2007 Financial Goals: We're On Our Way!
Posted on January 04, 2007 by Her and tagged goals, net_worth
With some difficulty, we've already made progress on our 2007 financial goals.
One goal is to fund one of our Roth IRA's 100% for 2007. Tonight we selected my Roth IRA (Him also has one), since I have very little in there now. We set up an automatic transfer to maximize the contribution. To max out my contribution I will put $333.33 into the account every month. We also could have split the funds and funded each account 50%, but by doing it this way we will maximize the benefit. By this time next year, I will have enough money in my Roth IRA to qualify for a reduced maintenance fee (annual savings: $10) and also meet the minimum investment required for most of the no-load, low-fee Vanguard funds ($3,000). This will allow us to start investing more efficiently. Next year we will re-evaluate to see how much to contribute, and to which of our accounts.
Another of our goals is to pay off our credit card debt this year. Inspired by a comment from reader Mandy, we have decided to pay off some of them even faster. We're going to pay off all our credit card debt that has an interest rate above 0% (about $6,600 of debt) as soon as we get the bills this month. This will ransack our savings account, but will save us about $350 in interest this year. And since the remainder of the credit card debt will be at 0% indefinitely, we can pay that off at our leisure.
By taking these two steps, we have already ensured that our net worth will increase by about $13,000 next year. I feel good about that.
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English Major: You're right, we're pretty much counting our chickens before they hatch. Assuming that our cash flow will be the same for this year as it was last year, the payment towards the credit cards will be a nice addition to our net worth.
alissabess: Currently we're winging our emergency fund. If an emergency comes up, we'll take from our savings. If not, then we'll put it towards the wedding.
English Major | Jan 5, 2007
Congratulations on your progress, H&H!
One thing that confuses me: doesn't applying your savings to your debt leave you in the same place you were before, net-worth-wise, except for the interest savings? I mean, X+(-X)=0, whether you're doing the math on the balance sheet or the credit card statement, right? I'm not sure where the addition of the $9,000 to your net worth comes from, if you already had that money in savings. Perhaps I'm missing something? Math isn't my strong suit.
Regardless, you're still making impressive strides towards meeting your 2007 goals.
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