Thursday, December 22, 2011

2012 Savings Planning

We are starting to think about our savings goals for 2012.

First on the list, max out our 401k accounts.  The amount we can save is going up from $16,500 to $17,000.  If you are over 50, the catch up contribution max is $5,500 in 2012.
So, goal #1 - Max out our 401ks - $34,000.

Second on the list, max out our IRAs.
So, goal #2 - Max out our IRAs - $10,000.

After the retirement accounts, we probably should be focusing on much of the same from 2011.  We should probably add more to our emergency fund.  And, I would like to keep chipping away at our mortgage principal.  Since we own a historic home, adding to our house project account (this is more of a short or mid term savings goal) would probably be a good idea.  Finally, we probably need to start a car replacement savings account for Mr. Sam.

Goal number one and two are set.  After that, everything else is up in the year and dependent on the 2012 Annual Spending Plan and deciding how much we can and how much we want to save this upcoming year.


Anonymous said...

our goals are similar to yours, continue to max the 401k for both of us including the 50+ catch-up. Then splitting (through automatic payments weekly) the amount we add to savings and paying down debt 50/50. Like you we have no credit card debt (use them but pay off monthly), we also have 3 properties with mortgages but also a 2nd that we have used only for investment purposes. The 2nd is only at 2% but the goal is to retire it in 2012. I am still weighing my plan after the 2nd is gone for paying down the mortgages vs all extra to investing.

Sam said...

Anon - How did you decide on your 50/50 split between savings/mortgage debt?

Anonymous said...

Sam - no real logic just didn't want to favor one over the other, both are important. If you put too much to the mortgage its too hard to get to if you need it. On the other hand I am not earning much on savings. One BIG lesson I learned during the recession is that assets values can go up a lot and/or go down a lot but debt doesn't move unless you are paying down principle. And debt can sink you. Most of our assets are in retirement accounts or tied up in various real estate investments. So I am trying to strike a balance between saving and paying down the debt even at the expensive that long term investment returns "should" be higher than the cost of debt.

I do enjoy reading your blog and have learned a few things from you, please keeping writing.