Financial Goals: The Long, Short & Middle Of It

I’ve been inspired by this post to list out our/my financial goals. I like the idea of planning out savings the same way you would plan out paying off debts using the Dave Ramsey snowball method.

Hopefully I will remember to refer to this and update as the years go by.

Short Term Goals (anything that needs attention in the next year):
Name: Maintain Emergency Fund
Life Reason: To give us the freedom to undergo hardship without stress
Terminal Amount: $40K (Source: Savings)
When goal needs to be met: Already met

Name: Car Replacement
Life Reason: We have 2 old cars but one is likely to die soon or cost too much to repair.
Terminal Amount: $25K
When goal needs to be met: September 2016

Once a short term goal is funded, you can immediately spend the funds, or save that money toward mid-term goals

Worthy Midterm Goals (anything that needs attention in between one year from and when we retire):

Name: House Down Payment
Life Reason: I would like to own a house that can be left to kids. However I’m firmly believe that most houses are not investments.
Terminal Amount: $200K
When goal needs to be met: 2017

Name: Life Insurance
Life Reason: We have a special needs child who will need financial help after we’re gone.
Terminal Amount: $100K*
When goal needs to be met: 2037-ish
* Truthfully I don’t know how much we need in this account. Several people have told me that the government programs will suffice, yet these are the same people who tend to favor budget cuts in government programs (which would include any program helping the disabled).

Long Term Goals:
Name: Retire
Life Reason: We want a comfortable retirement with ability to leave enough to our kids.
Terminal Amount: $1.5M indexed to inflation
When goal needs to be met: 2037-ish

While we’re okay in terms of emergency savings and our car goal, it seems highly unlikely that we can meet the 2 biggest goals — house down payment and retirement.  I am assuming that the house value will have to be a part of retirement or inheritance for kids.

 

 

Advertisements

How To Save When Your Spouse Is Not Interested In Finance

It’s very common for couples to have different spending / saving styles. Read this if you want good suggestions on how to get your spouse to be more frugal. (I’m assuming you’re the frugal spouse since this is finance blog.) Keep reading this post if you’re tired of attempting money talks with a partner who would rather gouge out his/her own eyes than read money blogs.

Without further ado, here are my uncommon, alternative “solutions” on how to save when your spouse is not interested in money.

  1. Your spouse keeps spending on “extras” because he/she has no idea how much money is needed for life’s necessities or future goals like retirement.  You’ve tried doing monthly/quarterly money talks over a romantic dinner. You’ve tried posting a picture of your future house on the fridge. Nothing has worked.  My solution: It’s time to get pro-active and set aside an amount via direct deposit to a retirement account (or accounts) each month. With time, the spouse gets used to a lower, net income.  Once in a while, he/she will ask “where does all our money go?” but their lack of interest in financial things will prevent a true investigation.
  2. Your spouse hates the idea of budgets. My solution: Get a joint credit card and have you and your spouse put most of your spending on this. The financially-savvy spouse can keep track of this by reviewing monthly credit card as well as bank statements for cash withdrawals.  Your spouse doesn’t have to know details but you can casually mention whether you’re in the red or black that month.
  3. Your spouse does not shop sales and wouldn’t know if a markdown is good or not anyway. My solutions:  1) Share drugstore and supermarket loyalty cards.  Every few weeks, CVS emails special offers such as “Spend $15, Save $5” or “Save 15% off your entire purchase”.  These are printable but can also be sent directly to your loyalty card. My husband shops at CVS without regard to sales but he is more than happy to see extra savings at check-out. 2) Get your spouse to try generic brands. Over time, you’ll find many items that are just as good as brand names. This is an easy way to save on groceries/household goods without using coupons.  3) Finally, be your household’s shopping ninja. Stock up on necessities during sales. Even if only half the household is saving money, that’s better than none.

However, it’s important NOT to think of money as his and hers, i.e. separate. At the end of the day, your finances affect each other.  On a day to day level, if you both spend without regard to household income/savings, it will be extremely difficult to save money for “bigger” things such as vacations, cars or home renovations.  At retirement, you will both need to have enough money to live on. You can’t eat caviar while the other one eats tuna!

To summarize, if your spouse is not interested in fiances and you want to save, practice deceit, take on the saving ninja role, and let it go because trying to change someone is impossible.

Of course the dividing line between frugal and non-frugal isn’t really clear cut. In our case, we usually agree on big expenses (which is important). Also, with time, we’ve influenced each other in good ways. I’ve learned to spend more freely. My husband has learned to hate late fees with a passion. He also asks me to find coupon codes before making most online purchases. Baby steps, baby steps…

 

 

 

 

 

Retired by 50?

Many finance bloggers are on the Early Retirement track.  They save a high percentage of their income in order to get out of the rat face, preferably no later than age 40. While early retirement has never been my top priority, I can see the attraction of spending more time on doing things you love/like and with friends and family.

However, I have seen way too many older workers get laid off in their 40s and 50s who are then unable to find a new job.  Maybe a forced Early Retirement will be the new normal?

layoffAs I approach my mid-40s, it’s hard not to wonder if I’m next on the cutting block. I enjoy learning new things and am relatively digital-savvy but I still find it hard to keep on top of technological changes. When I first got a smartphone, I had to ask a younger co-worker how to use it!  I still have no clue about Apple TV or other ways of streaming video to your TV set. I rarely use Twitter and haven’t even tried SnapChat or Instagram.

There’s a huge difference between getting laid off in your 20s/30s than in your 40s or 50s. Age discrimination is very real in corporate circles, from the lower echelons up to middle management. Even an experienced middle-aged managers with a stellar history can be passed over in favor of someone younger who is experienced but presumed to be more, tech-savvy and less expensive.

I’m not so much as focused on retiring in my 40s as NOT being retired by age 50 or sooner!

Hard Choices, Through Different Financial Perspectives

Everyone has different answers to spending priorities. I thought it would be interesting to re-visit my own family’s wants and needs list through the eyes of three different financial “camps”: 1) Frugal At All Cost, 2) Early Retirement Financial Independence (FIRE), or 3) Make More Money

First, some definitions are in order:

couponFrugal At All Cost are personal finance bloggers who espouse the benefits of saving money as the means to financial security. Methods include deal-hunting, coupon clipping, DIY, and other means of saving money. Some bloggers who I consider in this camp are: Surviving and Thriving, Frugalwoods, and The Simple Dollar.

MMM_bikeEarly Retirement bloggers focus on saving as much as possible in order to retire as early/young as possible. They are willing to make bigger sacrifices and be more flexible in order to save a lot of their income toward early retirement. One of the earliest blogs for this movement was Early Retirement Extreme. That torch is being carried by Mad Fientist, Mr. Money Mustache, Retire By 40, and many more.

RichMake More Money bloggers are the ones who tend to push side-hustles, second jobs and increasing your earning potential in order to reach millionaire status. I consider I Will Teach You To Be Rich and Financial Samurai to be in this group.

I know that my definitions are over-simplifications and may contain errors since I’m new to the FIRE world. If you read most personal finance blogs long enough, you’ll realize that there’s a gray area, or wiggle room, within those core principles. As an example, FIRE-blogger Mad Fientist had a great post cautioning about Financial Independence tunnel vision. Many bloggers acknowledge that there isn’t one path to financial security.

For this exercise, however, I was hard-core about following the financial principle of choice. 

List3

This ended up being an interesting exercise for me.  Once I prioritize my spending list, it’s hard to re-think those decisions and realize that there are other ways to prioritize needs and wants.  


This is one of a series of tips/ideas to help you stay middle-class (HTSMC).  Whether you consider yourself on the lower- or higher-end of the spectrum, you can probably find some useful tips to help you stay there and find save more for retirement even as wages stay stagnant.