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12/31/2007 Recaps and Resolutions: 2007 EditionSo here it is, with two hours left of 2007 and I haven't even started my recaps and resolutions yet. RecapsLooking back at the year, it was pretty durn good. Work: I landed a new job with an incredible team. Though it's more challenging than any job I've had before, I'm loving it and doing well, if not stellar. I'm still able to balance work and life and happy that I'm adamant about that. Remodel: The house remodel made a bit of progress in 2007. Dave moved back to town and lived here for a few months, paying rent in construction projects. Chris moved back to town and is working for Dave now. It's good to have them both back in town. I missed them while they were away. Yard: I did a little more with the yard this year, but not as diligently as I probably should have. I started my first vegetable garden and got a lot of carrots, a few peas and beans, some beets, onions, and a hint of spinach. Travel: I left the US for the first time in my life this year, too (I'm not counting a few weekend trips to Vancouver, B.C.). Work sent me to China to transfer my old job responsibilities. I had a much better time than I thought I would and look forward to traveling abroad again, if I can afford it with the weak dollar. Budget: As my previous post details, I went rather overboard digging into my finances and planning for the future in the past month. I found some great online resources and am making a commitment to getting back on track with saving. ResolutionsI'm not much for a bunch of nitpicky goals, mainly because I'm lazy and don't like having lists of stuff to get done. I like having nothing to do and all day to get that nothing done in. However, I have made a few commitments to myself. Budget: The big, obvious one is the budget. I plan to be able to retire early (by 50 if all goes well). Whether or not I do retire when I'm able will be up to me, but I want to have investments that generate more income than I need to pay for my living expenses. This is a pretty aggressive goal, especially with the mortgage payments I have to make. However, learning to live well below my means and hoard away large chunks of money every year is now a goal.
Health: Lose weight. Nine years ago, after I went from 245# to 180# in the span of 6 months, and then kept around 180 for a few years, I told myself that I'd starve myself if I ever got above 200#. Not a smart thing to do, but it helps underscore how strongly I felt about it back then. Well, earlier this year, I was up to 220#. I'm now at about 210. My plan is to get back under 190 again and keep it off as long as I can. Luckily, the mindset that helps me keep on my budget is very conducive to keeping me honest about workouts and eating well. For example, cooking at home will save money and allow me to make healthier decisions.
House: I will work with Dave to try to figure out how I can get the rest of the house remodeled on the budget I've created. This could be tricky, but if the downstairs is finished, it will generate rental income, greatly helping my retirement plan. So there it is. I'm guessing that there will be a lot of other things that happen in 2008: work, yard work, some travel, some personal development, but I'm not at a point in any of those where I'm comfortable committing to a resolution. I hope everyone's year has been as solid and pleasant as mine was. Here's to hoping that 2008 is even better. Budget: 2008 EditionI've spent the last month really looking into my finances. After buying the house four years ago (wow, I've been a homeowner for four years), I didn't really have a budget or savings goals. The house and its remodel were pretty much my only financial goals to speak of since all my reserve money and a good chunk of credit (paid off by various refinances) were all devoted to the house. I was constantly living on the edge of my equity until a couple years ago. Just after the kitchen was installed, I decided that I'd slow down a bit and let my finances settle. This was after adding $100,000 to the mortgage, making it nearly unaffordable then, and barely affordable now, but it's at 5.25% fixed for 30 29 years and I have no HELOC. If I play my mortgage payback cards right, I might have it paid off in 20 years instead of 29.
The upstairs remodel is about finished, but there's still pretty much everything left to do downstairs (walls, paint, lights, tile, bathroom fixtures, fix any electrical issues, carpet, etc.). However, I think I'm done living on credit or trying to roll the remodel costs into the equity of the house. I want to get back to the pre-homeowner days where I was out of debt, saving 50% of my after-tax income, and spending the other 50% anyway I felt. That's currently impossible, however, since house payments and bills take up about 60% of my after-tax income. I have to live off another 20-30%, leaving only 10-20% of discretionary funds (read: save for an emergency fund; save for more remodeling; save for a car to someday replace my 10-year-old one; save in accounts that will pay passive income and compound).
10-20% isn't very much to spread around to all of those financial buckets. What's worse is that without a real reason not to spend that 10-20%, I do spend it. For example, I went through all of 2007 without an actual budget and have no savings left over to show for it.
I spent a day downloading, formatting, and compiling my credit card statements for all of 2007 (yes, yes, I know that they sell software for this sort of thing, but I got a cheap copy of MS Money and it sucks for the kind of detail I'm looking for). I think there are plenty of spending categories that I can cut back pretty significantly so that I can actually live debt-free (minus the huge and glaring mortgage debt, of course) and build up some savings. Whether or not the downstairs remodel gets done is still up in the air. Since it can generate rental income once it's done, it's an investment, but as I said, I don't want to go into debt to finish it. The question is whether it's worth using up the newly created emergency fund. I'll have to figure that one out as I go.
I've created a pretty detailed budget plan for the year, with monthly goals and enough flexibility that I won't feel deprived. I may try to be more aggressive in 2009, but I figure I'll ease myself into this annual budget thing by being as realistic as I can.
My goal in 2008 is to save $10,000 in an emergency fund and to live debt-free (again, with the convenient exception of the mortgage debt) for the entire year. I considered going credit-card-free for a month or more, but after the ease of seeing 90% of what I spent last year by downloading my credit card statements, I may instead make it a goal to put everything I can on a credit card to ease my analysis throughout and especially at the end of 2008, as long as I pay in full and on time every month, which hasn't been a problem for the 12 years I've had credit cards.
If you're interested in personal finance, budgeting, living below your means, and becoming rich in the process, check out http://www.thesimpledollar.com and http://www.getrichslowly.org/blog. Use it as a starting point to go to a bunch of other blogs. Read an entry or two every day and keep the inspiration up. Or just come talk to me. I love talking personal finance. :) |
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