Thursday, December 1, 2016

Thinking Ahead to 2017 Financial Goals


My piggy bank is back. Despite being way off the mark in our 2nd half of 2016 goals, I found the goal kept me focused and better disciplined at identifying the trade offs spending requires us to make. Starting January 1, I'm going to start a blank slate in the savings department, establishing categories for each area we want to save. This may mean some months, because of the ebb and flow of DH's salary, we may have negative additions.

DD is helping to pay for more of her extras, particularly the travel opportunities through fundraisers, her little part time job, and saving gift money. It looks like she will have the opportunity to go to Ireland the spring of 2018. Some might question our indulgence of these trips, but traveling is a family priority, and her being able to do so within the parameters of an educational opportunity is a double bonus to me. I scrounged my senior year of high school, my parents added little bits to my account, and I had the opportunity to spend a summer in France before starting college. I truly believe that experience changed me as a person for the better and helped me understand the big picture of a global society  and what I most appreciate about my life in the United States. As long as she doesn't take these opportunities for granted, our long term savings plans are not jeopardized, I am OK with scrimping on a day to day basis, as is she. A new pair of jeans is a weeks worth of lunches on a trip, and hand me downs or thrifted versions wear the same. 

DH and I are not getting any younger. We are 55 and 51, with a goal of both of us retired by July, 2025. Neither of us see our 401 K, that's taken out before we see the paychecks, plus I have 5.5% taken out towards my pension, and 1% towards a health savings account. Those funds aren't missed, and will continue to grow. DH had some slow months so that meant his 30% contribution isn't going to reach the 24K pretax this year. We may still decide to do the catch up before the end of the year, but next year I want to plan better.  He gets untaxed perks and bonus's that end up being taxed heavily. So that we can ensure he is maxing his 24K, we'll set aside 30% of those funds as well. We also want to feed the after tax Roth and we are both eligible for the catch up so, total of $13,000. Goal: $19,000.

We made the decision in 2003 when everyone around us were moving into bigger and more luxurious homes to stay put, upgrade a few things to make our home more conducive to a family of five. We  beefed up our payments and paid off the mortgage in full. Keeping that home pleasant, inviting, and a place of welcome is my top, non retirement, 2017 priority. Starting with what will remain on January 1 from the home budget and adding new projects/purchases and we still have an aggressive goal.The project list includes new flooring for bedrooms, bathrooms, kitchen and entry, redo of the upstairs bathroom, some new landscaping, and either a new deck or a patio slab. Home furniture/goods purchase wish list is a new kitchen table (moving current down to family room with a new paint job for games and entertaining), patio table and chairs, and bedroom set of some sort for us. Any of these can be used/upcycled. We have $7,200 left from current fund. Goal: $5,800. 

Travel, oh I love you so. DD's Costa Rica trip will be paid for before years end, but Ireland is on the horizon. We are planning a frugal driving vacation to Yellowstone, plus want to build up a Europe or cruise fund for 2018. DS can't afford the airfare home, and that is my gift to myself for Christmas. Add a few weekends away for soccer, show choir, and family time and we have a hefty target. Goal: $7,500

The last but not least category is to work towards having at least an additional year of college tuition, room and board at a state college saved in cash, above what is already put away for her before her freshman year. I've done the projection calculators as to what costs will be for 2019 to 2023 and came up with $87,200, average $21,800 per year. We'll have 32 months to save the additional target. 2017 Goal: $8,117.

My heart is racing, but these are just goals. The grand total becomes, $40,417 or $3,368 per month. Realistically, I don't see it even remotely possible to make this, but seeing the numbers and what the money will go to should help our resolve to not waste, think about each purchase, and identify ways to add revenue. This is beyond ambitious as it means we are saving/targeting 58.5% of our income (including the 33.25% pretax that comes out before net pay) and living entirely on only one of our take home earnings. If successful with the Roth and topping off the 401K, the long term savings rate is 45% of gross income. All this assumes our base emergency/6 months minimal living fund is kept in full, but not adding to it. Maybe 2017 is the year I get creative and finally sell/unload some of the items no longer used or loved, chipping away at the totals. Maybe there is some untapped earning opportunity for one of us. The point is, we have goals with our money and no where in the list is  shopping as a form of amusement, over stocking my closets with more stuff, eating out every week, or seeing all the latest movie releases. Who else is thinking about financial goals for 2017? What strategies will you deploy to get there?

10 comments:

  1. I love your plan and the thought you put into it. Not many people project costs over a long period. Mostly what I hear are things like, "We'll renovate the kitchen this year and go on a cruise, and try to put away a few dollars in the college fund" - which doesn't sound like much of a plan (I can only hope that there is a real plan, but I am just not hearing about it!) At the least, even if your goals are not attainable, the knowledge of what you need will help prevent overspending on non-budgeted items. Good luck! (Not that you will need luck, because with planning and actions, luck is less of a factor!)

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    1. Our key will be two fold-hold fast to non reckless spending, and figuring out how to bring more funds in the revenue column. I'm due a minimal wage, with a portion of that eaten up with slightly higher benefit costs, so won't make much of a dent, but every few dollars should help.

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  2. Good on you for having a plan though it looks like a stretch to meet all your targets given the % of your income.
    I'd also prioritize each goal so if something has to give you know ahead of time which one it will be.
    Some are time sensitive(college for one)so in the face of that, home improvements can wait?

    With our added expenses(household and medical)since Daughter and BF came to live here I am thinking 2017 will be my Year of Austerity. The $ funding our retirement accounts will come out before we get the paychecks as always but I doubt I'll be able to put away much additional income into savings like I've done the last 10 years or so. The only areas I see I can cut anything from are gift giving, clothing, entertainment(maybe no vacation trips next year?). Taxes are going up and we need to dump more $ into CB's college account too so that will offset any progress I make. sigh
    At least we have a good income and we aren't wanting for necessities so I won't complain too much. ;-)

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    1. I agree college over furniture but a few of the home improvements aren't just visual-something has to be done, but maybe for "basic"as opposed to ideal. I do debate the Roth because we put so much away in pretax already but I get nervous we'll short change ourselves. Travel can be scaled back but my savings goal didn't take fundraisers and daughters contributions off the top so a few wins. I'll also hit my 24K by mid-November so will have a couple thousand to too off the year. Yes, we too lack for nothing necessary, still donate and volunteer, and have fun. Nothing to complain about, but goals to keep moving forward.I always appreciate your feedback. Sluggy.

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  3. I live in a completely different world where finances are concerned (our total annual income is a fair amount less than half of your savings goal), so our goals are very different... and being a Brit I don't know what a lot of the savings things are that you have mentioned so don't feel qualified to speak about your goals :) The number one priority for us is to stay in the black each month! The second is to overpay the mortgage each month, and the third is to put some money into savings each month, no matter how small the amount. I'm pleased to say that we have succeeded on all 3 fronts in 2016. One of J's colleagues recently said ' I don't know how you manage'. Truthfully, there are some months when I don't know either, but we do. We try our best to be happy with our lot, to enjoy what we do have, and to live our small , and quite old-fashioned life in the very best way that we can. Here's to more of the same for 2017, as that means we will remain on track for J to retire in 2022.

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    1. I do know we have a much higher income than most people, but in the US, you are pretty much on your own, especially once you retire so long term savings has to be high. No health care (medicaid will be a joke by the time we get there as will our social security I fear.) Over $1200 a month is paid for insurance for my family, $15000 a year and we still have out of pocket costs nearly $3,000. College education was pretty much self funded for both of us, plus our kids, minus a few merit scholarships. When I went back to work after second child, on paper, I barely broke even after the cost of working and child care. Those early years though is when I was able to build up my experience, go back to school,leading me to the good job and salary I have now. It was a huge trade off in stress back then-no one has it perfect, and I commend you how you are able to balance financially the way you do. I hope I use our resources for good, beyond just my own family.

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    2. My comment wasn't a criticism or a snipe at you because you have a higher income than me, just an observation that our worlds are very different.

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    3. Oh gosh, I never read it as anything more than participating and observing, and happy to have your perspective.One thing I was trying to highlight is that things are so out of whack economically here in the US, that unless you earn a good income, any medical blip can put a family not just in a hard spot, but out on the streets. Forget about college. Please keep joining the conversation whenever you are moved to do so, friend.

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  4. Setting goals for the next year is very important as it sets a standard for us to compare with. Similar to a share benchmark I guess but with our own financial outcomes.

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  5. Thank you for informative & really needed goals power post.

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