Money Infant

Your personal finances are no different than any other long term activity you take on in your life.  If you want to be successful you need to set measurable goals, act on them and reassess periodically.  As the saying goes; “He who fails to plan, plans to fail”.  As you can see here on 20sMoney some people are even making 10 year financial plans.

Up to this point my own personal finance goals have primarily been to pay down my credit card debt as quickly as possible.  That being the case, I didn’t do much in the way of planning outside of creating a budget and doing some quick monthly analysis to make sure I was freeing up as much cash as possible to accomplish that goal.  Definitely a down and dirty approach to financial planning, but it’s worked thus far.  It has taken me the past 2 ½ years and I’m not totally free yet ($6900 to go!), but I have been able to pay off over $30,000 from the credit cards.

Now that I’m almost done with the credit cards it’s time to get the rest of my financial house in order.  At 43 years old I have very little saved for retirement and that needs to be a priority.  In addition, my taxes this year are astronomical and I need to formulate a tax strategy to avoid a repeat next year and in years to come.  Third, I will become a father in late May/early June and want to start saving for college expenses for our new little girl right away.  And finally, we plan on making a move to Thailand within the next 2-3 years and need to put money aside for a variety of things in connection with that move.

Detailed Personal Financial Goals for 2010 and Action Plans

1. Pay off the remaining credit card balance.  While this is a priority it is no longer my only priority.  Over the past 30 months I have been using every dollar available to pay down credit card debt.  With a bit of breathing room now available and some changing priorities I won’t be doing that any longer.  My current balance on my one remaining card is $6906.17.  The plan is to continue to pay $350 per pay period (I get paid bi-weekly) throughout the end of the year.  Come December 31^st I will pay off any remaining balance with emergency savings.  Chance of meeting goal – Very High
2. Increase retirement savings.  There are several things I can do to address this and have already begun to do so.  I would like to max out my 401k by the end of the year and have already increased my withholding to get closer to that goal.  The nice thing is this also addresses my tax strategy as it will lower my AGI (Adjusted Gross Income).  At the current rate I will be putting roughly $11,000 in my 401k in 2010.  The second part of this strategy involves opening Roth IRA’s for both myself and Golf and funding them fully ($5000 for 2010).  Chance of meeting goal – Moderate  I believe I can meet the Roth IRA contribution, but am not sure I will hit the full $16,500 contribution limit for my 401k.
3. Start saving for our daughters college expenses.  Honestly I am still a bit clueless on this one, mostly because I can have no idea where she will be attending college.  As I mentioned we are planning on moving to Thailand which means our daughter will grow up in Thailand and will be attending English speaking International schools there for her primary and secondary education.  So that begs the question of whether or not she will want to come to the U.S. for college or if she will choose to stay in Thailand for college.  Obviously if she comes to the U.S. we could use a 529 plan, but I am unsure what would become of the money contributed to a 529 if she chooses to attend college in Thailand.  I am also trying to determine a good way to start putting money aside for International school in Thailand as they can be quite expensive.  I still have 3 months until she is born which should give me time to do the necessary research and you can rest assured I will be revisiting this topic in the near future.  Chance of meeting goal – Undetermined, more research required.
4. Increase emergency savings.  We currently have a nice 3 month cushion that will be mostly wiped out by our 2009 tax bill and 1^st quarter 2010 estimated taxes.  So, we will need to replenish the emergency fund.  We are looking to get roughly $5000 in there since we would also be able to draw upon the Roth contributions if necessary in a true emergency.  Our current budget allows us to put aside $1000 a month easily into this fund so it should be back up to strength by August.  Chance of meeting goal – Very High
5. Saving for the move to Thailand – This is another area that requires a bit more research as costs in Thailand can be very low to just as expensive as the U.S., especially in Bangkok which is where we plan on settling.  The good news is that some of our other savings vehicles can also be considered savings for the move to be drawn upon as necessary.  The emergency savings can certainly be used for this expense as can the Roth contributions.  At this point this is the lowest priority on my list of things to accomplish and I can’t say I have a set goal for 2010 as far as how much needs to be saved.  If I meet both the emergency savings and Roth contribution goals I will feel I am on a good path.  Since we do not plan on moving for a few years this goal definitely has some wiggle room.  The timing is also dependent on meeting my final goal – increasing self employment income.  Chance of meeting goal – Moderate
6. Increase self employment income.  This one will come down to how much work I put out over the next 9 months.  Currently my monthly income runs somewhere in the neighborhood of $1200-1300 and I would like to double that by the end of 2010.  I have started new projects and am re-investing 25% (currently) of my gross income back into my ventures in an effort to push the income higher more quickly.  My projections show that I will need a minimum of $3500 a month (at current currency exchange rates) prior to our move to Thailand if I don’t want to have to get a job teaching English once we’re there.  Obviously the higher this number is the better off we will be and the easier the move will be on our finances.  Chance of meeting goal – Assured.  I am committed and this one is non-negotiable.  Boy did I just put myself out on a limb or what?

So those are the current goals in a nutshell.  I will be assessing my progress on a monthly basis and updating you all on where I stand and where I’ve fallen.  As an infant it’s quite common to fall down pretty often when you’re learning to walk!  I’m considering meeting with a certified financial planner as well, just to get a second opinion and ensure that I am on the right course.