Monday, June 09, 2008

More goals!

I like goals. It keeps me focused on the big picture while still letting me get pumped up for the details. So we've got a couple laid out for the rest of the year into 2009...and by "we" I mean I say to M "We should do this" and he says "Okay, whatever." I guess if you look at our household from a company standpoint, he's the CEO and I'm the CFO :-)

So for startsies, we're increasing M's 401k contribution to 8%. We're both getting C.O.L. raises in in July, so the money's not even going to see our budget. That plus our regular savings and my IRA will put us at a healthy 18% savings rate. M's company also contributes to his 401k, but I don't count that in our savings % because we don't have any control over it and it could technically change at any time.

We're also opening an IRA for M in August. I decided to start his acct with Vanguard's STAR fund, which is a very conservative balanced fund (60-40 stocks and bonds) but only has a $1000 investment minimum. We'll eventually have most of his contributions going towards Vanguard's Target Retirement 2045 fund once we have enough to meet the fund minimum.

To round out the summer, I am upgrading our dishwasher and having a thesis committee meeting - hopefully my last. And of course vacation, but that's more a respite from the goals than a goal itself :-)

Moving into the fall - I'm expecting to have a "real" job in November, while our C.O.L. will remain relatively unchanged. With the price of gas and not having to drive to Baltimore anymore, it will likely even drop a little. I may or may not have a retirement account with this job (at the moment the opportunity I'm looking at is likely no), but if I do, it'll be funded. The new dollars in our budget will be funneled into our ING account for a few months. We'll also be paying off the 0% financing from the electronics purchases we made in the spring (not technically due until March but I want to free the monthly allotment up) as well as replacing our stove (which will complete our kitchen appliance upgrade and also free *those* dollars up).

At this point in the game we will be saving *over 30%* of our income (again, still not counting any matching funds going into 401k accounts). Now comes the fun part.

New year, new account. Since we're looking to buy a bigger place in around 2-2 1/2 years, I'd like to not just rely on the equity in our condo for our down payment. So we'll be opening up a taxable investment account in January and putting most of our former savings account contribution (60-80%) into it - I think there comes a point where excess liquidity becomes a hindrance rather than a help. Since we'll need the money in a relatively short amount of time, it'll be in conservative investments. I'm thinking half in Vanguard's Total Bond Market Index fund and half in their Prime Money Market fund; possibly a very small percentage in a Total Stock Market Index fund. After our next house is purchased, these dollars will be split towards increased 401k contributions and saving for our next car(s). In the meantime, we'll continue to fund the Roth IRAs yearly. I haven't figured in any pay raises after 2008, so we'll figure out what to do with that money when we come to it.

So there you have it. We are, of course, relying on a couple assumptions (for instance, that I can actually make it out of grad school unscathed and find a job that doesn't involve the prefix Mc; that nothing disastrous happens over the next two years - why is there no 'E' in disastrous??) I also recognize that saving 30% of our income is not likely something we can keep up in the long term (or maybe it is, who knows?) But for the most part I think we're on a really good track and I hope we can stay that way.

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