
 

Mtbsrfun

Well-Known Member
My first look at this year's numbers:

Gross income $30,000
Expenses: $5000
Mileage Deduction: $42000

Looks like a good year. I'll claim only a part of my mileage, just enough to show a profit. That means I'll only pay a small self employment tax -- about $400. Add in the earned income credit, and my net tax will be about $150.

During this year I've been able to pay down my loans. I'm a year ahead in my car payments.

Goals for 2020? Pay off the credit card($3000) and home improvement loan ($6000). Continue to pay down the remaining $15000 car loan. Replace my homes furnace and build a storage shed as well.
If you replace your furnace have the best chimney company in the area come out and perform a level two inspection on the furnace flue. Newer furnace units are very high efficiency meaning they exhaust a ton of moisture and wreak havoc on masonary flues; if flue is still ceramic install a new stainless steel liner and you shouldn’t have any problems.

Gas liner will fit in an existing oil furnace flue without removal of the ceramic tiles but a new oil liner will need the old ceramic tiles removed from the chimney chase before install begins. This will prevent worsening of existing chimney problems due to the new hvac unit and will mean you only need the unit calibrated once; stainless liners also have a lifetime warranty.
 

OldBay

Well-Known Member
Some guy got audited with ##s like that
He may have had other issues too but
that's not much $$ for those miles
Surely they have some line you cross before they call bullshit & audit you

I think there must have been a typo. Maybe (s)he meant he drove 42K miles and grosssed 30K.

If his mileage decuction really was $42k, that means he drove 72K miles.

If he legit drove 72K miles and only made $30k, he needs to quit NOW. He is either very bad at this or uber is paying .40/mi in his area.
 

SOLA-RAH

Well-Known Member
I think there must have been a typo. Maybe (s)he meant he drove 42K miles and grosssed 30K.

If his mileage decuction really was $42k, that means he drove 72K miles.
If he legit drove 72K miles and only made $30k, he needs to quit NOW. He is either very bad at this or uber is paying .40/mi in his area.
Typo or not, the $5,000 in expenses is wayyyy off. Even the most economical uber vehicle costs at least ~25¢/mile to run, so the ACTUAL cost of driving 42k miles would be $10,000 minimum.

To be worth your time, the formula should look like this:
Gross = $X
Miles driven = < X miles (gross >$1 per mile)
Expenses = .25X (and the lower, the better)

Gross of $25k on 20,000 miles with $5k in actual costs is profitable.
Gross of $30k on 42,000 (or 72,000) miles with $10k+ in actual costs is social charity.
 

Karen Stein

Well-Known Member
I posted good numbers.
Some of the confusion may come from definitions; I wasn't following the fine print of the tax code.

"Expenses" described were pretty much car repairs, new tires, oil changes, and office supplies. Gas was not included. Car payments, insurance, and some others were not considered. My return will eliminate most of these.

"Mileage" was door to door, with my home considered the primary place of business. Since I live considerably outside of town, a fair number of the miles are simply dead miles, getting "into the zone." Come tax time, I'll probably claim about two thirds of them.

Pay off the car (two percent) before the credit card (eighteen percent)? Yeah, I get the math. For some reason I'm more worried about my car wearing out before it's paid for than I worry about the interest. Like the old cavalry soldier, my horse comes first. It's an emotional choice, not a logical one. I'm paying down the card, just slower than I might.

One emotional factor is that the card is used daily. Once I pay off the car and house notes, those debts are GONE. I like the image of the mailbox having fewer bills in it.

I'm also putting money aside. While my savings don't come close to matching my loan interest, the simple discipline of deducting the savings FIRST helps me have the discipline to control myself. It's purely in my mind.
 

Mtbsrfun

Well-Known Member
I posted good numbers.
Some of the confusion may come from definitions; I wasn't following the fine print of the tax code.

"Expenses" described were pretty much car repairs, new tires, oil changes, and office supplies. Gas was not included. Car payments, insurance, and some others were not considered. My return will eliminate most of these.

"Mileage" was door to door, with my home considered the primary place of business. Since I live considerably outside of town, a fair number of the miles are simply dead miles, getting "into the zone." Come tax time, I'll probably claim about two thirds of them.

Pay off the car (two percent) before the credit card (eighteen percent)? Yeah, I get the math. For some reason I'm more worried about my car wearing out before it's paid for than I worry about the interest. Like the old cavalry soldier, my horse comes first. It's an emotional choice, not a logical one. I'm paying down the card, just slower than I might.

One emotional factor is that the card is used daily. Once I pay off the car and house notes, those debts are GONE. I like the image of the mailbox having fewer bills in it.

I'm also putting money aside. While my savings don't come close to matching my loan interest, the simple discipline of deducting the savings FIRST helps me have the discipline to control myself. It's purely in my mind.
You want to pay down debts smallest to largest, debt snowball; read into it.
 

Karen Stein

Well-Known Member
Another detail: I've cast aside the usual car loan payment schedule in favor of "taxing" myself.

My car loan is for five years (or is it six?). Since I drive 75,000 miles a year, I'll put at least 375,000 miles on the car before it's paid for.

How many cars last that long?

I'll be optimistic and bet on my car lasting 250,000 miles. Assume a new car costs $25,000. IF I "tax" myself ten cents a mile, I'll pay the car off just in time to buy a replacement.

So, every week or two I make a payment. Maybe not in the amount of the expected monthly payment, but I pay something. As a result, I don't have an "official" payment due for a year. My loan lets me do this without penalty or fee.

I suppose I could just pay the monthly minimum each month at the last moment -- but would it be wise to have the car wear out while I still owe $12,000 on it? No car, and I won't be making any payments. Thus, the car gets priority.
 
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TCar

Well-Known Member
Since you are 1 year ahead on payments, can you contact bank about car and start paying on principal of the loan? That should lower your total lifetime interest payments and the amount you have to pay.

I am getting ready to start paying principal this year after spending the last six months stockpiling some cash into a future maintenance fund and a doNotTouch fund for unexpected costs.

To be free, become indebted to no one!
 
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