This is the second year that my husband and I have actually sat down and decided to write down our annual financial goals. If you would like to see our goals from 2016, check them out here and see how they compare to this year’s goals. I must say that when we completed our 2016 financial goals early, I was very surprised and decided to push ourselves even further this year! Go big or go home, right? Well, I guess we will see how things go. Fingers crossed! 🙂
Personally, I believe that everyone should set annual financial goals AND write them down. It is amazing how motivating it can be to see what you are trying to reach on a piece of paper. When you write down a goal, it helps you grasp the meaning of that goal and helps motivate you to obtain it. No more, “Man, we need to pay off this credit card debt,” or “I wish that we could afford to go on a vacation.” Instead, set realistic goals such as, “I will pay off this credit card by December 2017,” or “I will save $500 for a weekend vacation this year.” So many people talk themselves out of financial freedom before truly running the numbers. They immediately assume that is something they can never afford. The thing is, THEY CAN with determination, open mindset and time.
I was proud that we reached our 2016 goals by October of 2016. In doing so, we started early on paying off some things that would be part of this year’s goals. I am even more proud to say that we have already crossed a big one off the list and January is not even over! I plan to update this post each time we accomplish a goal.
OUR FINANCIAL GOALS
So this year, we have a lot more goals, however, we are focusing on building some sinking funds in areas that we know we may need to spend from, we just might not know when. This helps us not take on more debt for those infrequent, yet unsurprising expenses. Our 2017 financial goals are:
DEBT TACKLING GOALS
Pay off Parent Plus student loan: $1450(Made the final payment 1/13/2017)
- Pay off personal bank loan: $2430
- My husband and I each have federal student loans that we are paying on. Federal student loans are broken down by each loan you received every semester and sometimes have different interest rates. I recently learned that you can target any extra* payments to the loan(s) of your choice, instead of it automatically being dispersed among each loan. To me, it much more motivating to tackle smaller chunks that just making the same payment every month single month and watch the total sum very slowly creep down. *Note: This only applies to extra over your required payment. I like to round up my payments so if the required payment is $136, I pay $150 or more. Anything over that initial $136 going to the loan that I target it to go to.
- Pay off the 4 smallest student loans: $2600
SAVINGS ACCOUNT GOALS
- Save $5,000 towards a new house down payment: $2,900 (we already have $2,100 set aside)
- We do not plan to move anytime soon but we know that it may take a few years to save up enough for a 20% down payment. We have considered keeping our current house as a rental property so we would not have the equity to use towards a down payment on a new house. Even though we are not 100% certain on what we plan to do, I know that it is safe to go ahead and start saving now. After all, our current house is only two bedrooms. It works for just the two of us but we are not sure how it will go when we decide to start a family. 🙂
- Build a $2000 family fund: $2000
- When we do decide to start a family, I want to be able to be prepared for any medical expenses, baby stuff, maternity leave, etc. We do not want to have to worry about any financial burdens during that process, whenever it may be.
- BONUS: If we can reach all the above goals, I would like to start saving for a new vehicle. My car is nine years old with over 100,000 miles. It is doing really well but in the next few years, I would like to upgrade. Also, my husband REALLY wants a truck. We still have to decide how we want to approach this so that is why it is at the bottom of the list with no definite amount set.
SINKING FUND GOALS
- Fund all sinking funds (Some of these will be revolving as I spend from them but it is my goal to keep them at these amounts on average):
- Vacation: $1000 – Because travel is important. 🙂
- Christmas: $800 – We made the mistake of not saving for Christmas last year and it really hurt our budget.
- Anniversary: $500 – As with Christmas, we did not save for our December anniversary so it hurt us even though we just enjoyed a nice dinner and evening at a wine bar. We will be better prepared this year, for sure.
- Gifts: $300 – It is always good to have a little saved up for those birthdays, baby showers, weddings, etc.
- Addie: $300 – Addie is our sweet fur baby. This will help fund her annual vet visit, medicines, and grooming.
- Car maintenance: $500 – Car emergencies are one of the main causes that people go into credit card debt. The thing is that it is not a matter of if there will be a problem, rather than when. I know friends and relatives that have freaked out about needing new tires or brake pads when this is really considered routine maintenance that is needed every few years.
- Home Maintenance: $500 – This very similar to the car maintenance category. Everyone should have a little bit saved for this if you own a home. At least enough to cover your home insurance deductible if anything serious happens. Since we live on the Gulf Coast, we are in a hurricane zone so this is very important. I plan to build on this more if I can.
- Terminex Bond: $305 – This is an annual expense that protects us since our 1930s cottage has previous termite damage.
- Home Warranty: $575 – This is also an annual expense that protects us with several things in our home such as appliances, electric wiring, plumbing, HVAC, and much more. Seriously, this is a MUST HAVE if you own a home, especially an older home like ours. This is not the same as home insurance. I plan to write more about home warranties, so stay tuned. However, feel free to ask me any questions.
Grand Total: $16,160
Yikes, that is almost double what we did last year! That equals to approximately $1347/month going towards our financial goals. That is a huge chunk of change that we have to come up with to meet these goals. However, since we paid off all our credit card debt last year, we freed up a lot of money to go towards these new goals. I am optimistic and know that we can do it with hard work, determination, and a few curse words. 🙂
HOW WE DO IT
Thankfully, I know that there are a few windfalls that we will receive throughout the year that will help knock out a few of these. First, we plan to pay off 1 and 2 fairly quickly with some extra Christmas money, a small refund we received from refinancing our house and the extra paycheck that I received in December (I am on salary so I got three checks instead of two based off of the pay schedule). Once we knock these two out, it adds $300/month to our budget to go towards the rest of our goals. Also, I use our tax refund, my husband’s baseball and football coaching supplements, and my extra paycheck months (June and December) to boost us forward.
The most helpful tool for managing our finances has been YouNeedABudget (YNAB). It is a premium budgeting software that completely changes the way you think about your money. YNAB is not just a fancy spreadsheet, it is a lifestyle that helps maximize your financial future. It teaches you how to make your money work for you rather than you working for it. Also, it lets you lay out everything that is related to your finances so you can see what your priorities are and what they need to be. I could not do this with YNAB, it is a complete game-changer!
WHAT YOU CAN DO
- Sit down and look at your finances. Pull out bank and credit card statements. Look at all your debt and account balances. Grasp the full picture of your financial health.
- Set 1-5 financial goals. How much money do you have in your savings? Need a new vehicle or want to go on a vacation this year? Or maybe you need to look more long term, such as saving for retirement or your child’s college education. Whatever it is, WRITE. IT. DOWN. Not only should you write it down, but give each goal a deadline. For example, “I will pay off ABC loan by June 2017.”
- Communicate your goals with your family. This is the most important aspect of setting financial goals. Talk to your spouse or significant other and your kids. Communicate what your goals are and how you plan to reach them. Are you going to eat out less or lower your cable plan (or cut cable altogether)? Make sure that everyone is on the same page. Keeping your children in the loop will teach them the importance of maintaining your finances to reach financial freedom. So many people think finances should only be for the grown-ups. If your child is old enough to understand how to save for a new toy, then they should know how setting financial goals will help the family’s future.
- Monitor your monthly progress. This is a big one. As you monitor your progress, you are much more likely to stay on track to meet your goals. We thought it would be almost impossible to meet all of our goals this year but we will most likely reach them a couple of months early. This all because we track our progress and budget our monthly expenses through YouNeedABudget (YNAB).
- Reevaluate every 3 months. Not only should you track your monthly progress, but I highly recommend reevaluating your goals every three months and make sure that it is still a manageable and obtainable goal. Do you need to cut some expenses to stay on track? Do you need to sell unused items in your house to give you a boost? Maybe you are doing so well that you add on another financial goal. Either way, checking the overall picture every three months will help guarantee your success.
Now, I challenge you to look through your finances and set at least one financial goal. Or let me know what your current financial goals are. I love being inspired! – CM