2016 Plan

Goals

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.

Spending

  • $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.
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11 thoughts on “2016 Plan

  1. I like this plan!!! I am not planning myself to have any net worth increases in 2016. More like decreases especially in January when charity & taxes come out.

    I am out of a job as of today and hanging around the home tends to make me spend $$$$$…. so I am trying my best not to inflate my lifestyle

    Maybe I should do a spending plan.. or not. I hate limiting myself. That said, maybe I should make it a goal to try and stay within that spending plan. Perhaps I’ll be more interested, then.

    Curious — your net worth is your household net worth right, with the two of you?

    • Nope this is just my net worth. I know of my partner’s net worth, but I don’t track it with mine. We don’t track our spending together either, other than at the end of the year. Since I have all of the housing expenses, he has a bunch of other expenses, like groceries, utilities, and some shared travel, which is why I underspent on travel this year.

      I don’t find that limiting myself with spending works very well, but I do find that I can predict some things relatively well, so I try to do that.

  2. That’s a huge net worth increase projection! I wish you the best. I’m projecting a pretty big one as well. 2015 my net worth increase was basically just my contributions since the equity markets were relatively flat. I’m also going to try to get a bigger hold on my spending. I’m going to shoot for under $30k, which I got decently close to in 2015. But I have a ton of travel planned in 2016. Hope 2016 is great for both of us!

    • Thanks! A good portion of the expected increase is from appreciation of my condo and stock investments at this point, but mostly savings still. My increase this year was mostly my contributions. We will see how next year goes on that.

      Under $30k would be great! I keep hoping my spending will go down from the $48k figure and then not quite getting there. Maybe I will this year by over budgeting! ;)

      Here’s to a great 2016!

    • :) that is a good plan!

      My plan is really summarized as accumulate cash and max out retirement accounts, until I feel like I have too much cash. I’m not sure when that’ll be.

  3. Yay on the dropping budgeting and prioritizing after tax contributions – I do the same thing in terms of depositing into the account my last years expenses/24 (+ a bit for yoy increase) each paycheck (we can split our paycheck into different accounts unlimited times as far as I know, so I just do it directly from the paycheck).

    • I can split my paycheck as well and I would probably do that if I wasn’t front loading my 401(k) contributions for six months while also maxing out the ESPP and thus leaving me with no paycheck. As it is, my plan is to deposit my paychecks and the ESPP sale proceeds to my savings account and I have an auto transfer out of there set up to cover my estimated monthly spending. This system allows me to do the same thing all year long.

      :) I’m happy to hear you use a similar system! That gives me hope it’ll work.

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