As promised, today I present my goals. I created two sets, one of very near term goals, for completion by the end of 2009, and another for a year from when I started working. I will post those tomorrow, so stay tuned!
Here are the 2009 goals:
By November 15th:
- Pay off the remaining $1,052 in student loans, which carry a 6.8% interest rate.
By December 31st:
- Save $3,000 in my ING emergency fund (currently at $1,800).
- Have a $1,500 buffer in my checking account for monthly expenses (currently at $1,000).
- Start a Roth IRA with $1,000.
The goals will be extremely difficult to achieve. Based on my estimates of paychecks and my average expenses, I will still be almost $700 short. However, I have a few different ideas about how to make up the difference:
- By referring people to do business through work, I can earn $15 per referral. I would have to be vigilant in order to make a significant dent in that difference.
- Be vigilant about saving money. This doesn’t sound fun, but if I wanted to, I could cut down on costs for 2 1/2 months and save a few hundred dollars.
- Adjust my withholding. Since I started work in July, I believe I have been withholding too much. By adjusting this, I would be able to earn my money now instead of getting a refund in taxes.
- I could stop contributing to my company’s Roth 401(k) plan for a few paychecks. Since it will still be in a retirement account, I will simply take the amount of money scheduled to go into the Roth 401(k) and use that to start my Roth IRA.
Still, I’d rather avoid this and save more, so it will be a struggle, but I believe an attainable goal. Using these strategies, I believe I will be able to make up the difference. This comes down to the fundamental rule of personal finance. The goal is to make the gap (income – expenses) as big as you can. There are two ways to do this: by earning more and by spending less.
My plan takes into account both of these avenues for saving money. By referring friends, I will boost my income, and even 10 referrals each month will add up to over $350 (pre-tax). By limiting expenses, I may be able to save about $200, leaving me $200 short of my goal, and adjusting my withholding until January will likely help me get all the way there.
What are your thoughts, do you think I can acheive these goals without having to stop contributing to my Roth 401(k)?