Single Ma’s Goals for 2008
I’ve alluded to my resolutions my goals before, but I must admit, they were extremely vague. I mean, how useful is it to say I’m going to do x, then y, then z, blah, blah, blah. Yea ok, and we’re all going to be millionaires by the year 2010. Ya know, I really like the number 2010. It’s so pretty. Did you know it was an even number? I bet you didn’t know even numbers were good luck? See, don’t say I never taught nuttin’. Wow, three negatives. I should be an English professor!
If being a millionaire is what you want, set it for a date with a pretty even number and consider it done. How do I know? Well, because I’m psychic of course…and a genius…and because I said so! Trust me. Wait until 2010 and watch it come true - right along with the other RESOLUTIONS you just made last night.
And if you believe any of that, call me quick!
1-900-single-ma
[insert Jamaican accent] I have more wonderful things to tell you. LOL
For the rest of us to have a reasonable chance at achieving our GOALS, we must “define” them so that they are SMART: Specific, Measurable, Achievable, Realistic, and Time-bound.
My ultimate financial GOAL is to establish a $1M+ net worth, but I thought it was a bit much for one year. Ya think? So I decided to spread the love over the next 12 years and apply the SMART principle to my (short term) goals for 2008:
1. SAVE 6 MONTHS CASH RESERVE
- Specific - Currently, my emergency fund balance is $12,461. However, my goal is to have a cash reserve of at least $15,000. This would be approximately 6 months of very basic living expenses.
- Measurable - To make this happen, I will save an additional $2,539 and monitor my progress in monthly net worth updates.
- Achievable - This goal will be my #1 financial priority. A few weeks ago, I set up a payroll allotment of $600/month to my emergency fund. I will also deposit any windfalls (e.g. bonuses, tax refund, etc.) if I’m so lucky to receive them.
- Realistic - See summary below.
- Time-bound - I will have a $15,000 emergency fund by 30 April 2008.
2. INVEST MAXIMUM 401K CONTRIBUTION
- Specific - As mandated by the IRS, the maximum tax deferred retirement contribution is $15,500 (excluding catch up) for 2008. Therefore, to maximize tax benefits and adequately plan for retirement, my goal is to invest $15,500 in my 401k. This will be my first year maxing out! Yay!
- Measurable - I will contribute a fixed dollar amount through automated payroll allotments, which is a simple way to guarantee success. This will also serve two purposes: 1) take advantage of dollar cost averaging and 2) avoid maxing out early to ensure the 5% employer match throughout the entire year. I will monitor my progress in monthly net worth updates.
- Achievable - Since my last paycheck of 2007 will be dated and deposited on January 3rd, there will be 27 pay periods in 2008, instead of 26. So I set up a payroll allotment of $574 per pay period (574 x 27 = 15,498).
- Realistic - See summary below.
- Time-bound - Max out my 401k on the last payday of 2008.
3. INVEST MAXIMUM IRA CONTRIBUTION
- Specific - As mandated by the IRS, the maximum Individual Retirement Account contribution is $5,000 (excluding catch up) for 2008. Therefore, to maximize tax benefits and adequately plan for retirement, my goal is to invest $5,000 in my IRA. I’m not sure if it’ll be a Roth - all depends on my eligibility - but good news is abound. Per the IRS:
“The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(I) for determining the maximum Roth IRA contribution taxpayers filing a joint return or as a qualifying widow(er) is increased from $156,000 to $159,000. The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $99,000 to $101,000.”Source: IRS Pension Plan Limitations for 2008
- Measurable - I will contribute a fixed dollar amount through automated payroll allotments and monitor my progress in monthly net worth updates.
- Achievable - Since there will be 27 pay periods in 2008, I set up a payroll allotment of $185 per pay period (185 x 27 = 4,995).
- Realistic - See summary below.
- Time-bound - Max out my IRA on the last payday of 2008.
4. INVEST MAXIMUM 529 TAX DEDUCTIBLE CONTRIBUTION
- Specific - As mandated by the state of VA, any Virginia 529 plan contributions up to $2,000 per year are deductible from state taxable income. Therefore, to maximize tax benefits and help BabyGirl pay for some of her college expenses, my goal is to invest $2,000 - the maximum tax deductible amount in BabyGirl’s 529 college savings account.
- Measurable - I will contribute a fixed dollar amount through automated payroll allotments and monitor my progress in monthly net worth updates.
- Achievable - Since there will be 27 pay periods in 2008, I set up a payroll allotment of $74 per pay period (74 x 27 = 1,998).
- Realistic - See summary below.
- Time-bound - Max out deductible 529 contributions on the last payday of 2008.
5. INVEST IN NON-RETIREMENT ACCOUNTS
- Specific - Now that I’m non-mortgage debt free, I would like to focus more on building wealth. Since my 401k and IRA are a given, this goal is specific to taxable accounts. I’m still wet behind the ears when it comes to investing, so my goal is to educate myself throughout the year and build a diversified portfolio with a value of at least $5,000.
- Measurable - I will manually invest a minimum dollar amount every pay period and monitor my progress in monthly net worth updates.
- Achievable - To accomplish this goal, I will:
- Invest at least $400/month in my online brokerage account.
- Based on what I know today (thanks to JLP @ All Financial Matters), primarily invest in low cost index funds.
- Visit more “investment focus” blogs/websites.
- Write at least one investment blog post per week.
- Read 1 investment book every 2 months and write a review.
- Update the status of my portfolio on the blog once per month.
- Realistic - See summary below.
- Time-bound - Over the course of the year, I will learn to make educated investment choices and establish a minimum $5,000 non-retirement investment portfolio by the end of 2008.
6. WORK LESS, LIVE MORE
- Specific - To strike a balance between work and play, my goal is to take three vacations in 2008.
- Measurable - The destinations and budget for all vacations are as follows:
- Spring Break
- Term: 4 day extended weekend
- Destination: within CONUS
- Budget: $500-$1,000
- Summer Break
- Term: 7-14 days
- Destination: Paris, France
- Budget: $5-7,000
- Winter Break
- Term: 7 days during week of Christmas
- Destination: Carribean Island
- Budget: $2,000
- Spring Break
- Achievable - I earn 6 weeks vacation per year, so this goal is definitely achievable. The hardest part will be planning for each trip and staying within a $10,000 budget. At initial glance, a round trip to Paris and 7 days in a 4 star is about $4,000 but I’m sure I can find better. Do you know of any helpful travel web resources? I will spend at least 2 hours/week researching options, checking out CC rewards, and planning our itinerary.
- Realistic - If all else fails, the summer vacation is a must and I’ll do without the other two. For the spend plan, see summary below.
- Time-bound - I will book the flight and hotel reservations at least 2 months in advance of each trip and anticipate enjoying my new work/life balance.
7. REMAIN DEBT FREE - no explanation needed.
Are these goals realistic?
By the end of 2008, I plan to save $30,000 (eFund, 401k, IRA, 529, taxable investments) and spend $10,000 (three vacations) for a total of $40,000. This means approximately 40% of my “earned” income has a designated purpose.
After subtracting another 10% for taxes (paid less than 8% last year), I will be forced to survive on only 50% of my current salary. According to my annual expenses (2007 review posts coming soon), this is very doable for required living expenses. It will also motivate me to increase “passive” income for non-necessities.
Now — are my short term goals Specific, Measurable, Achievable, Realistic, and Time-bound? Absolutely! Achieving my goals in 2007 was a challenge, but also a success. Hopefully, 2008 will bring similar results.
Read more about creating S.M.A.R.T. goals for yourself.
- or -
[insert Jamaican accent] You can always call me.
1-900-single-ma
Call me now!
~*~*~*~*~*~Work to achieve, not to acquire.
And as always, BE FABULOUS!
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21 comments:
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Fabulous Financials v2.0 » Single Ma’s "To Do" List for 2008 (Pingback), 20 January 2008, 17:15
[...] a supplement to my 2008 goals, I also created a “to do” list for the [...]
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Fabulous Financials » Subscribe to Fabulous Financials (Pingback), 2 March 2008, 8:50
[...] my career changes, BabyGirl’s teen financials, my progress towards meeting our net worth and annual goals, what I think of the books I’ve been reading, or how about the planning for our first trip to [...]
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Fabulous Financials » Annual Goals Update: February Status (Pingback), 3 March 2008, 16:50
[...] two months into the year and I’ve failed to mention any of my 2008 goals since creating them on January 1st. I’ll try to include a quick status every month to keep [...]
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Impressive planning and I definitely think it is doable. I am envious of Paris. Paris…good times…good times.LOL
By the way, hotels are not your only option for extended travel. Lsst time I was in Paris,(way too long ago, sniffle, sniffle) I stayed in an apartment for the week. I stayed in the 7th(with a view of the Eiffel Tower). I really felt like a local as I shopped at the local markets, enjoyed the apartment, etc. It was much cheaper than a hotel for the week. Cooking was not required as there were plenty of restaurants and cafes nearby and it was nice not to have to pay a premium to have a cup of tea first thing in the morning. Just a suggestion.
I suggest going to paris anytime BESIDES the summer aka high season. Not only is it hot (with no AC!) in Paris, it will be crawling with tourists, and its not the same experience. I lived in Paris 4 years ago, and I definitely enjoyed the wintertime better.
@ no fear - I’ll consider the apartment option. Thanks!
@ amaranta - Considering I will be a tourist as well, that lil detail wouldn’t bother me as it would a resident. As for when we go, there is a downside to every season: rainy, cold, businesses shut down, etc. With the current exchange rate, I expect it to be expensive. Besides, I have no desire to visit Paris in the winter. When it’s cold in the US, I want to be on a sunny Carribean island.
But did you say no AC?
Great goals!
As far as the travel, an airline reward CC may be good for you. I get a couple of free trips each year this way. If you can’t use FF miles, consider flying on “off” days. Vacationers like to fly on the weekends and business travelers like Mon/Thu/Fri so fares are highest on those days. If you’re open to flying on Tue/Wed, you can get significantly lower fares.
Also, be flexible on your destination (excluding the Paris trip). Hubby and I have a list of destinations that we’re open to. Then when we’re planning a trip, we’re willing to go to whichever of those destinations will allow us to use FF miles and/or hotel points.
For lodging, hotel points are an option. Once again, think outside the box though. Especially in the Caribbean, private villas (including cook and maid) can be cheaper than even a mid-range hotel. A group of us spent a week in Jamaica that way several years ago.
Travel is my thing so feel free to e-mail me if you want some other tips.
Always raising the bar, SingleMa! I’m working on mine-own goals, can’t wait to post them, but am now going to be keeping your super-organized goals in mind.
Do you plan to just roll over the remaining 3(ish) weeks of vacay, or will you just use them up throughout the year?
yep thats right! air conditioning is few and far between (and if it exists, its definitely not the same high powered AC we’re used to in the US) throughout Europe. I HATE to sweat, and had to get used to being… moist… during the spring/summer. Regardless of when you go, it will be an amazing experience.
@ gecko - I’m very flexible with the other two destinations. So that’s good huh? I’ll be emailing you for leverage tips.
I’m definitely interested in a new CC with travel rewards. Any recommendations?
I knew about the savings from travel days, so even for the Paris trip, I plan to travel from Tues to Tues.
Private villa, cook/maid? Sounds like my kinda vacation.
@ mini - technically, I’ll have 10 weeks of vacation in 2008 but I *have* to take 4 (or lose them). So I’m planning for 3 and the other I’ll use sporadically throughout the year. The remaining 6 weeks are always banked and rolled over from year to year. I use it as a safety net for emergencies or cash out ($10k+) if I ever lose my job.
Great plan… gives me some ideas about what I need to do for goals and such… As for travel, I like to use FODORS.com and look at their boards. The folks there are (a little particular at first but) very experienced in travel and can give good hints about hotels they enjoyed, good restaurants, most time/cost effective way to travel in the city, etc. I alywas try to scope out my hotels there and TRIPADVISOR.com to make sure I’m not in an unsavory area
I know you say your blog is no longer about reducing debt but to me it still is. As someone who has just gotten to a place where I can start throwing major dollars at my debt, savings, etc I look at your goals and say: that’s where I can be in a few years. Plus, I ask myself what baby steps can I take now that are in that direction. So maybe I can’t max out an IRA (I’m scared of you!) but I can meet my employer’s contribution on my 401k. It’s particularly inspiring now because I had to make a decision recently that set me back a bit financially and it is tempting to throw in the towel but reading your goals reminded me of my long-term goals and that I have to meet certain short-term goals in order to get there. So thanks, again, for not closing down shop when you hit the zero mark on your debt load.
BTW - don’t forget about Hampton U. for BabyGirl. Great school and just 3 hours away - save on trips home!
@ Fortunate - Comments like yours keep me writing everyday. I’m so happy to know that my blog keeps you focused on the future. There are many times when I considered throwing in the towel, but I refuse to be a quitter. One tip that I plan to write about in the future: everyone wants to reduce debt and save more, but accomplishing both is A LOT easier if you INCREASE your INCOME in the process. That has been a major factor in my journey.
re: Hampton U. It was hard enough convincing her to add Howard to the list. Being a short drive home is what she does NOT want. That chic is trying to get as far away from me as possible. If she had an opportunity to leave the country and study abroad, she probably would! LOL
Parle vous francés?
Go to Paris Baby !!!!!!!!!!
This looks wonderful. While reading, I was thinking, “she is going to be so loaded this time next year!”
I know you can do it - great planning!
(aka Samantha) SM, this is beyond impressive! You most definitely will succeed in this b/c you have it all mapped out and are being SMART! I’m going to create some S.M.A.R.T. goals for myself!
I love, love, love Paris. I spent one week from late March to early April last year. It was a great deal, a direct (from NY) Air France return ticket for around $500 per person, and we got a room at a four star hotel through priceline for $150 per night. So travel and flights for 1 week (6 nights) were less than $2000 for two people. So far so good. The downside was that because we went in the spring, it was still chilly and it rained half the time. Also, the hotel (it was the Meridien Montparnasse) looked glitzy from the outside but our room was so so.
Anyway, I would check out priceline, keep an eye out on travelzoo for good deals and I also like kayak for flight searches. I would also consider an apartment style hotel like http://www.citadines.com/ if you want to save money. I’m not suggesting you cook all the way in Paris, but even the grocery store food is so wonderful there, we had several delicious meals at the hotel with baguette, pate, ham and cheese. Washed down with wine and beer. But a fridge, plates and cutlery would have been useful.
Check out http://www.tripadvisor.com
We’ve had good luck with the tips from other travelers there. I also second priceline, expedia, hotels.com, etc. We got a GREAT deal at a nice hotel down in Sorrento, Italy through expedia. I know you are going to do your homework and have a fabulous time.
My tip for Paris is to lose 10 pounds before you go so that you can gain it back eating the croissants!!! The food is amazing:)
Love your SMART goals…I can’t wait to max my TSP. I have to investugate the 27 pay periods.
GI Jane
gijanefinances@blogspot.com
Looks likes your goals share some similairities with mine. make sure you do invest in the non taxable account
Wow! My sister introduced me to your website. The discipline that you show is incredible. I don’t know where you draw the strength. I recently paid all my credit cards to zero in September of 2007. I took out a loan to pay it off (from myself 401k). I have subsequently in the last 5 months charged some of them back up and still owe the loan. (not smart) Found that because of my tax issues I don’t have enough money to live on . I must as you say find ways to increase my income substantially. I am currently in school to finish my degree. I do not own a home. I am interested in any suggestions you can offer. Way to go! I’m really proud of you! Not only are finances on the top of my list(are they really if I do detrimental things) but Weightloss (and I would ask myself the same question as I did for finances).