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Yesterday afternoon, my husband and I started to talk about our financial goals for 2010. We’ve got a number of categories to talk over for the next few days, so we decided to jump in the deep end with money — it affects so many of the other goals we’ll discuss. In a few weeks, I thought I’d start a series on this blog covering some basic financial steps, so our chat was a good primer to kick off the year.
I’ve been so inspired by my friend Crystal at Money Saving Mom, whose family goal is to buy a house with 100 percent cash. In 2009, they went from having 33 percent in January to ending the year with more than 75 percent. edit: Actually, according to Crystal’s post today, they ended the year at 100 percent! If they can make that much progress in just one year, anybody can. I know Crystal would say the same.
Evaluating 2009
In January, we had a few thousand dollars left to pay off our school loans. By April, we had everything paid off and could — for the first time in our adult lives — say that we were completely debt-free.
Our next goal was to save up six months of living expenses, and had planned to finish that off by the end of 2009. By God’s grace, we hit our goal by August.
So this fall, we saved up enough cash to take our first family vacation in years, and it was such a blessing to celebrate together. And so for 2010, we’re turning the page and looking ahead at making more financial goals.
Looking Ahead to 2010
Since we more or less follow Dave Ramsey’s financial plan, finishing our emergency fund means we are technically on baby step 4 — increase our retirement savings. But we have more that we’d like to save up for, so we’re tacking on some baby steps “3b,” “3c,” and “3d.”
Photo by Sue
1. Vehicle Fund
We don’t own a car for two reasons — we live in a city that has great public transportation, and we’re borrowing a car for the next few months from friends who are out of town. But since our third child is due early this summer, we’ve decided that we definitely need to own a car for our sanity.
Since we won’t take on debt, we’ll save up the cash and buy a late model, used, reliable car. This is our baby step 3b.
Goal: 100 percent by May 2010
2. Baby Fund
Yes, we have good insurance, and yes, almost all of our prenatal care and birth will be covered. But since we live overseas and the medical care here doesn’t recognize American insurance, we get the thrill of paying for everything in cash and waiting for the insurance company’s reimbursement. That means we’ll need to save everything up in cash first — that’s baby step 3c for us.
Goal: 100 percent by June 2010
3. Down Payment Fund
We rent, and are happy about that (especially while we’re living overseas). But we hope to buy a home sometime soon, and eventually we’d like to custom build our own design. That means we need a solid down payment, and that doesn’t magically appear out of thin air.
We would love to follow Crystal’s lead and put 100 percent down on a home. In the meantime, our goal is at least a 20 percent down payment on a 15-year fixed rate mortgage.
So after we save up for our vehicle, we’ll start this down payment fund in June 2010, making that our baby step 3d.
Goal: 50 percent of a down payment by December 2010
4. Increase Retirement Fund
In Ramsey’s plan, he recommends putting aside 15 percent of your income into a pre-tax retirement account and tax-free accounts. Rather radically, he advises to stop all retirement contributions while you’re working baby steps 1 through 3. We honestly didn’t do that — but we did keep it low. But now that we’re done with those steps, we’ll jack it up to 15 percent.
Goal: Increase retirement to 15 percent, starting in January 2010
Photo by Sasha Wolff
The Value of Goal Making
When you have concrete goals, you can rest confidently knowing that your money is working for you. Money isn’t scary anymore because it’s simply a tool, not a master. And when you make goals together with your spouse, it strengthens your marriage in so many other areas.
I hope you have the time in the next few days to talk over financial goals in 2010 with your spouse. Next Monday, I’ll start reviewing Dave Ramsey’s baby steps, which I know will energize me to approach this year’s financial goals with eagerness. I hope it will for you, too.
What financial goals from this past year can you celebrate? What are your plans for 2010?
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Great post! I am a new but faithful reader.
I read your other money management posts in your archives and set to work on a financial plan for our family.
I really enjoyed planning more than I expected to- with the plan came freedom. Knowing what we wanted to do with our money makes it easier to stay no to impulse buys- knowing that money will be invested into my remodeled kitchen in a couple of years!
Your progress in 2009 is inspiring! Good work!
Hubby and I have began setting financial goals almost 5 years ago. This is SO worth doing. We were able to actually see how we progress towards some intermediate goals, achieve them (such as have a certain amount in savings), set new ones. These goals are our motivators, they keep up going through the tough times. Tsh is 100% correct, everybody needs financial goals, they are good for you.
Emma @ Baby-log.com´s last blog ..Merry Christmas!
We have a couple of loans we plan on paying off in 2010–our van as well as a home renovation loan we used to convert our sunporch into another room.
Those two “tools” have really helped us family-wise, but it will be amazing to have them paid off!!
Jamie
steadymom´s last blog ..Do You Value Your To-Do List or Your Family?
Tsh, I am confident that you can reach all those goals. It sounds like you and DH definitely have the determination and discipline for it.
If I could make one suggestion…I generally appreciate Dave Ramsey’s strategies and advice, EXCEPT for his limited ideas on saving for retirement. My DH and I recently discovered what is called “cash flow” life insurance, or maximum-funded tax-advantaged life insurance. 401K’s, 403bs and IRAs can’t hold a candle to the benefits of the MFTA life insurance. I highly recommend you looking into that option.
Happy New Year of great financial abundance!
Emily´s last blog ..Have Yourself A Merry Little Christmas
Hi Emily – thanks for being a reader!
I don’t know much about this subject, but overall, I hear that investing via life insurance isn’t the best deal. Low interest rates, high monthly rates, and losing the savings upon death are just a few of the things I’ve heard about it. But I admit to not knowing a lot about insurance.
To anyone else who’s interested, here is Dave Ramsey’s philosophy on life insurance.
Thanks for sharing your $.02, Emily.
Our goal in January ’09 was to be consumer debt free by the end of the year. It seemed like an audacious goal at the time…and we had many set-backs this year, making it even more doubtful. Unexpected medical expenses came up more than once making it seem impossible. However, by some miracle, this week I’m am set to send in the LAST payment on our last remaining credit card! We did it! I can’t tell you how excited I am.
So, this year our goals include, completely funding our Emergency Fund, refinishing our basement (doing much of the work ourselves), and a family trip to Colorado this summer. It will be so nice to do these things without creating more debt! What freedom!
Congratulations! That’s huge.
We, too, became debt free (Per Dave’s definition – i.e. except for the house) and save our fully funded emergency fund. We’re also saving up for several things while we work on Baby Step #4, #5, and #6. I love the fact that we can now do multiple steps at once. We’re saving for a car replacement fund and some major home improvements. We have a wish list that we’ve prioritized and complete in a similar fashion to his variable income worksheet. It’s so awesome to see the power of money when you’re not a slave to the lender.
Congratulations on your hare work and best wishes for 2010.
We came across DR just a few months ago and love it. We’re on Baby step 2 and loving the purpose of having a goal and an aim in life with money that we’re united on.
Your goals for the coming year look totally do able.
All the best.
Melitsa´s last blog ..Raising Playful Tots Podcast #6 Christmas Play Activities
We got aboard the debt-payoff train this year too and by decreasing spending & increasing our income were able to pay off $40K in school loan & car debts – now onto the mortgage (our goal is to have that paid off in the next 5 years) while beefing up retirement and kids college funds. Always inspired by your financial posts Tsh! Happy New Year!
LobotoME´s last blog ..{ starting off fresh }
Love it! I’ve found that getting one’s finances in order is one of the biggest feelings of RELIEF there is. Making a budget can be tough – especially when unexpected expenses come up randomly (dental work, car repair, gallbladder surgery, etc.) but having a firm grasp on all your assets, as well as your debts, can give you such a feeling of calm. Even if there’s not as much money there as you would like in your accounts, knowing is always better than that nagging feeling in the back of your brain that worries that you DON’T have enough money, and aren’t really sure of what you’re spending and what you’re saving anyway.
Doing this exercise with your husband is such a great exercise. It’s inspired me to do the same! Thanks, Simple Mom!
Plain Good Sense´s last blog ..Tonight, as you lay down: Count your blessings!
I loved this post! I wish my husband was on board with my when it comes to financial planning, but we’re so far into debt it often seems like we’re just struggling to catch up with the last 6 months. You are very blessed to have a husband who is right there with you.
We are not quite as far along on paying off debt as some are, but I am still proud of what we have accomplished. We are completely debt free except the house, and a student loan. We are now working like crazy to pay off that student loan, and believe it is possible within two years, which is huge for us!
Taylor at Stain-Removal-101.com´s last blog ..Beer Stains – Beer Stain Removal Instructions For Fabric, Upholstery And Carpet
We are just starting the getting debt free journey. I really appreciate all the articles you’ve posted over the years. This one was just encouraging to read, to know that it can be done!
We’ve only taken the tiniest of baby steps in the last week or so, but already, I feel so much better in heart and mind. I feel like we’re going somewhere instead of digging deeper and stressing out more. There’s a battle plan now…ruthless.battle.plan. I’m done with the stress!
Joy´s last blog ..The Christmas Re-Cap…
Thanks for sharing these! It is so encouraging to see while we are on Baby Step #2. Love the encouragement to keep going!
Amber´s last blog ..~ Lovin’ Kids’ music! ~
I’m excited that you’ll be featuring posts on financial matters in the coming weeks. The financial posts in your archives are what turned me into a devoted Simple Mom reader almost 2 years ago!!
Wow, we have very similar financial goals for 2010, Tsh! In addition to a car fund, a baby fund and saving toward our house “upgrade” several years from now, our family also needs to figure out how I will be able to (sensibly) buy into my company. I was just informed before Christmas that this opportunity was forthcoming early in the New Year, and we still need to put pen-to-paper and figure it out!
Goal setting is huge. I’m hosting a self-improvement challenge at my site to kick off the new year, and it’s amazing to see the wide variety of areas folks are tackling. But even the more “obscure” areas (communication, spirituality, etc.) need concrete goals…even if they aren’t as immediately obvious as those created for financial or weight loss initiatives.
Dustin | Engaged Marriage´s last blog ..Want an Exceptional Marriage? Stop Living in the Valleys!
How about saving for college? We started a money market fund and a 529 for each of our boys when they were born. Though I know there are parents who believe schooling should be the responsibility of the child, I believe this is one of the best gifts my husband and I can give our boys.
It is satisfying to watch their accounts grow. If, by some chance, scholarships cover a part of their schooling, they will have money to put toward an eventual down payment on a home after schooling is down.
Caroline Starr Rose´s last blog ..Why We Read
The reason most financial planners recommend saving for retirement before funding your kids’ education is that there are financing options for school in the form of scholarships and loans (which you know). But there isn’t any thing like that for retirement. You’re on your own for that! And based on the current state of social security, it’s wise to plan on being completely on your own. Most people underestimate how much they’ll want and/or need to live on, and overestimate the value of their house in the equation. You’ll have to live somewhere and you will never have “free” housing – even if you’ve paid off your mortgage you’ll always have property taxes (which tend to rise) and utility bills.
Of course, it’s always great when you can save for both!
Saving for kids’ college is Ramsey’s baby step 5, and we plan on doing that soon. But, for the same reasons Kelly here mentions, we’re not as concerned about that as we are beefing up our retirement as much as possible.
We feel like the best gift we can give our kids is a combination of a financial reward for education and an upbringing that’s filled with wise financial education. I want our children to leave the home understanding money management, investing, debt, and good stewardship. If we aren’t able to help them 100% with college, then my hope and anticipation is they’ll have a wise enough head on their shoulders to make smart choices, like working through college and paying for it in cash. As their parents, we’ll do what we can, though.
A very interesting topic. I think Germans are not so familiar with the thoughts about budgets, but it’s really a good thing.
Micha´s last blog ..Ananas und Chili / pineapple and chili
How exciting to be debt-free, and to finally be able to work toward your dreams.
We’re still working on the debt repayment part, but with diligence, I know we will get there!
Alissa´s last blog ..Mvelopes
Dave Ramsey is the man! His information has changed our lives and we are on our way to becoming debt free
Little Red Hen Mama´s last blog ..To Do List
We are excited that, in spite of a major financial setback with a year of unemployment in 2008, this year we were able to pay off all consumer debt, put away 4 months of living expenses (need to get up to six or more) and we had previously paid off two cars. We still have a student loan and a mortgage, but by baby steps we feel like we are making progress in the right direction! You are so inspiring Tsh! It sure does help to have goals and just seeing you realize yours makes me all the more motivated!
melissa @ the inspired room´s last blog ..Inspiration: Laundry Rooms
Ah, I just heart Dave Ramsey! We got his book a few years ago, and I couldn’t get hubby on board. Back then, money was never an issue really. This year, however, finances have become harder to come by! =-) In fact, we can count on regularly irregular income. Sooo…I feel like it is almost impossible to have any sort of budget. It’s more like – just save as much money as possible wherever ya can to help cover expenses – and don’t worry ’bout it!
Anyway, going through what we’ve been through this year has certainly changed our mindset on money for the better. If the economy ever picks back up again, then we will be equipped to handle finances better than ever because we have resolved to never take on any new debts. If we don’t have cash saved up to pay for it – then we simply don’t buy it. Also – once the economy picks up – we will be able to pay off our previous debts. Can’t wait to say that we’re debt-free!
BTW, Tsh, we can help you with your #3! Hubby is an architect and can hook you up with some fab custom home designs~! ;-D
Congratulations on baby #3!
In 2009, my husband and I were able to pay off both of our vehicles, and have 15% down for a townhouse that we purchased in Sept. Woo Hoo!
Goals for 2010?:
Replenish the savings account.
Open savings or some sort of savings accounts for our 2 kids.
Fence the backyard and add a patio- this will be paid for in cash.
Possibly a family vacation to the beach, our daughter is 19 months old and I’ve love for her to see the ocean! (this too will be paid for in cash.)
What a fantastic post! Exactly what my husband and I have been discussing the past week. I keep hearing wonderful things about Dave Ramsey’s program, I’m going to have to check it out!
Cary´s last blog ..Word of the Year: CREATE
Congrats on meeting your goals for 2009! And Congrats on baby #3!
I keep wanting to get a handle on my finances, but just don’t know where to start. I’m still a full-time law student and recently became a single mom. So with no job for a least a year and no steady other income coming in I fear I won’t be able to get a handle on things for this year.
LaToya´s last blog ..Jesse Tree
I can understand your fear, LaToya. Have you ever listened to Ramsey’s radio show? It’s also podcasted and available for free on iTunes. It would probably be a real encouragement and motivator for you. It definitely is for me; I try to listen daily.
I have to admit to being a real chicken when it comes to finances. The Lord knew what He was doing when he paired me up with my husband. He’s a “to the penny” kind of guy. I think my goal for 2010 would be to make sure I get the low down on our finances for myself. He always wants to sit down and show me, but it just never sounds like much fun. This year I need to just do it, and maybe make it fun…like a chocolate sundae meeting or something.
Polly´s last blog ..So glad you are here!
This is what we do — a dessert “date” after the kids are down, updating each other on our finances. Most of the time it’s a quick, weekly update, but once a month, it’s longer as we talk over next month’s budget.
great post. I wish my hubby was more into making money goals. I am such a saver and planner. I am also so ispired by Crystal, I can’t believe her family could do that!
I’m a new reader too, but I like your blog so much I’ve added it to my “Mom’s Blogroll”!
Such a valuable post!
Great article! This is something that every family needs to sit down and reassess each year! Great points to start with too! Happy New Year everyone!!
The Pursuit of Mommyness´s last blog ..The Pursuit of Mommyness-Best of 2009 Blog Posts!
I’m really enjoying reading everyone’s financial goals and the milestones they reached this past year. Congrats to everyone!
Wow praise God, that is so awesome.. really, to be commended. God is really blessing you. No debt is so great.
Erika
Thanks for the reminder. It helps to have intermediate goals along the way to keep you motivated. We have a BIG goal we are working towards, for which one of the steps is to shed all of our debt besides mortgage. But I can see how it is helpful to break it down and have a goal for each individual piece of debt. If we continue on our current path, we will have eliminated credit card debt by mid-year 2010, and be able to start paying student loan down more aggressively.
Laura´s last blog ..Magic
congratulations on reaching your goals. i am also a dave ramsey’s follower.
Hi Tsh. It changed our marriage when we finally got our finances in order a few years ago (paying off debt, no car payments, etc.) and having a plan. Even tho it’s been a tough year for us, you are right when you say money isn’t scary when it’s a tool, not a master. But our marriage didn’t start off that way, and it took HARD work! That’s why it’s so important to encourage others, like you are so good at doing!
Great post. Happy almost New Year!
Sandy´s last blog ..Did I do the Right Thing?
I didn’t want to let the cat out of the bag until Crystal announced it on her blog, but they are all the way there…100% down for the house. Isn’t that amazing.
We are only six years away from paying off our house and then we’ll be truly 100% debt free. Most of the other baby steps were completed before this year, so we’ll have to start over with a new with savings stash etc, but what a relief that we had planned in advance.
I never, ever would have thought I would be leaving a comment here at the end of 2009 saying that we are coming up on our one year unemployment “God Watch” and still are debt free (except for the house.) Having the freedom of debt free living in this economy, along with our relationship with Christ at the forefront, has been what has gotten us through. I am so blessed that we were committed to paying cash for the completion of our “attic”.
Initially, we applied for a $50,000 home equity loan but just felt it went against everything we had stood for in our financial planning. Wow, I am so thankful for that decision. We lived under our means for years socking away every dollar to finish that off so our kids would have an extra bedroom/teen hangout/mini kitchen. Well, we have lived off that “attic fund” for the last five months (after my hubby’s severance was completed).
Had we gone ahead and finished it off when we had a job (and many people encouraged us that this is the time we should do it, so the kids can enjoy it), we may have built a gorgeous addition, but probably would have lost the house in the process.
All I can say is “Paying cash rocks.”
Jen@Balancing Beauty and Bedlam´s last blog ..Recipe Ideas for Tasty Tuesday
That’s so cool, Jenn! Thanks for letting me know about Crystal — I’m going to write her a congratulations email in just a sec.
And I’m praising God with you for the foresight you had to live under your means and pay cash, and for holding off on your (awesome-sounding) remodel. So thankful for that in your life!
Thanks for sharing.
we too have followed the dave ramsey plan for 5 years now… but haven’t been doing well lately with sticking to the budget and we need to re-evaluate everything… Question- We need to rebuild our emergency fund, but have 15% going to IRA’s and we are a one income fam. (no debt) It is very hard to save much at all with most of our left over $ going to IRA accounts. So, would it be wise to stop or lower the 15% and build the emergency fund back up really fast this year or stay the way we are and build it back up slowly. thanks for any input!!
I don’t have any advice based on personal experience, but Ramsey would say to stop contributing to retirement until your EF is complete. Then go right back to it.
okay. sounds good, thanks for responding so fast!
We are also followers of Dave Ramsey’s Baby Steps. This year, we became debt free (except for our house) and reached our fully funded emergency fund goal. But my husband also lost his job this year, so we are continuing to contribute the emergency fund until this storm cloud passes. In 2010, we want to move to Baby Step 4 (increasing retirement savings), Baby Step 5 (college savings) and Baby Step 6 (paying extra on our mortgage).
The Working Home Keeper´s last blog ..I *Heart* Target Clearance!
Wow – those are impressive goals! Even if we saved every single penny we brought in this year, we would not be able to save up for even half of a 20% down payment on a home. Houses are just so expensive where I live that I doubt we’ll ever be able to afford one within 25 miles of the city.
I’d love to pay off my car this year and be debt-free again. Is it possible? Yes! Probable? Um, depends on how healthy my cat stays. We unfortunately spent a good amount of money keeping our cat alive this past year. He’s healthy right now. But expenses on pets mount quickly. Good thing you don’t have pets, too! Yikes on the new baby (congratulations, by the way!) – my hospital stay cost more than $10,000.
I put together some financial plans and goals for 2010, too. We are still working to build up a savings account and to pay off our car.
Thursday, I know what you mean about your cat. My expense was dogs. I lost one to Lyme disease and almost lost another to severe allergies that became a chronic skin condition. When we got a new dog, I decided to buy pet insurance for the first time. While his pre-existing eye problem is not covered, I did get help with shots and neutering and future health problems. I will get the most basic policy in future years, which doesn’t cover shots, but will help with health problems. Unfortunately, dog health insurance is not like people insurance, where vets have to lower fees to the insurer’s allowed amount. It is more like a partial reimbursement plan.
Katelyn´s last blog ..Family Fitness – Bus Stop Exercising
I love this quote:
“When you have concrete goals, you can rest confidently knowing that your money is working for you. Money isn’t scary anymore because it’s simply a tool, not a master. ”
It’s a lesson that I wish that I had learned much much earlier. 2009 was both a challenging and good year finanically. We were able to pay off both of our cars and about $20,000 in short-term debt. We also had saved up a $1500 emergency fund, but then had two emergencies that ate through it. (we were very thankful we took Dave Ramsey’s advice and had that emergency fund in place!)
Our goals for 2010 are to rebuild our emergency fund and pay off ALL of our non-house related debt. It’s a big goal, but I really feel that this is the year we’re going to break free of debt. What a huge difference living debt free will make to our household.
You are blessed to be debt free and be working towards your future goals. It is a powerful statement for your family!
…Shannon
Shannon at Living Life at Home´s last blog ..Frugal Cooking: How to get 4 Meals from 2 Whole Chickens
Good Luck! I am working on writing up our financial goals for the new Year. It is so good to see others working toward similar goals!
LeaDawn Grant´s last blog ..Broulims
I would love to be living closer to debt free-without school loans and a car loan. However, I have a hard time finding time to budget while being a full-time working mom. It’s hard to find the time to plan out grocery shopping trips, etc.
Any advice on this?
You might get some insight here starting next week, when I start a series on Dave Ramsey’s baby steps… stay tuned!
My husband and I are starting our journey to becoming debt free. We have so much debt but are SO MUCH MORE SERIOUS about getting OUT of debt. We have discussed becoming debt-free before but never really stuck with it. But not this year! We are so very serious about it. I have read Dave Ramsey (LOVE HIM!) and have started a “zero-based budget”. That has really helped me to see where our money needs to go. We have written out some goals for 2010 and really hoping to do more than what we wrote down. Thank you for your post!
Terrific goals! We bought a house with maybe 6% down on a 30 year note, and I will NEVER do that again. We have a fixed rate, so it isn’t that bad, but it just kills me to pay PMI every month. It’s a penalty for not having saved enough, basically! In 2010 we will be working towards getting 20% equity in our home so that we can stop those PMI payments. We are also going to start the college fund for our little one and pay off my husband’s loans. Mine will get tackled in 2011.
tiffany´s last blog ..Belly Laughs
Thanks for sharing your goals, Tsh! It is inspiring to read what others have accomplished and are planning to do, and it prompted me to sit down with my husband and evaluate our finances. I’d love to drag him to an FPU class, but I think it’s going to take some convincing.
It is Divine Guidance that got me to your blog today. I go to a preview “Finanaical Peace” university on Sunday. I am trying to get my husband on board. Plan on my visiting you often for inspiration, along with Crystal!
Thanks!
Matty
Matty´s last blog ..Pigs and Cokes
I just recently found your site and I love it! My husband and I did our financial planning for 2010 this morning, and I feel great about knowing that we are both on the same page, as to what is happening with our funds. Keep up the great work!
Fleurzty´s last blog ..Jan. 08 Twists
Tsh, Thanks to your blog, I have Dave’s book and a plan. I don’t recall seeing anything for single mothers. I have days I feel like I need someone to keep me on track. Is there a section in his forum for this situation?
One thing that set us back financially last year was our house burning down, and losing everything that mattered to us. We didn’t have any pictures of our things, no receipts, no record of what we had. The insurance company made it very difficult for us to get our things replaced.
We wanted to be sure that our things were safe if something like that ever happened again and I recently found a web site that helps keep track of that kind of stuff.
I wanted to share it with other families in case this happened to them. It’s called e-pact, http://www.e-pact.net and we use it to keep track of all our stuff now. Just hope this is a helpful tip.