Okay, so I warn you. These 2009 financial goals are pretty out there. Of course, if we manage to meet them we will be beyond happy, and even though the bar is almost too high to see over, I still think these might be achievable. Even if they’re not, I’d rather set my goals high and miss a few, than set out easy-to-meet goals that don’t force me to think outside the box.
One other niggling worry I have about these lofty goals. For the first time in years we will have a little (actually, a lot) of extra money coming in. Scrimping before didn’t worry us much because we knew we were on one income and so did everyone else. Now I’m a bit worried that one of us might rebel because of how strict the budget will be, or that people will expect us to be different now we are on two incomes. It could be my husband who struggles, or it could just as easily be me. We will have to figure out if any of these should be renegotiated along the way.
I’ve already stated that my overall goal in 2009 is to get our net worth above $100K. If we meet these goals, we’d more than meet that target.
Some of these goals are included here to counteract problems we’ve experienced in this past six months - since becoming `debt free’. Others are ones that you’ll recognise me talking about non-stop. But let’s cut to the chase – here they are:
Goal 1: Billpaying account `buffer’ – $500
This is here because I find that if we get a lot of bills all at once, our billpaying account plays it pretty close to the bone. With $500 sitting as our new `zero’ point, we shouldn’t be at risk of dishonour fees if a direct debit hits at the wrong time and it will also help us handle things if a bunch of bills come in at once.
Goal 2: Our own personal `credit’ account – $2000
This might seem like a stupid goal but we have continued to live beyond our means since becoming debt free, and therefore I’m going to try it. Since July, we have still carried a balance at different periods on our credit card (if only for a short time). Usually this is not because of frivolous spending but because of circumstances somewhat beyond our control. For example, I am currently awaiting a refund of $900 from the university for the travel costs of my elective. They were supposed to pay it back immediately but it didn’t happen and now the lady who handles these things has gone on holidays. So I can’t sort it out till she returns. Consequently, $900 is sitting on our credit card awaiting an interest fee! To avoid such problems, I would like to establish my own $2000 `credit’ account (really just a personal savings account) that is separate to my emergency fund and from which I cover such `problems’. I want to keep it separate from my emergency fund so that the e-fund does not get touched unless the emergency is real. And if I am in a situation where my `credit’ account gets eaten in to, I know I have to pay it back just as I would a credit card (minus the interest fees!).
Goal 3: $1000 voluntary superannuation contribution (me)
In Australia, our retirement system is called superannuation, and it is compulsory for all workers. As an incentive to put extra after-tax dollars away in our retirement accounts, the government co-contribution scheme will add up to $1.50 to the account for each $1 the low-income earner puts in (up to a maximum of $1500 from the government). You can read about it here. Because I will only be working this second half of the financial year, I should fit the bill. The amount the government will contribute starts getting reduced after $30,342 and I think I will earn just under that this financial year. So we need to find $1000 to put into this scheme, since the bare minimum return in one year has to be 150%, and this is virtually impossible to beat on any investment type.
Goal 4: $1000 after-tax superannuation contribution (husband)
While my husband isn’t eligible for the scheme outlined above, he is eligible for an employer match system on voluntary contributions. We aren’t sure of the limits for this, but think $1000 is about right.
Goal 5: $200/wk savings to emergency fund
We aim to put $200 week aside because we think with discipline this is achievable and it represents just over 10% of our combined income. This is important to me in terms of security and because I don’t want to buy a house and not have any cash available to us once we put the deposit down. When we do buy a house, we plan to leave our efund in an offset account attached to the mortgage, to `offset’ the interest. I’ve heard that this is not offered in the US and if it is, it only became available recently? Some people overseas refer to loans with this facility as `down under’ loans because they originated here. The grand plan is that our emergency fund will total $10,000 by the end of 2009.
Goal 6: House deposit savings of $650/wk
Between this goal and the one before, my weekly wage is (more than) wiped out, so you can see that we really are planning to continue to live on one income into the future. One benefit is that my husband has recently secured a large payrise, so we will still have a little more money than we do now. If everything goes right, we should have just over $30,000 for a deposit by year’s end.
Goal 7: Salary sacrifice $25/wk from my wage
The government in Australia allows workers to `sacrifice’ some of their wage to superannuation before tax is taken out. When it goes to retirement, it gets taxed at 15% instead of our usual tax rate (often 30% or more), so `more’ of our money goes to these savings. Of course, the tradeoff is that you can’t get the money back till you’re 65 (not even on loan). A small extra amount every week of my working life should make a big difference to my overall retirement package. (NB: To be honest, and without going into too many details, I won’t even really miss this money because I will be working for a benevolent organisation (a hospital) and therefore there are some small tax concessions that would have given me about $25 a week more in the hand than other employees in other industries on a similar wage).
Goal 8: Salary sacrifice $50/week from my husband’s wage
Hubby is a bit closer to retirement than me and needs to boost it pretty quickly. So we are making it a priority to send a bit extra to his superannuation accounts.
***
So these are the big goals. However, I’m not done yet! I have two smaller goals that I would like to record, but which I don’t yet see how to make happen. I know I should open myself up to possibilities, so in a `Pollyanna’ moment, I am going to add:
Goal 9: Contribute $5000 to the share market/managed fund
I would LOOOVE to do this but don’t see where the money will come from. If we received a lump sum from somewhere, we would probably actually do this since the market is currently so low. I have been researching companies like crazy and following their progress but don’t have any cash to send that way. So many really good companies are `on sale’ right now. Oh well, more opportunities will come, and hopefully something amazing will happen to make this happen.
Goal 10: Buy a late-model petrol-efficient vehicle
With little or no public transport in our city and a toddler to get to childcare each morning, my old car is dying a slow and ugly death. But I just can’t make myself buy another depreciating car when we essentially don’t have any real assets to our name. Maybe this will change and I will have to shuffle the goals a bit, but right now, I just can’t make it a priority.
So that’s where I’m at. I welcome comments and feedback. I also know that I am very lucky to be in a position where I might even come close to meeting so many goals in one year, but I will still have to work hard to get there and my little family will have to make lot of sacrifices to do it.
