2008 Financial Goals

2008 Financial Goals

1.  credit card debt free by July 2008

2.  $2,500 Cash Emergency Fund by March 2008

3.  Start 529 plan for my kids

4.  $2,500 into Roth IRA by December 2008

5.  Debt to Income Ratio of 3.1 by  December 2008

6. Increase net worth by 16,000

 

Plan

Can’t have goals without a plan on how to achieve them, right?  So here is the plan.

 

1.  credit card debt

I currently have ~6,000 in cc debt.  Believe it or not, 8 months ago I had no cc debt but then I stopped paying attention to my budget and now look!

I’m paying $1,000 towards the debt this month and $3,000 next month (I’m expecting a lump some of money (fingers crossed)).  So I’ll be entering 2008 with $2,000 in cc debt. 

In order to achieve this goal I must pay $330/month. (Doable). 

-Contigency..what if I don’t get the $3,000 lump sum, making total cc debt for 2008 $5,000.  --- Then I’ll have to increase payments to $420 and extend payoff deadline to Dec. 1. (Hard but doable)

 

2.  Cash Emergency Fund

$2,500 is weak emergency fund for a single mother of two, but I am compromising a bit until I get cc’s paid off and more debt paid down.

 

3.  College Savings

I have yet to start my kids’ college savings plan.  I suck. I’ve been talking about starting it for nine years.  Tsk, tsk.   Once I pass my P.E. the amount will increase but something is better than nothing.

 

4. $2,500 into Roth IRA for 2008 ($209/month)

This account will back up as my Emergency fund.  It’s not the maximum contribution but it’s a good start.

 

5. Debt to Income Ratio of 1.7 (my goal would be from 3.5 to 3.1) by the end of 2008

I recently read an article which said the debt to income ratio for a thirty year old should only be 1.7 times her income.  My debt to income ratio is 3.5.  Thus, I owe 3 and half times my yearly salary.  That is scary.  I worked on a few numbers and if things go as planned I should decrease that number to 3.1 by the end of December.  It’s still pretty high but it’ll be better than it was.

 

6. Increase net worth by $16,000 by the end of December

My current networth is -32,000 (includes home equity of $25,000), largely due to a student loan debt of $56,000.  In order to achieve this goal I will pay off $3,000 of my HELOC since it has a higher interest than my mortgage and student loans.

 

CC payoff	6,000
Roth	2,500
Mortgage will decrease by	1,200
Student Loan will decrease by	1,500
HELOC	3,000
401 (k)	1,021
Savings increases by	1,500
Total Networth Increase	$16,721

 

Conclusion

I plugged these numbers into my budget and it looks doable.  In fact, it looks easy.  If I stick to this plan I can actually have a positive networth in two years (Happy dance!!!)

I always get happy and lose sight of the long term goals when ever I gain short term success. But this time there will be no back sliding, no money lending to family members, and no crazy Christmas and Birthday gifts/parties. I will be well on my way to having a positive neworth by the end of next year!