It’s that time of year when I start thinking about filling up our savings accounts with funds to satisfy both short and long-term needs.
This exercise is meant to help me organize my savings goals and also to give you a peek at the kind of things you could be saving for (and the different ways to save).
Honestly, this year I’ve done a poor job of following my own saving advice. I haven’t automated my retirement savings. This is partly due to the fact that I’m self-employed and only pay myself randomly a few times during the year. Also, I think I’m close to being able to stop investing for retirement. But it’s also because I haven’t devised a secondary plan to save outside of those periodic checks.
Anyway, here’s a summary of my savings goals right now as we end 2013 and get ready for the new year.
Property Taxes (Capital One 360 Savings Account) – I pay my own property taxes each December. In Texas, these are significant because we don’t have a state tax. I’ve been automatically saving $350 a month in a designated account with Capital One 360. This worked like a charm as it always does and I’ll have the funds ready when I go pay my taxes. I’ll keep the automatic deposit going, maybe bump it up a bit, and will have funds available next December as well. I also pay taxes on my rental property and I simply use funds that accumulate in the checking account for that rental. I guess I could look into starting a small business savings account for this purpose.
Goal: Continue auto-saving $350-$400 per month, and open a business savings account for the rental property taxes, where I will save $350 a month.
College Expenses (College Advantage 529 Savings Plan) – Saving for our childrens’ college education isn’t a big priority for us, but we do automatically deposit $25 each month into 529 savings plan accounts with Ohio’s College Advantage plan. Since we live in Texas (no State tax) there isn’t much of an incentive to use a Texas 529 plan, so we chose one where the funds can be used at any college or university and that has low fees and great funds (i.e. Vanguard). We have an account for each child and will be opening up another soon for our baby on the way.
Goal: Continue auto-saving $25 per child and open up a new account for baby #3.
Medical Spending (InTouch Credit Union Health Savings Account) – We use a high-deductible health insurance plan and so we are eligible to contribute to a health savings account. I found a local credit union that doesn’t charge fees (or pay interest) for this account. I don’t automatically save into this account. I should be doing this, but to date I just fund it at the end of the year, or by April 15 (when it’s technically due), to the maximum. The maximum allowed in 2013 is $6,450.
Goal: Fund the maximum for 2013 before we file 2013 taxes, and start auto-saving $500 a month to this account for 2014.
Emergency Funds (Various) – This account has literally been all over the place this past year. It’s currently lower than desired and it’s residing in three or four different accounts: Chase personal checking (which is my rental property account), Chase business checking, and Capital One 360 checking. Notice I’m not earning any interest on this money. Also, in the past two weeks I’ve actually moved some of these funds to taxable investing accounts (see below).
Goal: Discuss the emergency fund savings needs with Mrs. PT and decide on a concrete strategy and location. Maintain six to twelve months of cash or near-cash for emergencies.
Retirement Savings (Vanguard Target Date Funds) – My retirement savings vehicle of choice is the Solo 401K. We’ve maxed it out from the employer side (25% of compensation), but I’ve only contributed about a third of what I can on the employee side (maxed at $17,500 for 2013). While we could always contribute more, we’ve contributed a lot to our retirement already this year. I’m fine if we don’t do anymore in this area. But I would like to explore starting a small auto-savings deposit for these accounts.
Goal: Find a way to auto-save a small amount into our Solo 401K accounts.
Taxable Investing (Betterment, Realty Mogul, Lending Club, Sharebuilder) – I’m starting to dabble into taxable investing. Partly because I’m tired of our emergency funds sitting on 1% interest options. But mostly because I want to slow down retirement savings (as we’ve reached a good spot already) and start saving funds for an early retirement. I’ve got some funds in Betterment (still a passive approach – 81% stock EFTs and 19% bonds), some in Sharebuilder (individual stock speculation – currently in ZHNE), and I just invested in a real estate flip using RealtyMogul, the crowd-investing platform. I’d like to diversify even further with some money into LendingClub.
Goal: Determine more concrete taxable investing goals and develop a more specific plan. Then start auto-saving into these accounts.
So what do you think of our current savings goals? Do you see any issues? Should I be saving for anything else?
Want to see my goals from the previous year? Click to the next page.
Image by Tony Crider