Wednesday, September 3, 2008

Update on my financial goals for 2008

I have not kept up with my financial goals since May 7 so these are in sore need of reflection. My last update I challenged myself to fully fund my Roth IRA for 2008 rather than just $3,000, an amount I have easily contributed, and kept the other four goals the same. How have I progressed in the intervening months?

1. To reach a net worth of six figures ($100,000).
I was feeling quite optimistic about reaching the six figures in May, but seeing that I have $10,000 to go and only four months left in the year, I am not so certain. Just from a cash basis, I would need to keep $2,500 per month to reach this number, but am likely to only see an extra $2,500 for the next four months if the savings is not touched. Extra money would help, but I have not fully explored what I would need to do to enhance my earnings. I am considering a part-time job for extra savings, but it would likely be short term. Since the stock market has been quite volatile, I am uncertain how much I can count on my retirement funds to make up this value in four months.

2. To have $15,000 in liquid savings for emergency expenses.
I have almost reached this number. I currently have just over $14,000 in savings accounts and CDs and will easily reach my goal by November 2008, pending any emergencies. Part of this money is allocated to car savings, but in a true emergency, I would use all resources if necessity required more than the $6,000 in my bricks-and-mortar credit union. I am glad to see that I can reach such a lofty number and may set some specific goals for emergency only money versus other savings I have allocated for a newer car, a farm, utilities, charity, etc.

3. To have $500 in my "found money" account.
My current balance is $257.49. I used some money to pay for a chest freezer, but also had a substantial deposit of money with an internet subsidy from my workplace. I am earmarking this money for a future computer purchase instead. Taxes took a big bite out of the award, but I hope the interest will make up some of it. Otherwise, contributions have been $2 here, $3.50 there. I am impressed how much these small amounts of money can add up. While I do not think I will reach $500 as a balance in this account, I know that total contributions have reached $500. This really shows the power of small contributions giving a good size total over the year.

4. To fully fund Roth IRA for 2008 at $5,500. Since I can add funds through April 15, 2009 for my 2008 Roth IRA, I will need the extra money from my 2008 Federal tax refund. I usually get some money back, but with my monthly contributions, my tax rebate and the cash from my life insurance, I will have invested almost $4,000 in year 2008. This is good for me as it is ~$1,000 more than last year. Money from extra income or the found money account as well as tax refunds will likely help fill out the balance of the Roth IRA for 2008. This is a stretch goal so I will have to see what I need to do to fulfill the maximum contribution.

5. To generate $2,000 from an alternative income source.
Unless I am inspired and can really build up a business in a short period of time, I am unlikely to reach this number. While I sold many things in the first half of the year, getting me to ~$500, I have not done much in the last few months. This means little was added to the balance from my alternative income. In fact, I have been more focused on buying things for my home and garden than finding ways to make money. With winter coming up, I will have time to consider all possibilities and even implement some before the weather gets too awful.

These results are not as encouraging as I hoped for when I wrote down my goals. While I am thrilled at my cash position, I need work on my net worth and ability to bring in income not based on my salary. My next analysis will likely be at the end of December so I hope that my net worth does reach my goal, but some of that is likely dependent on me being able to generate additional income rather than depending on the stock market to increase my portfolio value.

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