Happy New Year! (And Some Goals)

Just a quick note to wish you all a Happy New Year! As with last year, I don’t have any major, life-changing resolutions. But I do have some goals…

One thing that I still have left from over from last year is producing a “user manual” for our family finances in case anything bad happens to me. I still have that copy of “If Something Happens to Me” sitting on a bookshelf (or maybe in a box that has yet to be unpacked since our move?) collecting dust.

As I said last year, I’m not interested in making sure that my wife manages things in exactly the same anal (and sometimes archaic) fashion that I do. Rather, I just want to be sure she has a general roadmap of our finances so the transition would be as easy as possible. I’m envisioning a three-ring binder containing everything that she needs — account numbers, insurance policy numbers, contact information, usernames, passwords, etc.

In terms of financial goals, I’d like to:

(1) Max out our Roth IRAs for 2007 by the end of April (we just knocked out our 2006 this past December).
(2) Continue maxing out my defined contribution plan at work (5% contribution + 8.2% match).
(3) Save a minimum of $6000 in my optional 403(b).
(4) Max out the ’employer’ contribution to my SEP-IRA (25% of net self-employment income; see below).

Truth be told, I’d really like to max out the 403(b) at $15, 500 so let’s call that a stretch goal.

Aside from the above, we plan to continue developing our side income potential. The majority of this comes from our online endeavors, with a bit more coming from consulting-type gigs. A quick look at the numbers reveals that our average monthly income from our websites increased nearly 15-fold in 2006 vs. 2005. While I don’t really have a good feel for when/where things will level off, I’d like to do whatever we can to maintain an upward trajectory in our earnings going forward.

Of course, there are limits to everything, and one of the biggest limits that I see in this arena is time. I have plenty of ideas, but I just don’t have the time to implement all (or even most!) of them. It’s hard enough to maintain a full-time (and then some) job and raise four kids without even thinking about dabbling in other things.

In terms of hard numbers, my goal for 2007 is for our side income to equal 40% of my day job’s salary (without getting into too many details, my ‘regular’ salary is solidly into six figures since I started my new job earlier this year). Assuming that things hold more or less steady, that shouldn’t be a problem. If, on the other hand, things continue to grow, we could end up shattering this goal.

What about you? Do you have any goals in mind for the New Year?

5 Responses to “Happy New Year! (And Some Goals)”

  1. Anonymous

    HSBC is marginally solvent, which means I don’t trust them with my money. Also, their interface is too poorly designed for an account that I’ll be moving money out of every month.

    And no, we don’t _currently_ have enough in the ING account to pay even the reduced mortgage payments out of interest…but that’s because we haven’t closed on the sale of my fiancee’s old house yet. But we do already have a buyer lined up and a price agreed upon, so all that remains is lawyer-dances and getting her furniture moved.

    Once we have the cash, we’re going to refinance our current mortgage (using someplace like ditech, GMAC, or ING that’ll give us a way lower rate than we’re currently paying at the local bank-that-would-approve-us-in-time-for-our-own-closing-date…we’re paying 2.5% above what those other lenders are quoting). And unlike people who refinance in order to take equity _out_, we’ll be putting about $40,000 of equity _in_, which (in addition to the interest rate cut and the move from 15y adjustable to 30y fixed) will bring us to within $75/mo of what our ING interest on the remaining cash will be.

    I wrote a cool little simultaneous-amortization script in perl, and ran the numbers on a bunch of different repayment scenarios…including using 100% of the house-sale money to refinance the current mortgage (it leaves us $30,000 short of complete repayment with no source of guaranteed income to cover the payments on what’s left). This plan turned out to be the most flexible and financially sound. $75/mo is a trivial contribution to have to make to cover the cost of housing…and if I ever find myself COMPLETELY without other income or resources, I’d have almost 20 years of contributing nothing at all before the principal in the ING account would be completely drained. I’ve endured long periods of unemployment before (18 months out of 3 years, at one point), but nothing short of the collapse of civilization would keep me down for so long that I couldn’t keep the house, one way or another, on this plan.

    Yes. I’m extremely conservative about my payments for housing. Perhaps even neurotically so. But those 18-months-in-3-years of unemployment forced a lot of changes on me that I didn’t want, making my life an almost unendurable hell, and also keeping me from doing much to repair the credit damage I sustained from my foolish decision to go to college. Protecting my house (and by extension, my marriage-to-be) from a repeat of 2001-2004 is worth it.

  2. Great list Chris — You’ve really put some thought into this. That video inventory is something that we really need to do ourselves.

    Matt: That sounds like a great plan, care to share details? You don’t have enough stashed in ING to (nearly) pay your mortgage out of the interest, do you? Either way, you might be interested in checking out HSBC Direct. We have accounts at ‘the big 3’ (ING Direct, HSBC Direct, and Emigrant Direct) and have only been using HSBC recently. They’re paying a good bit more than ING in interest (currently 5.05%), and they have a pretty nice interface (as good as ING in my opinion, better than Emigrant). And they seem more reliable than Emigrant (e.g., the’ve never gone offline for a few days for an upgrade and then been unable to get their site back up like Emigrant did earlier in 2006).

  3. Anonymous

    1. Get a new “day” job, paying at least 60% more than my current one. Preferably in Indiana instead of Chicago, so I can cut out the daily city commute.

    2. Refinance our house, putting the money we’ll get from selling my fiancee’s old place in Michigan to work cutting the payments. (I have a plan in place which, once implemented, will cut the total mortgage payment in half, and pay all but $75/mo of that half out of the interest on our joint ING account.)

    3. Put every cent of savings and increased income towards a cushion of savings and working capital, so that as of this time next year, I can quit W2 work forever and devote myself full-time to my own businesses.

    I’ll feel comfortable taking that last step when I’ve got savings (outside the ING account that’ll be paying most of the mortgage payments) equal to a year’s household expenses. With the #1 household expense dropping from $1500/mo out of pocket today to $75/mo out of pocket going forward, that’s going to be way easier than it would have been before. If I switch day jobs soon enough, I should be able to manage it by the end of the year.

  4. Anonymous

    Here are a few of items/goals on my New Year’s checklist:

    Complete next year’s budget; Analyze current year results

    Adjust withholding for updated incomes

    Investment & Net Worth Review

    Check Credit Reports

    Insurance Inventory-Video tape belongings

    Add income-rental income, blogging, personal finance advice, taxes, sell crap, focus groups, surveys

    Check into 403b & 529 plans

    Make a photocopy of every card in wallet

    Set budget so net worth goal can be at least a 20% increase over PY

    Rebalance Portfolio

    Tax Projection

    Roth Contributions

    Look into estate planning

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