As I’ve done the past few years, I’m sharing my family’s financial goals with you, and again I will review them quarterly. Last week, my husband and I went out on a date specifically to talk through the past year, the coming year, and how our finances will adapt. We brainstorm all the “big” expenses we anticipate for the new year, we review our current debts and monthly expenses, and we adapt our monthly budget accordingly. From there, we came up with this plan:
1) Pay off one whole debt. We’re close, and we’ve agreed to snowflake every single penny between now and April into paying off a debt that will free up money for everything else on this list. We’re committed to a more stringent monthly budget–groceries, clothing, entertainment, eating out, etc.–in order to accomplish this. I have to say, this never would happen if it was just me doing the work. Having these conversations with my husband every year (and every three months on progress) makes all the difference. He’s not thrilled about cutting back, but seeing that it’s temporary helps a lot.
2) Bigger Emergency Fund. I never worried about our emergency fund, or my husband’s job security, but recent changes to the government have us a little concerned. We don’t know what will happen over the next year or two, so we’d like to be better prepared. Our goal for the first half of 2011 is to double our emergency fund. We can start this as soon as #1 is accomplished, aiming for the months of April through July.
3) Contribute to a retirement plan. We have been sorely lacking in this area, for many years considering that we’ve been working for almost 20 years now (yikes). We’re going to oppose the Dave Ramsey plan on this one and start contributing to my husband’s plan at work before paying off debt totally, because we found out that we were losing money since they match the first 5%. This will make the beginning of the year leaner, but we’re ready for that sacrifice.
4) Pay down our second mortgage. I mentioned last year that we’re still “upside down” on our house equity because we bought just as the market tipped (of course!). After debt #1, we’re focused on this one. Getting rid of this eases things and gives us breathing room, freeing up funds to focus on retirement and college savings. All our debt payoff will go to this debt starting when #2 is complete; we’re aiming for July 2011 and beyond. This will probably take a year to complete.
5) Two big expensive vacations. Huh?! I know, this doesn’t sound like frugal me, but it’s a necessity for this year. With my mom not traveling due to her health, our best chance of seeing her is meeting up in Florida. It’s safer for her to travel there than the cold weather, and we can drive it compared to flying to her in Arizona. Yes, we’ll be visiting DisneyWorld for the first time, and I will be doing everything I can to keep this on a budget. Our second trip will be to a family reunion in Missouri in August. That requires transportation for five of us, somewhere to stay, etc. and will be expensive in its own way. My plan to pay for these trips is by budgeting our monthly expenses based on only 24 of my husband’s 26 paychecks. That saves two whole paychecks to pay for the trips, and I hope to spend much less than that.
We have a lot going on this year! I’ll blog more about the opportunities out there to earn extra income and habits that save more to make these goals happen. The important thing is that my husband and I are on the same page, and we have three “cheerleaders” who are learning that not eating out means more money for Disneyworld. Good lesson, I think.
