Our Financial Goals: Savings and Debt Reduction

Goals From the Past

If you’ve been following Prime Time Money for some time you know I like to share a couple of personal specifics here on the blog: savings goals and debt reduction goals.  I do this as a way to motivate myself to stay on top of things and eventually reach my goals, but also to provide you with some insight into how you might want to be thinking about these types of goals for yourself.

Here are my goals and update posts from the past:

• Savings Goals (April 2007)
  
• Savings Goals Update Part 1 (Dec 2007)
• Savings Goals Update Part 2 (Dec 2007)
• Savings Goals Update Part 3 (Dec 2007)

• Debt Reduction Goals (April 2007)
• Debt Reduction Goals Update (Dec 2007)

Current Goals (August 2008)

After doing our own Mid-Year Financial Check-Up, Mrs. PT and I discussed the next 6 to 12 months.  We came up with these new and/or updated savings and debt reduction goals.  Most are specific, measurable, attainable, realistic, and timely (S.M.A.R.T.).  Yay for acronyms.

Savings Goals (Short-Term)

Emergency Savings – We’d like to fully fund our emergency fund by the end of this month (August).  At that point we’ll have around 4 months expenses build up, which is a comfortable level for us.  It’s good to have this almost complete as we’ll be moving to one income soon.  More reason to have an emergency stash.

Save Up For Our Property Tax Payment – I don’t escrow my property taxes.  I save up and pay them myself.  I shared a few months ago that my Employee Stock Purchase Plan (ESPP) had become my new property tax savings fund.  This is still the case.  I’ve been making automatic contributions to the ESPP for a few weeks now.  I plan to sell the stock upon purchase come November, transfer the money to ING DIRECT savings, and make my payment in January of 2009.  The ESPP is set up to provide a guaranteed 15% return.  So it’s a great place to put my short-term savings.

Save Up For Baby Expenses – That’s right…we’re expecting a baby!    We found out a few weeks ago that we’ll be having a baby next March.  I don’t have an exact savings goal for this, but I’m sure it’s not cheap.  I guess I’m assuming medical deductibles will be high, as well as furniture and equipment purchases (some things you just need new, right?).  This opens up a whole list of post ideas for me, or severely limits my future posting abilities.  Who knows?

Savings Goals (Long-Term)

Max Out 2008 401(k) Contributions – We’re on track with this goal.  In fact we may get there sooner than we thought.  At the beginning of the year I set my contribution percentage to achieve the maximum you can contribute to your 401(k) this year, $15,500.  Since that time, my company has offered an annual increase in my pay, as well as a few extra bonus dollars kicked in.  I’ll be watching my contributions close in the 4th quarter to ensure I don’t go over my limit.

Max Out 2008 Roth IRA Contributions – This is somewhat of a reach goal for Mrs. PT and I.  We haven’t started this yet, but hope to get it going by next January.  Since we’ll have till next April to contribute, we can take our time getting the $5,000 max (each) contributed.

Debt Reduction Goals

Aggressively pay off any auto loan with interest higher than 5% – We’ve done well here this year.  We paid off one car loan already (a car that I love and would love to keep a long time) and we’re getting closer with the other (my old two-door SUV).  The issue now is do we pay off this loan and keep the SUV, OR sell it and get a new SUV (with 4 doors) which we’ll need next year for the new baby?  I’ll be sharing a guest post from loyal reader J in the coming days that may help us make this decision.  We almost purchased a new SUV last month…with all the 0% financing deals available it’s hard to pass this up.

Continue paying off credit card expenses monthly – We’ve been blessed to not have to go to the credit cards out of necessity much this year.  When we did, we were disciplined enough to pay them off within a month.  By the way, if you can do this, this is how you should treat high-interest debt…get rid of it monthly.

Pay off student loan and mortgage debt using the minimum payments – Smooth sailing here.  We’re not at a point where we’re ready to tackle these debts.  The student loans (my all-time, favorite debt) would come first, but right now we just have too many other financial goals that take precedence.  My debt philosophy has us in an extremely comfortable place before we take these on.

—

Okay, so that wraps up the goal review.  Did I leave anything off?  I’ll likely revisit things at the first of the year.  Thanks for following along.  I’d love to hear what your goals are.  Feel free to leave them in the comments below.

1. A Look Back at Our Debt Reduction Goals
2. Our Current Debt Reduction Goals
3. My 2009 Financial, Blogging, and Personal Goals
4. Debt Reduction Bar Graph Added to PT Money
5. Our Current Savings Goals