Showing posts with label Goals. Show all posts
Showing posts with label Goals. Show all posts
Friday, January 30, 2009
Goal Progress Bars Updated
Just updated our 2009 Goal Progress Bars to take into account progress made for January. Looks like we had a fairly good month in the way of reaching our net worth goal. If the rest of the year is as good as January then we should be able to surpass this goal. As for our investment account goal, we only obtained 3% towards this goal. However, I am not concerned because we know the majority of progress towards this goal will happen in the later months of 2009. Thus I feel pretty good about our progress so far towards these two goals.
Thursday, January 29, 2009
Should We Invest or Pay Down Mortgage
At the beginning of the year my wife and I worked out a plan for our finances for 2009. We worked up a budget and made decisions about paying down debt, saving and investing. Most of the decisions were fairly easy such as deciding to aggressively pay down my car loan so that we are car loan free shortly into 2009. We also made decisions about how much to save for certain areas of future spending such as gifts, travel, car insurance, car repairs and home repairs. But one decision was not so easy for us to make. We had a dilemma to decide on.
Once we were done paying off my car we had to decide what to do with our extra cash flow each month. At this point our only debt left would be student loans at a really low interest rate and our mortgage. We also have a sizable emergency fund saved up in a money market account and cds. So our decision was between aggressively paying down our mortgage or beginning to invest more aggressively in mutual funds.
The risk with paying down our mortgage is that this money that we could have been investing will not be available to us in the future if we ever needed it. However, by aggressively paying down our mortgage we would be able to cut off about 18 years off our mortgage and save tens of thousands of dollars in interest.
The risk with investing all our extra cash flow is that money could be loss. With the drops in the market over the past year who is to say it can't keep dropping. Sure history is on our side and the market should rebound at some point. However we don't know when this rebound may occur therefore there is a risk for losing our investments. But it is highly unlikely that we will end up losing all of our money this way. The reward for investing could be a better return then we would recieve by paying down our mortgage. Also, this money will be available if ever needed in the future.
We made the decision to invest. We are willing to risk a loss for the possibility of a greater gain. We also want the added security that having this money in an investment account will give us. In our individual situation this is the best decision. There is the possibility that my wife will not be able to work in the future due to health reasons. If this were to occur we will feel more comfortable knowing we have this extra money saved up in case it is needed.
This decision would be different for every individual person. You must look at your own circumstances before making your decision. I am a believer in paying down debt. However with our own circumstances and the risk of losing an income in the future, it feels safest to me to invest this money. I believe that in personal finance there should be an emphasis on personal. Every individual must look at thier own situation before making decisions regarding thier own finances.
Once we were done paying off my car we had to decide what to do with our extra cash flow each month. At this point our only debt left would be student loans at a really low interest rate and our mortgage. We also have a sizable emergency fund saved up in a money market account and cds. So our decision was between aggressively paying down our mortgage or beginning to invest more aggressively in mutual funds.
The risk with paying down our mortgage is that this money that we could have been investing will not be available to us in the future if we ever needed it. However, by aggressively paying down our mortgage we would be able to cut off about 18 years off our mortgage and save tens of thousands of dollars in interest.
The risk with investing all our extra cash flow is that money could be loss. With the drops in the market over the past year who is to say it can't keep dropping. Sure history is on our side and the market should rebound at some point. However we don't know when this rebound may occur therefore there is a risk for losing our investments. But it is highly unlikely that we will end up losing all of our money this way. The reward for investing could be a better return then we would recieve by paying down our mortgage. Also, this money will be available if ever needed in the future.
We made the decision to invest. We are willing to risk a loss for the possibility of a greater gain. We also want the added security that having this money in an investment account will give us. In our individual situation this is the best decision. There is the possibility that my wife will not be able to work in the future due to health reasons. If this were to occur we will feel more comfortable knowing we have this extra money saved up in case it is needed.
This decision would be different for every individual person. You must look at your own circumstances before making your decision. I am a believer in paying down debt. However with our own circumstances and the risk of losing an income in the future, it feels safest to me to invest this money. I believe that in personal finance there should be an emphasis on personal. Every individual must look at thier own situation before making decisions regarding thier own finances.
Friday, January 23, 2009
Our Progress Since Buying a House
I wanted to do a post on the progress my wife and I have made since combining our finances together about a year ago. Looking back over our net worth statements I decided it would be beneficial to look at the period since we bought our house back in April up until now. This is a period of 9 months and I've wanted to see what we have accomplished and what I feel we need to work on. I also need to take into consideration that we put on and paid for a wedding in that timeframe as well so that takes away from our savings and debt repayment.
First comparing our assets. Comparing the two months I notice our assets has gone up just over $2,000. Most of this jump came from our Retirement accounts with a small portion coming from an increase in personal property (wedding rings, furniture). Our cash level has stayed about the same with a negative $62 difference.
Next, looking at liabilities we can see that our total debts have gone down. Doing the math shows that we decreased our debt by $13,447 since April. The majority of this came from paying off my wifes car and almost paying off my car. Our other debts have gone down slightly but nothing to get excited about.
Combined this gives us a total increase in net worth of $15,644 over the past 9 months.
Looking forward, I think the logistics of how our net worth will increase is going to change. Once we have my car loan paid off and our other personal debts paid off we are planning on changing our focus from paying off debt to accumulating assets. At that point the only liabilities we will still have will be the mortgage on the house we just bought and student loans. We are in no rush to pay off the student loans with thier low interest rates. As for the mortgage, we feel it will be more beneficial to grow an investment account rather then paying this off at a faster rate. I will probably add a little each month to pay down the principal but not as aggressive as I have been trying to pay off our car loans. So for 2009 I see an increase in our net worth coming from a combination of asset growth and decreasing liabilities. But the focus will be for the first half of the year paying off debt and then asset accumulation for the second half of the year.
First comparing our assets. Comparing the two months I notice our assets has gone up just over $2,000. Most of this jump came from our Retirement accounts with a small portion coming from an increase in personal property (wedding rings, furniture). Our cash level has stayed about the same with a negative $62 difference.
Next, looking at liabilities we can see that our total debts have gone down. Doing the math shows that we decreased our debt by $13,447 since April. The majority of this came from paying off my wifes car and almost paying off my car. Our other debts have gone down slightly but nothing to get excited about.
Combined this gives us a total increase in net worth of $15,644 over the past 9 months.
Looking forward, I think the logistics of how our net worth will increase is going to change. Once we have my car loan paid off and our other personal debts paid off we are planning on changing our focus from paying off debt to accumulating assets. At that point the only liabilities we will still have will be the mortgage on the house we just bought and student loans. We are in no rush to pay off the student loans with thier low interest rates. As for the mortgage, we feel it will be more beneficial to grow an investment account rather then paying this off at a faster rate. I will probably add a little each month to pay down the principal but not as aggressive as I have been trying to pay off our car loans. So for 2009 I see an increase in our net worth coming from a combination of asset growth and decreasing liabilities. But the focus will be for the first half of the year paying off debt and then asset accumulation for the second half of the year.
Thursday, January 22, 2009
Updated Progress Bars with 2009 Goals
I just updated our progress bars on the right with two of our 2009 financial goals. My wife and I recently opened an investment account and started contributing a small amount each paycheck to try to grow our investments. We haven't really figured out how much we will able to grow this account by this year but I think a goal of $10,000 by the end of the year is reasonable. Currently we are only contributing $200 a month but once we have paid off my car (hopefully by June or sooner depending on tax refund) we will be able to contribute at least $1,000 a month.
Another goal is to increase our Net Worth up to $75,000. I'll be honest, I just picked this number out of the blue. Hopefully with the combination of paying off our debts and saving in the investment account and retirement accounts we will be able to accomplish this goal. I'll update these progress bars at the end of each month!
Another goal is to increase our Net Worth up to $75,000. I'll be honest, I just picked this number out of the blue. Hopefully with the combination of paying off our debts and saving in the investment account and retirement accounts we will be able to accomplish this goal. I'll update these progress bars at the end of each month!
Wednesday, April 2, 2008
Goal Progress Bar Updates
After updating my net worth I went ahead and updated my progress bars on the left.
Earlier this month we paid off the remaining balance on my credit cards. We no longer are carrying a credit card balance from one month to the next. We are really excited about this because this was the debt earning us the highest interest.
For retirement we are only 18% of the way to our year end goal of $10k. After a quarter of the year has gone we are about 7% behind on this goal. Hopefully the market will turn and catch us back up in the next couple quarters. If not we will need to consider contributing to my IRA to reach this goal.
Our total debt has been reduced to just under $38k. This puts us 34% of the way to our year end goal of $30k in debt. We are well on schedule here. However this month we are taking on a mortgage. I will need to readjust this goal next month including the mortgage in our total debt calculation.
Total net worth has increased to $25,877. This puts us 66% of the way to our year end goal of $30k. When I made this goal I was not sure how much the wedding would cost us and hold us back. Now however, I am optimistic we will reach this goal within a few months and I may need to push for something higher. How much higher I have no idea.
Earlier this month we paid off the remaining balance on my credit cards. We no longer are carrying a credit card balance from one month to the next. We are really excited about this because this was the debt earning us the highest interest.
For retirement we are only 18% of the way to our year end goal of $10k. After a quarter of the year has gone we are about 7% behind on this goal. Hopefully the market will turn and catch us back up in the next couple quarters. If not we will need to consider contributing to my IRA to reach this goal.
Our total debt has been reduced to just under $38k. This puts us 34% of the way to our year end goal of $30k in debt. We are well on schedule here. However this month we are taking on a mortgage. I will need to readjust this goal next month including the mortgage in our total debt calculation.
Total net worth has increased to $25,877. This puts us 66% of the way to our year end goal of $30k. When I made this goal I was not sure how much the wedding would cost us and hold us back. Now however, I am optimistic we will reach this goal within a few months and I may need to push for something higher. How much higher I have no idea.
Tuesday, March 18, 2008
Savings Updates!
This past weekend I went ahead and transferred some money from checking into our wedding fund and our emergency fund. This month we were able to save $500 into our wedding fund. We were also able to save $800 towards our emergency fund. We decided to save more into our emergency fund because the money we need for closing costs for the house will come from this account. Once the end of the month hits I will know how much we were under budget. Currently it looks like we will be about $300 under budget which we will also put in our emergency fund at that point.
Also this weekend we completed filing my fiances taxes. Once all was said and done she will be getting refunds totaling just over $1,000. We will probably divide this money up between the wedding and emergency funds.
On my run yesterday I was doing some math in my head. I figured up that at our current savings rate we should be able to have about $11,000 in our wedding fund when it comes time to pay off everything we have yet to pay for such as catering and photography. Hopefully along with some help from my fiances parents this will be enough to cover everything and we won't have to dip into our emergency fund to pick up any slack. I also figured that if we save the rest of the year like we did this month that our emergency fund should be close to $25,000 by the end of the year. This is not including any money we can hope to get for our wedding which I'm sure some will go towards this goal. I also did not take into account the tax stimulus of $1,200 we should also be recieving in May. Thus, I was feeling pretty good on my run both physically and mentally. I feel like we are in a good position to end this year off in a good position with our wedding paid for in full and our emergency fund to the point we want it. That will put us in good position to work towards more exciting goals in 2009.
Also this weekend we completed filing my fiances taxes. Once all was said and done she will be getting refunds totaling just over $1,000. We will probably divide this money up between the wedding and emergency funds.
On my run yesterday I was doing some math in my head. I figured up that at our current savings rate we should be able to have about $11,000 in our wedding fund when it comes time to pay off everything we have yet to pay for such as catering and photography. Hopefully along with some help from my fiances parents this will be enough to cover everything and we won't have to dip into our emergency fund to pick up any slack. I also figured that if we save the rest of the year like we did this month that our emergency fund should be close to $25,000 by the end of the year. This is not including any money we can hope to get for our wedding which I'm sure some will go towards this goal. I also did not take into account the tax stimulus of $1,200 we should also be recieving in May. Thus, I was feeling pretty good on my run both physically and mentally. I feel like we are in a good position to end this year off in a good position with our wedding paid for in full and our emergency fund to the point we want it. That will put us in good position to work towards more exciting goals in 2009.
Monday, March 17, 2008
If You Were Debt Free!
Today I read a post over at Apples and Telephones that got me to thinking. The author is debt free and most of the personal finance books she has read focus on getting out of debt. She mentions Dave Ramsey who it seems focuses completely on getting out of debt. I feel this is because this is the biggest and most important step in his plan. Also, most of Ramsey's audience is probably in debt which is why they are looking for help. The author of Apples and Telephones states that she has no debts and therefore does not quite no what to do. She has no big goals to aim for such as becoming debt free.
For me, once my fiance and I are debt free we will have a plan. I've thought about this many times before. I am considering having all our debt besides the mortgage paid off as being debt free. I think once we are at this point we will be in a good position to save.
We currently save for retirement but once we have no debt we will be able to save a higher percentage of our salaries. I believe that it is very important to save as much as you can towards retirement close to 15% of your salary.
Once we are debt free except for the mortgage we will start paying off the mortgage at an accelerated rate. We don't want to carry a mortgage for 30 years. Hopefully if things go well we can get it paid off in 20 years or less.
We will have our emergency fund built up to 6 months of expenses and we will focus on keeping this at 6 months worth of expenses in a safe online savings account that hopefully earns us a higher rate of return then a regular account at a brick and mortar bank.
At this point we will save for things we want. We will have different accounts saving for new cars when the time comes to replace our current cars. We will save for vacations we want to go on. We will save for anything new we would like.
Last we will be saving into a couple of mutual funds through my company (a mutual fund company) for our futures. We will be saving to build wealth. For us the ultimate goal is building a large amount of wealth where we can feel comfortable financially. An amount of wealth where we will not be concerned with any emergencies that may arise. An amount of wealth where we can feel comfortable donating large amounts to charity. An amount of wealth where we can feel free to experience different things we would like to experience such as world travel.
I feel that once you have become debt free the journey has really just begun. At that time it is time to really save for your future. Enjoy the now but also save so you can really really enjoy the future!
For me, once my fiance and I are debt free we will have a plan. I've thought about this many times before. I am considering having all our debt besides the mortgage paid off as being debt free. I think once we are at this point we will be in a good position to save.
We currently save for retirement but once we have no debt we will be able to save a higher percentage of our salaries. I believe that it is very important to save as much as you can towards retirement close to 15% of your salary.
Once we are debt free except for the mortgage we will start paying off the mortgage at an accelerated rate. We don't want to carry a mortgage for 30 years. Hopefully if things go well we can get it paid off in 20 years or less.
We will have our emergency fund built up to 6 months of expenses and we will focus on keeping this at 6 months worth of expenses in a safe online savings account that hopefully earns us a higher rate of return then a regular account at a brick and mortar bank.
At this point we will save for things we want. We will have different accounts saving for new cars when the time comes to replace our current cars. We will save for vacations we want to go on. We will save for anything new we would like.
Last we will be saving into a couple of mutual funds through my company (a mutual fund company) for our futures. We will be saving to build wealth. For us the ultimate goal is building a large amount of wealth where we can feel comfortable financially. An amount of wealth where we will not be concerned with any emergencies that may arise. An amount of wealth where we can feel comfortable donating large amounts to charity. An amount of wealth where we can feel free to experience different things we would like to experience such as world travel.
I feel that once you have become debt free the journey has really just begun. At that time it is time to really save for your future. Enjoy the now but also save so you can really really enjoy the future!
Wednesday, March 5, 2008
Paid Off Credit Card!
We did it! Yesterday afternoon I went online and paid the balance of my final credit card off. The balance was a little over $1,000. We used the proceeds that came from me selling my stock in an account that I basically am kidding myself with thinking I can make millions in. We also used some money that we had from going under budget last month! Thus, we are free from carrying a balance monthly on our credit cards.
Now we will only use my fiances credit card which we put groceries and gas only on and which we pay off in full each month.
So what to do with the money that was being budgeted towards paying down the credit card? Well, last month we budgeted $200 to be paid towards the balance of the card. In this months budget we have redirected that money to go towards saving for the wedding. With our wedding coming up in October we will need quite a bit of money to pay all the vendors the month or so before the wedding. After the wedding, the wedding savings will be redirected to emergency savings and paying down more debt (car loans).
Friday, February 29, 2008
Challenge for Myself in March
I have been reading some different blogs where the writers are challenging themselves not to eat out for lunch for a certain time period. Most of the bloggers are actually doing the same challenge. I decided that I needed to provide a challenge for myself that is similar in nature.
I have a lot of trouble spending practically all of my "fun" money every month on eating out. Whether it is lunch or any meal over the weekend, I have trouble getting myself to eat at home. I find myself wanting the convenience of getting a sandwhich somewhere like subway rather then fixing something at home. On the weekends I feel like it is something to do for entertainment instead of just eating something normal at home.
I have tried to cut back on my eating out before. This month I am going to challenge myself to not eat out the whole month if I am paying. I know I will have to eat out at least once when my group at work takes our monthly lunch together. Other then that I can push myself to make sure I save my money and don't eat out. I will be marking a calendar in my cubicle at work to make sure I keep track of my progress. I will mark the days I don't eat out with a green mark and the days I do with a red. I will try for all green.
At the end of the month I will reward myself depending on how I do. If I have any fun money leftover at the end of the month I will split this money in half. I will put half of the money into our emergency savings because I love seeing that fund go up. I will save the other half in a different account for something for myself. Something big that I want. I'm not sure what yet but possibly a Garmin Forerunner GPS watch which tells how many miles you've ran and what pace you are running. They are pretty expensive and I will have to be really disciplined if I want one. It will take a few months to reach that goal. But that can be a good reward if I can get myself to eat out less.
I have a lot of trouble spending practically all of my "fun" money every month on eating out. Whether it is lunch or any meal over the weekend, I have trouble getting myself to eat at home. I find myself wanting the convenience of getting a sandwhich somewhere like subway rather then fixing something at home. On the weekends I feel like it is something to do for entertainment instead of just eating something normal at home.
I have tried to cut back on my eating out before. This month I am going to challenge myself to not eat out the whole month if I am paying. I know I will have to eat out at least once when my group at work takes our monthly lunch together. Other then that I can push myself to make sure I save my money and don't eat out. I will be marking a calendar in my cubicle at work to make sure I keep track of my progress. I will mark the days I don't eat out with a green mark and the days I do with a red. I will try for all green.
At the end of the month I will reward myself depending on how I do. If I have any fun money leftover at the end of the month I will split this money in half. I will put half of the money into our emergency savings because I love seeing that fund go up. I will save the other half in a different account for something for myself. Something big that I want. I'm not sure what yet but possibly a Garmin Forerunner GPS watch which tells how many miles you've ran and what pace you are running. They are pretty expensive and I will have to be really disciplined if I want one. It will take a few months to reach that goal. But that can be a good reward if I can get myself to eat out less.
Updated Net Worth and Progress Bars
Well the end of February is upon us and that means it's time update our net worth and make sure we are still headed in the right direction.
This month our cash is up quite a bit. This is because we didn't pay anything on our wedding and I got my tax refund. I also sold some stock and have the money in cash which will be used probably next week to pay down my credit card. Our retirement went up quite a bit to put us over the $5,000 mark. Hopefully by the end of the year we can get that up above $10,000. With 10 months left that is about $500 a month so unless the market performs very poorly and loses what we are putting in, we should reach this goal.
On the debt side we paid monthly bills as normal. We have one credit card with a balance that we are working on paying down and hopefully next month that will be gone. The other credit card is paid off every month in the middle of the month. Therefore when I update the net worth we will always have a balance on there of monthly expenditures such as groceries, gas, and medical expenses which are the only things we use it for.
Overall our assets went up 5.79% or $3,362 and our liabilities went down 1.4% or $562. This combines for a net worth increase of $3,924 or 21.78% to put us almost up to 22k.
I updated the progress bars on the right. I think I did them right. The only area we aren't making good progress towards our goal is debt reduction. Everything else is going good. However, we are making good progress on getting rid of the credit card balance so this is a plus. Everything else is looking well on track to reach the goals I set out at the beginning of the year.
This month our cash is up quite a bit. This is because we didn't pay anything on our wedding and I got my tax refund. I also sold some stock and have the money in cash which will be used probably next week to pay down my credit card. Our retirement went up quite a bit to put us over the $5,000 mark. Hopefully by the end of the year we can get that up above $10,000. With 10 months left that is about $500 a month so unless the market performs very poorly and loses what we are putting in, we should reach this goal.
On the debt side we paid monthly bills as normal. We have one credit card with a balance that we are working on paying down and hopefully next month that will be gone. The other credit card is paid off every month in the middle of the month. Therefore when I update the net worth we will always have a balance on there of monthly expenditures such as groceries, gas, and medical expenses which are the only things we use it for.
Overall our assets went up 5.79% or $3,362 and our liabilities went down 1.4% or $562. This combines for a net worth increase of $3,924 or 21.78% to put us almost up to 22k.
I updated the progress bars on the right. I think I did them right. The only area we aren't making good progress towards our goal is debt reduction. Everything else is going good. However, we are making good progress on getting rid of the credit card balance so this is a plus. Everything else is looking well on track to reach the goals I set out at the beginning of the year.
Thursday, February 28, 2008
Don't Just Wish, You Need Action to Reach Those Goals!
Today I read an article found on Yahoo! Finance titled "Wishing for Retirement? Replace Hope with Action!" This article is talking about actually putting a plan into action to reach your retirement goals. Many of us might want to retire. We might have a specific date we want to retire and we have a general idea of how much we need to have saved up to make this possible. However, we may just be throwing what seems like a reasonable amount of money into our retirement savings and "hoping" that this will be enough.
This article gives some good points. Make your dreams yours. This involves being able to picture your dreams. Know what you want. You are more likely to be motivated to sock away plenty of cash in savings if you know why you are doing it. If you just know you want to retire but you have no idea where or what you want to do then it's harder to stay motivated for that. If you know you want to retire at a certain age, buy a nice lake house, and spend your days fishing and cruising around the lake, then you have a pretty set dream and will be more motivated to make that happen.
Chart your goals. You need to know your ultimate goal or at least a very good idea of that goal. You need to figure out a plan of where you need to be at different points along your journey in order to reach the end goal. Make a plan and check your progress along the way. Make a visual chart and this can help motivate you on your long journey.
Find inspiration on a daily basis. For me I believe a chart will be quite a bit of inspiration. I may put up a chart in my office at work charting my progress in different goal areas. For example I want to cut down on eating out. I may chart every day I do not eat out a certain number of dollars for savings so I can see the impact it is having on my savings.
Whatever you do, it is good to have goals and a plan of action. Whether retirement, weight loss, a big project at work, or any other goal, it is good to know what your ideal end result will be and how you plan on getting there. Stay motivated and put a plan into action. The end result will be great!
This article gives some good points. Make your dreams yours. This involves being able to picture your dreams. Know what you want. You are more likely to be motivated to sock away plenty of cash in savings if you know why you are doing it. If you just know you want to retire but you have no idea where or what you want to do then it's harder to stay motivated for that. If you know you want to retire at a certain age, buy a nice lake house, and spend your days fishing and cruising around the lake, then you have a pretty set dream and will be more motivated to make that happen.
Chart your goals. You need to know your ultimate goal or at least a very good idea of that goal. You need to figure out a plan of where you need to be at different points along your journey in order to reach the end goal. Make a plan and check your progress along the way. Make a visual chart and this can help motivate you on your long journey.
Find inspiration on a daily basis. For me I believe a chart will be quite a bit of inspiration. I may put up a chart in my office at work charting my progress in different goal areas. For example I want to cut down on eating out. I may chart every day I do not eat out a certain number of dollars for savings so I can see the impact it is having on my savings.
Whatever you do, it is good to have goals and a plan of action. Whether retirement, weight loss, a big project at work, or any other goal, it is good to know what your ideal end result will be and how you plan on getting there. Stay motivated and put a plan into action. The end result will be great!
Sunday, February 24, 2008
The Ultimate Savings Goal (for me)!
This morning I worked on an excel spreadsheet that I have used to determine how much I ultimately want to save up to be able to sustain my current life. I figured in savings in my 401k and a taxable account. I did not take into consideration taxes.
On my spreadsheet I took my current salary and increased it by an annual raise of 4%. Since I've been there my raises have been higher but I like to be conservative in my estimates. So, if I get no higher of a raise then 4% and no promotions to higher pay grades then I will be making approximately 182k by retirement age of 65. Honestly I'd like to retire sooner but that's going to depend on how well I progress towards my savings goals.
Next I figured out how much I feel I need after retirement to sustain the same standard of living. I decided that in retirement, I would need about 80% of my current income. This is probably a little more then I will need because hopefully I will not have a house payment at that time. To come up with 80% I just figured that if I am saving roughly 20% of my salary during my working years I won't be saving while I'm retired. Thus I figured I need 20% less. This is again pretty conservative I feel. I took the 80% of current salary I figured I would need and adjusted it with a 4% level of inflation out until I am age 95. I figured if I live that long then I'm doing good and honestly I hope I don't live that long. If I pass in my 80's I will be happy.
So next I took my retirement savings. I took what I currently have and what I will be saving into retirement each year from my salary and adjusted it for a return of 8%. Hopefully I can get more of a return but I like to be conservative. I grew this account up to retirement age(65).
I also have a taxable savings account where I took current savings and grew it by about the amount it currently grows and adjusted it for a gain of 6.5%. I will have most of this money in mutual funds so I expect it to earn me a high return. I did this through retirement age as well.
Once I hit retirement age, I took the amount I figured I would need to live off of and divided it by two. I took half of that from the retirement account and half from the taxable savings. I switched the return on those accounts to 5% because they will now be invested in a mix of bonds and stocks. I continued to decrease these accounts by taking out what I would need to live. Once taxable savings was down to 100k I took only from retirement savings. I decreased these accounts until the age of 90 and if I live to 91 with this plan I will be completely out of money.
Anyways, these are all really really rough estimates. In the long run I could need more I could need less. I may live off of half my current salary when I retire. I didn't take into account a pension I plan on receiving from work. I didn't take into account the fact that my highest expense should be gone by retirement which is mortgage or rent. But I said I wanted to live without worry. I wanted to be able to be at financial peace with myself. Therefore, I took the numbers I came up with that I would need at retirement to come up with my goal number. At retirement I figured I would need roughly about 3.5 million. Therefore, my goal savings number is going to be 4 million by retirement. With that number as my target, I will work out a plan to achieve that goal.
By the way, I said I am not worried about being incredibly wealthy and to me 4 million sounds incredibly wealthy. However, once you take into account inflation and the fact that I plan on living off of this savings with no other income for 25 years, this is not a lot of money. Today it is. In 2050 it will not be. Four million is my ultimate goal and next I will work on plans to reach that goal through mini goals.
On my spreadsheet I took my current salary and increased it by an annual raise of 4%. Since I've been there my raises have been higher but I like to be conservative in my estimates. So, if I get no higher of a raise then 4% and no promotions to higher pay grades then I will be making approximately 182k by retirement age of 65. Honestly I'd like to retire sooner but that's going to depend on how well I progress towards my savings goals.
Next I figured out how much I feel I need after retirement to sustain the same standard of living. I decided that in retirement, I would need about 80% of my current income. This is probably a little more then I will need because hopefully I will not have a house payment at that time. To come up with 80% I just figured that if I am saving roughly 20% of my salary during my working years I won't be saving while I'm retired. Thus I figured I need 20% less. This is again pretty conservative I feel. I took the 80% of current salary I figured I would need and adjusted it with a 4% level of inflation out until I am age 95. I figured if I live that long then I'm doing good and honestly I hope I don't live that long. If I pass in my 80's I will be happy.
So next I took my retirement savings. I took what I currently have and what I will be saving into retirement each year from my salary and adjusted it for a return of 8%. Hopefully I can get more of a return but I like to be conservative. I grew this account up to retirement age(65).
I also have a taxable savings account where I took current savings and grew it by about the amount it currently grows and adjusted it for a gain of 6.5%. I will have most of this money in mutual funds so I expect it to earn me a high return. I did this through retirement age as well.
Once I hit retirement age, I took the amount I figured I would need to live off of and divided it by two. I took half of that from the retirement account and half from the taxable savings. I switched the return on those accounts to 5% because they will now be invested in a mix of bonds and stocks. I continued to decrease these accounts by taking out what I would need to live. Once taxable savings was down to 100k I took only from retirement savings. I decreased these accounts until the age of 90 and if I live to 91 with this plan I will be completely out of money.
Anyways, these are all really really rough estimates. In the long run I could need more I could need less. I may live off of half my current salary when I retire. I didn't take into account a pension I plan on receiving from work. I didn't take into account the fact that my highest expense should be gone by retirement which is mortgage or rent. But I said I wanted to live without worry. I wanted to be able to be at financial peace with myself. Therefore, I took the numbers I came up with that I would need at retirement to come up with my goal number. At retirement I figured I would need roughly about 3.5 million. Therefore, my goal savings number is going to be 4 million by retirement. With that number as my target, I will work out a plan to achieve that goal.
By the way, I said I am not worried about being incredibly wealthy and to me 4 million sounds incredibly wealthy. However, once you take into account inflation and the fact that I plan on living off of this savings with no other income for 25 years, this is not a lot of money. Today it is. In 2050 it will not be. Four million is my ultimate goal and next I will work on plans to reach that goal through mini goals.
Saturday, February 23, 2008
What is Financial Peace for Me?
Earlier in the week I wrote an article about how I wanted to develop a plan towards reaching financial peace and prosperity. I want to formulate a number and mini goals to help myself keep on track towards the ultimate goal.
However, before I can do that I feel like I need to define what financial peace is exactly for me. Financial peace can be different for every single person. One person may be happy just having enough money to get by with every day living with no luxuries, no vacations, no entertainment. Others may want to be able to take the occasional vacation or the occasional dinner out but are not concerned with being very wealthy. And yet there are others who may want to accumulate as much as they can until they are millionaires when they feel they can do what they want.
I would like to define what I believe would be financial peace for myself. Just after college I took a job as a financial planner. They promised the potential for a very high salary and I was all game. I wanted to be rich. That is all I knew and that is all that mattered to me was I wanted to say I made over 100k this year and have x amount in the bank with a big house to come home to. However, once I got into that job I quickly found out that it was definitely not for me. I was working every day from 8 in the morning until 9 in the evening. I was working half a day on Saturdays. What good would it do me to have all this money if I never had any time to enjoy it? I quit after a couple months and searched for something with less hours. Therefore I know I would much rather have time to spend with those I love and earn a little less instead of working all the time and earning a lot.
So for me, financial peace will involve being able to live comfortably while spending most of my time with those I love.
What is comfortably? Comfortably for me involves being able to afford to pay our bills each month without worry. Also being able to go to eat occasionally on the weekends. Also being able to take a vacation or two every year. Being comfortable would mean I'm not worried about the budget when I go looking for a gift for my loved ones. I would have a house that I love and am happy with and can afford to pay for. I probably wouldn't be living excessive. I wouldn't be traveling every month of the year to far off places. I wouldn't have to have all of the latest electronic gadgets, although an occasional one would be nice. I don't need a maid or a live in home nanny. I just want to live comfortable. I want to be able to pay for the necessities, a few luxuries, and have some left over to save because I love to save.
Later I will write a couple more posts about how much money I will need to live "comfortably." I will figure out how much I need in savings to support the lifestyle that I want. Ultimately I will not be forced to work to live how I want to live. I will write a post about where I want to end up and another one about how I want to get there. Stay tuned for more.
However, before I can do that I feel like I need to define what financial peace is exactly for me. Financial peace can be different for every single person. One person may be happy just having enough money to get by with every day living with no luxuries, no vacations, no entertainment. Others may want to be able to take the occasional vacation or the occasional dinner out but are not concerned with being very wealthy. And yet there are others who may want to accumulate as much as they can until they are millionaires when they feel they can do what they want.
I would like to define what I believe would be financial peace for myself. Just after college I took a job as a financial planner. They promised the potential for a very high salary and I was all game. I wanted to be rich. That is all I knew and that is all that mattered to me was I wanted to say I made over 100k this year and have x amount in the bank with a big house to come home to. However, once I got into that job I quickly found out that it was definitely not for me. I was working every day from 8 in the morning until 9 in the evening. I was working half a day on Saturdays. What good would it do me to have all this money if I never had any time to enjoy it? I quit after a couple months and searched for something with less hours. Therefore I know I would much rather have time to spend with those I love and earn a little less instead of working all the time and earning a lot.
So for me, financial peace will involve being able to live comfortably while spending most of my time with those I love.
What is comfortably? Comfortably for me involves being able to afford to pay our bills each month without worry. Also being able to go to eat occasionally on the weekends. Also being able to take a vacation or two every year. Being comfortable would mean I'm not worried about the budget when I go looking for a gift for my loved ones. I would have a house that I love and am happy with and can afford to pay for. I probably wouldn't be living excessive. I wouldn't be traveling every month of the year to far off places. I wouldn't have to have all of the latest electronic gadgets, although an occasional one would be nice. I don't need a maid or a live in home nanny. I just want to live comfortable. I want to be able to pay for the necessities, a few luxuries, and have some left over to save because I love to save.
Later I will write a couple more posts about how much money I will need to live "comfortably." I will figure out how much I need in savings to support the lifestyle that I want. Ultimately I will not be forced to work to live how I want to live. I will write a post about where I want to end up and another one about how I want to get there. Stay tuned for more.
Wednesday, February 20, 2008
Do You Have Goals for Your Blog?
Do you have goals for your blog? I'm not talking about the financial goals that I'm sure every single PF blogger has. I'm talking about personal goals for your blog writing and readership.
There can be many different types of goals you set out for yourself and your blog. Some bloggers might want thier blog to help earn them some income. Some bloggers might want to gain a growing number of readers striving to reach a certain amount of visitors in a given month. Some bloggers may strive to post more often or better quality posts.
When I started my blog I was not really concerned with any of these things. I didn't care if I had any readers and never expected to be able to make some money from blogging. I do try to make quality posts more for myself then for anyone else. The posts I make are more for my own interests and if others enjoy them then that is all the better.
Recently, I have become more and more into checking out daily how many readers I had for the day and for the month. I am finding myself striving to grow both numbers and find myself obsessed with checking the results. My numbers of visits has been growing since I started this blog back in August but the numbers are still pretty low. So far my highest number of visits in one day has been 30 and my highest in one month has been 203. This month I have broken the 203 number already with a week and a half still to go in the month. How high can I go this month? Will I reach 250? 300? I've decided I want to set goals for myself in growing this blog.
I'm not concerned with making an income from this blog. My main goal is growing the number of visitors. I think my next big goals are going to be 50 visits in one day and 400 visitors in a single month. Can I achieve this? I think so and here is how I hope to do it. I hope to write more posts and more quality posts in the upcoming months. I find the more posts I write the more visitors I have to my page. I plan on reading more of other peoples blogs and commenting on thier posts. If I become a frequent commenter, people may click and check to read my own blog. I also typically like to voice my own opinion on others blogs.
Are there any other ways to grow your readership? What do you do to try to attract more readers to your blog? I know there are some people out there who have hundreds of visitors a day. How do they bring in that traffic? Let me hear your thoughts!
There can be many different types of goals you set out for yourself and your blog. Some bloggers might want thier blog to help earn them some income. Some bloggers might want to gain a growing number of readers striving to reach a certain amount of visitors in a given month. Some bloggers may strive to post more often or better quality posts.
When I started my blog I was not really concerned with any of these things. I didn't care if I had any readers and never expected to be able to make some money from blogging. I do try to make quality posts more for myself then for anyone else. The posts I make are more for my own interests and if others enjoy them then that is all the better.
Recently, I have become more and more into checking out daily how many readers I had for the day and for the month. I am finding myself striving to grow both numbers and find myself obsessed with checking the results. My numbers of visits has been growing since I started this blog back in August but the numbers are still pretty low. So far my highest number of visits in one day has been 30 and my highest in one month has been 203. This month I have broken the 203 number already with a week and a half still to go in the month. How high can I go this month? Will I reach 250? 300? I've decided I want to set goals for myself in growing this blog.
I'm not concerned with making an income from this blog. My main goal is growing the number of visitors. I think my next big goals are going to be 50 visits in one day and 400 visitors in a single month. Can I achieve this? I think so and here is how I hope to do it. I hope to write more posts and more quality posts in the upcoming months. I find the more posts I write the more visitors I have to my page. I plan on reading more of other peoples blogs and commenting on thier posts. If I become a frequent commenter, people may click and check to read my own blog. I also typically like to voice my own opinion on others blogs.
Are there any other ways to grow your readership? What do you do to try to attract more readers to your blog? I know there are some people out there who have hundreds of visitors a day. How do they bring in that traffic? Let me hear your thoughts!
Tuesday, February 19, 2008
A Long Road to Financial Prosperity
The journey to financial prosperity and peace is long and sometimes seems to be an impossible task for me. I started my personal finance journey back in August when my eyes were opened up to the vast world of PF blogs and books available. I became consumed with reading everything I could about personal finance. I quickly turned to my own financial situation with a critical eye. Deciding I needed to make some changes, get out of debt, and start saving for the future, I set out on a mission. This journey is long. There are many turns and bumps on this road. Since becoming interested in personal finance and my own finances, I have had a few life changes. One is that I became engaged and now my fiance and I's finances are one. Another change which is coming up is the future purchase of our first home. This is something we are considering this sometime between now and the middle of summer. These changes throw forks in the road and a plan that was once set has to change.
However, I never really had a set plan. I never really had an exact idea of where I needed to go. I know where I have started but how will I know when I've reached the ultimate dream of having financial peace?
This week, I would like to set out to answer these questions. I want to come up with a goal number that will be my ultimate financial peace. The number where I no longer need to worry (as much) about money and work. The number where I have saved and invested enough to live off of the earnings and my work salary is no longer important. For most, this is the goal number to reach by retirement. This week I would like to try to find this number. I would like to develop a plan complete with short, medium and long term goals to achieve my ultimate goal of reaching this number and being at peace with my finances. After all, how can I ever achieve financial peace if I don't know what that is? I wouldn't start out on a road trip across the country without a map. And I shouldn't start out on my financial journey without some idea of where I ultimately want to end up.
Keep posted for some more posts about where I ultimately hope to end this journey and how I hope to get there.
However, I never really had a set plan. I never really had an exact idea of where I needed to go. I know where I have started but how will I know when I've reached the ultimate dream of having financial peace?
This week, I would like to set out to answer these questions. I want to come up with a goal number that will be my ultimate financial peace. The number where I no longer need to worry (as much) about money and work. The number where I have saved and invested enough to live off of the earnings and my work salary is no longer important. For most, this is the goal number to reach by retirement. This week I would like to try to find this number. I would like to develop a plan complete with short, medium and long term goals to achieve my ultimate goal of reaching this number and being at peace with my finances. After all, how can I ever achieve financial peace if I don't know what that is? I wouldn't start out on a road trip across the country without a map. And I shouldn't start out on my financial journey without some idea of where I ultimately want to end up.
Keep posted for some more posts about where I ultimately hope to end this journey and how I hope to get there.
Monday, February 18, 2008
Should I Sell Stock to Pay Down Credit Card?
Today I made my monthly payment on my credit card towards paying down and eventually paying off the balance. Right now I am able to throw around $200 a month at the balance so that this month it went down from $1,400 to $1,200.
I want this debt gone. It is credit card debt and I have grown a terrible hatred for credit card debt. I have always believed carrying a balance on credit cards is a bad thing to do. Due to some irresponsible moves the past couple years I built up a large balance and have been working since September at paying it all off.
Today I found myself contemplating whether I should sell some stock I own and use that money to pay down some of the debt. I have a small online stock brokerage account which only has about 800 dollars worth of stock in it. I am contemplating selling one of the holdings which would give me a little over $500 to put towards the credit card. This would help me pay off the credit card a couple months earlier then the current plan of paying down $200 a month.
Once I have that credit card paid off I will be able to save an extra $200 a month. This would help boost my savings quite a bit. My stock account is for fun. I like speculating in the market. However, I don't see myself getting rich off of this. Especially with such little capital and considering I've lost money on most of my trades except a couple. I don't see myself growing the capital I can trade anytime soon either. My fiance and I have specific goals and none of them include building up my stock account. We are saving for our wedding. We are buying a house. We are paying off our debt. After all of this we want to build our emergency fund up about $6,000 more. And after all of this we would like to start saving into a couple mutual funds. I don't see myself contributing to my online stock brokerage account any time soon. Even after our wedding and after our debts are paid off, I doubt my fiance is going to want to put our savings into my stock picking ideas. She would rather put our savings into mutual funds with a history of good performance. And since I work for a mutual fund company, we can do this at NAV with no commissions or sales charges.
It may pain me to liquidate my stock account and use the money to pay down the credit card. However, I believe it is time to face the facts and go after my first goal. Being debt free. Getting rid of this credit card debt will free up a couple hundred dollars a month and that is what I need to do.
I want this debt gone. It is credit card debt and I have grown a terrible hatred for credit card debt. I have always believed carrying a balance on credit cards is a bad thing to do. Due to some irresponsible moves the past couple years I built up a large balance and have been working since September at paying it all off.
Today I found myself contemplating whether I should sell some stock I own and use that money to pay down some of the debt. I have a small online stock brokerage account which only has about 800 dollars worth of stock in it. I am contemplating selling one of the holdings which would give me a little over $500 to put towards the credit card. This would help me pay off the credit card a couple months earlier then the current plan of paying down $200 a month.
Once I have that credit card paid off I will be able to save an extra $200 a month. This would help boost my savings quite a bit. My stock account is for fun. I like speculating in the market. However, I don't see myself getting rich off of this. Especially with such little capital and considering I've lost money on most of my trades except a couple. I don't see myself growing the capital I can trade anytime soon either. My fiance and I have specific goals and none of them include building up my stock account. We are saving for our wedding. We are buying a house. We are paying off our debt. After all of this we want to build our emergency fund up about $6,000 more. And after all of this we would like to start saving into a couple mutual funds. I don't see myself contributing to my online stock brokerage account any time soon. Even after our wedding and after our debts are paid off, I doubt my fiance is going to want to put our savings into my stock picking ideas. She would rather put our savings into mutual funds with a history of good performance. And since I work for a mutual fund company, we can do this at NAV with no commissions or sales charges.
It may pain me to liquidate my stock account and use the money to pay down the credit card. However, I believe it is time to face the facts and go after my first goal. Being debt free. Getting rid of this credit card debt will free up a couple hundred dollars a month and that is what I need to do.
Thursday, January 31, 2008
2008 Goal Progress Bar Updates
I updated my 2008 goal progress bars to the right this morning to reflect our end of January numbers.
This month we paid off alot of the credit card debt. The goal is to reduce my credit card debt to zero. This goal does not include B's credit card because it is paid off in full every month. By using my emergency money and some money from B's checking, we were able to wipe out half of the credit card debt this month. We are well on our way to accomplishing this goal in 2008. One credit card is gone. Our next mini goal is to get the other card balance below $1,000.
Retirement was not so good this month. Our accounts rose a total of only $95 which doesn't put us very far towards our goal of $10k. Hopefully next month will be better because we still have 98% to go towards our goal this year.
Paying down our total debt was a decent month. We got 29% closer to our goal of being under 30k by the end of 2008. Hopefully we keep this up and go below our goal!
Total net worth did not have a good month. While our debts decreased quite a bit, so did our cash. What we saved in retirement did not show in the small increase in those accounts. What we paid out for our wedding location won't help us for the next 4 months. While we paid down alot of the credit card debt, it was at the expense of some of our savings so the cash number went down.
Overall, I am pleased with the debt reduction this month. Hopefully next month will be a better month for retirement and overall net worth!
This month we paid off alot of the credit card debt. The goal is to reduce my credit card debt to zero. This goal does not include B's credit card because it is paid off in full every month. By using my emergency money and some money from B's checking, we were able to wipe out half of the credit card debt this month. We are well on our way to accomplishing this goal in 2008. One credit card is gone. Our next mini goal is to get the other card balance below $1,000.
Retirement was not so good this month. Our accounts rose a total of only $95 which doesn't put us very far towards our goal of $10k. Hopefully next month will be better because we still have 98% to go towards our goal this year.
Paying down our total debt was a decent month. We got 29% closer to our goal of being under 30k by the end of 2008. Hopefully we keep this up and go below our goal!
Total net worth did not have a good month. While our debts decreased quite a bit, so did our cash. What we saved in retirement did not show in the small increase in those accounts. What we paid out for our wedding location won't help us for the next 4 months. While we paid down alot of the credit card debt, it was at the expense of some of our savings so the cash number went down.
Overall, I am pleased with the debt reduction this month. Hopefully next month will be a better month for retirement and overall net worth!
Monday, January 14, 2008
Money Decisions
My fiance and I have decided this weekend to use my emergency fund and some money from some stock I just sold to pay down some credit card debt. I have an emergency fund saved up of $1,000. On top of that in the same account I have been saving a set amount each month for my next car insurance payment. My fiance and I decided that she has a big enough emergency fund for both of us, close to $19,000 and that my emergency fund would be better off used to pay down my credit card debt. We have decided to leave $200 from the $1,000 in the account to help with the fiances auto insurance and this leaves us $800 to use. We decided that I would use $500 to pay towards the credit card debt and the other $300 would go into our wedding fund.
On another note, I owned some preferred shares in Countrywide which recently had a nice run up due to being bought out by Bank of America. I sold these shares today for a nice 17% profit and have decided to withdraw the money from my stock account and use it to pay down more credit card debt. This will leave me only a couple hundred left in my stock account which is invested in Bank of America. I don't want to completely close the account but have decided to put my dreams of being a rich stock trader on hold until we are more financially stable in other areas of our lives.
So, I will be putting a total of $300 into the wedding fund and a total of $1,150 paying down my credit card. This will leave me with credit card debt around $1,500 which I will still be working towards paying down!
On another note, I owned some preferred shares in Countrywide which recently had a nice run up due to being bought out by Bank of America. I sold these shares today for a nice 17% profit and have decided to withdraw the money from my stock account and use it to pay down more credit card debt. This will leave me only a couple hundred left in my stock account which is invested in Bank of America. I don't want to completely close the account but have decided to put my dreams of being a rich stock trader on hold until we are more financially stable in other areas of our lives.
So, I will be putting a total of $300 into the wedding fund and a total of $1,150 paying down my credit card. This will leave me with credit card debt around $1,500 which I will still be working towards paying down!
Sunday, January 13, 2008
Created Goal Progress Bars
Today I created four goal progress bars to help keep track of how we are doing in 2008. We have set up goals this year discussed earlier like saving for the wedding, paying down debt, saving for retirement.
I set up four bars to help keep track of paying down debt, saving for retirement, and growing our net worth.
The first progress bar set up is to pay off the credit cards. This is the first debt that we are trying to completely eliminate. I am starting out with just under $3,000 in credit card debt and would like to have that completely eliminated this year.
The second progress bar set up is for retirement. This is a joint goal for the fiance and I. I just chose a nice round number, $10,000, and decided to aim for that. Hopefully by the end of the year our retirement account values will be over this mark.
The third progress bar set up is the debt elimination bar. This is our total debt. Combined, my fiance and I have over $37,000 in debt. This is made up of credit cards, 2 car loans, student loans, and personal loans on an engagement ring, bike, and furniture. Our goal is to pay off at least $7,000 of this debt this year and owe under $30,000 heading into 2009.
The last progress bar is our Net Worth bar. I keep track of net worth in NetworthIQ. This bar is to track our progress throughout the year from the beginning. We hope to grow our Net Worth to $35,000 by the end of the year. This is while we are paying for our wedding this coming October. This will be an increase in net worth of 53% and is quite ambitious considering our upcoming wedding. However, I think with an effort of paying down our debt and saving in retirement, we can come close to reaching this goal.
I will update these bars each month around the same time I update my NetWorthIQ profile. Keep watching to see our progress
I set up four bars to help keep track of paying down debt, saving for retirement, and growing our net worth.
The first progress bar set up is to pay off the credit cards. This is the first debt that we are trying to completely eliminate. I am starting out with just under $3,000 in credit card debt and would like to have that completely eliminated this year.
The second progress bar set up is for retirement. This is a joint goal for the fiance and I. I just chose a nice round number, $10,000, and decided to aim for that. Hopefully by the end of the year our retirement account values will be over this mark.
The third progress bar set up is the debt elimination bar. This is our total debt. Combined, my fiance and I have over $37,000 in debt. This is made up of credit cards, 2 car loans, student loans, and personal loans on an engagement ring, bike, and furniture. Our goal is to pay off at least $7,000 of this debt this year and owe under $30,000 heading into 2009.
The last progress bar is our Net Worth bar. I keep track of net worth in NetworthIQ. This bar is to track our progress throughout the year from the beginning. We hope to grow our Net Worth to $35,000 by the end of the year. This is while we are paying for our wedding this coming October. This will be an increase in net worth of 53% and is quite ambitious considering our upcoming wedding. However, I think with an effort of paying down our debt and saving in retirement, we can come close to reaching this goal.
I will update these bars each month around the same time I update my NetWorthIQ profile. Keep watching to see our progress
Friday, December 28, 2007
A Look Back at 2007
2007! The first year I started keeping track of my finances. I graduated from college in May of 2006 and took what I consider my first real job (current job) in September of 2006. Now I have worked for an entire year and have made significant financial progress.
I started keeping track of my finances more in depth in August of 2007. Back then my net worth started at $2,952. I know have a net worth of $5,321 for an increase of 80.25%. That is quite an increase. My best month was December which accounted for almost half of those gains.
2007 wasn't just a good year for my net worth. This was my first year out in the real world after college and I want to take a look at some things I did right that I am proud of and some things I did that were probably bad ideas.
First lets take a look at what I did right this past year:
I started keeping track of my finances more in depth in August of 2007. Back then my net worth started at $2,952. I know have a net worth of $5,321 for an increase of 80.25%. That is quite an increase. My best month was December which accounted for almost half of those gains.
2007 wasn't just a good year for my net worth. This was my first year out in the real world after college and I want to take a look at some things I did right that I am proud of and some things I did that were probably bad ideas.
First lets take a look at what I did right this past year:
- I began the year by opening a traditional IRA. I contributed 5% of my salary a month into the IRA until I was able to start contributing to my 401k.
- Once eligible to contribute to my company's 401k in September, I took full advantage. I contribute the maximum amount needed to recieve the company's full match.
- I opened an online money market account and funded it with $1,000 for emergencies through automatic savings.
- I got engaged to a beautiful woman who I love with all my heart. I can't wait to get married next year and spend the rest of our lives together.
- I took a nice vacation with my girlfriend (now fiance) to Mexico. A great experience and well worth the money to enjoy a vacation with her.
Now lets take a look at the things that could've gone better:
- I racked up quite a bit of credit card debt through the year before I got serious about finances. I paid for last christmas with my credit cards. I overspent on christmas trying to impress my family with the money I now make. I also paid for the Mexico trip with a credit card. I now know I would have been better off saving for things before I spend money on them and not racking up the debt.
- I bought a new bike and took out a loan to pay for it. The loan is at 0% interest and will be paid off so I won't owe any interest on it. I still count this as part of my current debt. The bike was an impulse purchase and if I would have waited a few weeks I probably would not have bought the bike.
- I opened up a stock brokerage account and tried trading stocks without really knowing what I was doing. I felt like I've read alot about investing but I ended up losing over a thousand dollars. I funded the account with $1,700 and now have about $600. I now plan on leaving the money in the stocks I currently have them in and earning dividends and hopefully seeing some appreciation over the next year. However, I absolutely will NOT add any more money to the account this year. Once I have a better financial base, I will consider trying to invest in stocks on my own. If I had not tried jumping into the stock market prematurely, I would have a net worth of about $7,000 instead of $5,300. In the long run this will be an inmaterial amount but currently, it would have been nice to have that much less debt or that much more into my retirement account.
So, I generally feel like I had a good year. I made some good progress and since tracking my finances have increased my net worth and lowered my credit card debt. Hopefully I continue to make good progress in 2008.
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