Handling Finances

Without goals, it’s incredibly difficult to determine where you are and whether or not you’re on track with your finances. I’m not the sort of person who finds it useful to tag and track every penny, but I do review my expenses every week and I keep track of what I spend where to make sure it’s reasonable (in other words, if I forget to bring a lunch to work twice one week I’ll be extra careful to make my peanut butter sandwiches next week). At the same time, it’s very important to set and strive to meet financial goals. The discipline of figuring out what’s reasonable and what steps need to be taken to reach the goal helps to keep you from making purchases you can’t afford or wasting money on things you don’t really want or enjoy.

With that said, here are my financial goals for 2008.

• Save $10,000 (about 12% of my gross income) in retirement accounts.
• Have $24,000 on hand as a down payment on a new house
• Save $3500 for a trip to England (first wedding anniversary)

I think these goals should be quite achievable over the next year. I’m putting about $500 per month into my 401(k) right now which will give me some leeway to decide whether to step up contributions later in the year or to put the other $4000 into my Roth IRA. I will be saving $2000 a month toward my new house which will cover a 10% down payment plus a few thousand to cover extra fees.

If we can keep our monthly expenses (minus rent) under $1200 this goal should be easily within reach as we could live reasonably comfortably on $900 a month or so. There is some wiggle room to allow for working on increasing our emergency fund from it’s current level of $1000, but in general, we’ll be living on bag lunches and free concerts for the year. Once we’ve purchased the house, we’ll have a lot more room to pour money into savings and retirement as well as to work on getting ready for children.

The travel to England and our stay in a hotel for our first wedding anniversary is already paid for, so we haven’t really started mortgage savings yet, but we’re still on target to meet the goals. We won’t be traveling really frugally like my last stay in Europe (wandering around London and Paris hopping from hostel-to-hostel) but $3000-$3500 seems quite reasonable to me and is definitely achievable.

Because of the large commitment to buying a house, I’ll be putting off purchasing a camera (probably around $1500 with accessories) until after we have a new house. I’m sure I want a digital SLR, but I’m not quite as sure how much I’d use it or that it’s worth the expense right now. I’ll have to make an effort to get out and photograph events in film when it gets a bit warmer so I can justify the expense (I love taking pictures, but I haven’t made time recently).

This entry was posted on Friday, January 25th, 2008 at 6:13 am and is filed under Investing, Saving. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.