1) Enjoy living together!
2) Do well in grad school and enjoy it!
3) Do well at my job!
4) Contribute the maximum to all tax-advantaged accounts available to me. This means $5,500 in a Backdoor Roth IRA, $18,000 in a pre-tax 401(k), some additional funds to the after-tax 401(k)*, the maximum to the Employee Stock Purchase Plan (and selling that right away), and the maximum to my Health Savings Account. This will account for probably about 75% of my savings in 2016, though the ESPP funds will be reallocated once they’re sold.
5) 7,000 steps per day.
6) Spend no more than in 2015 ($48,000).
7) Save 70% of my net income before tuition savings account withdrawals. (This is achievable if I spend no more than $48,000.)
8) Increase my liquid funds (including my stock index funds outside of retirement accounts and my Series I Savings Bonds, but ignoring the grad school savings accounts) to two years of living expenses. This means adding $40,000 to my general savings account in 2016, some of which will probably be put into Series I Savings Bonds and/or CDs.
9) Pay down the mortgage with what’s left. I anticipate having about $0 left after all of the other goals in 2016. (I don’t anticipate being able to meet the liquid savings goal in 2016 – my current figures show me coming up about $5,000 short.)
10) Turn my “taxable assets – debts” figure around so that taxable assets are > debts. (This is my “golden” goal for 2016.)
I’m anticipating total compensation from work around $170,000 plus bonus for a net worth increase of around $145,000. I’m anticipating saving about $87,000 of that figure.
*I’ve debated increasing my liquid funds some more before contributing to the after-tax 401(k), but since those contributions are withdrawable with minimal penalties/taxes and I already have a decent enough for now amount of liquid funds, I’m going to do the after-tax 401(k) contributions first.
- $23,000 Housing: mortgage payments, HOA dues, property taxes (assuming a 5% increase from 2015), condo insurance, cell phone bill, condo maintenance
- $3,600 Travel: We both have a reasonable number of points to put towards a trip, but due to various circumstances, I’m not sure if we’ll be able to use them, so I have no idea how much we’ll spend here. I’m going to guess $300/month for now.
- $3,000 Gifts and Donations: I donate 1% of my gross income to various charities and give about $100 at weddings, birthdays, and Christmas to each person on my shopping list.
- $2,400 Transportation: car insurance, vehicle tab renewal, fuel, tolls, oil change and wiper blades
- $2,000 Clothing: guess as to how much I’ll spend
- $1,400 Entertainment: hanging out with friends
- $1,000 Recreation: I’m guesstimating 3 pairs of athletic shoes of some sort, a punch card of yoga classes, and a few other activities.
- $1,000 Medical: I seem to spend about this much per year
- $900 Personal care: eyebrow waxes, toiletries, facials and massages, and hair cuts.
- $600 Food: This is just lazy eating out including work lunches.
- $275 Life: Umbrella insurance and NEXUS card as I renewed my driver’s license and passport in 2015, so they’re good until 2025!
- $200 Shopping: I replaced my laptop and upgraded my desktop in 2015, as well as buying a new cell phone, two purses, a sunglasses case, and a new computer desk and chair. I think I’m doing just fine in this category, but I’ll leave $200 here as a buffer.
- $39,375 Total
I’ve written this down as a spending plan, but honestly? These are just the things I know about. For the last several years, I have pretty solidly spent in the $45,000 to $50,000 range. 2014 fell pretty much spot on $48,000, as did 2015. So I honestly believe I will end up spending somewhere closer to that figure than this $39,000 figure. I have a guess I won’t be too spendy since I’ll be otherwise occupied with grad school and I hear that keeping busy helps you to spend less money, but we’ll see how that goes ;)
Instead of budgeting in 2016, I’m simply going to transfer (2015 spending – charitable donations) / 12 to my checking account each month. Why ignoring charitable donations? That budget goes to a savings account that when the budget gets large enough, I’ll switch over to a donor advised fund. I’ll check in in June to see if I am significantly under or overspending that and then I’ll reconcile in December.
End of year forecasting
Including my employer’s contributions to various accounts and expected market contributions, I expect the end of the year to look like:
- $735,200 in overall net worth (a $143,700 increase)
- $95,900 in savings (a $36,100 increase)
- $280,000 in investments (a $71,000 increase)
- $125,000 in mortgage balance (a $9,000 decrease)
- -$4,500 in taxable assets – debts (a $43,500 increase)
- $644,600 until FI (a $116,700 decrease) *note to the naysayers: this is a target to shoot for and once I reach it, I’ll do some more exact calculations because until I reach it, I’m definitely not FI :) Until then, I’m using a 4% SWR of my investments bucket, a paid off mortgage, and the rolling last 12 months of expenses to calculate my target.
- A split of 14% cash / 48% condo equity / 38% investments (changed from the 2015 EOY of 11% cash / 53% condo equity / 35% investments). At its highest, my condo equity was about 60% of my net worth.