Wednesday, January 16, 2013

If at first you don't succeed . . .

If at first you don't succeed, try and try again.

That will be our 2013 savings motto.  We have finished strategizing about our 2013 goals and we've figured out our plan.

Our goal is to save $69,900 in 2013.  And as you might recall, $69,000 was our 2012 savings goal number. And as you might further recall, we fell short in 2012 and saved $62,446.  So, we are trying again to reach that number although the individual goals are a bit different.

First, we want to max out our 401k for each of us.  The limits for 401k savings have gone up to $17,500 so that will be a total of $35,000.

Second, we want to max out our non-deductible IRAs for each of us.  The limits for IRAs have also gone up to $5,500 so that will be a total of $11,000.

Third,  we will add $5,000 to Mr. Sam's after-tax spillover account (assuming his company continues to match those monies) or to our trading account.

Fourth, we will add $10,000 to our emergency fund.

Fifth, we will prepay the principal on our primary mortgage by $5,000.

And, sixth, we will save $3,000 for house projects.


Anonymous said...

Congratulations to Mr Sam for the increase and for continuing to raise the bar on savings. I see you continue to add to your emergency fund and wonder if is all in case of an actual "emergency"? I struggle with how much to have and decided to hold steady at $25k in an emergency fund. My brokerage account is my second level of liquidity if I need more funds in an emergency. Seems like with these low interest that you are looking to save another $10k in an already large emergency fund when those funds could be invested else where to get a better return. Just wondering if you would share your thoughts on how much is enough.

Sam said...

Anon, Because we have three rental properties (all with mortgages) my plan has always been to have a larger emergency (liquid) fund. While we strive to keep all three properties rented and bringing in cash, I would feel more comfortable having a larger fund in case something happened and we would have to cover the carrying costs on one or more properties for one or more months.

I'm not sure what is enough and I agree we are not getting a great return, .80% at present, on our emergency fund. We have, once before, taken some of that money and put it in a brokerage account and Mr. Sam, who has the MBA, tried his hand at short term investing. He did better than .80% that's for sure and I might consider doing that again, but only for a small amount like $5,000.

Frugal Coconut said...

How is the recent refinance playing into things so far? I imagine that it should help with the savings goals since you'll now have more available cash to put toward them.

Sam said...

Actually FC, our refi doesn't free up any cash flow us at present. Since we went from a 25 year mortgage to a 15 year term, our monthly payment went up by about $100 even with the great rate of 2.75%.

But, the up side is that we'll have the mortgage paid off 7 years earlier and we saved $180,000 by refinancing.