Save as much as possible:
1. Max out my traditional 401(k) – $17,000.
2. Invest 20% of my gross income. Use my Roth IRA to the maximum that I am eligible and invest the rest in my taxable investment account.
3. Save $3,000 towards a car replacement in 9 years by automatic transfer of $250 each month.
4. Re-pay the various savings buckets that I borrowed from to form my down payment in priority order: taxable investments, emergency fund (including improving it to 6 months at the new level of expenses), car replacement. Estimate of completion of each in order: January 2012, August 2012, November 2012. (Total: ~$20,000)
5. Put any leftover savings amounts after paying myself back into an “other” savings account and figure out what to do with this in 2013 when I will have extra monthly cash flow.
Have excellent credit:
6. Make all mortgage payments on time.
7. Make zero requests to change the limits on my credit cards throughout all of 2012 – let the credit card companies come to me.
Keep financial anxiety to a minimum:
8. Maintain my system of: a) nearby credit union for checking, most/all of my emergency fund, vacation savings, and other small and/or short-term goal savings, b) Ally for larger, more long-term savings amounts (e.g. car replacement and down payment funds).
9. Only check my checking account once per week, to ensure that there were no fishy transactions.
10. Only check my Vanguard account on the 2nd business day of the month (when the previous month’s dividends post in my 401(k) account). Wait until they post to write my monthly summary.
11. In January, create an investment plan for the year and stick to it.
After much deliberation, I decided not to set a net worth goal for the year. With the bonus structure of my income, my income could swing wildly in 2012, so I didn’t want to make a goal that could be unachievable despite huge efforts on my part. I am going to concentrate on how much I am saving and investing in 2012. I will still track my net worth, but I’m not striving for a particular number. If I hit all of the above savings and investing goals, then I will be saving about $50,000. That could turn into a net worth increase of $50,000, but it could not, so I don’t want to spend the year stressing about that.
Since I bought my condo and will move in in February, my spending will change a bit and my monthly savings will go down a bit as well. I am anticipating about $10,000 gross in more income in 2012 than what I earned in 2011 which should translate to about $7,000 more in savings and investments, but we will see how that plays out.
I don’t plan on making any mortgage pre-payments in 2012 because I don’t want my condo to be too high of a percentage of my overall net worth and I will spend a good portion of my discretionary savings paying back my various savings buckets. I will re-evaluate this decision once I have re-paid all of my various savings buckets.