My Goals for 2008

December 4, 2007

Since starting this blog, I’ve been thinking alot about goal-setting and the importance of focusing on smaller, more attainable goals. I’ve also been greatly inspired by J.D.’s articles at Get Rich Slowly. This one on goals really inspired me. No Credit Needed also has a great article on his 2008 goals, which also inspired me to get very specific with mine. I think it’s very important to have the “$1 million by age 55″ – type goals, but if they’re not broken down into much smaller chunks, then I think people (ok, me) are much less likely to achieve them.

So, I’ll start my long term goal by setting yearly goals, and maybe I’ll break them down even further, I’m not sure yet. So for 2008, here are my financial goals:

1. Pay off all my consumer debt. This includes my credit cards, medical bills and my 1 car loan, for a total of $23,587. I’ve outlined all this debt in my November Financial Status Update.
2. Get $1000 into an emergency fund and leave it there. I’ve built up an emergency fund before, but I couldn’t resist dipping into it to pay off a bill. I get anxious like that – I can’t see the sense in having money laying around when I can use it to pay off a debt that is costing me interest every month. I will take this issue up in another post, as it’s one beef I have with Dave Ramsey’s baby steps.
3. Fully fund my Roth IRA. I know the ideal is to have 3-6 months worth of living expenses in an emergency fund, before contributing for retirement, but I feel contributing toward retirement is more important right now. I plan on the saving the 3-6 months after I fully fund both our Roth’s. This may be a gamble on my part, but I don’t think I can afford to waste any more time to start really putting money toward retirement.

   I have up until April 15th to contribute to this year’s Roth limit, ($4000) so I think I’ll do that first and contribute all I can. After April 15th, I’ll start adding to my next year’s limit, ($5000 for 2008). I really would like to open a Roth IRA for my wife, but that’s probably for next year, or if I get lucky and fully fund mine before the end of this year.

That’s it. Ambitious enough I think, and yet I’m trying to make them as uncomplicated as possible. The complicated part will come, I’m sure, in coming up with the money and avoiding impulse buys, and unexpected expenses.

So my total debt payment goal this year is $23,587, which breaks down to $1965 per month in payments. I’ll get an early boost from a tax return which should be about $3000, so taking that off my total, I’ll be looking at $1715 per month toward my debt repayment goal.

My emergency fund goal should be relatively easy. I’ve already set up an automatic transfer to my Bank of America Savings account at $40/week, (I get paid weekly and this amount seems reasonable to me right now) So I should have that in place by May.

To fully fund my Roth IRA, I’ll need about $416/month ($5000/12). Starting in January, I’ll start an automatic transfer to my Fidelity account at $105 per week.

So my total monthly outlay to meet my goals for 2008 will be around $2295 per month. Seems very substantial, but the majority of this money is for consumer debt! If I didn’t have this big chunk of debt, and only had my Roth IRA and emergency fund goals, I’d only be putting out $500 per month to meet them. And I could easily be putting lots of extra money toward my wife’s Roth, or paying off my mortgage.

So there’s my plan and I’m ready to take it on. I’ll be posting periodic updates to track my progress.

photo by Frank Jakobi

Posted in Goals, Investing