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?