Goals for 2013

I hope that everyone had a great holiday! I enjoyed the break from blogging, though I was still reading blogs somewhat and will catch up on some commenting. It’s so wonderful to be back home in my condo! I really want to put some more home-y touches around the place in the next month or so. The second bedroom especially needs some work. I found some $2 picture frames at Target that should be great for trying out a gallery wall of my travel photos!

Last year, I made 11 goals. This year, there are a lot fewer, or there were when I first started the list, oops. I thought these were all set at the beginning of December, but I’ve been putting a lot of thought into these. I’ve debated purchasing i-bonds, maxing out my Roth IRA for 2012 and 2013, paying down the mortgage, increasing my emergency fund, and purchasing index funds in my regular account. I even opened a Treasury Direct account! To be honest, I’m still debating what I’ll end up doing for the year as I publish this post. What I do know is this: savings is a huge priority, the traditional 401(k) will get maxed out, and it’s just a matter of how to allocate all of the funds other than that…

To help with the problem, I thought long and hard about what I want my finances to look like at the end of 2013. That was definitely an easier way of phrasing this.

I want…

1) another $20k-ish in my 401(k). I say ish because maxing it out means putting $17,500 in, plus the match from my employer and dividends on all of the index funds. The dividends are the best part – in 2013, the dividends might even outpace my employer match!

2) to have a full 12 months of expenses in an account that is accessible within 3-5 days, at the prior year’s spending level. Until I closed on the condo in mid-2012, about 70% of my assets were in cash and I had over two years of living expenses in cash. I’m now down to 9.5 months, with about 13% of my assets in liquid cash and 6% in taxable investments. 30% of my assets are in tax-advantaged retirement accounts that can’t be withdrawn except with huge penalties. 47% of my assets are tied up in my condo value and while I don’t like the size of my mortgage, I want to have a bit more money in cash. (The other 4% is my checking accounts.) It’s less about the percentage of my assets that are in cash and more about the number of months I could live off of my easily accessible funds.

3) to put the maximum I can into the Roth IRA through the front door. I need to do some more research before putting any more money in the back door. My deadline for this research is April 1st for the 2012 tax year’s contribution. This research will be important since I’m pretty confident I will be over the income limit to put any money in through the front door in 2013.

4) to put every purchase on a credit card. This may result in me moving my primary checking account (since it’s currently a dividend rewards account and only by making enough debit purchases do I get free ATM transactions). It will result in higher credit card limits since my current limits are essentially unusable. The first step is to ask my primary credit card credit union to increase my limit to $10,000. The second step is to ask my other credit card company to increase my limit to $10,000. It doesn’t hurt to ask, right? And they can always come back with less than that, but at least I tried.

5) to pay down the mortgage. I would like to get it under $200,000 if possible. A stretch would be paying it down to 50% loan-to-value (LTV) or to my 2013 gross income including RSUs.

6) to save 50% of my net income each month, ignoring RSUs. That seems like more than a reasonable spending level, so I’m going to try to stick to that.

7) to save 100% of my RSUs. Why? I don’t want to rely on these. 2013 could be an anomaly income year and I want to take advantage of that to increase my net worth by leaps and bounds. I think that I could increase my net worth by $100,000 without a lot of effort this year and I would love to do that!

8) to close the gap between debt and assets. There is a gap of ~$150,000 between my mortgage and my non-property assets (checking, savings, CDs, stock and bond investments). That is a huge gap. I don’t think that I can eliminate it entirely in 2013 (perhaps in 2014!), but I would like to narrow it pretty significantly. I think that I can get it down to ~$50,000 by the end of 2013, which is much more manageable and making it possible to reverse the gap (assets > debt) in 2014.

So my ideal financial structure would look like this at the end of 2013:

  • $100,000 in investments (2 years of expenses)
  • $48,000 in cash savings/taxable investments (12 months of expenses)
  • $200,000 in mortgage debt
  • $50,000 less in assets than debts

This may or may not be ambitious, only time will tell.

Readers, what does 2013 look like for you?

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15 thoughts on “Goals for 2013

  1. I want to get my emergency fund up to covering a full year of expenses, so I have a bit of work to do since I’m currently just under 6 months. My goal, although it’s going to be tough is to average 80% after-tax savings rate for the year, that’s going to be pretty tough, but if I can get my raise early enough in the year then I should be able to hit that since I know there’s still some fat left to cut in my spending but not much easy cuts.

    My biggest goal that I completely ignored in 2012 is weight loss. Before I started the job I currently have I was 25 lbs lighter and in great shape. Now not so much.

    Great goals for the year and best wishes with 2013!

    • 80% after-tax savings rate, wow! Your expenses must be a lot lower than mine because I can’t even really dream of that with all the fat in mine.

      Good luck with your goals and best wishes in 2013!

  2. Happy New Year! I love how you are starting with end goals in mind.

    I’m still working on our 2013 goals but I know we will really focus on paying down our mortgage. And I also want to write an IPS so that all our goals and asset allocation are written down somewhere.

    • I started out by writing down random goals and then I realized that I wasn’t understanding the why, so they were going to be useless. This was a much better way!

      Good luck with writing your IPS! Paying down the mortgage is so addictive once you get started. I think nicoleandmaggie has had that problem a few times too. It’s just so hard to put money into savings/the stock market when I could instead pay down this monstrous loan…

      • I’ve been focusing on the why so much lately and it’s allowing me to really focus. i’ll see if I can put that into my goals that I’m still writing.

  3. We do our financial reckoning when school starts. I’ll be enjoying my last semester of not having to worry about our cash flow. Then this summer or next semester, DH can start playing savings games if he wants, and we’ll have to examine purchasing decisions more carefully. Maybe we’ll do mint or something.

    • When you first set up Mint, it only pulls in the 2ish months of transactions. So it might be worth setting up now to have transaction history, even if you don’t set budgets yet.

    • Liability and points. With most credit cards if there are unauthorized purchases, you as the cardholder have zero liability and the charges will be reversed. I do a lot of online shopping and strongly prefer to use credit cards for that, but with how low my credit card limits have been, I’ve needed to make multiple payments before the bill even comes to keep the usage under 30% of the credit limit. And lastly, I can get points/cashback if I use a credit card!

      • I assumed points was a big factor, but I didn’t know if there was some other secret benefit that I didn’t know about. :)

        • Even 1% cashback on $2-3k/month of spending is $20-30/month or $240-360/year. I’m a huge fan of being rewarded for not even modifying my habits :) The problem before was that my limits were super low and so I wasn’t able to put much of my monthly spending on credit cards.

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