In the week between Christmas and New Years it is common to look back on what we’ve accomplished and learned and begin to focus on goals for the coming year. Does anything really change when we flip the calendar from one year to the next? Aside from a tax standpoint there really is no difference between today and January 1st yet we are compelled to commit ourselves to change. I am no different. The changing of the year seems as good of a time as any to make changes, but I refrain from setting too many concrete goals or resolutions.
Events of 2006
The past year has been one of significant change. Between my wife and I we saw three new job changes, a significant move to a completely new location, the purchase of a home and struggles with many unexpected events and expenses. The year has for the most part been dealing with change and becoming adjusted to new surroundings and fiscal responsibilities. These changes made it very difficult to become focused on any specific goals and it often felt as if we were flying by the seat of our pants on a daily basis.
Financially speaking 2006 was good to us. Each job change mentioned above introduced increased income and benefits. These changes did impact to some extent retirement savings due to new employer restrictions on length of employment to begin contributing to and receiving a match in the employer sponsored retirement plan. 2006 continued to be a debt reduction year. With fairly significant debt lingering in the form of credit cards and to a greater extent past business debt nearly every additional penny left over went towards paying that down. This left very little in the way of available expenses for luxury spending or vacation, but our plan to be completely consumer debt free (credit cards, auto and student loans) in four years is a top priority.
This coming year will differ greatly from the last. Having been in our new home for almost one full year and establishing permanent positions within our career paths will provide some stability to our lives that was lacking in 2006. This stability and routine will help establish a method that caters to focusing on a few specific goals as opposed to worrying about every day as it comes. I don’t like to set specific goals such as: Increase savings by $5,000 or 10% or put specific dates on goals. I find this can often lead to disappointment when a goal is not met or even cause abandonment of a goal all together after unsatisfied with progress. So my goals are in more general terms.
- Continue to pay down debt and apply any additional money after all other obligations are taken care of towards that
- Increase retirement savings percentage each quarter
- Cut spending on groceries
- Spend more time preparing for the holidays
- Start a vacation fund
These are fairly straightforward but each have a significant impact on how we will view 2007 one year from now. First and foremost it comes to taking care of the debt and hopefully cut even more time off of our plan. The second area is stepping up retirement savings. Even with our debt reduction plan we do not skimp on retirement savings. While we aren’t maxing out every account currently, the goal is to increase each account’s contribution every quarter to get closer to that goal. Spending money on groceries is a big budget killer in our house. My second passion is cooking and it shows on the supermarket receipts. We can definately cut our grocery bill down by shopping smarter.
The last two are things I had not really thought of until we got home from our holiday visits late Christmas night. First we need to focus on holiday spending better in the coming year. The good news this year is that since we do not use credit anymore, all holiday spending was paid in cash or with money we had on hand. The bad news is we did not plan ahead for this spending very well so our gifts given to friends and family this year were less than stellar. I realize that it is the thought that counts, but we did not give anywhere near what we should have. Back in October I wrote about how to painlessly save for the holidays. Unfortunately that was when we started to do this and thanks to some unexpected car repairs and such we eliminated a good chunk of what we saved. This year we are starting fresh right from our first January paycheck. Another holiday issue I want to improve on is planning in general. Given our distance from family now we have a significant amount of travel involved. This year we did not coordinate our days off very well and wound up becoming very stressed out and not spending enough time with all of our loved ones. Next year more time will be spent planning out our travels to create a more stress-free holiday season.
Finally it is time to begin saving for a vacation. Having been married going on two years now we have still not had a honeymoon. In fact we have not had a vacation other than a long Memorial or Labor day type weekend in three years. After looking back at how stressful the past year has been it has become clear that we need to spend time off at some point. It doesn’t have to be an expensive or extravagant trip to an exotic location, but just some time away from the house and away from work.
So there it is, what we’ve gone through the past year and changes that we will be making. There isn’t any Earth-shattering stuff going on here and no lofty goals being set. We simply want to take what we’ve learned from the past year and improve on what we’re already doing a little in the coming year. These goals should be attainable yet still very beneficial in improving our financial situation for the future. I look forward to revisiting this post a year from now to see how well we’ve done in keeping true to the goals set.
Author: Jeremy Vohwinkle
My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.