Wide Open Wallet
An honest look at family finances
Financial Goals
Author: Ashley5 Sep
It just dawned on me that I don’t think I’ve ever written about my financial goals. How strange that I’ve been writing a personal finance blog for 7 months and I’ve never written down my goals for my readers. Well, patient readers, here they are…
1. Pay off cars and start a car fund so that I never have another car payment again: We currently owe $24,857 on our cars. We plan on having my van for at least another 9 years, so no rush there. But we do need to stay focused on saving up for a new car for my husband. If you can do it once and stay on top of it, there is no reason to finance another car. Just start making that car payment to yourself. We are going to pay off my husband’s car when we get our taxes. Then start making the car payment into a savings account and hopefully get a good fund built before it needs replacing. I doubt we will be able to buy a car outright this time, but the loan should be less than we would have had otherwise, which means we should be able to pay it off sooner. Then we will have that much longer to save up for the next car.
2. Pay off the loan for the backyard landscaping. It’s at zero percent so I’m not in a huge rush to pay it off. But getting rid of the payment would be nice. We currently owe $7,461 and pay $162 a month towards it. We also have $2,100 earmarked for it.
3. Fully fund our emergency fund. With our current budget we would need about $24,000 to have 6 months of expenses. We currently have about $11,000 saved. Of course if we didn’t have car payments or the back yard loan our expenses would be reduced quite a bit. At that point we would only need about $15,000. So maybe we will just shoot for $15,000 and use the rest to pay off the cars. We currently put $100 a month into our e-fund.
4. Max out our retirement savings. Once we have the above goals met we can start really funding our IRAs. We send about $150 a month to them right now, but I know that’s not enough.
5. Pay off the house. Oh what a beautiful day it will be when we don’t have a mortgage. I can’t wait. When we have fully funded efunds, car funds, and retirement accounts I will start going to town on my mortgage. We currently pay $100 a month extra and $1,000 from our tax returns. We owe $141,752.
I listed these goals 1 through 5 but really they are all going on simultaneously. I don’t know if this is the best idea. Should I ignore my other goals and attack one at a time. Kind of a goal snowball. Or keep working on them all at once and make a little progress in each area. I’ve never really laid them all out like this. It’s interesting to think about all the options. I would like to know what you think. What would you do?
Pic by: James Jordan
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7 Responses for "Financial Goals"
Don’t pay off your house early, chances are you have less than a 6% interest rate. Hopefully you can do better by investing that $100 a month somewhere else. I would put the extra $100 into your e fund or into your cars. Your rates on your cars are probably higher than 6% so you should pay them off.
As far as paying cash for a car, I think it depends on your interest rate you can get if you finance it. Sometimes it is better to finance something than pay cash for it. Good luck on your goals!
“Should I ignore my other goals and attack one at a time.”
I am in a very similar situation…I have $7000 left to pay on our car, and then we will be debt free except for the house (I expect to have this finished by December). After that, we are planning on increasing our emergency fund to get it up to $15000, increase our retirement savings from 10% up to 15%, start a new car fund AND put down $300/month extra on the principal on the house.
These goals can be simultaneous, but I wonder if it would make more sense to finish the emergency fund first before we start on any of these other goals…
Hey guys, thanks for your comments!
Kristy: The rates on our cars are actually lower than our house. The house is at 5.75% and my husband’s car is at 4.75% and my van is 3.9%.
Paying them off is more about getting rid of the payment to help with cash flow than avoiding interest. Really, same with the house. I don’t want the payments anymore! I was thinking about taking the extra payment from the house and putting it on the cars, though. Get rid of those payments that much quicker.
Brandon: I know, I think about finishing the e-fund first too… but when I’m making loan payments I have a hard time sending extra to savings. We do have money in savings outside the e-fund, so that’s what I tell myself. Obviously if my husband lost his job today we won’t be going to Disneyland.
I save a set amount each paycheck for my efund, retirement, and non-retirement investments. I will do the same for a car fund when I have paid off my current car. These are like background goals for me. They’re things that I don’t feel I can/need to concentrate on completely right now (because other things need to be done first), but I’m not willing to ignore them completely. All other goals are prioritized and tackled one at a time.
Don’t pay off the house, you should focus at least on the cars and car fund. If you don’t you’ll end up with another loan, which would be way worse than the house.
Use the $100/month to pay off the car or landscaping. Get rid of the debt. Trust me building up the car fund is HARD.
It’s hard because you never know when someone will hit you or something will happen. The faster the car is done the better.
I would milk that 0% interest as long as possible — assuming it is long term. Even earning 3% in ING is better than paying that sucker off.
Personally, I find that carrying no debt gives me a peace of mind that offsets any benefit that I would get through any slightly better saving option.
Once you have all your debt paid off, no matter what sudden unfortunate and unpredicted event happens, you’ll never have to worry about having to pay that debt. You won’t be obligated to anyone.
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