Sunday, February 3, 2008

2008 Financial Goals: Addendum

Although my original 2008 Financial Goals were close ballpark figures, they were more or less off the top of my head. I've amended them slightly, taking into account expected interest.

If I simply maintain my current automatic savings and IRA contributions of $100 and $200 per month, respectively, I should end up with about $4280 in assets by the end of the year. This is now my base target asset goal (I'm calling it C-level). This should be as good as done, considering that these are automatic payments.

If I can find an extra $50 per month to stick in savings beyond my automatic contribution, then I should end up with about $4,890 in assets. If I can squeeze in an extra $110 in either savings or retirement funding over the course of the year, then I will break $5,000 in assets for the year. This now represents my B-level asset goal.

I am still in the process of establishing an accurate monthly budget with which I can maximize my savings, but I can definitely save more by eliminating some unnecessary spending. I think if I am focused and disciplined, I should be able to up my IRA contribution to $300/mo. moving forward. If I can do this, coupled with the previous additional normal savings, then I'm projected to have around $6,000 in assets by the close of 2008. This is now my A-level asset goal.

My debt reduction should be constant for my student loan and credit card, which will come out to $1,173.48 on the year. This represents my base, or C-level debt reduction goal. The remainder of my debt is to family and friends, and while this carries zero interest, it nevertheless weighs on me emotionally, and starting to eliminate this would be a huge morale boost (not to mention it will help increase my overall net worth). I have two smaller, separate debts that I want to pay off soon that amount to $505.13. If I can pay those off in addition to my other debt I will have achieved my B-level goal for the year ($1,678.61). Anything beyond that I would consider an A for debt reduction.

My net worth goals are based on my having starting 2008 with $0 in assets and $27,202.75 in debt, for a net worth of -$27,202.75. I've run through the nine permutations of coupling my asset and debt reduction goals (i.e., C+C, B+A, A+C, etc.) and I've come up with the following target goals for my net worth by the end of 2008:

C-level: 20-22% increase
B-level: 22-28% increase
A-level: 28%+ increase

I think these goals are reasonable and achievable, but will require a lot of hard work and discipline on my part. I can't hit that A-level goal without A-level assets, for instance. My projected asset accumulation is simply far higher than my anticipated debt reduction, as it should be right now taking into account all the variables in my financial situation. Of course, if any of these variables change, as they are wont to do, I will have to reassess my goals for the year. But this is a good place to start.

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