Wednesday, March 5, 2008

$1,000 Emergency Fund Goal Reached!

You'll notice that my Emergency Fund pie chart is at 100%! Through a combination of a few snowflakes I was able to get the fund over $900, and then at the end of February I made up the difference with some extra cash I had on hand (due to successful budgeting). It feels great to have this $1,000 cushion in place - it's already come in handy - so that I can rest a bit easier and concentrate on more interesting and rewarding goals. I'm going to leave that up for motivational purposes while I come up with another goal for the NCN Network to track.

Moving forward I plan to prioritize my saving as such:
  1. Retirement
  2. Savings
  3. Debt reduction
I've currently put $500 toward my 2007 Roth IRA. I've got until April 15th to put as much in for 2007 as I can. I'd like to do this for a few reasons: I got started late for 2007 (this past January) and I'd like to make the most of this opportunity to maximize my retirement savings. I plan on trying to fully fund my IRA for 2008, which will require $5,000. There's little chance barring a miracle that I can find $3,500 to shove in my IRA over the next two months, but I should be able to make a significant total contribution for 2007. Every dollar I can get in there now will pay off in the long run. It's likely that a majority of my automatic savings, previously having gone to my emergency fund, will now go toward my IRA. And I'm considering tapping the fund for a contribution - not a technical emergency, but again I'd like to get as much in there as possible.

After this I'd like to build up my cash savings including growing my emergency fund to accommodate 3-6 months of expenses, saving for specific funds (i.e. vacation), and general savings which I can perhaps use to look at some other cash vehicles like CDs.

Once I'm comfortable with my retirement and savings goals then I will consider a more aggressive debt reduction strategy. There are a couple loans to friends and family that I would like to pay off soon because they affect me in a morally negative way, but aside from that my debt is relatively "good." My only interest-bearing loan is my student loan at 7.25%, but of course that has tax deduction benefits. Still, I would like to be able to put more money toward that each month as well.

This is my plan for the next few months, and it will likely remain the same over the next year or so barring any major changes.

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