Monday, December 30, 2013

2014 Planning - Third Time is the Charm

So, for the third time we are going to plan/try to save $69,000, maybe 2014 will be the year we hit this number.  Now that we have our 2014 total goal number, we have been working on planning.

Some goals are pretty easy to establish.

First, tax advantaged retirement savings.  I will max out my 401k savings, $17,500, in 2014.  We both will max our our non-deductible IRAs for 2014, so that is $5,500 each or $11,000.  We will save $17,500 for Mr. Sam in 2014, that money will be after tax until he is eligible for his 401k in September.  Then we will max out what he can contribute from 9/1/2014 until 12/31/2014 which Mr. Sam thinks will be about $12,000.  So, the monthly savings we do for Mr. Sam's 401k between 1/1/2014 and 9/1/2014 will be used to supplement income for the last quarter when he is putting the bulk of his paycheck into his 401k.  Then, the amount that is left over will be put into our trading account.  While Mr. Sam will not be able to save as much in 401k savings, we will make sure to save at least the same amount in our non-tax advantaged trading account.

(1)  Max out 401ks (goal is $35,000)
(2)  Max out IRAs (goal is $11,000)

As for our IRAs, we have already saved $1800 towards our 2014 goal.

Second, other savings goals.  I probably will maintain the monthly savings already set up which means we would put another $10,000 into our emergency savings in 2014.  I like having money go towards e/r savings.  With our various real estate properties, a health emergency fund makes me happy.  For similar reasons, I probably will keep the $200 a month that goes towards our house account.  With an old house, there are always repairs or projects (last year I imagined plantation shutters, but that project got put off).  This year, we are also likely looking at a roof repair or roof improvement on our carriage house.  Accordingly, I am putting $5,000 into roof project savings.  If the roof project costs less, then we will put that money towards mortgage principal prepayment.

(3)  Emergency account (goal is $10,000)
(4)  Roof fund (goal is $5,000)
(5)  House fund (goal is $3,000)

Third, Mr. Sam is going to need a replacement vehicle within the next couple of years.  So, the last goal for 2014 is car replacement fund (goal is $5,000)

(6)  Car replacement fund (goal is $5,000).

How about you, what are your financial plans and goals for 2014?


Jason said...

Our goals for 2014 are.
24K+ toward 401K
11K towards IRAs
10K towards taxable account
15K vacation savings (we are DINKs we travel a lot)
12K toward our car fund. Both of our cars likely will need replacement in the next year to three.

All in all these should be doable with some diligence. This past year we had a quarter she was out of work, and when she went back to work. It was with a much different pay structure but similar money which took some adjusting too. Plus her 401k didn't start up until 2014. So we missed on a few of our numbers this year but overall did much better than most people do at putting aside money.

Sam said...

Jason, Sounds like you had a somewhat similar year to us. We, similarly, missed on our goal number but we continue to put away money at a much greater rate than most.

Anonymous said...


It's great that you have savings goals, I guess. But to keep harping on a theme, you're at or close to the point where you should be earning more on your investments than you can save from work income.

So what is your goal for investment earnings, both as a percentage of your portfolio (to include real estate) and as a total figure?

Anonymous said...

Investor Anon, How do you access the investment income when its in retirement funds which have restrictions on when you can withdraw?

Another curious reader.

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Anonymous said...


If you were asking me this. . .

You can always access the retirement accounts, but the penalties are very steep.

The question is, why would you want to, except in the most dire emergency?

There are two sources of growth in the retirement accounts. One is the money you put into them based on the limits the government will allow. The other is the appreciation of the assets you have purchased in those accounts and the dividends/interest that those assets produce.

My point to Sam has been that, at some level of assets, you should earn more from appreciation and interest than you can put in. So it's at least as important to be concerned about your return on those assets as about the amount of money you can save.

In 2013, for example, you could contribute $5500 to an IRA. If your IRA was worth $50,000 and you were 100% invested in a whole market fund or ETF, you would have earned $12,500, more than twice your contribution, and your account would now be worth $68,000. If you had kept the money in cash in the IRA, it would be worth 55,500.

My additional point is that you shouldn't wait until you're a millionaire to learn how to invest. And, as with saving, it's important to know how you're doing at investing.