2015 was an interesting year in terms of my personal finances. I managed to continue tracking every dollar spent and using my framework of a budget. I also managed not to carry over any credit card debt (meaning all balances were paid off each month, accruing zero interest). I increased my 401k contribution to 9% of gross pay, maintaining the 3.5% company match. So, three positives.
On the other hand…I spent a decent chunk of cash on two major events. First, in May, the girl and I got engaged! It was exciting and we are enjoying the wedding planning process, but the ring and the related wedding expenses has definitely put a damper in my savings. Then in August, we bought a house in Midtown. We split all expenses 50/50, so I paid half of the $12,500 down payment, half of the closing costs and half of the moving expenses. I had to move quite a bit of money around, and cash out my old traditional IRA that was funded with a cashed-out pension fund from a previous employer. Sure, I’ll take the tax hit (I had them withhold 28%) but I’ll avoid the 10% penalty since it was for a first time home purchase.
With that as the backdrop, here are my 2016 Financial Goals:
#1. NO. NEW. DEBT.
This is the most important one. Obviously last year I added a massive load of debt with the house mortgage. Additionally, we added some furniture at 0% that we will pay off this year based on our calculations. It is critically important to not add any more debt to what I’m already facing between my car loan, my student loans and the mortgage/furniture bill. In order to accomplish this, we must be vigilant about…
#2. No debt for the wedding
I’m confident in this one. We have set a budget for what we’re willing to spend and we have been diligent in funding that account. So far we have paid for all expenses (deposits, dress, suit, etc.) in cash, and have built up a bank to cover what is left. We will continue to build that up so that on the day of our wedding we won’t owe anyone anything.
#3. Pay off smallest student loan
Sure, it isn’t the biggest one I have, but my third loan has a balance of $1987.25 and an interest rate of 5%. It’s paid quarterly, which is annoying, so I’d like to just kill it off this year and not have to worry about it. This should be completely realistic.
#4. Increase emergency fund to $10k
I’m currently at $6900 so I’ve got $3100 to go. Most of the savings will happen in the back half of the year (wedding in April and honeymoon in June), but I’m confident it can happen.
#5. Stretch goal: Pay down highest interest rate student loan to <$10k
If we maintain #1 and #2, this could happen. It’s at $13,800 right now @6.8%, which definitely puts this as a high priority loan. Cutting out some entertainment and discretionary spending would help a lot.
My calculations say that doing this, along with maintaining minimum payments on my other loans, would put my personal (non-home) net worth back in the positive. It will also also me and the girl to have an awesome wedding day with our family and friends, and enjoy a great honeymoon on a tropical island.
Coming soon: personal and health goals for 2016