As I’ve noted in the past, I’m not much for New Year’s resolutions. Rather, at the beginning of each year, I like to lay out goals for the upcoming year — and it looks like I’m not alone. So, with that said… Let’s take a look at what this upcoming year will look like for us…
I’m going to continue maxing out my employer’s regular retirement plan (5% + 8.2% match) as well as my 403(b), 457(b), and SEP-IRA. Unfortunately (or fortunately, depending on how you look at it), we’re beyond the income limits for deducting our traditional IRA contributions, or even making Roth IRA contributions, so those are out of the question.
This goal is pretty much assured, as we were able to pull it off last year, and the fact that we’re bumping up against the limits means we couldn’t really set the bar any higher. Moreover, I’ve set everything up to happen via payroll deductions or automatic transfers, so it’s hard to imagine not meeting this goal.
Now that we’re maxing out all available retirement savings options, my attention has turned to investing in taxable accounts. While we’re currently using Target Retirement funds (or the equivalent) wherever possible within our retirement accounts, tax efficiency is an important concern outside of these accounts. As things stand right now, we’re transferring a fixed amount to Vanguard each month, but it’s all going into their Total Stock Market Index Fund. What we really need is a well-balanced, tax-efficient strategy. So… My goal in this area is to come up with one.
Simplifying Our Finances
One of my big goals for the year is to simplify our finances. I’ve actually done a good bit of this in the recent past, and I’m hoping to wrap it all up in 2008. Here’s what’s left:
I intend to drop down to three credit cards — our two main reward cards Amex Blue Cash and Chase Freedom as well as a Citi Dividend Platinum for use at Sam’s Club (they accept MasterCard but not Visa or Amex). This means I’ll be closing another Citi account, though I’ll be sure to consolidate the credit limits before I do so.
I also intend to finish automating our finances. We’re doing pretty well here already, but there are still some loose ends that need to be tied up. For example, I need to set up all of our credit cards for autopay (one is done, the other two are in the works). I also need to schedule recurring payments for a variety of infrequent payments (e.g., our annual life insurance premiums). My goal here is to come as close to putting our finances on auto-pilot as possible.
Protecting Our Future
While we’ve gone to great lengths to protect our assets, we still have a gaping hole — long term disability. I have coverage through work, but it’s pretty minimal. Thus, I need to pick up a private policy. While I actually started this process late last summer, I still haven’t managed to follow through and get it done.
Creating a User Manual for Our Financial Life
This one is a holdover from last year (and the year before)… In short, I’d like to create a “user manual” or roadmap for managing our finances. While we both share in all financial decisions, I tend to do most of the bookkeeping and I want to be sure she has everything she needs in the even something happens to me.
I’m envisioning a three-ring binder containing everything that she needs — account numbers, insurance policy numbers, contact information, usernames, passwords, etc. I have all of this information around, I just need to find some time to collate it.
Kids and Money
Our oldest son is now ten years old and has a decent amount of money in the bank. This year, I’d like to introduce him to the concept of investing.
I’m still not sure exactly how I want to go about this, so figuring that out will be Step #1. Given that we have four kids, I’m looking for a scalable solution that won’t be overly complex once they’re all old enough to be involved — more than anything, I want to avoid account overload.
In all likelihood, we’ll end up doing something along the lines of opening an account and buying a reasonably well-diversified mutual fund. Unfortunately, I can’t be more specific than that right now, as I haven’t had the opportunity to think it all of the way through. This is a big step for us, though, as it will set the stage for teaching all of our kids about finance and investing.
Every year around this time I think it would be great if I had kept tax-related paperwork together throughout the year rather than having to scramble to find it. So in 2008, my goal is to create and maintain a dedicated tax folder where I deposit anything that I’ll need to lay my hands on in advance of April 15, 2009. Even though it’s a very simple thing, I’m pretty sure that this will be the among the hardest things for me to pull off this year.
What About You?
Do you have any goals or resolutions for the New Year? If so, please share them with us in the comments, below.