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"Goals"
Woe be unto those who attempt to build a Savings Laser; ours has been sputtering crazily for the last couple of pay periods. We were off to a good start there at the beginning, right in line with what we were projecting. However, when a car payment was paid by check and a credit card payment was made online, it left our checking account teetering on the edge of the $1000 threshold set by First Niagara for the privilege of No ATM Fees. So we pulled back $600 of the $700 for that pay period (lame!).
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In a prior post, I discussed how I want to keep track of how much money I save by bringing lunch to work by transferring $8 per brought lunch from checking into savings. Well, so far that has netted me a whopping $24 over two weeks. I definitely didn’t bring lunch as often as I had hoped 
.
I’ve also outlined that a short term goal of mine is to determine how much money to invest periodically in Lending Club. Well, it turns out my goal and my lunch money saving scheme work well together. I now plan on taking my cash that I save for lunches and putting it into Lending Club. You need $25 to make one loan at Lending Club, so I can make one loan per week if I bring lunch 3 days (rounding up slightly to $25). This should work out great for the short term to really get me started with lending club.
That’s ~4 loans a month, so after 1 year I should have a fairly diversified loan portfolio. I’ll probably seed my first investment with a bit more than $25 just to get some diversification early on.
Well I’ve been making some progress on my goals, so I thought I would put out an update:
Goal #1: Life Insurance
OK, so when I said some progress, I didn’t actually mean on all of my goals. I totally slacked on this one. Truth be told, I’m a little daunted by this one because I don’t really know how to shop for insurance. I know I want term life insurance, and probably about how much I want, but who should I get it from? Are some policies cheaper than others? Are some policies better than others? Anyone? Anyone? Bueller?
Goal #2: Get Emergency Savings to $10,000
BAM! Done! I currently have almost $12,000 in my emergency fund. I’ll be siphoning off the extra above $10,000 and putting it in other accounts, like one for goal #3, and putting some of it towards student loan debt.
Goal #3: Begin Saving for Second Home
This one turned out to be two goals, the first of which was to actually open an account for house savings. But then I realized I had an unused ING savings account that I had opened just to get a bonus. I’m also taking $1,000 out of the emergency fund and putting it into this account. Over the next few months I should be able to define exactly how much of our paychecks will go into this account. Goal #3 Complete!
New Goals
Now that I’ve completed a few of my goals, I’m going to add a few more:
- Determine how much per pay period we want to save for our new house, and make it automatic via a direct deposit or a transfer.
- Start a periodic investment in a Lending Club account
- Start a periodic investment in my Scottrade account. We currently have $100 in that account, but it’s just sitting there, not invested, earning no interest.
Overall Progress
Anna and I got engaged in May of 2011. It’s been kind of a whirlwind romance, considering we met only a year before that–in that time we dated long distance, and after 7 months she moved here and started a new job. I proposed to her the day we moved in together and we immediately started planning our nuptials.
In our discussions we had two dates in mind, either this October (to take advantage of the lovely fall weather, and keep on our already pretty accelerated courting schedule), or next April which would give us longer to save money and get married on the anniversary of the day we met. In the end, we decided to go for the closer date for a variety of reasons, but above all: we just really want to be married.
Our Goal
I put together a spreadsheet in the first week and have been refining it ever since. Our back of the napkin estimate for a wedding party with ~100 guests (including catering, photography, location, booze) started at $10,000 and has remained around there even as we’ve ironed out the details. Add our honeymoon in there (7 days in Mexico!) and our current estimate is a grand total of $13,925.
Starting Point
After purchasing the ring, I had about $1,800 left over. That became the seed around which the rest of the savings have grown.
The first thing I did was to create a new ING Direct account. ING is where I keep all of my short term savings: it’s easy to move money around online, you can create multiple accounts for free and earmark them for whatever you’d like, and it still pays some interest (1% as of this writing). I currently have the following accounts set up:
- Home Improvement – About to be totally cleaned out by my siding contractor
- Car Insurance – A way to pay myself every month and get some interest before paying State Farm every 6 months.
- Motorcycle Accessories – $25/paycheck goes a long way when you shop very rarely for the bike.
- Travel – This allows us to have a cash buffer for vacations when we feel like it.
- Emergency – I’m not going to tell you the balance here, but trust me: it needs work.
- Wedding & Honeymoon – The new addition!
Anna is an incredible saver, even though she’s pretty disorganized about it. She had about $6,000 sitting in her checking account and we immediately moved $4,800 of it into the Wedding & Honeymoon fund, giving us a huge head-start at $6,600. After that, we had $7,325 (give or take) to go, and 23 weeks (11 pay checks) to get there.
Saving
With that goal and that timeline, we were looking at $1330 per month that needed to be put away in order to make it in time. I immediately diverted all of my monthly savings to the Wedding & Honeymoon account and added a bit more on top of that. That turned out to be $600 per month. It may not sound like much, but I let my salary pay for all of our fixed expenses (with the exception of Anna’s car payment) while she covers more of the fun stuff.
Since she had moved into my house, that freed up at the very least the cost of her rent, or $725 per month. Rather than impose an automatic savings plan on Anna, we let her savings grow organically in her checking account, but as she is by no means a spender, this was not an issue.
That put us just shy of our target at $1325 per month.
Gifts and Happenstance
We were very fortunate to receive $3,000 from Anna’s grandpa and an additional $1,000 from mine, along with Anna’s $1,850 deposit from her apartment. All of this brought us closer to our goals.
Diversions
As always happens, there are other things to spend money on. We had some house work that required about $3,000 which was not in the Home Improvement account, so this came out of the Wedding & Honeymoon fund, dropping us back a bit.
Bottom Line
With 5 weeks left to save, we have $110 remaining to pay for the wedding and the honeymoon. This puts us in a great position, and well ahead of schedule. We can continue saving into the wedding account, and after the wedding divert anything left into the Emergency fund and start growing the bottom line there.
| Item | Amount |
|---|---|
| Estimated Cost: | $13,925 |
| Spent: | $1,839 |
| Owed: | $12,086 |
| My Savings: | $6,976 |
| Anna’s Savings: | $5,000 |
| Remaining: | $110 |
Later I’ll write a post about our personal savings plan going forward–as soon as we have one. Don’t expect it until after we get back from the honeymoon.
I’ve got some short term goals that I would like to get out there to help keep myself accountable. I feel like I’ve been slacking a bit on these, so I hope writing them down here will help me work towards resolving them.
Goal #1: Life Insurance
I currently have quite a bit of life insurance through my work at a very cheap price. However, I feel like I need to have a longer term life insurance solution, especially with the new baby. Through work, I automatically get 1.5X my salary in basic life insurance, and I pay for an additional 5X my salary for supplemental life. But if I were to lose my job for some reason, then that life insurance would be gone. For this reason, goal #1 is to get a 20 or 25 year term life insurance policy that will cover all of our current debts, plus put my son through college. Anyone have any suggestions for good life insurance? Are they all the same?
Goal #2: Get Emergency Savings to $10,000
I currently have about $6,400 in an account called “Joint Savings”. However, this account represents emergency funds as well as cash available for spending on bigger things, like trips or my recent trailer purchase. The goal herer is to separate my emergency fund into it’s own account and get it up to $10,000. I think my method for doing this will be to continue saving in my current account until it reaches $10,000. Then I will open a new account for general savings
Goal #3: Begin Saving for Second Home
As a middle-term goal my wife and I would like to move in to (or even build) a larger house. We would like to also have this house be on some substantial amount of land, like maybe 8+ acres. A secondary goal to this is to keep our current home and rent it out once we are able to move into our new home. This is going to require us to save for a down payment on the second house, because we aren’t going to be able to tap the equity in our current home as a down payment. We need to setup an account and start automatically funding it every pay check. I think saving for this starts when Goals #1 and #2 are complete.
Donald
Age: 32
Assets: $401,669
Liabilities: ($129,290)
Net Worth: $272,379Memberships
Paul
Age: 31
Assets: 477,660
Liabilities: ($123,725)
Net Worth: $353,935
