2014 Budget and Goals

**snafu** · 12-12-2013, 08:23 PM

I suggest you work out your Net Worth each December to keep you aware of Assets and Liabilities
Awesome to contribute to 401K to get total match. I suggest you track your contribution, employer match and value each December or employment anniversary date to fully understand value.

I wonder the outstanding balance and interest rate on your student loan. At $ 300. how many months of payment remains? How much have you already paid towards principal and how much have you spent in interest? What is your plan for Income tax rebate? What earning do you anticipate for ROTH and how does that compare with SL liability? Do you have rental insurance for your personal belongings? What are your expenses for this holiday season? We are expecting a 4% increase in living expenses like heating, food, transit, insurance. Would you benefit from noting every expenditure for two months to track $ leaks.

Is there any possibility of taking on a part time job weekends or in spring to escalate savings for condo/home DP purchase?

**Retired To Win** · 12-14-2013, 04:34 AM

One Goal at a Time

Whenever I develop a list of goals like you have, I rank them in order of importance to me. Then I tackle the first one until it's achieved, at which point I'll go to the second one... and so on. The sense of accomplishment that comes from checking off a goal as done is a great motivator to stay the course and even go at it harder.

If I had your list of goals, I would treat at least the house fund, car fund and emergency fund in that way. I might even think about adding the student loan to my goals list.

Retired to Win
making the most of my time and my money

**BMEPhDinCO** · 12-16-2013, 09:37 AM

Originally posted by Retired To Win View Post

Whenever I develop a list of goals like you have, I rank them in order of importance to me. Then I tackle the first one until it's achieved, at which point I'll go to the second one... and so on. The sense of accomplishment that comes from checking off a goal as done is a great motivator to stay the course and even go at it harder.

If I had your list of goals, I would treat at least the house fund, car fund and emergency fund in that way. I might even think about adding the student loan to my goals list.

Retired to Win
making the most of my time and my money

I do this too - For example, my 2014 Goals look like this:

$22,000 - EF (CHECKED OFF)
$300 - Bike Fund (CHECKED OFF)
$500 - Music Fund (ie, DH's business account - CHECKED OFF)
$700 - Medical (CURRENT GOAL)
$1,000 - Auto
xxx - Housing
xxx - Travel
XXX - Misc (ie, electronics, dinners for special occasions, gifts, etc)
XXX - pet fund
xxx - taxes (SE)

And then I hit each one hard... while still contributing something to retirement accounts.

I think you are doing very well - $150 a month for groceries is really low for 1 person!

I'm a bit confused with your EF amount though - your current expenses are around $1,550 per month, making 6 months worth $9,300, not $7k.

I'd do something like this though..since you have $1557 per month for savings...

$400 Roths
$157 Travel
$1000 EF - then in 8.5 months, you'd have your full EF (with the $1k you already have).

Then, I'd put the $1k into the car for 3 months - the final .5 months would go to the Roth to hit the max.

Then in 2015, I'd put $1k into the car for 7 more months. There's your car payment, let it sit and earn interest until you move. The other 4.5 months of the year, I'd put into the house. The last .5 goes to the Roths for the max.

The third year, 2016, I'd put the $1k fully into the house. That would then give you 16.5 months (ie, $16,500) for the house starting Jan. 2017. Plus you'd have the full EF, plus the car. And both of those would have been earning interest for awhile.

As for a house, closing costs can vary greatly - in our case, we bought from a bank, so we had to pay more (~5% of the house value). Sometimes sellers are wiling to pay some of a buyer's closing costs. There's also inspection, fixing minor issues, paint, etc that come up. Not including the new roof we needed, I think we spent around $2-3k on "extra" stuff after we closed that needed to be done before we could move in. For a place under $70k in Atlanta, it may need some fixing up and a new security system and so forth. The plan above gives you that extra $1,500 for whatever comes up.

Good luck and great job planning for what's coming.

**EconDiva** · 12-17-2013, 09:30 AM

Originally posted by snafu View Post

I suggest you work out your Net Worth each December to keep you aware of Assets and Liabilities
Awesome to contribute to 401K to get total match. I suggest you track your contribution, employer match and value each December or employment anniversary date to fully understand value.

I wonder the outstanding balance and interest rate on your student loan. At $ 300. how many months of payment remains? How much have you already paid towards principal and how much have you spent in interest? What is your plan for Income tax rebate? What earning do you anticipate for ROTH and how does that compare with SL liability? Do you have rental insurance for your personal belongings? What are your expenses for this holiday season? We are expecting a 4% increase in living expenses like heating, food, transit, insurance. Would you benefit from noting every expenditure for two months to track $ leaks.

Is there any possibility of taking on a part time job weekends or in spring to escalate savings for condo/home DP purchase?

It is possible I may be able to take on a pt job...it's something I've been considering, as my weekends are always free...

**EconDiva** · 12-17-2013, 09:36 AM

Originally posted by Retired To Win View Post

Whenever I develop a list of goals like you have, I rank them in order of importance to me. Then I tackle the first one until it's achieved, at which point I'll go to the second one... and so on. The sense of accomplishment that comes from checking off a goal as done is a great motivator to stay the course and even go at it harder.

If I had your list of goals, I would treat at least the house fund, car fund and emergency fund in that way. I might even think about adding the student loan to my goals list.

Retired to Win
making the most of my time and my money

Makes sense...determining what should come first is always an issue for me...I try to do too much at a time and end up failing sometimes.

I think the retirement contributions outlined above won't be difficult...but deciding what one thing to do next is. I'm beginning to think I should just pay everything I can to get the student loan knocked out, because then that would be extra money to go to the next thing. Which I think would be a car. I feel the EF can be funded simultaneously with the other goals. I guess I'd rank the house goal last.

So, I'd be working in this order:

#1 Increase retirement contributions to above, put everything I can towards student loans.
#2 Once student loan is paid off, then put everything I can towards cash for a car purchase.
#3 Once car fund is done, save for house purchase down payment.

As mentioned above, I think the EF will be fully funded for sure by the time I finish with #3. Just don't know how long it would take to get there....

In the meantime, I will look towards increasing my income through a part time job or perhaps a raise at work over the next year, which would help speed along the process with these goals.

Having goals really makes you sit down and think about what's most important to you...I had the plan to visit Costa Rica in 2014 but I'm willing to put off vacations until all of the above are done...that's just how bad I'm starting to want to accomplish these things.

**EconDiva** · 12-17-2013, 09:38 AM

Originally posted by BMEPhDinCO View Post

I do this too - For example, my 2014 Goals look like this:

$22,000 - EF (CHECKED OFF)
$300 - Bike Fund (CHECKED OFF)
$500 - Music Fund (ie, DH's business account - CHECKED OFF)
$700 - Medical (CURRENT GOAL)
$1,000 - Auto
xxx - Housing
xxx - Travel
XXX - Misc (ie, electronics, dinners for special occasions, gifts, etc)
XXX - pet fund
xxx - taxes (SE)

And then I hit each one hard... while still contributing something to retirement accounts.

I think you are doing very well - $150 a month for groceries is really low for 1 person!

I'm a bit confused with your EF amount though - your current expenses are around $1,550 per month, making 6 months worth $9,300, not $7k.

I'd do something like this though..since you have $1557 per month for savings...

$400 Roths
$157 Travel
$1000 EF - then in 8.5 months, you'd have your full EF (with the $1k you already have).

Then, I'd put the $1k into the car for 3 months - the final .5 months would go to the Roth to hit the max.

Then in 2015, I'd put $1k into the car for 7 more months. There's your car payment, let it sit and earn interest until you move. The other 4.5 months of the year, I'd put into the house. The last .5 goes to the Roths for the max.

The third year, 2016, I'd put the $1k fully into the house. That would then give you 16.5 months (ie, $16,500) for the house starting Jan. 2017. Plus you'd have the full EF, plus the car. And both of those would have been earning interest for awhile.

As for a house, closing costs can vary greatly - in our case, we bought from a bank, so we had to pay more (~5% of the house value). Sometimes sellers are wiling to pay some of a buyer's closing costs. There's also inspection, fixing minor issues, paint, etc that come up. Not including the new roof we needed, I think we spent around $2-3k on "extra" stuff after we closed that needed to be done before we could move in. For a place under $70k in Atlanta, it may need some fixing up and a new security system and so forth. The plan above gives you that extra $1,500 for whatever comes up.

Good luck and great job planning for what's coming.

Thank you for your insight and for sharing your goals.

See my post right above this one for a revision to my plans. You are correct; I need to adjust the EF fund # actually.

Based on my new prioritization of goals, whereas you have $1000 above in your post^ for EF, I was thinking I'd do student loan instead.

2014 Budget and Goals