Category Archives: Goals

Goals for 2016

December 24, 2015 cb3 2 Comments

Bring on the New Year

Here we are. Already at the end of 2015. It’s hard to believe how fast this year has flown by. It’s also pretty cool that I’ve managed to track my expenses, stick to my plan and meet my goals for the year.

Now it’s time to formulate a new plan. I’m fairly confident that we could take the same goals from 2015 and re-apply them. After all, if I continue to do that then I’m only 9 years away from being debt free (In order to do that, I would need to reduce debt by 10% of the 2015 starting balance each year which is approximately $24k. If I use this years starting balance, I need 11.7% reduction to maintain the pace).

Accelerate the Finances

I’ve done a little back of the napkin analysis and based on a few factors, I think we can be more aggressive in 2016.

Financial goals:

Reduce overall outstanding debt (including mortgage) by 15%.
Make contributions to investments (taxable and retirement) of 15% of salary.
Eliminate outstanding credit card debt.
Eliminate remaining student loan debt.
Make a contribution to an IRA.
Generate revenue from a new income stream.

The first two are pretty simple and I believe easily accomplished based on what I learned last year. I’m trying not to spend extra income before it arrives, but I know what my ESPP and RSU schedule is and around how much I will receive. Most of that money is earmarked for debt reduction which is how I plan to accomplish the second pair of goals.

The next goal is more for the mental victory than anything else. I’m not maxing my 401k contribution yet, so this is technically not a priority. I think it would feel good to make the contribution even if it’s just $50.

Finally, I want to establish another income stream. Right now, most of my income is generated by my full-time job. I know that my investment portfolio is earning dividends, but I haven’t started tracking those. I’m not sure what form this new income stream will take at this time, but I do have a couple of ideas to explore.

Decelerate the Expenses

I’ve looked at a couple of areas on our variable monthly expenses and it looks like there are some easy wins to be had.

Expense Goals

Meet the $800 per month grocery budget
Reduce dining out to $400 per month (2015 – $600)
Reduce entertainment/alcohol to $250 per month (2015 – $435)

If we can accomplish these, we should be able to free up around $5500 in cash flow. We just need to make sure to stick to the meal planning schedule and have groceries ready for the week. I’ll be setting up a spreadsheet to track progress on that and help with accountability.

Let’s Talk Business

I’ve been reading a bit about business entities and the various benefits afforded to them. This year I plan to create my first business entity and being to explore what I can do with that.

While I don’t have any firm plans for what I want the business to accomplish quite yet, this exercise is more about learning the process at this point.

What about Chuck

When I started the blog, I talked about the canoe dock and what it means to me. That place is capable of centering me and I love the way I feel when I’m there.

This year I’m adding some personal goals as well in order to find that state of being more often. In 2015, I only took a total of six days away from work. That was back in March. With the crunch of project deadlines, the last half of the year was a bit stressful.

For 2016, I intend to take a little more time for myself.

Personal Goals:

Meditate at least three days a week
Take walks at least three days a week
Spend at least seven days camping
Go kayaking at least one time
Take one family vacation

The first two items might be challenging as I’m not very good at establishing new routines. I’ll need to set up another spreadsheet to track progress and keep me accountable. There may also be apps that I can use on my phone to help.

The last three items should be pretty easy to do. My wife and I already have plans to hike part of the AT while our daughter is at summer camp. We also have a family vacation already scheduled.

That’s at least two weeks away from work which is much better than last year.

State of the Blog

My goals for the blog really haven’t changed much. I still want to continue to document my progress and record stories about relevant events in my life.

I have gotten a couple of comments from real people (Thank You!), so I know that I’m starting to reach an audience. If I could grow to ten comments in the new year, I think that would be just fine.

Happy Holidays

Thanks for stopping to see what’s happening here and I wish you the best in 2016.

Cheers!

-cb3

Expenses, Goals, Investing, Strategy

2015 Year in Review

December 18, 2015 cb3 Leave a comment

As we wind down 2015, I wanted to take a look back at the Goals for the year and how we did. I’m also going to talk about what went well, what didn’t, and a few of the surprises along the way.

This may be the first year of my life that I’ve ever been able to view my financial health holistically. It’s also the first time that I’ve ever written down financial goals for myself. I’ve tracked every dollar each month as well as goal progress along the way. Sitting down and Drawing My Picture has been a powerful tool indeed.

Financial Goals 2015

I started the year with three pretty basic and achievable goals.

Reduce overall outstanding debt (including mortgage) by 10%.
Make contributions to investments (taxable and retirement) of 10% of salary.
Eliminate any monthly interest payments due to credit cards.

In 2014, I had only managed to reduce my overall debt by a little more than 2%. Not wanting to spend another 49 years working on the problem I set my sights on 10%

I also wanted to continue to contribute to investments at least a little. I had a general idea of how much I would be making over the course of the year and what my previous year’s total spending was so I also set a 10% goal (pre-tax included) here. I did reduce my 401k contribution and increase my ESPP contribution to help generate some extra income for debt reduction.

Coming into 2015, I had pre-existing credit card balances of approximately $20,800. Towards the end of 2014, I had done some balance transfers to 0% offers so $12,300 of that total was not generating interest and $8500 was. Tackling the $8500 was my top priority since it was costing me an extra $180 per month in interest.

I’m happy to report that at the time of writing, all goals have been met for the year. Debt reduction is at 10.65%, investment contributions are at 10.38%, and I only paid interest on a credit card four months out of the year. I thought I had eliminated interest after March, but the extra Vet bill led to a $38 charge on the November statement.

Year-End Balance Sheet

Let’s take a look at the balance sheet for the year. I’ve intentionally left out the cash accounts (Checking/Saving) since these have relatively low balances and will fluctuate a bit by year end.

The ‘Other Assets’ listed is the estimated value of our house according to Zillow. I hesitate to use it in the balance sheet since it is an estimate and not a very liquid asset at all. Asset value increased by 7.53% this year which is mostly due to contributions and an increase in estimated home value.

The remaining $7180 of credit card debt is sitting on a balance transfer card with a 0% introductory rate that will expire sometime in January. I need to review the terms of the transfer and make a plan to deal with that before the interest starts. I do have an ESPP coming up on Jan 31 that will eliminate the balance if everything goes according to plan.

Overall Net Worth increased by 44.32%. That’s a really incredible number to see, but it makes sense when you look at the fact that I’m both adding assets and decreasing liabilities.

Cash Flow

This is the first year that I’ve tracked Cash Flow. I can say that I was very surprised to see the numbers at the end of the year. It’s eye-opening (and slightly alarming) how much money is going out the door. Here’s a summary (Income and Investments include pre-tax contributions to retirement accounts)

I’m confident that we can lower expenses next year. Right away, I know that we’ll be spending around $6000 less on outstanding credit card debt (~$13000 this year with $7180 remaining). We also had two larger purchases of a replacement laptop ($3000) and a Vet bill ($4000).

It’s possible that I can be a little more aggressive with my goals for 2016, but I don’t want to set myself up for failure so I’m still working on finding a balance. We may also be able to fund a family vacation next year which will help with the mental health aspect for the rest of the family (I think I’ve only taken 5 or 6 days off this year).

The slightly alarming bit is the fact that our total income included bonuses and RSU sales. If it hadn’t been for that, we may have ended up adding to debt instead of removing it. I need to get us to a point where we’re not dependent on extra income and everything can be handled by regular salary.

Expenses We Can Control

There are a few areas of expense where I know we can make a difference. I tallied up the monthly average for variable expenses and found the following items are over budget on average:

Pets and Electronics both have outliers that are skewing the average. Both should be much lower next year. The top item is basically anything we buy at the grocery store. We’re only slightly over budget on that but if we can cut it by 10% that’s around $1000 in savings.

Dining out should be half of what it is. One of the key challenges for us is having a weekly menu and getting the grocery run done. If we can make a better effort to be consistent there then we can easily cut this in half and save $3500 or so.

Entertainment and Alcohol includes things like movies and hockey tickets as well as trips to the package store. I’m cutting back on the craft beer and will be re-focusing some hobby time to brewing again in 2016. Honestly, I’d like to see this number cut in half too but a 10-20% reduction will be great.

Combine those reductions with the unexpected expenses and credit card payoff and we could reduce expense by up $18000. Stretch goal would be to make it under $100000 total expenses for the year, but we are still in debt reduction mode so I’m not as focused on that.

2015 – Year of Success

Well there you have it. As of right now, it looks like I was able to meet my financial goals for the year. Woohoo!

I’m looking forward to 2016 and will be updating my goals for the new year in a few days.

Cheers!

-cb3

Expenses, Goals, Investing

Quick RSU Update

December 9, 2015 cb3 Leave a comment

A little more at Vesting

The RSU vested on December 1st and came in a little higher than the $3300 that I calculated. I had based the number of shares to be held for taxes on the previous cycle. However, this time around the stock price was lower so they didn’t hold as many shares.

Total gain after the sale was around $3700.

Divvy it Up

I kept the allocation that I had build based on the previous estimate and used the extra for debt payoff:

$3000 went towards outstanding debt including the remaining $1550 balance from the Vet bill.
$500 went into my individual brokerage account at Personal Capital.
$200 will go towards a family outing for the holidays

Back on Track

This puts the current debt reduction projection for the year back up to 10.65%. Barring anything unexpected happening, I believe we will meet the 10% goal for the year.

Over the next couple of weeks, I will be setting up my spreadsheets for next years cash flow and debt reduction projections. I’ve already started jotting down a few new goals that I want to add for 2016.

Cheers!

-cb3

Expenses, Goals

November 2015 Progress

December 1, 2015 cb3 2 Comments

Happy Holidays!

November was, to be honest, an ass kicker on the full-time job front. I had even started a slight rant post that I’m not sure I’ll finish. Regardless, it makes the sound of financial freedom even more appealing and I was exceptionally thankful for a few days of downtime over the Thanksgiving break.

The week leading up to the holiday I was traveling for work to Ireland. It was my first trip out of the country and while I didn’t have a whole lot of time for tourism, I did get to see the Jameson distillery in Middleton. Of course, that lead to a little extra personal expense as I purchased a few gifts for family. I’ll use some of these as Christmas gifts, so it won’t be a huge overage as I’d be spending the money anyway.

Other than the travel expense on gifts, there wasn’t anything unexpected this month. Groceries, restaurants, and entertainment/alcohol were back up this month due to holiday events. We still managed to keep it under control and none of the categories were the highest of the year.

Current Goal Status:

Reduce overall outstanding debt (including mortgage) by 10%.
1. At the end of November, overall debt reduction is 9.15%. We put extra towards the Vet bill to help recover. Year-end projection is currently 10.03% so it look like we’re back on track.
Make contributions to investments (taxable and retirement) of 10% of salary.
1. Combined saving in investment accounts is now at 10.19% which is still below the 10.71% high in September. I’m still on track but may be able to bump this a little at year end.
Eliminate any monthly interest payments due to credit cards.
1. November broke the streak and I paid $38.03 in interest on the card holding the Vet balance. This brings total credit card interest to $386 for the year. I don’t anticipate any interest in December.
2. Of the $3200 balance increase from veterinary surgery, ~$2200 remains on the card. I have an RSU vesting today that will eliminate this balance.

Total expenses for November rose to $8031 which was still the second lowest of the year. Net cash flow was slightly positive at $423.

Looking forward to the gift-giving season, we’re working on setting a budget for gifts and making sure we have a checklist of each person before we start buying. We’re also looking at using the points on our Chase Sapphire card on Amazon to offset purchase costs. I don’t believe we’ll use them all and we don’t have any travel planned for first half of next year where we could use the points.

-cb3

Goals, Investing, Stocks, Strategy

What to do with RSU

November 10, 2015 cb3 Leave a comment

Have a Plan

With another segment of my Restricted Stock grant vesting on December 1st, I thought it would be a good topic to cover. Before we dive in, I want to emphasize the importance of having a plan for extra income before it arrives.

Too often do we get caught up in the excitement of a bonus or windfall and if we haven’t planned carefully, the money seems to vanish overnight. I’ve been guilty of this in the past. It’s very easy to lose track of where it goes.

Due to my current debt circumstances, I want most of the extra to be applied to that. I think it’s still important to get a little morale boost too, but we’ll be conservative with it. In this case, I will be applying 80% toward outstanding debt, 15% will go to our investment account, and the remaining 5% will be used for play.

By the Numbers

The expected net income at sale will be around $3300. This puts ~%2600 towards debt which will clear the outstanding Vet bill. That gives us around $500 to add to our investments. The remaining $165 will most likely go towards a nice dinner out with my wife. With this plan, I can feel good about spending a little on enjoyment knowing that I put most of it to work for me.

Tax Implications

With my current grant, a number of shares will be sold at vesting to cover taxes on the gain. I plan to sell the day it vest, so I don’t anticipate an additional tax burden. My ESPP behaves differently and I will cover that in a future post (probably in January when that is up next).

Portfolio Management

Some people hold onto their RSU shares as an investment. There are pros and cons to this approach. My portfolio is small enough that the shares would be a larger percentage of my holdings that I want in any one security. I like to keep each position to less than 1% of my overall holding (including all 401k, IRA, and Individual accounts). This reduces the risk that any position would have a large impact on my Net Worth.

Since I’m still in debt reduction mode, that’s all intellectual exercise at this point. It’s much more important to me to use the value to pay down liabilities than it is to hold on to the assets.

Cheers

-cb3

Expenses, Goals

October 2015 Progress

November 1, 2015 cb3

Relief!

October came and went without any major unplanned expenses. It felt good to see my weekly Personal Capital report showing a nice smooth expense chart and approximately $4900 lower spending than the last month (which is what I expected without the car and vet bills from last month).

We do have an outstanding balance remaining for the vet bill so the Goal for debt reduction is off track. I expect to pay it off with an RSU that is vesting on Dec.1. More than likely I will pay a little interest on this since the bill is due before the stock vests. Based on my calculations it will be around $50 which is less than it would cost to transfer the balance to my Chase Slate card.

Current Goal Status:

Reduce overall outstanding debt (including mortgage) by 10%.
1. At the end of October, overall debt reduction is 7.77%. This dropped from 8.69% last month due to the outstanding vet bill. Year-end projection is currently 8.87% if we don’t clear that bill.
Make contributions to investments (taxable and retirement) of 10% of salary.
1. Combined saving in investment accounts dropped to 10.06% from 10.71% last month. I made a withdrawal of $900 from a taxable investment account to cover the truck bill.
2. Unless we need to withdraw more to cover an unexpected expense, this goal is still on track.
Eliminate any monthly interest payments due to credit cards.
1. We maintained $0 in credit card interest in Oct. for a seven month streak.
2. Of the $3200 balance increase from veterinary surgery, ~$2400 remains on the card. We will be able to reduce this a bit more before the bill is due on Nov. 19th. As I mentioned earlier, we may pay a bit of interest on this.

Total expenses for October fell to $6969 which was the lowest of the year. Net cash flow was positive at $2028!

Dining out and entertainment/alcohol expenses were both second to lowest for this month. I am continuing my commitment to cut back in those areas for the remainder of the year but may make an exception for the holiday season.

Getting closer. Cheers!

-cb3

Expenses, Goals

September 2015 Progress

October 8, 2015 cb3

As discussed in my previous post, we had a significant extra expense this month in the form of a major vet bill. On the one had, I’m happy that my wife was able to give the gift of sight back to her beloved pet. On the other, I’m a bit embarrassed since this might be the single most 2%, privileged, or frivolous thing I’ve purchased. I would never be able to explain such a thing to my grandfather. He’d laugh and call me a knucklehead.

On top of that, we saw our highest outflow for food/household items in September at $1149. Dining out was also high at $600. There was also some repairs needed for my truck and that cost me an unexpected $900.

Goals are still mostly on track, but we may see a small interest charge in November. Here’s how we stand:

Reduce overall outstanding debt (including mortgage) by 10%.
1. At the end of September, overall debt reduction is 8.69%. Still on track.
Make contributions to investments (taxable and retirement) of 10% of salary.
1. Combined saving in investment accounts is 10.71% of income. This includes 401k, IRA, ESPP.
2. This may be impacted by the additional cost of major vet surgery. My wife agreed to use her savings for this procedure, so I may have to draw some out of investments to cover or face an interest charge.
Eliminate any monthly interest payments due to credit cards.
1. We maintained $0 in credit card interest in Sep. for a six month streak.
2. We added approx. $3200 to a card with a $0 balance to pay for the vet surgery. I have an RSU grant coming in Dec that will cover this, but we may be faced with a month of interest before that money is available. I’ll calculate the estimated charge and see if it’s worth pulling out of an existing investment before we get charged with interest.

Total expenses for September were $12,241 with the addition of the extra vet expense. With no additional income in September, this put us in the red by $3880.

I need to recommit to live a little more frugally for the rest of the year. I personally am cutting out alcohol until the holidays to help reduce expenses. I also need to help solve the grocery planning struggle so that we can consistently plan meals (Planned meals definitely helps combat dining out)

Here we go!

-cb3

Expenses, Goals

August 2015 Progress

September 3, 2015 cb3

Well, August hit like a freight train. There were a couple of whammies this month in the form of my wife’s car needing new tires and her laptop dying. We also had our anniversary dinner where we splurged a little and I had a work trip to Vegas and spent a bit extra on a dinner with friends. Needless to say, our expenses were elevated.

Luckily, and I do realize how fortunate I am, we got a bonus from work that, combined with proceeds from an ESPP sale, made up for the extra spending. If I hadn’t know that the bonus was coming in, I probably would have been a lot more conservative this month. Even though we’re focused on cutting back, it’s hard to not spend the extra.

Here’s how we did.

Goals:

Reduce overall outstanding debt (including mortgage) by 10%.
1. At the end of August, overall debt reduction is 7.71%. Still on track.
Make contributions to investments (taxable and retirement) of 10% of salary.
1. Combined saving in investment accounts is 10.55% of income. This includes 401k, IRA, ESPP.
Eliminate any monthly interest payments due to credit cards.
1. We maintained $0 in credit card interest in Aug. for a five month streak.

Total expenses for August were $14924 which was the second highest compared to Feb, but the difference being in Feb we made a $6200 payment against outstanding credit card debt.

Also, with the bonus we were still net positive by $2300 for the month. That money got divided between debt and investments.

We’re going to really buckle down and try to have a couple of calm months before we hit any holiday spending. I’m confident since I’m still on track for my goals, but it would be great if we could accomplish a little extra!

Cheers!

-cb3

Expenses, Goals

July 2015 Progress

August 2, 2015 cb3

July was a very interesting month for the family finance. We had one planned extra expense in the form of a vacation and one unplanned expense in the form of veterinary surgery. First I’ll give a quick goal update and overview and then talk about how we planned for the vacation expenses.

Goals:

Reduce overall outstanding debt (including mortgage) by 10%.
1. At the end of July, overall debt reduction is 7.15%. Still on track.
Make contributions to investments (taxable and retirement) of 10% of salary.
1. Combined saving in investment accounts is 10.36% of income. This includes 401k, IRA, ESPP.
Eliminate any monthly interest payments due to credit cards.
1. We maintained $0 in credit card interest in July for a four month streak.

Total expenses for July were $8305 which was $36 lower than June making it our lowest expense month of 2015. I had to double check this with the vacation and vet bills, but we really buckled down and almost eliminated dining out (except for during our travel, which I’m breaking out into travel expenses).

The trip was a combined work/vacation to California. I had to go out for an onsite session so my airfare and hotel for the week was covered. The family’s flights were mostly paid with Skymiles so their airfare was around $600 total and was paid in June. We extended the stay for four nights past the work engagement which gave me a three day weekend with the family. We got to see Muir Woods, Half Moon Bay and top of Mt. Tamalpais. Total personal expenses for the family were around $1100. Not too bad.

The unexpected vet bill was around $450. We have an older pure bred small dog that just turned 14, so I guess unexpected is not really accurate, but we didn’t have it budgeted.

All in all, it’s remarkable that we still hit the low mark for expenses on the year. We’re also not paying childcare expenses during the summer since both kids are home, so that does help balance things out.

We also just got an ESSP purchase on July 31 which will help clear some more of the long term debt. I’ll write that up in another post.

Cheers!

-cb3

Expenses, Goals, Lifestyle

The Great Grocery Cycle

July 11, 2015 cb3

One of our biggest challenges is controlling food cost. I believe that this is an area we can improve. The struggle is around consistent meal planning an trips to the grocery store. It’s easy to neglect because there is a convenient alternative available (dining out). This is likely a common occurrence amongst our peers (though I’m not sure everyone considers it a problem).

We budget $800 per month for groceries and household supplies. I also budget $240 per month for dining out. That’s around one restaurant trip per week for our family of four (sit down type as we rarely do fast food). So far this year, we should have spent $4800 on groceries and $1440 on restaurants. Instead, we’re currently at $5300 on groceries and $4200 on restaurants!

One would think that if we neglected grocery runs and dined out instead that we would see groceries come in under budget. What happens though, is that by not having a weekly meal plan we end up doing on demand grocery runs to pick up things for the next day or two. This leads to inefficiency and a propensity to buy impulse items.

We definitely dine out much more than we should given our budget. It’s very easy to fall into the trap of convenience when we’re both tired from the day and unprepared for dinner time. It’s even easier when we know we can afford it. The problem is that we’re throwing away money that we could be investing in our financial freedom and getting closer to our canoe dock lifestyle.

New 2015 Goal: Cut the dining out expenses in half. $2100 or less.

Here we go!

-cb3