Now that I’ve created my debt graph poster it’s time to start thinking about what to do to those red bars and to my net worth in 2008.
My first goal, which was actually set earlier this year, is to completely pay off the car loan. Its interest rate isn’t all that high, but auto loan interest isn’t tax-deductible like my other loan balances. Because of that and the fact that it’s the lowest balance, my wife and I decided to knock that one out first by accelerating our payments and stocking away an extra $3,000 in a 12-month CD with a higher APR than the car loan. After the 12 months are up, the CD will be redeemed and the money will go to finishing paying off the car. Our surplus, if we have one, will be either applied to my wife’s student loans or to the home equity loan.
My second goal is to officially start the side business I’ve been thinking about for the last few months. In search of supplemental income and a way to personally take control over my family’s financial future, I decided that it’s time to put my entrepreneurial spirit to work for me. I hope to have everything in place by the end of Q1 2008 to make my dream a reality. I already have my first client tentatively in place, so I know I have a decent chance of accomplishing that goal.
My third goal is to better track our expenses and to build a budget based off of that data. We have used Quicken for years to track our expenses, but the way we tracked it was lacking some data I wanted to track: cash transactions. Now we use both. We will continue to use Quicken for the overall tracking and maintenance of our various accounts and we will also use the spreadsheet to track every expenditure. This will help us find where we’re losing money (I bet it is from eating out) and to stop the bleeding now before we kill our savings and our future.
My fourth goal is to tithe to my church. In the process of tracking our expenses, we realized that we’re pretty close to tithing already. We’re only about $26 a week short from that goal. Once we have a chance to build our new budget, this is one of the few budget line items that will actually increase. This may not have a direct impact on our debt or our investments, but it is something that is important to me and it would make me feel right.
My final goal is to continue to maximize my employer’s match in my 401(k) and to rebuild our emergency fund. I have a 401(k) and have finally increased my contributions to 6% to get my maximum employer’s match (50% match up to 6%). I am determined not to back it back down again. If we run into money problems, we’ll cut back in other areas, but I do not want to keep robbing our future to pay our present. On top of that, with my wife becoming a stay-at-home mom, our collective income has fallen dramatically without proper readjustment in expenditures. In order to shore up some losing months, we had to draw from our savings. Now that our savings has fallen to an unacceptable low, emergencies become that much scarier. We have to get that built back up through smart saving and behaving thriftier.
All in all, I have set my goals high but still reachable. Since I know these can be accomplished, I’m less likely to write them off ahead of time and not really try. As this year progresses, I’ll regularly re-evaluate this list to see if I can accelerate any of the goals or add anything that I think I can also accomplish.
Here’s to a productive 2008!
