2013 is underway and I thought I would revisit my goals from 2012:
1. Refinance the mortgage
need to free up cash that would otherwise go towards paying off useless
interest. The only way to do that is to obtain a refinance at a much
reduced rate than what we're paying now. So far, no joy BUT .... I'm
not giving up. I have a call in to our current investor to see what
he's willing to do for us.
Update: The private investor
told me last week that he would begin the process of refinancing, to
take effect on March 1st. I need to call him this Tuesday to make the
appointment that he was supposed to have made with me last week to get
the ball rolling. No guarantees on the refinance.
Mortgage refinancing will create some much-needed breathing room in the
household budget. Mortgage rates are at record lows and refinancing
would mean cutting our monthly payments by hundreds of dollars per
2012 goal: A mortgage payment less than $450 per month.
2012 result: Refinancing has been unattainable due to our poor credit so we are still paying $900 on an interest only mortgage. We have been paying on our interest only loan for 4 years now and we really need to end this. We have paid $45,000 into the pockets of investors but we haven't paid our loan principal down one bit.
2. Contemplate health insurance matters
health insurance is currently costing us $600/month. There has to be a
way to cut this expense down. It may mean opting out of the spouse's
employer's health plan altogether and going with a company that we find
on our own. We have 6 months to get our health in order and all medical
tests done and out of the way. In particular, I need a clean bill of
health which I do not have right now.
Update: Working towards a clean bill of health for both myself and
the spouse. I have had a bunch of major tests in the past couple of
months and all of them have turned up clean except for one.
Investigating the cause/treatment of that one errant test. Spouse is
healthy and doing well with his weight loss. Looking at high
deductible health plans (HDHP) to save money beginning July 1 2012 which
will also necessitate a health spending account (HSA) via the spouse's
employer. Pretax dollars are set aside with every paycheck and, by
paying with pretax dollars instead of after-tax dollars, we are
essentially getting a discount on all medical expenses we may incur. We
would be paying for medical expenses with pretax money instead of money
that has already been taxed. Money that isn't used that year for
medical expenses rolls over to the next year and can essentially be used
as another form of retirement savings if we keep our health
related expenses under control. We must both have a clean bill of
health in order to contemplate a HDHP. Changing from a family health
insurance plan to a HDHP will also mean uninsuring all the kids but we
would still help one of them to make other health insurance
arrangements. Two of our kids work in good paying jobs while
also attending university and so can obtain health coverage through the
employers. If they choose to be irresponsible and forgo health
insurance in favor of partying, that must be their choice. The spouse
and I must begin cutting down our level of financial support and
instilling the notion of individual financial responsibility within each
of our kids.
2012 goal: To reduce health insurance premiums by at least 30%
2012 result: Goal met. Our health care premiums have dropped by over 75%. We opened a high deductible health plan and, so far, it is working out well for us.
3. Pay off the final 401k loan
is definitely one of the stragglers left over from our dumb spendaholic
ways. We would put money into the 401k and then ... take it right back
out again. Dumb. This loan is finally paid off in May 2012 which will
free up $50/wk extra. This amount will be put towards our
Update: On track.
2012 goal: To leave the 401k alone for the next 10 years bar catastrophe.
2012 result: 401k loan paid off.
4. Grocery bill and weight loss
Continue to cut down on food expenses and stay out of the shops, restaurants and mall in general.
I've been working on this one for the past 4 years but 2012 will begin
with a completely different attitude regarding the consumption of food
around here. I am allotting a set amount of money each week for food
and once that money's gone for the week it's gone. $75 is the weekly
limit. I need to work on my weak will when it comes to food. I also
need to work on my weak will with the kids when they start up about
going out to eat. If the kids want to go out to eat, for the most part
they will have to go without the spouse and me. We must use our money
for other things like the 'Somewhere List' and overfeeding a family of
adults is now permanently on the 'Nowhere List'! Drastic changes demand
2012 goal: Spouse goal weight in 2012: 240 pounds.
My goal weight in 2012: 140 pounds.
2012 result: Huge failure re: weight loss. Good results, however, with grocery bills and staying out of restaurants. 2013 has gotten off to a good start in this regard: we are no longer using restaurants as a stop gap when food hasn't been prepared at home. Instead, I am solely responsible for making sure that we have home cooked meals every day. Consistent exercise is going to help both the spouse and I to get our weight under control which is of paramount importance now.
5. We should finally consider a rewards credit card
just opened a secured credit card with our bank but our ultimate goal
would be to obtain a rewards credit card and use it for all monthly
expenses to be paid in full each month. I have an aversion to credit
cards because of past irresponsibility, which is my fault and my
problem, but I think I can handle credit cards now. With a rewards
credit card, we would be compensated in the form of cash back, airline
miles, etc. and it would now make sense for us to accumulate airline
miles in exchange for the purchases we make every day. It would be
another way to help us to accomplish our travel goals. We need to
compare card offers based on what percentage of our purchases are paid
out in rewards. A 1 percent reward ratio is the most common, but many
cards exist that have higher payouts for certain categories of spending
or above a certain spending level. However, it's important to shop
around for the best deal. I've been looking at surveys of cash-back
credit cards and the deals vary considerably. The accumulation of
airline miles definitely appeals to us and could potentially put
hundreds of dollars per year in our pocket for the every day expenses we
incur anyway. The keys to success are (a) always paying the balance in
full and (b) resisting the urge to overspend just for the sake of the
reward. I'm not anticipating a problem here because I no longer buy
crap I don't need and I have become far more disciplined with our
personal finances than I have ever been before!
2012 goal: Obtain a rewards card. Smart use of credit.
2012 result: Rewards card obtained. We are using credit carefully to build up our credit score.
6. Adjust our tax withholding
have been holding off on this one for years because we like receiving
that lump sum tax refund every year. The reason that we like that lump
sum so much is because we have usually been irresponsible over the prior
year and that money bails us out. Now, however, by adjusting the
spouse's paycheck withholding, we'll be giving ourselves a raise by
having less withheld from each paycheck and we can certainly use that
money for wealth building. The goal is to have just enough taken out of
each paycheck to break even. That way, we won't be relying on a lump
sum at the end of each tax year any longer and we won't owe the IRS a
penny either. Instead of being a 'windfall', a refund now indicates to
us that we've given the government a tax free loan for the year and that
is not smart is it? I used the IRS tax withholding calculator here.
The spouse will need to file a new W4 with the employer's payroll
department to put the new withholding into action. We need to find
money wherever we can find it.
2012 goal: Pay just the right amount of income tax each week to free up cash.
2012 result: Still reliant on that tax refund .... not quite ready to live without it as we have grown used to that lump sum every year. I know that giving the government an interest free loan is not good finance management .... must work on my mindset regarding tax withholding.
7. Continue to become more financially disciplined
time we get paid, we will instantly transfer 50% of that paycheck to
another bank account. Just get it out of the checking account before it
can be spent! We want to pay all bills, the mortgage and all other
living expenses out of the remaining 50%. Beginning with the first
paycheck of January 2012, we'll see how we manage with this stretch
goal. The plan is to invest this culled 50% in stocks. First stock I
want to purchase? Metro PCS.
Become emotionally comfortable with living on far less than we are right
now and building the will to deny 'wasteful' pleasures.
2012 result: We did really well in 2012, saving a large chunk of money. Invested that money in stocks and doing well. It is becoming easier and easier to stop wasteful spending that we know will railroad our future plans.
8. Work on dividend/stock/fund investing
Future cash stream in retirement.
Update: I am looking at Vanguard's Index funds as well as individual stocks.
2012 goal: Build a third individually managed stock portfolio even in the face of economic uncertainty.
2012 result: FAIL. This goal would've easily been met had we not been hit with large college expenses. The college expenses have killed this goal but I'm keeping the goal in mind for the day when we no longer have to spend thousands of dollars in college costs.
9. I need to STOP giving money to family members
that we are becoming empty nesters after spending an absolute fortune
maintaining a large family over the years, we now need to think about
how we'd like to spend the next 25 years of our lives. We love
to travel but travel has been snuffed out over the past decade. We
have fulfilled our obligations to our kids and it's time for them to
spread their wings and fly solo for a while. I recently put new tires
on a vehicle belonging to a family member at a cost of almost $700
because the tires were dangerously bald and I was concerned for that
person's safety. One week later, I discovered that they had purchased a
new XBox, Kinect and Kindle for their apartment. That $700 represents a
lost plane ticket AFAIC and I was extremely disappointed to see those
electronics that were purchased in place of tires. I will not encourage
financial irresponsibility any longer. Someone who purchases marijuana
with the money that I give them for food and rent are off the rolls as
2012 goal: Stop giving
money to people who don't deserve it. Prevent financially irresponsible
people from fleecing me and thus causing the negation of my own
2012 result: WIN. The people who were hitting me up for money to buy drugs are now having to buy drugs with their own money. The people who were hitting me up for money to cover their basic living requirements yet were irresponsibly spending money on iPhones and XBoxes are now having to fund their own lives. Enough said.
10. Continue to build savings
did very well this past year. I set a stretch goal of saving $30k over
the course of the year and we exceeded that goal. I'm setting a goal
of $30k again for 2012 in the hope of exceeding it again.
2012 goal: We can do it!
2012 result: WIN!
be even more honest with myself than I have been throughout 2011. If
I'm feeling down, or insecure, or inadequate, or like a failure, or that
no one loves me, or that I've screwed up irreplaceable relationships,
or that I'm too angry at the past, or that I'm allowing past highly
regretful behavior and actions to continue to cloud my present, I need
to be honest with myself about why I'm feeling the way I am at that
particular moment. Too often, I've brushed these feelings aside to
'deal with later' with the result that they never get dealt with and,
instead, fester and flourish in a negative way. I then eat too much or
spend too much money. I ignore people and isolate myself. I abandon
important relationships and then wonder why I'm alone. I must find the
inner motivation to stop this negative behavior.
goal: I no longer want the past to continue to define and destroy me. I
have, however, made progress throughout 2011 and I want that progress
2012 result: Progress continues. I feel myself becoming emotionally and mentally stronger. I have moved into a new phase ... I am moving past the regret and the anger even though I will still voice my 'flare ups' as they arise. 'Uncover, discover, discard.'
2013 Goals to follow ...
And the winner is...
7 hours ago