Thursday, December 13, 2012

2012 Savings Goal - Update

(1) Max out 401k(s) - $33,293 (98%)(goal is $34,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000)
(3) Add to e/r fund - $9,600 (96%)(goal is $10,000)
(4) Pay down mortgage - $2,490 (50%)(goal is $5,000)
(4)(a) Savings for goal (4) - $1,250
(5) House projects - $1,500 (30%)(goal is $5,000)
(6) Trading account fund - $50 (1%)(goal is $5,000)

Total - $58,183 (84%)

Well, the good news is we have finished maxing our our non-deductible IRAs for 2012.  The other good news is that we are on track to max out our 401ks and to complete our emergency fund goal.

As, I posted previously, our revised* goal is to complete goals 1-4 which means that as of today, we have to save another $2,357 before the end of the year.  I am confident that we can do it.  We have, generally, completed our holiday spending (which is funded by our ING holiday savings account).  I have a trip this weekend, that is paid for already.  We, also, have a New Year's trip planned, we've paid for the condo for the trip, but we will have gas, grocery and misc. expenses associated with that trip.  My hope and plan is to have our 2012 savings completed before we head off on our New Year's trip.

* We are $8,163 behind on our original 2012 goals.  

Thursday, December 6, 2012

Mortgage Musings

Now that we are a few months into our new loan term it is time for me to start dreaming about killing the mortgage again.

As a reminder, our new loan term is 15 years (or 180 months) and our new rate is 2.75% fixed.  Post-refinance, our monthly mortgage payment actually went up, although our rate went way down, about a $100 because we shortened the loan term by 6 years.  Our current monthly loan payment is more than 60% principal payment, so we are already making good progress at chipping away on our principal.

If we continue to pay an extra $415 a month towards principal, which is what we have been doing the last couple of years, we will shorten our loan period by 40 months or 3+ years.  We actually don't save that much in interest by prepaying on our loan because our current interest rate is so low.  If we keep to this prepayment schedule of an extra $415 a month, we will save $13,500 in interest.

If we increased our prepayment to $830 a month (doubling what we are prepaying now) we will shorten the loan period by 65 months or almost 5 and a half years.  Meaning that we would have the mortgage on our primary home paid off in under 10 years.  Doing so would mean saving $21,800 in interest.

Having our mortgage paid off in under10 years is very appealing, but we'll have to balance that against whether it makes mathematical sense to do so and the priority of other goals.

Wednesday, December 5, 2012

2012 Savings Goals - December Update

(1) Max out 401k(s) - $32,693 (96%)(goal is $34,000)
(2) Max out IRA(s) - $7,898 (79%)(goal is $10,000)
(3) Add to e/r fund - $9,200 (92%)(goal is $10,000)
(4) Pay down mortgage - $2490 (50%)(goal is $5,000)
(4)(a) Savings for goal (4) - $830
(5) House projects - $1,400 (28%)(goal is $5,000)
(6) Trading account fund - $50 (1%)(goal is $5,000)

Total - $54,566 (79%)

At present, we are $10,453 behind on our 2012 savings goals.  Currently, our revised plan, is to complete savings goals 1-4 which requires a total of $5,889 in savings contributions before the end of the year.  The remaining 401k contribution will take care of itself, via payroll deductions, so that means we really have $4,582 that we need to pull together before the end of the year.

Can we do it?  Reflecting on on my last post, I'm going to say that I will do whatever it takes to get this money into savings.

Tuesday, December 4, 2012

Goal Setting

As I start planning our 2013 savings goals and I reflect on our progress to date on our 2012 savings goals this NYT Bucks Post by Carl Richards really resonated with me.

When setting an important goal, he focuses on financial goals, how do you respond to the question "how badly do you want it?"

Mr. Richards notes that there are generally two kinds of answers to this questions:
  • I want it badly, and I’ll do whatever it takes to get there.
  • I want it badly, but I don’t think it’s possible.
Looking at my own history of financial goal setting, in 2007 (shortly after my marriage to Mr. Sam and on a trip to Key West, Florida) I decided that we would pay off all of our unsecured debt, which exceeded $55,000.  I also decided that we would pay off all that debt in one year.

When I set our 2007 debt killing goals, I had the mindset that I (we) would do anything to reach our goals.  Frankly, Mr. Sam thought I was a bit loony and he wasn't on board until he saw the plan on paper.  During 2007 there were a number of times that we got derailed and our plan seemed like it was destined for failure. What did we do, we doubled our resolve and get going.  The result, we paid off $55,500+ in just over a year.

Thinking about our 2012 savings goals, I can honestly say that we did want to save $69,000 but we were unwilling to change our lifestyle to meet our goals.  Yes there were lots of other important expenses, our refi expenses, Mr. Sam's certification classes, that derailed us.  But, more importantly, we did not make the sacrifice necessary to meet our goals.

I'll be thinking about this article as we set our 2013 savings goals and its further applicable to some career goals and personal goals that I'm working on.