Wednesday, January 2, 2008

10 Financial Goals for 2008

It's that time of year, and I want to share what I plan to accomplish this year. 2007 was a landmark year for me, in that I took serious control of my finances and started a very aggressive debt eradication plan. I paid down 40% of my debt, and I realized today that that amount was about 20% of what I earned.

1. Pay off an additional 40% of my [original] debt. I actually hope to pay off my entire debt, but I’m being conservative because I don’t know how much I will actually work.

2. Diversify my income. Occasionally, I petsit for pay. I’m also building a basic website for a client, and I hope that this can turn in to another skill I use to pick up side projects. I’ve also been thinking about making jewelry (not because it’s high profit, but simply because I enjoy it). I’m also hoping that I will generate a steady income from this blog. I’ve thought about working again at selling books [that I’ve finished reading] online, but this has been real hit or miss in the past, and I’m not sure it’s valuable enough for how I value my time.

3. Make more money. I will be raising my hourly rate sometime in January and I’m going to start working on following through on the other things I’d like to do (outlined in #2).

4. Work more. This goes along with items 2 and 3. While I greatly enjoy working only part time, I feel I could have used my off time in a more productive manner. I want to pursue doing things I enjoy (but maybe not necessarily greatly profitable) as a way to use that spare time. I also now have this blog, so I also want to write and stockpile articles during the downtimes, so I’m better prepared to provide articles when I’m busy with my clients.

5. Invest. Once I re-fund my emergency fund to 3-4 months living expenses, I plan to start investing some of the money I would normally save. The stocks I watch have done very well over the last several years, and I want to start taking advantage of that. I also just want to diversify my portfolio, so that it is not so tied up in the one stock I already own, my 401k, my IRA, and cash accounts. Part of the reason of this is also to (hopefully) earn some good profits, so that I can use that (in addition to what I’ve already saved – which isn’t anywhere near as much as I’d like) towards a down payment on a condo.

6. Open and fully fund a new (Roth) IRA. I opened a Traditional IRA in 2007, because all the online calculators I used said it was better for me. However, after reading more and talking to friends, I’m going to switch to a Roth IRA. I’m also going to abandon contributing to my existing Traditional IRA, because it hasn’t been getting any noticeable returns (at year end, it was at a lower balance than all the money I contributed over 8-9 months…).

7. Use cash only. This will be hard, as I'm hardwired to use my debit card when I'm at home. The only time I ever consistently carry [more than $20] cash is when I travel. I'd like to play a trick on myself and not take out the full amount each week (so I could stash the rest), but I don't know how well that will work. In a perfect world, I just won't carry my debit card with me, though I would probably carry the credit card to take care of emergencies.

8. Travel. With most of my financial focus in 2007 being on debt reduction, I didn’t really do anything big for myself. The laptop I bought was a necessity for my work. I only went on two small trips. I’d really like to go to Iceland, and I’ve been thinking about parts of Asia. I will definitely have to create a projection of what I hope to afford, after I update my budget for this year. Regardless, I definitely plan to take a proper Get Out of Town vacation and travel more than 300 miles from Seattle!

9. Build up the readership for this blog and cultivate a daily readership of 500 readers. While I do hope to earn some money with this blog, it’s more important to me to share my point of view and experiences. I’ve mentioned previously that I never found another personal finance blog that was written from the point of view of someone self-employed (though I’m certain some exist – I just couldn’t find any), and I want to share the lessons I’ve learned since I started working for myself, in addition to more universal personal finance topics.

10. Help my mother sort out her finances. I started looking at my mother's finances a couple months ago, but didn't finish fully analyzing them. I found out she's in a better position than I thought, though her portfolio could definitely use some re-structuring (she's slated to retire in a few years). My mother has had a pretty hands-off approach to her finances and investing (e.g. choose the fund once and just let the money stay there without really tracking the fund's performance), and I want to help make sure that what she already has saved is optimized for her retirement.

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