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-DONE. On February 5, I become credit card debt free. It's marked on my calendar and I plan on celebrating every year!
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-DONE I decided to increase the efund goal from $2500 to $3600. I have two kids and I own two houses. I need the extra cushion. In fact my goal will be to save $18,000 before all is said and done.
$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-DONE $100 down and $25 per month. Isn't much but it's there and it's steadily growing. My daughter is excited and asks me about it monthly.
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) -NOT QUITE I decided to focus more on the liquid part of my efund, but I did get this sucker up to $1,000 from $0.
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 Done I'm currently at 2.66. But that's because I changed how I calculated the amount. I'm still on my way though!
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 Done. My net worth is ----Drum rollllll--- is -$1,295.54. Wow! My net worth increased by $30,000 due to my home increasing by$12,000 and decreasing my debt by $10,000 among other things!
My current net worth 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.
Planned
Actual
CC payoff
$6,000
$6,000
Roth
$2,500
$1,058
Mortgage will decrease by
$1,200
$1,633
Student Loan will decrease by
$1,500
$969
HELOC
$3,000
$855
401 (k)
$1,021
$-1,015
Savings increases by
$1,500
$2,065
Total
$16,721
$11,565
Conclusion---I"m on my way
I didn't hit all of my targets, but I'm through the most difficult, the most exciting, and the first step to financial freedom. Now all I have to do is stay the course.
