Saturday, August 18, 2007

The Plan

In my last post I talked about my main personal financial goals. Here I want to discuss they way I hope to go about achieving these goals.

My first goal is growing my net worth. I would like to have $5,000 by the end of the year. In order to do this I plan on saving more and paying down credit card. I believe this attainable especially with my enrollment in my companies 401k in which I will recieve a match from my company. I plan on putting in 5% of my salary to get the full match which is 4% of my salary. I also plan on continuing to contribute to my IRA 5% of my salary which is what is currently going in there. My net worth will grow as I grow my retirement accounts, emergency fund, and stock account. I also must decrease my car loan and credit card loan. My strategy to increase my stock account is by writing covered calls. I will post more on this later. I also need to find other ways to accumulate money besides my normal salary.

My second goal is to build an emergency fund of $5,000. I would like to have $3,000 by the end of this year which is about another $1,000 from what is currently in there. With 4 months left in the year I will need to put in $250 a month. Not sure this will be attainable but will try my best. I probably won't be able to consistently put in $250 per month and will have to catch up at end of year. This will also help boost my net worth.

The third goal is paying down the credit card debt. The best way to do this is by not putting so much on the card in the first place. I have been spending too much money recently and plan on cutting back. One huge thing that I blow too much on is eating out. I want to cut this down dramatically and hopefully I will find that I can pay the card off quicker.

Fourth, paying my car off early. The best way I know to do this is by adding a little extra each payment. I have put this on hold recently (past month) because of extra money being spent for moving. By the end of this year I want to start paying more towards my loan again.

The last goal is purchasing a home. I won't feel comfortable purchasing a home until I have an emergency fund built up. Is $5,000 enough to make me comfortable? No! But more comfortable then $2,000. Ideally my stock account and emergency fund account combined will be close to $10,000 when I plan on looking for a house.

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