After a fairly successful 2007, I am excited about moving forward in 2008. As this is a personal finance blog, I have a few goals for both our finances and the blog itself.
Financial goals:
1. Wipe out credit card debt. I can't wait to say goodbye to this forever. We have $12486.99 in credit card debt right now. The goal is to have it all paid off in April. This has been a goal for a long long time and to finally achieve it will be momentous.
2. Build our Emergency Fund. Despite all the times I talk about it, our emergency fund remains empty. I just can't bring myself to squirrel away money when I am paying all this interest. I have a million reasons to have a little one for now at least, but I still just... don't. The goal for 2008 is to put away $5000 into an emergency fund.
3. Open a 401(k) with my company. My company has a half match up to 8% of my earnings, fully vested immediately. I know I am throwing away free money by not opening the account. Once the debt is gone, I will open the 401(k) and work my way up to the 8%.
4. Open Roth IRAs for my husband and me. We don't have any retirement accounts currently and we need to get the ball rolling. There will only be so many years (hopefully!) until we hit the income limit to have Roth IRAs, so I really want to capitalize on them while we have the chance. In 2008, the maximum contribution per person is $5,000, so this is a $10,000 goal.
5. Start paying down our second mortgage. The next debt on the list is our interest only (cringe), adjustable rate (double cringe) $42,000 second mortgage. The goal is to pay $8800 of principal from the second mortgage.
These goals are definitely a stretch for us as we paid $23,712 towards our credit card debt in 2007 and the total amount we're working towards in 2008 is about $40,000. I have a shoot-for-the-stars, land-on-the-moon approach. Part of having separate goals is that we can achieve them individually and still be successful in 2008, even if we don't achieve them all.
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9 comments:
Just a suggestion, starting this year you should put just up to the exact percent to receive your full company 401k match. If you ask your HR benefits person, they should have the % number. Since this money is taken out of your paycheck first, it will lower your taxable income, consequently not making a very large impact on your salary. Furthermore by setting up you 401k this year as apposed to later give you years of compounding retirement interest, a big bonus is you just gave yourself a raise without even asking for it. - Don’t lose the forest, in the trees.
Love your blog!!
I also made new financial resolutions for 2008... hang in there and make it happen
I am a fan of your `shoot for the stars' approach myself! Unfortunately, I have had a $3500 unexpected expense already this year and, looking at the numbers again yesterday, I landed with a thud. I don't think we are going to get close to my original 2008 goals. But you never know what unexpected (good!) surprises are around the corner, so I am not going to change my goals just yet!
Of course you don't have to answer anything you're uncomfortable sharing, but I'm a new reader, and also a newlywed, and I was just curious as to what led to the credit card debt. What were the major items? Wedding expenses/honeymoon, home furnishings, or something else along those lines?
Anon - that's the plan! I love the idea of investing my money pre-tax and my company contributing as well.
Batd2008 - Thank you! Great work on your 2008 resolutions. It's easier to reach the finish line once you know where it is.
df - sorry about your $3500 expense - ouch! Hopefully you'll get an "up" to go with that "down".
Anon #2 - Great question. I'm going to be writing about just that soon.
You are actually in luck with the HELOC being adjustable. The fed is about to lower interest rates again, keep checking to see if you can refi your heloc into your mortgage at a really low rate and go for the 15 year or 20 year mortgage. If you are staying in your home for a while, it will definitely save money. I believe the interest rate on a 15 year mortgage is teetering at 5%.
sharon - the HELOC interest rate is currently at 9.75%.
We could re-fi into the first mortgage, but we plan on moving within the next few years and haven't looked into this option. Might not be worth the closing costs. I haven't looked into it, though.
If you are not staying in your home, then no, it's not worth it. My HELOC's adjustable rate through First Horizon is 6.0%. Most 30 year fixed rates are going below 6%.
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