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.
Thursday, December 22, 2011
Wednesday, December 21, 2011
2011 Savings Goals - December Update
(1) Max out 401k(s) - $31,329 (95%)(goal is $33,000)
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $9,200 (92%)(goal is $10,000)
(4) Pay down mortgage - $5,000 (100%)(goal is $5,000, this goal is completed)
(5) House projects - $2,161 (40%) (goal is $5,000)
Total - $57,690 (92%)
Based on my calculations and projections, we will complete three out of five of our 2011 goals. Two goals have already been completed, maxing out our IRAs and paying down an extra $5000 in mortgage principal.. We will come very close to maxing out our 401ks and I likely will count that as completed for 2011. I will max out my 401k contributions and Mr. Sam will be just a couple of hundred dollars short of maxing his out. And, since Mr. Sam has already received $5,000+ in matching 401k funds in 2011, in addition to his contributions, I think it is safe to say we completed goal number 1. We will also complete goal number 3 and we will finish up adding $10,000 to our emergency fund this year.
I don't see how we will finish funding our house project account, at most I might be able to get it up to $3,000 by the end of the year. I was trying to bump up the house project account by year's end, but we just paid out $2000 for Mr. Sam to take a Six Sigma green belt class so that is $2000 that we don't have to bump up the house account.
Overall, I'm generally pleased. We have saved $7000+ more in 2011 than we did in 2010 and we still have a couple of weeks to go. However, as I've discussed in other posts, we think we can do better and someone we respect is challenging us to look closer at our numbers and see if we can save more in 2012. This year we basically saved more because we saved our salary increases. So, we kept our expenses generally flat and we banked our increases.
I have to give us a pat on the back for fighting lifestyle creep. But, as previously discussed we could be doing better on controlling our expenses.
(2) Max out IRA(s) - $10,000 (100%)(goal is $10,000, this goal is completed)
(3) Add to e/r fund - $9,200 (92%)(goal is $10,000)
(4) Pay down mortgage - $5,000 (100%)(goal is $5,000, this goal is completed)
(5) House projects - $2,161 (40%) (goal is $5,000)
Total - $57,690 (92%)
Based on my calculations and projections, we will complete three out of five of our 2011 goals. Two goals have already been completed, maxing out our IRAs and paying down an extra $5000 in mortgage principal.. We will come very close to maxing out our 401ks and I likely will count that as completed for 2011. I will max out my 401k contributions and Mr. Sam will be just a couple of hundred dollars short of maxing his out. And, since Mr. Sam has already received $5,000+ in matching 401k funds in 2011, in addition to his contributions, I think it is safe to say we completed goal number 1. We will also complete goal number 3 and we will finish up adding $10,000 to our emergency fund this year.
I don't see how we will finish funding our house project account, at most I might be able to get it up to $3,000 by the end of the year. I was trying to bump up the house project account by year's end, but we just paid out $2000 for Mr. Sam to take a Six Sigma green belt class so that is $2000 that we don't have to bump up the house account.
Overall, I'm generally pleased. We have saved $7000+ more in 2011 than we did in 2010 and we still have a couple of weeks to go. However, as I've discussed in other posts, we think we can do better and someone we respect is challenging us to look closer at our numbers and see if we can save more in 2012. This year we basically saved more because we saved our salary increases. So, we kept our expenses generally flat and we banked our increases.
I have to give us a pat on the back for fighting lifestyle creep. But, as previously discussed we could be doing better on controlling our expenses.
Slow Posting
Sorry for the lack of posts recently.
One, I've been having trouble with Blogger. As you can see, I'm updating the design. Certain features are not displaying properly at this point, but I'll work on getting them back.
Two, busy with holiday activities, family in town and the like.
Thursday, December 8, 2011
Investment in Self
Mr. Sam has an MBA and works for a large corporation in logistics. He works very hard and is trying to move the company forward from 1980s systems to modern, automated processes that are both more efficient and more accurate. He is under utilized in his current position and also bored at times. He is also a behind the scenes type of employee, so he thinks if it came time for cuts or layoffs he would be easily cut because no one really knows his worth.
But, the job has lots of pros, he is working in his field in a professional job, he is paid reasonably well, he can work from home, if he works in the office his commute is 20 minutes, the benefits are great (we save quite a bit of money by both being insured under his medical insurance plan and this year he probably will get close to $6000 in 401k match), and he has a boss that is very hands off, etc.
While he sits tight in this job with this company, he is thinking he ought to be obtaining more education. As a result, he is thinking about taking a Six Sigma class. First, he would like to be challenged since he is somewhat bored right now. Second, he thinks the classes would be helpful for his career both at his current position (demonstrating his initiative to further his career and utilizing the techniques he will learn) and if he opts to look elsewhere. The black belt certification and the green belt prerequisite will cost about $6000 and he will end up using two weeks of vacation. There is a chance his company will reimburse part of the class costs (maybe like $2000).
Anyone obtained a Six Sigma certification and if yes, was it worth it?
But, the job has lots of pros, he is working in his field in a professional job, he is paid reasonably well, he can work from home, if he works in the office his commute is 20 minutes, the benefits are great (we save quite a bit of money by both being insured under his medical insurance plan and this year he probably will get close to $6000 in 401k match), and he has a boss that is very hands off, etc.
While he sits tight in this job with this company, he is thinking he ought to be obtaining more education. As a result, he is thinking about taking a Six Sigma class. First, he would like to be challenged since he is somewhat bored right now. Second, he thinks the classes would be helpful for his career both at his current position (demonstrating his initiative to further his career and utilizing the techniques he will learn) and if he opts to look elsewhere. The black belt certification and the green belt prerequisite will cost about $6000 and he will end up using two weeks of vacation. There is a chance his company will reimburse part of the class costs (maybe like $2000).
Anyone obtained a Six Sigma certification and if yes, was it worth it?
Wednesday, December 7, 2011
All Spending is Local
Talk about an expenditure cascade, I'm living across the bridge (we call it a moat) from the richest zipcode in the nation.
Expenditure Cascade
I came across the term "expenditure cascade" in this Slate article.
The author defines the expenditure cascade process as starting with the fact that those at the top are spending a lot more money.
Such spending then changes the norm in a particular circle, neighborhood, or community "since all spending is local" and those on the edge of that circle spend more and "shift the frame of reference" for the next group down and so on. So, you are not just keeping up with the Joneses, but keeping up with your peers, friends and other circles you may move in and out of.
I feel like I normally do a good job at ignoring the Joneses, but I recently altered my normal behavior based on context. I was at a charity, holiday luncheon on Palm Beach with a very large group of women who are affectionately known as "ladies who lunch." These women range in age, but the majority are super rich or very rich, they do not work and rather their "job" is to attend social lunches, support wonderful causes and be seen in the society pages. Before the luncheon there was shopping opportunities, think high end jewelry, fancy purses, etc. Normally, I would never shop at this type of event because Palm Beach is not known for bargains. But, being with this group, normal shifted for me and I bought two items (paying too much for both, but 20% went to charity). Looking back, I was taking my cues from both the environment and the group that I was with.
The author defines the expenditure cascade process as starting with the fact that those at the top are spending a lot more money.
The process begins with the completely unremarkable fact that top earners have been spending at a substantially higher rate than before. They’ve been building bigger mansions, staging more elaborate weddings and coming-of-age parties for their kids, buying more and better of everything.
Such spending then changes the norm in a particular circle, neighborhood, or community "since all spending is local" and those on the edge of that circle spend more and "shift the frame of reference" for the next group down and so on. So, you are not just keeping up with the Joneses, but keeping up with your peers, friends and other circles you may move in and out of.
I feel like I normally do a good job at ignoring the Joneses, but I recently altered my normal behavior based on context. I was at a charity, holiday luncheon on Palm Beach with a very large group of women who are affectionately known as "ladies who lunch." These women range in age, but the majority are super rich or very rich, they do not work and rather their "job" is to attend social lunches, support wonderful causes and be seen in the society pages. Before the luncheon there was shopping opportunities, think high end jewelry, fancy purses, etc. Normally, I would never shop at this type of event because Palm Beach is not known for bargains. But, being with this group, normal shifted for me and I bought two items (paying too much for both, but 20% went to charity). Looking back, I was taking my cues from both the environment and the group that I was with.
Monday, December 5, 2011
Eating Out
In reviewing our spending, in preparing our 2012 Annual Spending Plan, one of the categories we could cut back on is eating out.
I eat out, on average, five times a week. Eating out can consist of ordering lunch in at work, eating out on the weekend with my husband, eating out during the week with work colleagues or friends, etc. I prefer eating out because (1) I hate to cook; (2) I work hard and after working 12 hours I'd rather not spend time cooking or preparing lunch for the next day; (3) I enjoy food prepared by professionals more than food prepared by me or my husband. But eating out is expensive and adding it up we are spending more than $4000 a year eating out.
So, I'm going to cut back in this category. I've decided that it would be reasonable to eat out twice during the week and once on the weekend. My plan is probably to order lunch in on Monday, go out for lunch once during the week and bring my lunch the other three days. I think that I can probably save $1000 by making this switch, plus I likely will reduce my calorie intake. I can't cut the bill in half because the grocery bill is going to go up and groceries are expensive too. I also won't cut back on eating out when we are traveling, when we have guests in town or during the holidays.
How about you, is this a spending category that you struggle with? If so, any tricks you have utilized to decrease your eating out spending.
I eat out, on average, five times a week. Eating out can consist of ordering lunch in at work, eating out on the weekend with my husband, eating out during the week with work colleagues or friends, etc. I prefer eating out because (1) I hate to cook; (2) I work hard and after working 12 hours I'd rather not spend time cooking or preparing lunch for the next day; (3) I enjoy food prepared by professionals more than food prepared by me or my husband. But eating out is expensive and adding it up we are spending more than $4000 a year eating out.
So, I'm going to cut back in this category. I've decided that it would be reasonable to eat out twice during the week and once on the weekend. My plan is probably to order lunch in on Monday, go out for lunch once during the week and bring my lunch the other three days. I think that I can probably save $1000 by making this switch, plus I likely will reduce my calorie intake. I can't cut the bill in half because the grocery bill is going to go up and groceries are expensive too. I also won't cut back on eating out when we are traveling, when we have guests in town or during the holidays.
How about you, is this a spending category that you struggle with? If so, any tricks you have utilized to decrease your eating out spending.
Thursday, December 1, 2011
Progress - Depends on Your Point of View
I think, over the last five years, we have done a super, duper job with our finances.
We, in year one of our marriage (2007), paid off all our unsecured debt ($55,000+), created an annual spending plan, began tracking our expenses and developed our allowance system.
In the last couple of years, we have saved quite a bit of money. Last year we saved $49,500 and this year we have saved $54,400 (thus far). I'll have to look back and see what we saved in 2008 and 2009 as I don't have the data available right this minute.
We feel like we are doing great, we are maxing out our retirement funds and also saving other monies, we are not incurring debt, we are paying down mortgage debt and we are saving monies in our emergency fund and elsewhere.
According to the Employee Benefits Research Institute’s 2009 Retirement Confidence Survey, 53% of workers in the U.S. have less than $25,000 in total savings and investments. The typical American household had just over $18,000 in savings. So, we are certainly doing better than many, but these statistics set a very low bar.
So recently, someone (whose opinion I respect and whose personal finance acumen I admire) has challenged us both on our perspective and our progress. He says we could save more and, that since we started late and based on our age, we should save more.
Could we save more? I think we could which is why I'm working hard on our Annual Spending Plan and trying to figure out where we could squeeze and reduce to free up more for savings or debt repayment (I count putting money towards our mortgage principal as savings).
Should we save more? Probably.
How do we save more? I'm working on this, but I, more than Mr. Sam (sorry honey), work really hard and as a result want to enjoy some of the fruits of my labor now. If I'm just working really hard and putting every dime into needs and savings I'm going to get grumpy fast. I want to eat out, enjoy my entertainment, travel, clothes, art, etc. now.
Anyways, I'm glad that we were challenged in our thought process and I'm going to be working on reassessing our current habits, how we can improve, how we can save in some categories to free up money for spending in other, more important, categories and additional savings.
We, in year one of our marriage (2007), paid off all our unsecured debt ($55,000+), created an annual spending plan, began tracking our expenses and developed our allowance system.
In the last couple of years, we have saved quite a bit of money. Last year we saved $49,500 and this year we have saved $54,400 (thus far). I'll have to look back and see what we saved in 2008 and 2009 as I don't have the data available right this minute.
We feel like we are doing great, we are maxing out our retirement funds and also saving other monies, we are not incurring debt, we are paying down mortgage debt and we are saving monies in our emergency fund and elsewhere.
According to the Employee Benefits Research Institute’s 2009 Retirement Confidence Survey, 53% of workers in the U.S. have less than $25,000 in total savings and investments. The typical American household had just over $18,000 in savings. So, we are certainly doing better than many, but these statistics set a very low bar.
So recently, someone (whose opinion I respect and whose personal finance acumen I admire) has challenged us both on our perspective and our progress. He says we could save more and, that since we started late and based on our age, we should save more.
Could we save more? I think we could which is why I'm working hard on our Annual Spending Plan and trying to figure out where we could squeeze and reduce to free up more for savings or debt repayment (I count putting money towards our mortgage principal as savings).
Should we save more? Probably.
How do we save more? I'm working on this, but I, more than Mr. Sam (sorry honey), work really hard and as a result want to enjoy some of the fruits of my labor now. If I'm just working really hard and putting every dime into needs and savings I'm going to get grumpy fast. I want to eat out, enjoy my entertainment, travel, clothes, art, etc. now.
Anyways, I'm glad that we were challenged in our thought process and I'm going to be working on reassessing our current habits, how we can improve, how we can save in some categories to free up money for spending in other, more important, categories and additional savings.
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