Thursday, July 10, 2008

Halfway Mark

Wow - I cannot believe six months have gone by in 2008 already. I feel like it was just yesterday that I first opened up my ING savings account, my Roth IRA, and started this blog. My financial journey so far has had its ups and downs, but on the whole I'd say it's been successful. I've gone from $0 to just over $2,700 in assets and have made some progress on specific debt. I have learned an unbelievable amount about personal finance from reading countless blogs - my PF Google Reader is huge now - about everything from interest rates to car loans to index funds. I have established goals for the year (several of which I've already completed!) and I have an idea of my short, medium, and even long term goals. Although I've been sloppy here and there, on the whole I've been disciplined - certainly far more so than I used to be. So a quick thanks to everyone who helped me along the way, from my "personal financial advisor" R. W. Buffett to everyone in the personal finance blogosphere for being inspirational, informational, motivational and incalculably helpful in my own financial quest.

A bit of a review of my goals for 2008. My A-level debt reduction goal was anything over $1678.61. Currently I've only paid off $169.52, taking into account $587.27 in additional outstanding debt that I've taken on, giving me a balance of $1509.09. This means I'd have to pay off at least $251.52/mo. for the remainder of the year to reach my goal. Doable? Yes, but very unlikely at this point. It would require me to put far more towards debt than I'd like. I would prefer to build up my assets and concentrate on reaching my savings goals first before I accelerate my debt payoff.

Assets are a much clearer picture. I had established an A-level goal of accumulating $6,000 in assets by the end of 2008. This was based on regular savings and IRA contributions with a "whatever else I can stick into savings" estimate built in. Definitely a stretch goal savings-wise. In this category I'm doing much better - currently at $2,720.19 in assets. I need $3,279.81 more to reach my goal, or $546.64/mo. This one will be tough. I received a pretty substantial raise in June, which will help, but this month I simply won't be able to save too much because I will be paying off travel debt from June. I still think it's doable, and hard discipline and a little help from compound interest should help me make it, but it's going to be tough.

My A-level net worth goal for the year was an increase of 28% or more. Definitely had some setbacks here with additional debt and being slightly behind in my asset accumulation. Right now I'm only at 7.84% - I should be at 14%. Way behind. I'm going to need an increase of at least $914/mo. in a combination of asset accumulation and debt reduction to be able to meet this goal. This one's going to require some serious action on my part.

I set some fairly aggressive but achievable goals at the beginning of the year. I didn't know I was taking a trip to Europe, for one, but I also had my fair share of unnecessary or exorbitant spending. It's been a mixed bag so far. It's good to review my goals and see where I am, what I need to do from here on out. It's going to be very difficult to reach those top-tier goals at this point, but I'm going to do my best.

I don't want to discount or rationalize my failings so far, but in terms of my financial life and long term view, I consider the past six months to be extremely successful. I've learned to adhere (ahem, or attempt to adhere) to a monthly budget, plan for my future, set up some financial security for emergencies, and simply get into the mindset of saving, spending less, and preparing for retirement.

I consider that to be a big achievement in and of itself.

(Also I haven't bought lunch at all this week!)


Mark Nelson said...

I think it is really great that you are doing your budget and setting goals. It is the only way you are going to get a head.

I sometimes have gone backwards when I am trying to build my assets. I have used real estate so until the appreciation kicks in or I have sold a property my net worth goes backwards.

Keep on plugging. You are doing a great job.

The Impecunious Investor said...

Hi Mark,

Thanks for the kind words and encouragement! I will be checking out your blog from here on out as well.