The year is flying by and in a few short months it’ll be 2011. Like many people, I set a number of financial goals for this year. I used to have a huge list of goals, which I inevitably didn’t meet. This year, I decided to keep it relatively simple and short.
My goals were:
- Consolidate my student loan
- Start a car replacement fund
- Contribute more to my Roth IRA for retirement
I don’t think these goals are unique; many people are looking to get their finances in order. I’ve been doing pretty well, but there’s definitely room for improvement.
Like others, I’ve been distracted and I’m behind on one of my goals. That being said, I’m determined to get back into the swing of things and complete my list. What about you?
Whatever it is that you hope to achieve, I hope I can help you get back on track (or stay on track) and meet your goals. What follows are three common financial goals, and steps you can take to meet them.
Building up your emergency fund
Your circumstances (single, married, with kids or not) and risk tolerance will dictate how much money you need to have in your emergency fund.
We’ve found that treating our savings goals as bills is the best way to keep us on course. When you develop your monthly budget or spending plan, include your ’emergency fund’ and other savings goals in it.
Next, set up an auto-payment (transfer) to cover that bill each and every month. If you wait until all the bills get paid before save, you’ll rarely have anything left to set aside.
Getting out of debt
Right now, our only debts are my student loans and our mortgage. We had a car loan when we got married and decided to accelerate the payments and get rid of it. We were planning to buy a house and figured it would look better if reduced our debt-to-income ratio.
Getting out of debt is a great goal to have, but it’s not easy to implement and maintain. I think the biggest issue for most people is making debt reduction a priority.
If you’re sick and tired of being in debt, then debt reduction is likely a priority. Your intensity level may vary, but when once you make it a part of your routine, you have a much better chance of eliminating your debt.
One big thing to do is to ask yourself tough questions when you’re about to spend money.
- Is my money better spent paying off my credit card or buying new clothes?
- Do I want to pay off my credit card sooner, or do I want to eat out more often?
- Is having a new car that important, or can I keep my used (but good) car for an extra year or so?
What helped me was to: (1) keep reminding myself that these sacrifices were temporary, and (2) avoid cutting out the extras entirely. I know, I know, we weren’t “gazelle intense, ” but it was sustainable. I’ve done the extreme frugal routine in the past, and wound up burning myself out within a couple of months.
Contributing more for retirement
This is an area where I could definitely use some improvement. I’ve made contributions, but I know I could do better.
The good news I have until I file my 2010 taxes to make my IRA contributions. I plan on using that extra time to deposit more than I otherwise would have. My problem has been that I’ll tell myself that I’ll transfer the funds at the end of the month, but then I often don’t.
How did I overcome my procrastination? I took the plunge and automated my Roth IRA contributions. I think this is the best option for me personally. I set aside a monthly amount I know I can make. If I earn more or spend less than expected, I’ll take a portion of that extra money and deposit it into my Roth IRA.
If you’re behind on your IRA contributions for the year, try to make an automatic contribution each month or pay period. While you might not make the $5, 000 limit, you’ll wind up saving more than if you didn’t take action.
Your goals and progress
How are you been doing this year when it comes to meeting your financial goals? What’s gone well? And what obstacles have you come across?