I have to admit, there are a lot of times when I write about personal finance that I tend to leave out the “personal” parts. I talk about things that others should be doing and I just skip over what my wife and I should be doing about our own finances. Well, the fact is that I’d like to tell you that I’m just so darn good at this that I don’t need to improve, but I can’t lie! We have a lot of areas we can and want to change. There, I said it. Improvement only begins when you are being real and honest about your situation. Remember that please.
Every year at this time, Suzanne and I sit down and talk about the upcoming year, and the financial goals we want to set for ourselves. It’s something we have been doing since we first married 10 years ago and it’s one of the big reasons that we’ve been pretty good with our money issues. I have always believed that planning ahead is the first step in achieving your goals and with finances, it is essential.
There will always be something that isn’t in your plan that can upset the apple cart; we all have those things happen to us. But even when the unexpected happens, there are ways to cope. I am still surprised that so many people don’t do an annual “sit-down” and plan out their personal finance goals for the year in advance. To me, it’s an essential part of gaining real control of your finances. If we aren’t taking stock of where we were, where we are right now, and where we want to be by the end of next year, how could we ever get to that good financial place? So here is what we’ve decided as we look ahead and present our list of personal finance goals we’ve set for 2017.
Our Personal Finance Goals
Goal #1: Live within the new budget
We have all our records for last year and the previous years for both income and expenses and those are the basis for our 2017 plans. We always compare what we spend and save with last year’s goal and then adjust the numbers based on any changes in our situation for the upcoming year. In many cases, the changes are fully predictable. Things like mortgage payments, car payments and real estate taxes are definitely on the radar as “known quantities” as we start the year. The adjustments we have to make are not complicated but they may not be final. We make a firm habit of reviewing our results every month of the year so we can adjust during the year whenever necessary.
The challenge is predictable. Discretionary spending is the thing that can make or break a budget. Last year we carried, because of several unforeseen or unplanned expenses, substantial credit card debt (no interest of course, thank you very much). It took us from 2015 to this month to pay off those bills and get back to a place where we finally feel like we are in control again.
Goal #2: Increase our income
This coming year, for the first time in recent years, we’ve set a serious “earn more” goal into the plan. Since I am in retirement and my wife is disabled, we have made a habit of using my retirement funds to help supplement our income. Along with side hustles, income tax rebates, and Social Security benefits, we have managed to pay the bills and still live close to the lifestyle we had when we were both working full time. For 2017, we decided to skip a withdrawal of those retirement funds in order not to expedite the use of them for the future and hope to avoid it altogether for the entire upcoming year.
The best way to make sure that actually happens will require a two pronged attack. First, I am committing to a huge effort in making the blog gain more traffic and produce more income. We have been considering re-branding for some time and this year it’s going to happen. After 2½ years, and lots of research and networking, it’s obvious that there are ways to accomplish this goal. Truthfully all it requires is a greater focus.
Prong two is that I plan to be more active in guest posting than ever before in order to expand the audience. What started out to be something just to pass my time and keep me occupied has evolved for me into so much more than before and I want to see it succeed.
Goal #3: Sell my junk for cash
You wouldn’t believe the amount of things I have collected over the years that are packed away in boxes, some of them unopened since my moving in 2005. I have things like sports memorabilia, CDs that have never been opened or played, and what I’d like to refer as “vintage clothing” (ahem) too! I’m not expecting to get rich from it, but it’s time to face the fact that if you haven’t used something from the last century, it is time to find it a new home for it, make some space in the closet and earn a few dollars along the way. I’m setting a reasonable goal of making $1,000 next spring when flea market season is more suitable to my 67 year old bones. A day or 3 out in the sunshine at the flea market is always a fun time.
Goal #4: Make serious changes in our investment portfolio
Over the past several years, I have been very conservative with my investments and it has rubbed off on my wife’s portfolio as well. While not wanting to take big risks, there is the reality that one can be just too conservative. For my wife, having a more aggressive approach makes a lot of sense since she is 20 years away from her “retirement”. Even though at this time she is on disability, the hope is that one day she will be able to return to work, and even if that doesn’t happen, the funds we do have invested need to reflect more accurately what she will need in the years 2030 and beyond.
Earning little or nothing, merely protecting your assets is not a good strategy. The past 6 months have shown that if you are on top of your investments, you can see big gains as the market has outperformed even what the experts thought could happen. While a long term goal, it’s something we must do in the first quarter of 2017 to increase the returns.
Goal #5: Increase “extra” mortgage principal payments
If I were to give you any advice about retirement and having a mortgage I would say “just don’t!” Having a mortgage when you don’t have the kind of income you once had when employed doesn’t work very well when you are retired like I am. There are reasons as to why and how I got into this situation. Going through a divorce at age 47 wasn’t the original plan after owning several homes and being well on my way to paying off my mortgage long ago. My current home is a downsized property from anything I have ever owned before, so I’m not living with my wife in some kind of McMansion with just 2 occupants like some retirees do. But even this isn’t as comfortable a financial situation as I want. Sometimes things just don’t work out the way it appeared on the drawing board.
We have refinanced the mortgage and lowered the amount owed since we first purchased back in 2007. But realistically, I would love to end the payments long before the 30 year timeframe. We just could afford to refinance again to a 20 year mortgage at this point, but that would leave us no wiggle room in case of unexpected expenses, so the best way we can cut off our mortgages is by increasing the monthly principal payments. Last year, we added $50 a month to our payments and this year we’re committing to $100.
While it may not seem like that big a deal, it will help knock off a couple years on our debt if we can maintain that plan. Doing this kind of thing goes right along with the concept of “pay yourself first”. I look at it as an investment in myself and our future without laying out the time, energy, and expense of another refinancing.
Now you might say these are not all S.M.A.R.T. goals, and you’d be correct. The fact is we still have some work to do on fleshing these goals out. But we still have…oh, less than two weeks to get them set.
So now that I have offered you a peek into our finances and the plan for 2017, I’m asking the question to you. Do you have a sit-down to review your goals and plans for the upcoming year? Now is always the best time to take action.