Flippity Flopper

For those of you who have noticed that I change my short-tern financial goals at the bat of an eye, I want to explain why I do it and why I think it’s okay.

Every time I change my mind about how much money to contribute to a fund or loan or when to do it, I try to explain the reasoning behind my decision.  Usually I try to look at the numbers or give a real justification, but sometimes I just don’t have one.   The thing is THAT’S OKAY.

My personal finances can change all the time and for any reason I choose.  That’s part of why we call it personal finance.

If you wondered if I ever regret my decisions (i.e. pouring money into loans for most of 2013, then realizing I should have been contributing more to my Roth), then I guess I can tell you that I don’t.

Even though I change short-term goals, my long-term goals are probably never going to change.  That’s because they’re so simple:

1.      Spend less than what I bring in.

2.      Increase my net worth.

These two things seem so simple, and, to be honest, number 1 fits into number 2.  Whether I contribute to my Roth or pay down my loans, I’m still increasing my net worth just in different ways.

Do you flip flop on your financial goals?  Does this happen with long-term or short-term goals?

Goal Schedule circa 2014

After much internal debate, I think I’ve finally figured out my 2014 financial goal schedule based on how much I prioritize each thing.

My first goal is to pay off the remainder of my smaller loan.  I have about $2,500 left on this one, so it’s definitely doable in the next 2-3 months.  I’m prioritizing this goal as number one for a couple reasons.  I really hate being in debt.  Realistically, I can get this out of the way pretty quickly and then move on to bigger and better things.  I also find it annoying to be paying to two lenders, so eliminating one completely would be awesome as well.

Second, I’m going to focus on maxing out my Roth IRA.  Since the maximum contribution this year is $5,500, this will definitely take me into the summer, possibly into the fall.  This is a high priority for me because of the amount I’ll gain between 2014 and retirement.  Assuming this money earns 8% annually, that’s more than $130,000 earned by the time I turn 65.  While putting this money toward loans could save me a couple thousand dollars in interest over the long run.  I’ll gladly take a $2,000 hit for that $130,000 later.  Until Goal 1 is completed I will still be automatically contributing $200/month.

Then (third) my focus will be on building up my e-fund.  I can always take that money and put it toward my loans later, but I definitely won’t be able to get it back once I send it off to the lender.  Additionally I have $5,000 in a CD due in July.  I have decided that when it’s up, I’m going to use that money to finish out my Roth and my e-fund.  I’m not really earning enough in the CD to justify not putting it toward loans or other financial priorities.

My fourth and fifth financial goals are to contribute $3,000 to my 401K and $4,000 to my larger loan.  My 401K contribution is automatically taken out of my paycheck, so I really shouldn’t even have to think about that.  I have 6% of my pay taken (>$3,000) every check and my company will match 50% of that.  How rad!

As for my larger loan, this is the lowest priority.  While I am aiming to contribute $4,000 to it this year, about $3,000 will be required in minimum payments.  Most likely, my Christmas bonus or gift money will end up making up the difference.

Do you lay out a schedule for your financial goals?  How do you decide to prioritize your money?

Monthly Budgeting

I went a little budget crazy yesterday and set up preliminary budgets for every month of 2014.  I know this is overkill and that I will end up changing each one as I go along, but I felt so at peace after making sure all of my expected bills and such are budgeted in.

I incorporated my transfer plan for the month into each one, but am hoping that the reason I’ll have to make adjustments is that I’m blowing away my goals!

I’m a big fan of the monthly budget and having monthly goals.  I like that I can monitor as I go along and I can really feel like my efforts pay off and help me to achieve something.  As for my yearly budget, I don’t really create one the same way as I do a monthly.  This is my first “year’ in the “Real World,” so for me it just makes sense to set some realistic, yet still tough to attain, goals for 2014 and figure out what I need to do each month to get there. 

Do you set up monthly budgets?  What about annual?  How do you mix and match your budgeting strategy?

Net Worth December 2013

December ended up being a pretty mediocre month when it came to my finances.  I definitely spent less than I brought in and I actually didn’t use up my entire budget.  I’m debating whether I should be putting more money into my emergency fund right now or paying down my loans.  I’ve been looking at houses to rent with some friends and more money in the bank would definitely help with that.  However, I love seeing the negative part of my net worth get closer and closer to zero.  It helps me to really visualize the payoff date.

Reasons December was Financially Awful

1.      Christmas gifts – Even though I set aside a good amount of money for this in November, I still somehow managed to go over budget in this area.

2.      Gifts to myself – The issue with online shopping for Christmas gifts for my family is that I often find things for myself.  My spending on myself (in regards to clothing and accessories) was WAY up.

3.      Social spending – I took vacation time which meant I was able to spend more time with friends and that meant eating out and buying drinks at the bar, definitely not good for my discretionary spending.

4.      Travel – Usually I come in way under budget on fuel/train tickets, but this month I just barely squeaked by.  Additionally, I ended up buying plane tickets for two different trips (one in February and one in July).  I was able to get pretty good prices, but still spent a little over $700 that I don’t typically spend.

5.      Student loans – This month I only paid about $150 more than the minimum, which is well below my target.

Reasons December Finances could be Moderately Recovered

1.      Christmas money – The good news is that pretty much all of the money I spent on gifts to myself was recovered through Christmas gift money.  While it’s sad that I can’t imagine all of the possibilities for that money, I’m very pleased with all of my already purchased items.

2.      Travel – While I spend $573 on my trip to Atlanta, that was actually the cost for both my girlfriend and me to go.  Therefore, I’ll get an unexpected income of $246.50 in January or February when she reimburses me!

3.      Student loans – I was still able to pay more than the minimum this month.  I didn’t pay as much as I normally do, which is a bummer, but I should be able to recoup that with my friend’s plane money and by cutting my shopping and other spending this month.

4.      Savings – I managed to put my standard $267.20 as well as an added $350 into my emergency fund savings account.  I decided to put this toward my savings instead of my loans because I foresee an eye doctor’s visit and new glasses on the horizon.  Additionally, I want to be putting money there to get ready for LASIK surgery.  I’m (sort of) hoping to do this by the end of 2014, but more realistically will be getting it done in 2015 or 2016.  Regardless, I feel more comfortable having that money on hand in case I need it.

Let’s see how I did.

·         December:

o   Assets: $8,653.04

o   Liabilities: $(24,706.90)

o   Net Worth: $(16,092.97)

o   Bottom line: + $1,302.68

·         December GOALS:

o   Contribute $200 (instead of the usual $100) to my Roth IRA

o   Achieve a net worth of $(16,000.00)

I did manage to contribute $200 to my Roth IRA, so I’m glad I hit that goal.  I hope to max that out for 2014.  I didn’t hit my net worth goal of $(16,000.00).  While I’m disappointed that I didn’t make it, I love when I get to see that get closer and closer to the zero mark.

What I really love is that fact that my total net worth for 2013 increased $8,831.34!  My gross income for 2013 was $27,763.13.  Taxes, social security, health insurance, etc. took $7,278.71 out of commission, which means that my total spending for the year was 11,653.11.  While I feel really great about this number, I also feel like it could have been lower.

Since I’m starting my goals for January of 2014, I’m also going to do a goals list for the whole year of 2014.  Hopefully I can make it!

·         January GOALS:

o   Spend no money in the clothing category (I typically budget $250/month, but I went overboard in December.  I am going to buckle down for this month to balance it out!)

o   Achieve a net worth of $(14,500.00)

o   Contribute $1,200.00 toward my student loans.

o   Build my assets to $9,000.00

·         2014 GOALS:

o   Have a positive net worth!  This is a pretty hefty and overarching goal.  The reason I believe I can achieve it is that I would need to increase my net worth by $1,333.07 per month.  I’ve proven in September, October, November and December that I can meet, or at least get close to this goal.  Additionally, if I really buckle down in those three paycheck months (May and October this year!) then I really think I can balance out my low gain months.  I want to still be aware that I may be missing one paycheck at some point during the year as I’m hoping to do some international travel and may have to use unpaid vacation time.

o   Pay off my second AES loan, leaving me to only make payments on my MGL loan.  I really hope to do this by April of 2014 at the latest, but I recognize that contributing to my Roth IRA and my emergency fund may not allow this until later in the year.  That’s why I’ll make it a monthly goal when I have a closer idea of when it will be realistically achievable.

o   Contribute $4,000.00 to my MGL loan.  If I only make them minimum monthly payment of $256.62, then I would contribute $3,079.44 over the course of 2014.  To up this to $4,000.00, I would need to contribute $333.33/month.  I’m hoping that this is realistic, but I’m not sure with all of my savings goals.

o   Max out my Roth IRA.  I’m able to contribute up to $5,500 this year.  I plan to max this out, and I’m hoping to do so by September, which means I would need to contribute about $611.11 every month.  I’m not sure how this will work out or if I’ll even contribute evenly.  For now I’m keeping my automatic monthly payments at $200 and I’ll reassess later on.

o   Contribute $3,000.00 to my 401k.  If I take no unpaid time off and work no overtime, I would contribute $3,182.40 out of my pocket.  Therefore, I’m assuming that even if I take two full unpaid weeks (~$122.40 in contribution) and no overtime, I can still meet my goal here.  Since there’s a possibility I’ll be doing some international travel, I want to make sure I’m accounting for at least one totally missing paycheck.

o   Get to $5,000.00 in my emergency fund.  I’m currently at $2,017.23. My automatic monthly contribution is $267.20.  At that rate, assuming no interest growth as it’s so low, I will make it to $5,223.63, so I should be able to meet that goal easily.  Obviously, it’s nice to have the excess, but that “extra” money might go toward loans or one of my other goals.

I’m trying to think of a good way to consistently remind myself of my financial goals throughout the year as well as throughout the month.  Last month I definitely lost sight of my net worth goal and that obviously contributed to my lackluster financial performance.  Do you have any ideas of how to keep your financial goals a top priority?

Net Worth November 2013

November was a great month for a couple of reasons:

1.      It was a three paycheck month.  Even though I took a couple hundred dollars out to help buy Christmas gifts in December, I still managed not to cut into the third paycheck at all and could put the entire thing (plus more!) toward my student loans.

2.      Although I went away for two weekends, one was with four other family members so my costs were reasonably low and the other was for Thanksgiving.  My mom has a certain number of personal miles for use on her company car, so we took that.  Regardless of whether she maxes out those miles, she is charged for them, so that trip cost me nothing in gas and almost all purchases were Christmas gifts.

Let’s see how I did.

·         November:

o   Assets: $7,642.06

o   Liabilities: $(24,998.60)

o   Net Worth: $(17,356.54)

o   Bottom line: + $3,399.86

What an awesome month!  In total I contributed $2,692.21 to my loans (blew away the $2,000 goal!) and achieved a net worth of well above the $(20,000.00) I set for myself.

·         November GOALS:

o   Contribute $2,000 to my loans

o   Achieve a net worth of $(20,000.00)

While December is a holiday month and I will probably be receiving gift money from some family members, I am not budgeting that into my goals at all.  I will probably see what comes in and then find a balance between adding to my Roth IRA, paying down my loans and buying myself some tangible gifts.  Here’s what I hope to do:

·         December GOALS:

o   Contribute $200 (instead of the usual $100) to my Roth IRA

o   Achieve a net worth of $(16,000.00)

NOTE: My company does a 401K match, but I do not include that or any growth in that account in my net worth updates.  This is because I don’t have access to the account on a daily basis.  When a statement comes in, this will all be updated with true-to-life values.  Additionally, my Roth IRA isn’t invested in anything at the moment.  I am hoping to up my contributions in the new year to accomplish two things: (1) max out 2014 contributions at $5,500 and (2) bring my account up to the minimum value to start buying into some different mutual funds.

Net Worth October 2013

In 2009 I made the decision to pursue my education at my dream school.  Of course, the school I adored couldn’t be an in-state public school.  That would have been too easy.  Instead, I had to fall in love with one of the most expensive private schools in the country.  Even though I received a scholarship that covered a good portion of the cost and my parents were so generous and paid for most my schooling, I still came out with loans totaling almost $30,000.

This is somewhere around the average for new graduates, but it doesn’t feel any less daunting.

Because of this debt (which I hate), I decided to accept a job offer in my hometown and move back in with my parents.  About three times a day, I think about moving out and getting my own place, but I start to break down the finances and I really like the idea of contributing $1000+ to my loans every month, something that almost certainly would go away if I lived on my own.

To give a breakdown of my progress thus far:

·         June:

o   Assets: $5,000.00

o   Liabilities: $(29,885.20)

o   Net Worth: $(24,885.20)

You can see why this was such a bummer.  Who wants to have a negative net worth?  Nobody!

·         July:

o   Assets: $5,000.00

o   Liabilities: $(29,715.54)

o   Net Worth: $(24,715.54)

o   Bottom line: + $169.66

While it doesn’t really appear that my financial situation has changed, it totally has!  I started my first full-time job in June and was able to finally make a payment on my loans!  It’s such a great feeling to see the amount of debt I have go down!

·         August:

o   Assets: $5,300.00

o   Liabilities: $(29,244.96)

o   Net Worth: $(23,944.96)

o   Bottom Line: + $940.24

This was the first month I was able to contribute to my emergency fund and the first month I made a reasonable impact on my debt.  I went up almost a thousand dollars – a great feeling!

·         September:

o   Assets: $5,923.02

o   Liabilities: $(28,771.81)

o   Net Worth: $(22,848.79)

o   Bottom line: + $1,096.17

September was an awesome month!  I built up my net worth by more than a thousand dollars.  This was the result of four things:  1) Paying off student loan debt ($600 – almost double the minimum payment once I’m required to start paying back!), 2) Contributing to my emergency savings fund, 3) Opening and contributing to my Roth IRA, and 4) Contributing to my work’s 401k plan.

I really like saving, but, for me, it doesn’t feel quite as good as paying down my debt.  I decided to really buckle down and get really frugal to start paying down my loans even faster!

·         October:

o   Assets: $6,870.76

o   Liabilities: $(27,627.16)

o   Net Worth: $(20,756.40)

o   Bottom line: + $2,092.39

Wow!  I gained more than two thousand dollars!  October was a great month.  I put a ton of money toward my loan ($1,299.45) and added a bunch more to my various savings accounts (emergency, Roth IRA and 401k).  All of these finances are getting me pretty excited for the end of November’s net worth.  November is an extra paycheck month for me, so I bet I’ll really see the savings come through!  I’m hoping to match (and even exceed!) October’s gain!  Do you think I can get my net worth to be more than -$20,000 and contribute $2,000 to my loans?  I definitely think it’s a possibility.

·         November GOALS:

o   Contribute $2,000 to my loans

o   Achieve a net worth of $(20,000.00)