This past year was tough on the old bank account. Before my son was born in July, I saved like mad and pinched many pennies – but it wasn’t enough. After he was born, I made some smart money decisions – and some dumb ones. But I’m giving myself a fresh start tonight. As Vicki Robin and Joe Dominugez say in their best-selling book, Your Money or Your Life: “No shame, no blame.” I will start the new year with strong focus and resolve.
Here are my financial goals for 2016, in order of importance.
1. Repay $15,000 of debt.
I will start 2016 with $27,959.59 in debt. My long-term goal is to be debt-free by the time I turn 40 on Aug. 13, 2017. Paying off $15,000 gets me over half way there. That’s $1,250 a month, $288 a week, or $41 a day. It will not be an easy goal for me to reach, but I will do whatever it takes because I believe, deeply, that this is crucial to our long-term stability and success as a family.
2. Save $2,500 in my son’s college savings account.
I am generally a Dave Ramsey follower, and saving for your kids’ college is Baby Step 5. I’m only on Baby Step 1. But here in Canada the government matches Registered Education Savings Plan (RESP) savings. If I save $2,500, I’ll get $500 from the government (the maximum annual grant). Thankfully, the government gives me a monthly baby bonus cheque for $160, and a monthly child tax benefit cheque of around $40, so I only have to put those two cheques directly into his RESP and I’ll have enough. Plus, I wouldn’t feel right using this money for anything else.
3. Establish and maintain a $1000 emergency fund.
At the start of the year, my emergency fund sits at $723.24. My plan is to top up the emergency fund (Baby Step 1) before cracking down on debt (Baby Step 2).
4. Live on last month’s income.
I am currently living on last month’s income, and I want to keep it that way. Have I mentioned that I’m a YNABer from way back? After a decade of remarkable stability, my income is in dramatic flux. I’m on maternity leave until July 1, and government benefits total roughly 40 per cent of my regular take-home pay. When I return to work, my income will increase. What’s more, I’m in the process of interviewing for a new job, which would increase my salary significantly. Fingers crossed. In the meantime, I’m going to be living on last month’s income.
5. No eating out for 12 months.
This may seem like a lifestyle goal, but I assure you that it is a financial one. Eating out is by far the biggest (fixable) drain on my budget. To be clear, it’s not that I’m eating at swanky restaurants and ordering $100 bottles of wine; it’s that I spend $1.90 coffee here, $1.50 on a bagel there, 50 cents on a candy machine over here. It has to stop. More on this later. For now, suffice it to say: This will be HARD.
6. Establish a lucrative side hustle.
I don’t know what this will be. Cleaning houses? Taking in laundry? Baking? Blogging? Sewing? Knitting? Freelance writing? An online business of some kind? Who knows. At various times I have entertained all of the above. This year, I will commit to one and make it happen. Why? Because if I’m going to pay off $15,000 in debt, I have to.
8. Set a goal for early retirement.
I think it’s realistic for me to aspire to retire at 50, if I work hard and make good decisions from here on out. That’s 12 years from now. I know very little about how to do this, but I’m inspired to learn more about early retirement, and to set some goals. I need to study what others have done, read blogs and books, and map out a financial plan for the next 12 years. Recommendations, anyone?
9. Read five books on investing.
My son’s RESP is set up as a self-directed investment account. Starting in January, I will have money to invest. I want to make wise decisions with my son’s education savings; I also want to learn enough that I can make smart decisions with the retirement savings I accumulate after I pay off my debt. I’m going to start with The Intelligent Investor, by Benjamin Graham. Any suggestions about what I should read next?
10. Track my progress.
At the end of every month, I will track my progress here. The report will include an update on each of the above goals, plus a net worth assessment, a savings rate and a debt repayment rate. I may add in other stats over time.
These are aggressive goals, but I’ve thought a lot about them. I have other goals, too, relating to my family and personal life, which I’ll share later in the week. But 2016 is going to be all about money – both because it has to be, and because I really believe that getting control of my finances is the only way I’ll be able to secure a stable, happy future for my little family.