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Goals Review – October

November 9th, 2009 at 02:56 pm

I was thinking about an incidence that occurred a few years back. I was at a kind of holiday type party at one of my wife's friend's house. We are both about the same age and same stage in life. At the time, our finances were interchangeable. Be both had credit card debt, mortgage, car payments, school payments, etc.

We were both probably had the same stresses. The balance between work, friends, and family. Never enough money to pay for everything. Always wondering how the neighbors paid for that.

Up until this point, I was always able to out earn my bills but that was coming to an end fast and I didn't even know it as circumstances outside my control would force my hand.

In any case, at that party, we were talking and he said to me "Welcome to the crunch years." What he meant by this was for the next 15-20 years, the job was to survive. There was no way to get ahead. Just survive and then after college expenses, we could prosper. Then, there wouldn't be mortgage and school expenses, just the car loan.

And at the time, I agreed completely. It summed up how I felt to a T – just survive.

Fast forward today. At one point in my life, I thought him and I would be good friends with our families hanging out together on the weekends. In the few years, he has continued down the path that he was on. Mine has taken a different turn.

I may have been forced to alter my path, and in hindsight, I do find it to be a blessing.

In December, it will be a year since I paid off my last consumer debt. Looking back, I am in a place were I see a bright future as oppose to "just surviving". I am no longer waiting for that next promotion or raise.

It’s an interesting place to be.

By the by, don't forget to get your holiday budgets together. Christmas is less then 2 months away.

Goals Review - September

October 6th, 2009 at 01:47 pm

It's been awhile since I last updated in August. I am still updating my sidebar. I have maxed my 401 (k) contributions for the year.

I also rebalanced by portfolio. I do this twice a year (March and September). The theory is that I sell my winning sectors and asset class and purchase my under performing sectors. So in March, I reweighted my portfolio where I sold some bond funds and bought stock funds. In September, I sold some of the stock funds and bought some bond funds.

The easy way to achieve this is to buy a target fund that is close to the allocation you want.

I now used to my higher mortgage payments. It's nice to see over $1,300 going to mortgage as oppose to less then $500. I can see the balance going down and can envision it being paid off.

In February, I was asked (as well as all the consultants) to reduce my billable hours. It was a 20% decrease and I opted to take Mondays off. I was still living below my paycheck, but I knew that the larger financial goals were not going to be tackled. So, I have been generally in a holding pattern, taking a break, and enjoying the family.

Two weeks ago, we received word that we could go back to charging our normal hours. I actually increase my hours by 37%. So that coupled with the 401 (k) deductions being maxed, I have received a little boost in income.

Needless to say, it will all be going to furniture this month. But no new debt.

Also with this, I have found a new fire to start reviewing my other financial goals and start attacking them.

Mid June Update

June 16th, 2009 at 06:10 pm

July 1st is the first payment to my new mortgage. And for once, I am excited. It seems kind of weird. Some of you may be dreading pay your bills because you don't have a budget (or one that works) or you and your spouse aren't functioning as a team.

I like getting my paycheck every week and allocating my pay to expenses and other savings. I like tracking the spending and making sure the budget is working.

But most of all, I like updating progress towards my goals. I like updating my 401(k) savings and trying to determine when that will be maxed; and most of all, I like updating the principal on the mortgage and watching that go down.

Sure I like having a plan and executing on that plan. But even more, I like watching goals being achieved, perhaps even more then the achievement itself.

As for my goals, I'm moving forward. The 401(k) will be finished around the end of August, then I'll be able to achieve more of my goals. One of the big goals I am looking to start is to start saving for college for my kids. I have a lot of time (14 years before the oldest hits college), but why wait and make excuses.

Mid May Update

May 13th, 2009 at 05:40 pm

Wow!!! What a month so far. Things are finally calming down. I had a few interviews in New York and California. At the end of the day, I like where I am currently and where I am heading at the moment.

By paying off all my consumer debt and medical and having an emergency fund, I have this sense of content in my life. I no longer feel like a hamster on a wheel, trying to out earn my spending. For those of you where I was, it is worth the struggle and sacrifice to be debt free.

The way I would explain it is you are at the bottom of a hill and there is a path going up the hill. It is heavily wooded, sometimes you can get a glimpse of the sky but the view is obscured. Its buggy at times and dark, sometimes you slip on the loose gravel. When you get to end, you see this spectacular scenic view and for that moment you feel in awe of what you have accomplished. That's what getting out of debt felt like to me.

Now, I am back at the bottom of that hill and looking at a much steeper longer journey – paying off the mortgage. At first like the last hill, it looks daunting. I can't even see the top. I am standing at the bottom in the shadows and am in awe, is it too high, am I ready for this, maybe I can just rest a little more?

Then my inner voice speaks up, "What are you waiting for? There aren't any escalators here."

And with that I continue my journey.

(My refinance went through. My mortgage will be 353,000 at 4.5% for 15 years. I have shaved off 11 years and around $267,000 in interest.)

Goals Review – April

April 30th, 2009 at 02:20 pm

It has been a busy first third of the year.

So, basically, I have completed my emergency fund for the moment. It is currently 4-5 months in size. My wife had competing goals furniture and an emergency fund of eight months. The compromise was that we would bring it up to 4-5 months and if I were to lose my job, she could work full time and we would be able to stretch the EF to probably at least a year.

My retirement savings is just chugging along. I am at 50% of my 401(k) being funded. I'll probably have this finished at end of September. After this and the furniture, we will probably start move to college savings and reevaluating if we want more money in the EF.

Next week, I will close on my refinance for my mortgage - 4.5% for 15 years. I know there is disagreement on the best type. Maybe I should have gotten a 30 year and paid it off like a 15 year. This would have given me more flexibility and I could have bought points to have the same interest rate as my 15 year.

I think the real reason is that I got a taste of being out of debt and I like it. I dream of my life without a house payment and think of all the things I could do with that extra money. I also think of how much freedom I can have. I would no longer need a job to pay the mortgage. I could pursue my interests and be less worried about compensation.

Also, I really do want to get into real estate and charity without a risk to my family. And I really believe that pursuing some of these endeavors really means having no house payments.

Just the risk to family of having a house payment plus some mortgage payments on investments properties seems more of a risk them I am willing to take. I do fully understand leverage and good versus bad debt. I also believe you don't get involved with something unless you're in for the long haul

If you didn't have any debt or a house payment, how would that change your life? Your family's?

It's just become a very powerful idea from me.

Long Time

April 10th, 2009 at 02:33 pm

Well, it's been a long time since I wrote on this blog. At work, I am still at 80% of the hours I was working last year. I am currently debt free except for the house and am still tracking and updating my goals.

For those of you struggling with debt trying to get out, remember the best things in life are never easy. We all lose hope and focus. It's what you do after you lose focus and get knocked down. Remember perseverance is the secret to success. As Yoda said “Do or do not... there is no try.”

I have been debt free now for 3 months. During this time, I have replenished my emergency fund and have continued to increase my retirement. For those following Dave Ramsey's baby steps, that puts me on step 4. I am also in the process of refinancing my mortgage to 4.5% from 5.5% and from 30 years to 15 years.

But how does it feel to be where I am? Out of debt with and emergency fund, saving for the future?

I think the biggest thing is my attitude is more positive and losing those negative emotions. When I was living paycheck to paycheck with CC debt, 2 car payments, medical debt, etc.; I was jealous of what people had and I didn't. I was angry I wasn't making more money. I doubted myself and it wore on my relationship with my wife.

The process of getting out of debt caused my wife and I to have truly honest communication and set goals. Sure, at the beginning, I was embarrassed trying to keep up the illusion of a successful life. We had to look beyond the material things and during the journey the jealousy, anger, and doubt melted away to be truly successful. The journey of getting out of debt really caused me to focus on what I do have and prioritize what was really important to me (sounds so cliché).

Now getting back to the biggest change I see in my life over the past year and a half. I have started noticing that differences in a lot of aspects of my life and there seems to be a snowball affect. The positive attitude has led to a better relationship with my family, it has allowed me to operate with more integrity at work (I don't fear losing my job), and able to take criticisms a lot better which causes me to continually think about what I need to do better.

So for those of you in the middle of the process and doubt is starting to creep in because Murphy came for a visit, just remember this is part of the process. Look back to where you were and look forward to where you are going. Persistence is the only way to achieve your goals and the struggles and fight WILL make you a better person.

Mid February Update

February 17th, 2009 at 09:38 pm

Wow. I have been away form the site for the last few weeks. My hours have been cut here at work so I have been putting the resume and cover letter together. I have also been doing a lot of networking.

More just setting myself up for Q3 or Q4. I have a non-compete that ends June 1st so I can compete directly with my old employer. So now is the time to just start reaching out and networking with some recruiting firms.

There is an old saying "Never burn your bridges." At one time, I had over 35 people reporting into me and most were consultants. I would often deal with recruiters via hiring and firing people. I always tried to be fair and honest with all parties involved.

Now that I am on the other side of the fence, a lot of the firms see my resume and remember how I treated them (even if I don't know who they are). My advice to people especially just starting their careers is to remember always treat people fairly and honestly and you will be remembered. You will stand out from other people.

Anyway back to the update.

My hours have been cut by over 25% and logically my paycheck too. The good news is that I am still living below my means,. I am still on track to max the 401(k). I am also able to save a little.

None of this would have been possible if I wasn't out of debt.

My current goals are to max the 401 (k) and put an additional $30k in my EF. So far I have $3,600 in the 401 (k) which is a great start. I also have almost $6,000 of the $30,000 for the EF saved.

I have also been looking at refinancing my mortgage. I currently have a 30 year at 5.5%. This weekend I just received paperwork for a 15 year at 4.5% with 0 points. My mortgage broker wants to wait because the market is going in our favor. So, I wait.

Goals Review - January

February 4th, 2009 at 06:11 pm

So at work, they brought all of the consultants into a room. I was thinking "this ain't going to be good." I hear from my friends who got laid off from State Street, Lehman, Fidelity, etc. So I figured they were going to prep us with the first round of layoffs.

I actually wasn't too worried. I had figured I could last through at least 3 rounds. They decided to do a more socialist move that results in my billable hours being cut by 20%. So in essence, I am done to a 4 day work week.

Surprisingly, I was quite calm. I mean I had to tell my wife that it may mean we have to cut new furniture out of the budget. But since I have been on a budget and paying off debt, we can cover all the expenses and still max my 401(k) and save a little. All and all, not bad in my industry.

I think the real thing that since I paid of all my debt, right now, this is an inconvenience and not a disaster. I think this just further demonstrates the risk that debt can have in your life.

As for my goals, I am pretty happy that I have saved $4,204 in January for the emergency fund. I am 14% towards my goal of adding $30,000.

I have also socked away $2,529 towards my 401(k). Or about 15% done with that goal.

So all and all – things could me worse. But if this is as worse as 2009 gets, it won't be that bad.

Mid January Update

January 12th, 2009 at 03:28 pm

First mid month update for 2009.

I have a lot of goals on the left and there are 2 basic approaches I could take – the shot gun approach or the laser approach. Most of us don't have enough financial leeway to accomplish all of our goals at the same time. The shotgun approach is trying to hit all the goals at the same time with little progress being made on any. I don't know about you, but I get a little frustrated seeing my goals progress at a snail's pace.

I prefer the laser approach. I like the idea of focusing my resources, hit the goal, and saying "what's next".

Last year, when I was setting up the goals, I was inclined to but a little money on each. But now I decided to hit a few and try to quickly progress through them.

Why the change? Well, it really worked well for my wife and me in 2008. Also, my contract has been extended to end of March, so prioritizing the EF seems like a great idea.

So right now, I am focusing my resources on the EF and maxing the 401 (k). All other ones are secondary at this point.

So far, I have saved $3,319 out of a total of $30,000 to top of the EF. I divided in to smaller increments so that the wife and I can feel we are accomplishing things. Most of the $3,300 was saved in December. I was debt free in mid December and started throwing everything extra at the EF.

The second thing I am currently funding is the 401 (k). I currently have $769 saved out of $16,500. Seems like so little, almost not worth mentioning. LOL.

The last thing I am working on is refinancing my mortgage. I currently have a 30 year at 5.5%. I am looking at switching to a 15 year at 4.75%. Will see how that goes. Rates spiked up a little at the end of last week, so I am just waiting for them to go down.

Since I am hourly paid, my paycheck has been less over the holidays due to less hours. I am bringing home about 70% of what I normally do. Also with FICA and 401 (k) contributions coming out of the paycheck again, I have had to redo the budget a few times. By end of February, the budget should once be stable again and I should be able to project better when goals will be hit.

And for those keeping score at home, I am starting to budget for new furniture and rugs and stuff. So, yes the wife won.

2008 Year in Review

December 29th, 2008 at 04:31 pm

This may be a little early but I just got my last paycheck for 2008. It's been a little over a year that I have been on this site. The thing I find most interesting about this site is the helpful comments, the encouragement, and thoughtful alternative. Even if you disagree with people, their views, etc, this site continues to offers disagreement in a respectful way.

You also have a community here where people try to elevate themselves above petty jealousy and try to be truly happy for you and what you accomplished.

Enough of that and on to the review.

My original goals for 2008 were:

1) Pay of $6,000 in CC by May 1st
2) Pay of one car by August 1st (currently $5,700 is owed and last payment is 2/09)
3) Invest $10,000 by year end in Taxable assets
4) Invest $15,500 in 401(k)
5) Review and reallocate (if necessary) retirement funds by end of Q1

They quickly mushroomed to these:

1) Pay off debt (except mortgage) by October 1st
. a) Pay off CC
. b) Pay off Car
. c) Pay off Car 2
. d) Pay off wife's braces
. e) Pay off son's medical
3) Invest $15,500 in 401(k)
4) Review and reallocate retirement funds by end of Q1
5) Will by end of Q2
6) Life Insurance by end of Q2

2) Invest $15,000 by year end
7) Save $4,000 for college

Could I have done more in 2008? Probably. But as people here point out, you have to find a balance in your life with your family.

All and all, I experienced huge changes this year. I am out of debt (except for the mortgage), living below my income, living on a budget, have great communication with my wife, and truly feel as a team.

For people starting this journey, I think the biggest two things to start is to be honest and non-judgmental. What does this mean? You have to be honest with yourself and spouse about how much debt, expenses, and income you have. That second thing is not to blame each other for the problem. The truth is the both of you are to blame and you both have to work together to get out of this mess.

If you can do those 2 steps, the rest are easy.

The next step for me and my wife were setting up goals and the budget. We also set up some ground rules for the budget. Any changes to the budget after it was set, we would both have to agree. If one of us didn't agree, the budget didn't get changed. The first few months were tough on the budget. We forgot this expense or another. I actually had a line item called "Things I forgot to put on the budget" and I would fund this with a couple hundred bucks.

Once the budget started settling down, we could really start tracking our goals and looking at the progress. At this time, our relationship started to really change from the universe revolves around me to us. We were both making sacrifices for our common goals.

We still have a couple of common goals left, but soon we will be prioritizing are own goals into the mix. She wants new furniture and I want a riding lawn mower and shed. 2009 should be interesting as our individual goals come into the mix.

And thanks again everyone for your encouragement, thoughts, and advice. The journey hasn't ended. It's just starting.