Yesterday afternoon, my husband and I started to talk about our financial goals for 2010. We’ve got a number of categories to talk over for the next few days, so we decided to jump in the deep end with money — it affects so many of the other goals we’ll discuss. In a few weeks, I thought I’d start a series on this blog covering some basic financial steps, so our chat was a good primer to kick off the year.
I’ve been so inspired by my friend Crystal at Money Saving Mom, whose family goal is to buy a house with 100 percent cash. In 2009, they went from having 33 percent in January to ending the year with more than 75 percent. edit: Actually, according to Crystal’s post today, they ended the year at 100 percent! If they can make that much progress in just one year, anybody can. I know Crystal would say the same.
In January, we had a few thousand dollars left to pay off our school loans. By April, we had everything paid off and could — for the first time in our adult lives — say that we were completely debt-free.
Our next goal was to save up six months of living expenses, and had planned to finish that off by the end of 2009. By God’s grace, we hit our goal by August.
So this fall, we saved up enough cash to take our first family vacation in years, and it was such a blessing to celebrate together. And so for 2010, we’re turning the page and looking ahead at making more financial goals.
Looking Ahead to 2010
Since we more or less follow Dave Ramsey’s financial plan, finishing our emergency fund means we are technically on baby step 4 — increase our retirement savings. But we have more that we’d like to save up for, so we’re tacking on some baby steps “3b,” “3c,” and “3d.”
Photo by Sue
1. Vehicle Fund
We don’t own a car for two reasons — we live in a city that has great public transportation, and we’re borrowing a car for the next few months from friends who are out of town. But since our third child is due early this summer, we’ve decided that we definitely need to own a car for our sanity.
Since we won’t take on debt, we’ll save up the cash and buy a late model, used, reliable car. This is our baby step 3b.
Goal: 100 percent by May 2010
2. Baby Fund
Yes, we have good insurance, and yes, almost all of our prenatal care and birth will be covered. But since we live overseas and the medical care here doesn’t recognize American insurance, we get the thrill of paying for everything in cash and waiting for the insurance company’s reimbursement. That means we’ll need to save everything up in cash first — that’s baby step 3c for us.
Goal: 100 percent by June 2010
3. Down Payment Fund
We rent, and are happy about that (especially while we’re living overseas). But we hope to buy a home sometime soon, and eventually we’d like to custom build our own design. That means we need a solid down payment, and that doesn’t magically appear out of thin air.
We would love to follow Crystal’s lead and put 100 percent down on a home. In the meantime, our goal is at least a 20 percent down payment on a 15-year fixed rate mortgage.
So after we save up for our vehicle, we’ll start this down payment fund in June 2010, making that our baby step 3d.
Goal: 50 percent of a down payment by December 2010
4. Increase Retirement Fund
In Ramsey’s plan, he recommends putting aside 15 percent of your income into a pre-tax retirement account and tax-free accounts. Rather radically, he advises to stop all retirement contributions while you’re working baby steps 1 through 3. We honestly didn’t do that — but we did keep it low. But now that we’re done with those steps, we’ll jack it up to 15 percent.
Goal: Increase retirement to 15 percent, starting in January 2010
Photo by Sasha Wolff
The Value of Goal Making
When you have concrete goals, you can rest confidently knowing that your money is working for you. Money isn’t scary anymore because it’s simply a tool, not a master. And when you make goals together with your spouse, it strengthens your marriage in so many other areas.
I hope you have the time in the next few days to talk over financial goals in 2010 with your spouse. Next Monday, I’ll start reviewing Dave Ramsey’s baby steps, which I know will energize me to approach this year’s financial goals with eagerness. I hope it will for you, too.
What financial goals from this past year can you celebrate? What are your plans for 2010?