I’ve been meaning to write this a couple of weeks ago, but I’ve been under the weather for awhile. I just want to quickly say thank you to all the bloggers who pitched in and graciously shared some guest posts on my site. It’s been extremely helpful as the posts gave me time to take it easy and rest.
2010 was a great year for us and I’m happy that we achieved our goals. Now that 2011 has started I wanted to share our financial goals with you so we can be accountable for them on the site. We’re focusing on 3 goals because we don’t want to sabotage ourselves. Keeping it simple with our financial goals has worked well for us.
I thought I’d do something differently with our goals. Besides mentioning them, I’ll break each of them down into a SMART goal with numbers, and then I’ll give a basic strategy on how we’re going to accomplish it this year. Hopefully it’ll be helpful for those in a similar boat.
For those unfamiliar with SMART goals, here’s the basics on them:
Specific: Choose a specific goal. Don’t say ’save more’, but instead choose ‘put aside 5% of my paycheck into my emergency fund.’
Measurable: How do you know when you reached your goal? If you are saving an emergency fund up, consider setting aside 3-6 months of living expenses in the account.
Attainable: Work on a few goals at a time so you don’t feel overwhelmed. Be gazelle intense on the ones you have.
Realistic: Make sure your goal is something you can do and truly believe in. Have a plan of action that you can sustain.
Time Based: By setting a deadline, you can work backwards and break down the steps into mini goals.
Financial Goal #1: Build Our Car Replacement Fund
You’ve seen this account mentioned a few times on this site. We would really like to avoid taking on a car loan for our next vehicle. To do this, we know we need to sock away a sizable amount of money to get a good car and not just a beater.
We specifically want to save $5,000 this year to our car replacement fund. Repairs are still sparse on the VW Jetta, but they are getting to be bigger ones. We’d rather prepare now and have the money ready than wait until the car dies to save up.
The key to success with this goal is automating deposits straight to the car replacement fund. I’ve set up an automatic transfer of $400 to be deposited into the car account each month. That will put us at $4,800 and the additional $200 will be from new advertising deals on the site. I believe that the money we already have saved in the account and money from selling the current car will cover the next vehicle.
Financial Goal#2: Bump Up Our Savings
Looking at 2011, we see some big expenses coming up (future post!) and we’d like to go ahead and increase our emergency fund.
We’ve been comfortable with our account, but we’re now going to move in a more conservative direction and try to get up to a full six months of expenses. We’ve stayed steady with our savings and as things come up, we work hard at replenishing the funds. I’d like us to get to our goal by the end of June, so we’re going to be watching our expenses for the next few months.
Yes, it may sound repetitive, but automated savings is the plan. Money saved from food expenses will be going towards the savings account. We’re also transferring a chunk for the year end bonus to get us closer to our goal and bring us up to 4 months of expenses by the end of this month.
Financial Goal #3: Pay Down Student Loan
We have one student loan between us and its our only non-mortgage debt left. We would love to knock it out this year, but due to our circumstances, we’re going to be focused on our other 2 goals.
Since this is kind of our reach goal, I’d like to pay down our student loan principal by $3,000 this year.
To keep track with our higher priority goals, we’re not going to change our monthly payments. Instead we’re focusing on setting aside at least 50% of big and small windfalls through out the year towards paying down this debt. That means any bonuses, tax refunds, bump in work income, etc will go towards paying this down.