There is no guarantee of much in life except death and taxes. That means my job is not secure, I may become seriously ill or become homeless due to fire or natural disaster. I found it even difficult to type about these issues because it is not easy to contemplate. While I am confident that my company will be fine for the next two quarters, I have no predictions about six months from now. I think our position will still be more than adequate, but circumstances can change unexpectedly.
Like many of you, my friends and family are talking about contingency plans, hunkering down and cutting expenses just in case income is cut to one salary rather than two. For others, it is from one salary to none. The husband of one of my colleagues is one of 84 men left standing at his company after 16 were recently laid off. My mechanical engineer cousin works for General Motors in Flint, Michigan, and GM just announced it would lay off 10,000 of its salaried employees and cut the salaries of those that remain. His income supports his wife and six children.
Feeling scared or apathetic can paralyze you and me from taking action in the face of possible threats to our welfare. While my immediate future will be occupied with decluttering, doing my taxes and listing the items I have stockpiled, there are steps that can be taken to deal with the possibility of a layoff in the future.
Look at your spending.
What can you reduce or eliminate from your current pattern of spending? Small steps like eating out once or twice a week instead of five days a week or reducing the features on your calling plan are a good place to start reducing expenses. Eliminating entire categories (e.g., cable television or vacations) could drastically affect your bottom line. Figuring out how to spend less than you earn now means if you lose your job and your next opportunity cannot match your current wage or salary, you can live within your reduced means.
Think about other revenue sources.
Are there things that take up space or remain unused? Consider selling a motorcycle that sits in a garage eight months out of the year or renting out a room just used to hold stuff in your home to bring in more money. If you have a way with animals or children, think about offering your services to those who need to have pets looked after or need more time at work than just the hours kids are at school. With gardening season starting up with seed orders and seed starts, think about growing extra and selling them to other, more lazy gardeners (i.e., me) to earn a little cash. You might consider offering your physical labor to help get an outdoor garden or landscaping project started (and even maintain it) for neighbors and friends who have more plans than time (i.e., me).
Keep your resume up-to-date.
I am guilty of not doing this at-least annual project. This is a true investment because having a resume ready at a moment's notice means you can take advantage of an opportunity that has caught your eye even if you are not looking to leave the company you are at. A few modifications to tailor the resume to the possible job, a good cover letter, and you may have just found yourself an interview for a great new position. If the worst should happen, a prepared resume means one less task that needs to be completed under the stress of an emotionally devastating job loss.
Reflect on what you have.
For many people, his or her job is closely identified with who he or she is. Enjoy time with family and friends. Laugh at your child's antics, your father's bad puns or the crow walking across your lawn. You are more than a job. You are a human being with connections to other human beings who care for you. Indulge in a rewarding hobby like reading, biking, painting or knitting. Give and receive as many hugs as possible. Physical affection is always emotionally rewarding. Be grateful for your health, your family, your friends, your pets, the beautiful tree in your yard and the warm greetings from your neighbors across the hall or across the street. If you have the opportunity, volunteer for an organization or event. I find it rewarding to help out and feel like my time was well-spent.
These strategies may not find you a new job, but will help as you look for your next opportunity. Expanding your network and exploring your interests will benefit you both in the short-term and long-term. That event at the library may be the key to the next job or to connect with a person that becomes your next best friend and/or business partner.
Showing posts with label income. Show all posts
Showing posts with label income. Show all posts
Saturday, February 14, 2009
Wednesday, July 30, 2008
Dealing with a monthly paycheck
When I first started working for the company with which I am still employed, I was completely thrown by how often my paycheck was deposited into my checking account: biweekly. For many people, this is commonplace. However, for the six years prior, I had received a monthly paycheck. I liked this because I knew what my income was for the entire month and that it had to cover all my expenses (hopefully with a bit added to savings). One paycheck gave me a total I needed to keep under when planning for the month, and I created a budget that accounted for all the money I was given on the first of the month.
Now, I have embraced the biweekly paycheck because I save two and live on the money from 24. I like the extra boost to my savings without much pain and have adapted to having at least two influxes of money in my account each month. However, my spending plan is still created monthly and I tally up savings in a month-to-month basis. Here are a few tips to keep within a monthly paycheck plan that have served me well:
Ignore the last three digits on the paycheck.
If I was paid $803.47, I created a $800 budget. The extra money could be directly saved in a separate savings account or left in the checking account as a cushion. While amounts under $10 do not seem like much, it is a start to creating some extra money for emergencies.
Account for regular and irregular expenses.
It took me some time to learn this lesson, but it is important. If a spending plan has categories like rent, utilities, food and gasoline, do not forget to add categories like gifts, car repair, car insurance, pet care, clothing and others that crop up in a predictable fashion (e.g., car insurance) or go in streaks (e.g., birthday gifts or school clothes shopping). Be realistic about these category amounts as well. Do you spend $20 or $100 on each person? In the case of gifts, multiply the amount per person by the number of people you buy gifts for and divide by 12. Round up if it is not a whole number (e.g., total is $11.53 so designate $12). Look at past vet bills or credit card statements to get a handle on the amount of money spent on a category and figure out an appropriate monthly amount for the spending plan. As always, round up to to give a bigger cushion. No numbers are fixed, even car insurance, but by giving these fluctuating expenses room in your budget, you are less likely to abuse savings accounts or credit cards.
Automate deposits and transfers.
In the beginning, I had my paycheck automatically deposited into my checking account and then manually transferred money to my savings account later. Strangely, I did not save as much as I had planned. I am comfortable using the web-based interface at my credit union so I quickly setup an automatic transfer to my savings account each time I received a paycheck. I was stunned how much money I saved using this automatic method. Out of sight, out of mind. However, be sure to record the transfer if deposited to your checking account so as to not spend the money. Other people have had great success by having their paycheck deposited to their savings account and transferring a set amount to their checking. Use whatever method works better for you.
If you are still receiving a paper check, ask the teller (or ATM) to divide the money between checking and savings accounts when you deposit the check. I highly recommend electronic deposit. It saves you time and gasoline since you do not have to go to the bank and in my case, the money is immediately available on pay day.
Refine the budget.
No budget or spending plan is set in stone. Adding up all the money spent on a monthly basis may be an eye-opening experience, helping to reinforce how well or poorly money is being managed. If overspending is an issue (with possible credit card debt), figure out which categories to reduce spending and plan to start paying off the credit card. If you are spending less than you earn, see if you can add a bit more money to the savings account. Do you want a house? Remodel or update a room in your home? Have you started saving for retirement? Do you want to travel the world? After saving for emergencies, define a savings goal you would like to work toward. Even moving a few dollars among the categories because the Netflix subscription was ended in favor of prioritizing grocery spending to buy more local and organic foods.
Figuring out where your money is going is the first step toward taking control of it. With a monthly paycheck, the limit to your spending is listed in black ink. It would be even better if spending was below that number. Use the number wisely, keep a cushion for the future and plan for expenses as well as you can. Unexpected emergencies will happen and the less money you spend of your income, the greater your ability to deal with financial pressures. In addition, a spending plan will help smooth out monthly finances so it is not feast at the beginning of the month when the paycheck is received, and famine at the end when waiting for the next paycheck.
Update: Welcome to those readers from the Carnival of Money Stories #71-Wander Around the World with Me! If you liked my post, please explore my blog or subscribe to my RSS feed.
Now, I have embraced the biweekly paycheck because I save two and live on the money from 24. I like the extra boost to my savings without much pain and have adapted to having at least two influxes of money in my account each month. However, my spending plan is still created monthly and I tally up savings in a month-to-month basis. Here are a few tips to keep within a monthly paycheck plan that have served me well:
Ignore the last three digits on the paycheck.
If I was paid $803.47, I created a $800 budget. The extra money could be directly saved in a separate savings account or left in the checking account as a cushion. While amounts under $10 do not seem like much, it is a start to creating some extra money for emergencies.
Account for regular and irregular expenses.
It took me some time to learn this lesson, but it is important. If a spending plan has categories like rent, utilities, food and gasoline, do not forget to add categories like gifts, car repair, car insurance, pet care, clothing and others that crop up in a predictable fashion (e.g., car insurance) or go in streaks (e.g., birthday gifts or school clothes shopping). Be realistic about these category amounts as well. Do you spend $20 or $100 on each person? In the case of gifts, multiply the amount per person by the number of people you buy gifts for and divide by 12. Round up if it is not a whole number (e.g., total is $11.53 so designate $12). Look at past vet bills or credit card statements to get a handle on the amount of money spent on a category and figure out an appropriate monthly amount for the spending plan. As always, round up to to give a bigger cushion. No numbers are fixed, even car insurance, but by giving these fluctuating expenses room in your budget, you are less likely to abuse savings accounts or credit cards.
Automate deposits and transfers.
In the beginning, I had my paycheck automatically deposited into my checking account and then manually transferred money to my savings account later. Strangely, I did not save as much as I had planned. I am comfortable using the web-based interface at my credit union so I quickly setup an automatic transfer to my savings account each time I received a paycheck. I was stunned how much money I saved using this automatic method. Out of sight, out of mind. However, be sure to record the transfer if deposited to your checking account so as to not spend the money. Other people have had great success by having their paycheck deposited to their savings account and transferring a set amount to their checking. Use whatever method works better for you.
If you are still receiving a paper check, ask the teller (or ATM) to divide the money between checking and savings accounts when you deposit the check. I highly recommend electronic deposit. It saves you time and gasoline since you do not have to go to the bank and in my case, the money is immediately available on pay day.
Refine the budget.
No budget or spending plan is set in stone. Adding up all the money spent on a monthly basis may be an eye-opening experience, helping to reinforce how well or poorly money is being managed. If overspending is an issue (with possible credit card debt), figure out which categories to reduce spending and plan to start paying off the credit card. If you are spending less than you earn, see if you can add a bit more money to the savings account. Do you want a house? Remodel or update a room in your home? Have you started saving for retirement? Do you want to travel the world? After saving for emergencies, define a savings goal you would like to work toward. Even moving a few dollars among the categories because the Netflix subscription was ended in favor of prioritizing grocery spending to buy more local and organic foods.
Figuring out where your money is going is the first step toward taking control of it. With a monthly paycheck, the limit to your spending is listed in black ink. It would be even better if spending was below that number. Use the number wisely, keep a cushion for the future and plan for expenses as well as you can. Unexpected emergencies will happen and the less money you spend of your income, the greater your ability to deal with financial pressures. In addition, a spending plan will help smooth out monthly finances so it is not feast at the beginning of the month when the paycheck is received, and famine at the end when waiting for the next paycheck.
Update: Welcome to those readers from the Carnival of Money Stories #71-Wander Around the World with Me! If you liked my post, please explore my blog or subscribe to my RSS feed.
Saturday, April 26, 2008
When spending plan hits new reality
Okay, now I am starting to feel pinched financially. First, I overestimated my take-home pay from my raise. Second, at&t increased the cost of my DSL (and my landline). Third, I projected my savings over the next four years as well as estimated home expenses I will likely be paying (e.g., exterior painting, replacement windows and attic insulation). All-in-all, I am feeling like I cannot reach my goals with my current income and expenses.
While the increased costs of a landline and DSL will not kill me, that in combination with my overestimated take-home pay made me cut $15 from my budget. Not a lot really, but with the cost of gas going up, increased cost of phone/DSL service and starting to feel deprived with the categories I had to modify (plus the pressure of my financial challenge this month), it all overwhelmed me.
There are areas I can cut more from my budget but now it is starting to make me wince. I thought I would have a bit more warning that finances need to be revised than this, but I have been wrong before. There really are not a lot of categories for me from which to take money to bulk up other categories. Entertainment and clothing typically have money leftover each month. I cringe because I have cut from them before and while these monies are not in high demand now, I fear that could change. For example, I have been gradually losing weight and at some point, it may just be ridiculous for me to wear the clothing I currently own.
I have been revisiting the roommate possibility as well as brainstorming what other things I can do to generate more income. Each of my ideas may need to be test run first. My attempts at getting a part-time retail job have generated nothing other than indifference. Some ideas may require more resources than I have or finding the right market.
For now, I will finish up my financial challenge, attend the class on wills and trusts for which I registered, and see where my my financial markers leave me May 1. There may be more spending plan alterations and be more stringent cost-benefit analysis of purchases to place me well for now and the future.
While the increased costs of a landline and DSL will not kill me, that in combination with my overestimated take-home pay made me cut $15 from my budget. Not a lot really, but with the cost of gas going up, increased cost of phone/DSL service and starting to feel deprived with the categories I had to modify (plus the pressure of my financial challenge this month), it all overwhelmed me.
There are areas I can cut more from my budget but now it is starting to make me wince. I thought I would have a bit more warning that finances need to be revised than this, but I have been wrong before. There really are not a lot of categories for me from which to take money to bulk up other categories. Entertainment and clothing typically have money leftover each month. I cringe because I have cut from them before and while these monies are not in high demand now, I fear that could change. For example, I have been gradually losing weight and at some point, it may just be ridiculous for me to wear the clothing I currently own.
I have been revisiting the roommate possibility as well as brainstorming what other things I can do to generate more income. Each of my ideas may need to be test run first. My attempts at getting a part-time retail job have generated nothing other than indifference. Some ideas may require more resources than I have or finding the right market.
For now, I will finish up my financial challenge, attend the class on wills and trusts for which I registered, and see where my my financial markers leave me May 1. There may be more spending plan alterations and be more stringent cost-benefit analysis of purchases to place me well for now and the future.
Friday, March 7, 2008
Financial goals for the next five years
I have been considering how I want to push some of my financial goals. I have mentioned what my goals are for this year. However, I would like to add more challenges to get me closer to a lifestyle I will enjoy. Suburban living is really not for me and I want to get back to the country. This move necessitates many things including additional savings I do not have. What can I do to get myself closer to my dream living situation?
Save 40% of my gross income.
Right now, I save just over 30% of my gross income. My retirement accounts, my targeted savings (e.g., to purchase a new auto), and my regular savings accounts bring me to this point. However, I would like to increase that by 2-3% a year to reach 40% in 5 years. This is quite ambitious as I am not sure what I need to cut in order to get to this point. Likely my spending plan cuts would include entertainment, eating out, personal care and utilities. The latter is tough, but I could be more miserly when it comes to using energy. A 2% savings increase would require me to save over $100 a month. I have a lot of work ahead of me to make this goal a reality.
Generate additional income to save more.
This is a great if cliched statement. If frugal living is not enough to get the desired result, find a way to get more money. Potentially, I have a raise coming up, but I will not count on such a factor. So that means a source other than my biweekly paycheck. Currently, I am selling unwanted items, but this is hit or miss. Someone might be interested or may not be. I lose some potential money to haggling, but that is part of business. But in the end, there is a finite amount of stuff I am willing to sell. That means I need to find other methods to generate income.
I have considered the possibility of having a roommate. Despite my loud protests over the loss of privacy and the concerns about sharing my space, this idea has not disappeared. It ends up in my head at least once a day so my revisiting of this idea may not be too far in the future.
I could also leverage skills I have to generate income. I can sew and quilt items to sell or ask for commission. I think the former is what I will do first if I intend to pursue this path. Basically, I am not excited about this because I have not sewed things I need or wait until the last minute to make. Would I really sew for someone else even if it is for money? I could also use my work skills for possible income, but my thoughts are limited as to how to do this.
Use my money to generate more money.
I have much of my savings in high-yield interest-bearing accounts. The rates are nothing to write home about (my highest is 3.6%), but this is more than my credit union pays. The more money I have in savings and Certificates of Deposit, the more passive income I earn. The numbers are not spectacular, but it is more money than I had when I first deposited it. Since the money in these savings accounts are for emergency use, I do not feel comfortable investing in stocks. However, this is a path I will explore further as my savings becomes more robust. Past my $15,000 threshold, I might investigate a bond or a stock mutual fund. These potentially have greater return but also greater risk. I will need to do a gut check to make sure this is okay before deciding to pursue this path.
I have no plans to buy additional real estate as an investment property to rent. I am comfortable with my mortgage and do not feel the need to take on a second. Contemplating a roommate is difficult enough. A full-blown landlord situation--that is scary.
These are the various idea that drive my financial goals which basically comes down to saving more money to give me the freedom to do what I want. I have learned so much more now than I knew even before I bought my house. While I would not trade the personal gain in having my own home for the apartment I was living in, it does mean I have committed a good portion of my income to fixed expenses associated with homeownership. I would like to find a place to live for the rest of my life, but it is hard to predict where life may take me. I will save money and keep an open mind and see where I end up.
Save 40% of my gross income.
Right now, I save just over 30% of my gross income. My retirement accounts, my targeted savings (e.g., to purchase a new auto), and my regular savings accounts bring me to this point. However, I would like to increase that by 2-3% a year to reach 40% in 5 years. This is quite ambitious as I am not sure what I need to cut in order to get to this point. Likely my spending plan cuts would include entertainment, eating out, personal care and utilities. The latter is tough, but I could be more miserly when it comes to using energy. A 2% savings increase would require me to save over $100 a month. I have a lot of work ahead of me to make this goal a reality.
Generate additional income to save more.
This is a great if cliched statement. If frugal living is not enough to get the desired result, find a way to get more money. Potentially, I have a raise coming up, but I will not count on such a factor. So that means a source other than my biweekly paycheck. Currently, I am selling unwanted items, but this is hit or miss. Someone might be interested or may not be. I lose some potential money to haggling, but that is part of business. But in the end, there is a finite amount of stuff I am willing to sell. That means I need to find other methods to generate income.
I have considered the possibility of having a roommate. Despite my loud protests over the loss of privacy and the concerns about sharing my space, this idea has not disappeared. It ends up in my head at least once a day so my revisiting of this idea may not be too far in the future.
I could also leverage skills I have to generate income. I can sew and quilt items to sell or ask for commission. I think the former is what I will do first if I intend to pursue this path. Basically, I am not excited about this because I have not sewed things I need or wait until the last minute to make. Would I really sew for someone else even if it is for money? I could also use my work skills for possible income, but my thoughts are limited as to how to do this.
Use my money to generate more money.
I have much of my savings in high-yield interest-bearing accounts. The rates are nothing to write home about (my highest is 3.6%), but this is more than my credit union pays. The more money I have in savings and Certificates of Deposit, the more passive income I earn. The numbers are not spectacular, but it is more money than I had when I first deposited it. Since the money in these savings accounts are for emergency use, I do not feel comfortable investing in stocks. However, this is a path I will explore further as my savings becomes more robust. Past my $15,000 threshold, I might investigate a bond or a stock mutual fund. These potentially have greater return but also greater risk. I will need to do a gut check to make sure this is okay before deciding to pursue this path.
I have no plans to buy additional real estate as an investment property to rent. I am comfortable with my mortgage and do not feel the need to take on a second. Contemplating a roommate is difficult enough. A full-blown landlord situation--that is scary.
These are the various idea that drive my financial goals which basically comes down to saving more money to give me the freedom to do what I want. I have learned so much more now than I knew even before I bought my house. While I would not trade the personal gain in having my own home for the apartment I was living in, it does mean I have committed a good portion of my income to fixed expenses associated with homeownership. I would like to find a place to live for the rest of my life, but it is hard to predict where life may take me. I will save money and keep an open mind and see where I end up.
Thursday, February 14, 2008
How spending can get away from you
I used to regularly carpool with someone from my workplace. It was only twice a week but driving one less day a week was a nice treat especially during the winter (even thought I seemed to drive during the worst winter days). We would talk about many things during our trips to and from work and finances came up more than once. I happily expounded on my spending plan, talking about how the budgeting class I took helped me get firm control of my money. His situation was different than mine for many reasons including that he is married with three children.
He told me he used to work for our company but left for greener pastures many years earlier. Unfortunately, the company he worked for nearly ten years was bought out by an industry giant. Noting the writing on the wall, my carpool buddy left the company on his own terms when he interviewed for and received an offer at his old company.
Here's where the situation gets tricky: when he took a job with our company, he took a pay cut. Four months later, his wife left her part-time job to stay home full-time and evaluate what she wanted to do. How did this change in income affect the family? Not much actually. My carpool buddy confessed that they had not adjusted their spending. He budgeted using credit cards. That is, he charged most expenses and then rectified it when the statement arrived.
Using the credit card as he did is not a great way to manage money. Items and services have been paid for before you know how much you have spent. Then you have to do what he did: dip into savings to make up the balance. And if you don't have savings, you are in debt. Unfortunately, my carpool buddy is telling me this story about four months after his wife left her job and eight months after he switched jobs. He wondered how was he to pay for groceries and other things when he is only left with $200 after all the expenses were taken out. He was considering things like canceling whole life insurance (might be a smart move but not a large effect I imagine) and switching to a 50-year mortgage (a really bad move).
What lessons can be learned from my carpool buddy?
1. Manage the money before overspending becomes an issue. If, like my carpool buddy, you happen to switch jobs for whatever reasons, make sure that the change in pay is taken into account. Immediately adjust spending to the new lower level before it gets you into trouble. Ideally, a spending plan would help guide you in how to spend the new income with small changes in discretionary spending.
2. Communicate with family members. If you are married with or without children, living with someone or in some similar mutually beneficial relationship, make sure your household members understand what the change in income means. For example, no more delivery pizza and rented movie Fridays. Instead, consider making your own pizzas and renting movies from the library--for free. This is a small change in spending with little effect on family time. Children should be informed at age-appropriate levels so they understand the changes and possible "no"s when they ask for a shiny new toy or gadget. Adult household members can help look for frugal alternatives to usual activities and even be supportive in the new endeavor.
3. Preserve savings. Savings should be for unavoidable and unexpected expenses (e.g., furnace breaking in winter) rather than spending shortfalls. By putting a spending plan in place, you minimize the reliance on savings to supplement spending and keep the maximum amount available for those emergencies. You may even be able to add to savings as well depending on the changes you make in your spending.
These suggestions apply to more voluntary situations with a modest decrease in income. If you have a partner and children, this job change affects more than just you and is better discussed and understood before being committed to the change. Hopefully, you will find yourself happy, with a nice savings cushion and living well rather than asking "where did all the money go" after changing jobs.
He told me he used to work for our company but left for greener pastures many years earlier. Unfortunately, the company he worked for nearly ten years was bought out by an industry giant. Noting the writing on the wall, my carpool buddy left the company on his own terms when he interviewed for and received an offer at his old company.
Here's where the situation gets tricky: when he took a job with our company, he took a pay cut. Four months later, his wife left her part-time job to stay home full-time and evaluate what she wanted to do. How did this change in income affect the family? Not much actually. My carpool buddy confessed that they had not adjusted their spending. He budgeted using credit cards. That is, he charged most expenses and then rectified it when the statement arrived.
Using the credit card as he did is not a great way to manage money. Items and services have been paid for before you know how much you have spent. Then you have to do what he did: dip into savings to make up the balance. And if you don't have savings, you are in debt. Unfortunately, my carpool buddy is telling me this story about four months after his wife left her job and eight months after he switched jobs. He wondered how was he to pay for groceries and other things when he is only left with $200 after all the expenses were taken out. He was considering things like canceling whole life insurance (might be a smart move but not a large effect I imagine) and switching to a 50-year mortgage (a really bad move).
What lessons can be learned from my carpool buddy?
1. Manage the money before overspending becomes an issue. If, like my carpool buddy, you happen to switch jobs for whatever reasons, make sure that the change in pay is taken into account. Immediately adjust spending to the new lower level before it gets you into trouble. Ideally, a spending plan would help guide you in how to spend the new income with small changes in discretionary spending.
2. Communicate with family members. If you are married with or without children, living with someone or in some similar mutually beneficial relationship, make sure your household members understand what the change in income means. For example, no more delivery pizza and rented movie Fridays. Instead, consider making your own pizzas and renting movies from the library--for free. This is a small change in spending with little effect on family time. Children should be informed at age-appropriate levels so they understand the changes and possible "no"s when they ask for a shiny new toy or gadget. Adult household members can help look for frugal alternatives to usual activities and even be supportive in the new endeavor.
3. Preserve savings. Savings should be for unavoidable and unexpected expenses (e.g., furnace breaking in winter) rather than spending shortfalls. By putting a spending plan in place, you minimize the reliance on savings to supplement spending and keep the maximum amount available for those emergencies. You may even be able to add to savings as well depending on the changes you make in your spending.
These suggestions apply to more voluntary situations with a modest decrease in income. If you have a partner and children, this job change affects more than just you and is better discussed and understood before being committed to the change. Hopefully, you will find yourself happy, with a nice savings cushion and living well rather than asking "where did all the money go" after changing jobs.
Tuesday, January 1, 2008
Financial goals for 2008
As I mentioned in my earlier post, I wanted to see where my financial situation was at the end of December 2007 before considering what I should do for 2008. I first calculated my net worth (including home and car) in mid October 2007. Therefore, my 2007 numbers do not include a year's worth of financial data. To calculate my debt, I also created a simple mortgage calculator to keep track of how each payment decreases what I owe.
In 2007, assets increased 1.16% , debts decreased 0.44% and my net worth increased 3.34% to $85,360. I have enough liquid assets to cover 5.5 months worth of expenses. My debt-to-income ratio is 23% of my gross monthly income (below the 30% or less target), and I save 28.5% of my gross income (covers liquid and retirement savings).
My 2008 financial goals (to be fulfilled by December 31, 2008):
1. To reach a net worth of six figures ($100,000).
I will have to work hard on this one. I do not think it is out of my reach on my current income but I will need to keep assessing where I am. My monthly calculation of net worth will help me keep on track for this target and allow me to adjust my savings to reach this goal.
2. To have $15,000 in liquid savings for emergency expenses.
My liquid savings includes what I am saving for a car, a small amount for fun items which I am discontinuing and my "found money" account. Excluding these and my planned window replacement expenses means this is a challenging goal for me. I have just over $9,000 now and my current savings rate should get me to this number. However, being an emergency expense fund, I cannot count on current numbers getting me to this point.
3. To have $500 in my "found money" account.
This account is funded by rebates, bonuses, gifts or other irregular and unexpected amounts of money. I do not put all of a bonus in this account, just the odd dollar amount (e.g., $8.37 from $38.37). I currently have $81 in this account and my final goal is $3,000 to open a Vanguard account. It is difficult to predict how much I can put in there in one year as I have only started it in October 2007.
4. To increase my contributions to my Roth IRA to $3,000.
I opened a Roth IRA in 2001, contributed twice, watched my money lose half its value and promptly ignored it. In 2007, I rolled it into a T Rowe Price index fund, contributed monthly and threw my state income tax refund at it. My contributions fell just short of $2,000. In 2008, I will be contributing for the entire year and adding my state income tax refund. I anticipate I should be able to get to this amount.
5. To generate $2,000 from an alternative income source.
This goal is more nebulous because while I know I want to make money other than through my job, I have yet to figure out what my alternative income source will be. My track record finding a retail job speaks for itself (they do not even call me back), and I am not sure what skill to use on behalf of others. This will be a challenging goal for me for these reasons but I want to limit my dependence on a single job and income. I believe in having back ups and I need to have another income source.
I expect that my percent saved (28.5%) will fall a bit but not below 27%. This will change depending on my raise and alternative income stream. I am looking forward to learning if I can meet these goals. To exceed them would be fantastic. What are your goals?
In 2007, assets increased 1.16% , debts decreased 0.44% and my net worth increased 3.34% to $85,360. I have enough liquid assets to cover 5.5 months worth of expenses. My debt-to-income ratio is 23% of my gross monthly income (below the 30% or less target), and I save 28.5% of my gross income (covers liquid and retirement savings).
My 2008 financial goals (to be fulfilled by December 31, 2008):
1. To reach a net worth of six figures ($100,000).
I will have to work hard on this one. I do not think it is out of my reach on my current income but I will need to keep assessing where I am. My monthly calculation of net worth will help me keep on track for this target and allow me to adjust my savings to reach this goal.
2. To have $15,000 in liquid savings for emergency expenses.
My liquid savings includes what I am saving for a car, a small amount for fun items which I am discontinuing and my "found money" account. Excluding these and my planned window replacement expenses means this is a challenging goal for me. I have just over $9,000 now and my current savings rate should get me to this number. However, being an emergency expense fund, I cannot count on current numbers getting me to this point.
3. To have $500 in my "found money" account.
This account is funded by rebates, bonuses, gifts or other irregular and unexpected amounts of money. I do not put all of a bonus in this account, just the odd dollar amount (e.g., $8.37 from $38.37). I currently have $81 in this account and my final goal is $3,000 to open a Vanguard account. It is difficult to predict how much I can put in there in one year as I have only started it in October 2007.
4. To increase my contributions to my Roth IRA to $3,000.
I opened a Roth IRA in 2001, contributed twice, watched my money lose half its value and promptly ignored it. In 2007, I rolled it into a T Rowe Price index fund, contributed monthly and threw my state income tax refund at it. My contributions fell just short of $2,000. In 2008, I will be contributing for the entire year and adding my state income tax refund. I anticipate I should be able to get to this amount.
5. To generate $2,000 from an alternative income source.
This goal is more nebulous because while I know I want to make money other than through my job, I have yet to figure out what my alternative income source will be. My track record finding a retail job speaks for itself (they do not even call me back), and I am not sure what skill to use on behalf of others. This will be a challenging goal for me for these reasons but I want to limit my dependence on a single job and income. I believe in having back ups and I need to have another income source.
I expect that my percent saved (28.5%) will fall a bit but not below 27%. This will change depending on my raise and alternative income stream. I am looking forward to learning if I can meet these goals. To exceed them would be fantastic. What are your goals?
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