Jan 08 2009

Financial hopes for 2009


I don’t think I recorded any goals to accomplish in 2008. Sure, I had some, but I never wrote them down. So, I can’t look back and say, “Aha! I achieved that!”

Here’s a brief year in review, and then a look ahead to what I hope 2009 will bring.

The year 2008 was a pretty good one for us. We became more adjusted to Pittsburgh. By the end of the year, I started making more trips without using our GPS (I still need it for new destinations, of course). We became more social with others. I joined a women’s group for ladies who had recently moved to the city, and they were incredible! We all had an instant connection.

Shane took a new position within his company and he’s enjoying that a lot. He likes his coworkers and boss, and most of the time he enjoys what he’s doing. Gotta love that.

We traveled to Florida for Shane’s sister’s wedding, and had a great time visiting with family, heading to the beach and general relaxing.

Oh, and we had a baby. We love Jonathan to bits!

So really, it was a great year.

Financially speaking, we started the year without any credit card debt and kept out of credit card debt since. We built our six-month emergency fund a lot faster than I thought possible. After that, we started setting aside money to prepare for Johnny’s arrival.

For 2009, I want to keep it fairly simple. I know that I will just overwhelm myself if I outline too many goals, so here goes:

File taxes ASAP. As soon as we get our W2s and other necessary tax documents, I want to get our taxes situated. I think we’ll owe a little this year, and I want to know the exact amount as soon as I can so we can know what to expect. And, if for some reason we happen to be entitled to a refund, I’d want to get that right away!

– Eliminate our car payment. We owe about $8k on our car and we expect to own it outright by the end of the year. Given the shaky economy, I don’t know if it would be better to set aside extra cash in a savings account to pay it off in one fell swoop, or if we should try to save a little more in interest by making extra payments each month until it’s gone. Thoughts? Once this is gone, we’ll be completely debt-free!

Increase retirement contributions, start college savings, set aside money for down payment on a house. After our debt is paid, we’ll tackle these three things simultaneously. Before we do this, we’ll need to get a ballpark figure of how much we’ll want to have in our retirement accounts by retirement, how much we want to contribute to our son’s education, and how much we’ll be able to set aside for a house. It might be slow going, since we’ll be spreading our ‘extra’ money among three goals in some way, but you’ve gotta start somewhere!

What are your goals?

Posted under Uncategorized | 9 Comments »

9 Responses to “Financial hopes for 2009”

  1. Depending on how many deductions were claimed on those W2s during the year, you may be in for a pleasant surprise with the taxes. If I recall correctly, any child born before December 31st counts as a deduction for the entire year.

    My husband forgot to change his withholding after our daughter was born, and we only found out when we went to do our taxes last year. It was nice to get a refund, even though we may have been better off not giving the government an “interest free loan” of our money.

    KayleighJeanne’s last blog post..Where Has The Year Gone?

  2. Yeah I was really counting on Johnny being born in ’08! I know that if he waited until ’09, we’d definitely owe. We’re probably still going to owe anyway because i haven’t yet paid taxes on my freelance and blogging income, and that stuff is taxed pretty hard :-\.

  3. On the car: if it were me, I’d put the extra toward the payment each month, rather than saving it up for a “one fell swoop” payment. The reason is because of compound interest. I assume (and if you’re with an AWESOME credit union or something, this could be wrong and you can ignore it LOL) that you are paying more in interest on your vehicle loan than you would earn each month in a savings account. So if you make extra payments that are applied to the principal you’ll be paying down your actual loan faster and you’ll be charged less in interest, which is figured off your balance. In some cases you may have to specifically TELL them to do this or they’ll just put it in as a pre-pay for the next month; other banks will do it automatically – I would check into it to verify. I’ve had to do this with car loans and credit cards in the past. If I didn’t tell them to put the difference on the PRINCIPAL, they’d just apply it to the next payment and say I owed less per month – but still charge me interest on the balance I thought was being paid down faster. :-(

  4. If it were me, in this economy, I would save up the extra car payments and send it all at once when you can pay it off. The interest saved here is probably minimal, depending on your interest rate. I know my cars are very low interest, so we would be talking about maybe a 2% difference between what I would be paying on the loan vs what I would be earning interest.

    Right now, that extra flexibility would be worth the interest paid.

    If the economy wasn’t so bad then I would say pay the money towards the car because of the interest situation and then there is less chance of saving it up and then spending it on something else.

  5. We are trying to pay off our last bit of debt too (well besides our mortgage). I think due to the economy that I am going to hold the money back and pay off the remainder of our student loan toward the end of the year. We are a one income family and my husband works in the auto industry…so I’m thinking having the extra cash on hand wouldn’t hurt.

  6. I paid off my car early last year, the interest rate was pretty low so I stashed the extra cash until I had enough to pay it off in one lump sum. At the time the interest rates were above the loan rate. I would probably use the same method today even though savings rates are low, the cash in the bank is like a second e-fund. If I really needed the money for something else I could use it and just keep making payments on the car. Good luck with your goals.

  7. Yeah, I’m still not totally certain on how we’ll handle this. We have an emergency fund now, but saving all the money and doing it at once would serve as a second e-fund for the time being. Kind of nice, given the bad economy.

    The interest I would earn would be minimal, but it would help.

    On the other hand, I’d save more money in car loan interest if I sent extra money each month.

  8. As for the car, simply ask yourself this:

    What’s the interest rate I pay on that? If that rate is higher than your savings account, (and I’ll bet a month’s pay that it is) then you do well to pay as much as you can towards your debt.

    For anyone with debt, you should each month rank all your debts by interest rate, top to bottom. Pay minimums on all the debt except the very highest debt, then pay as much into that one as you can.

    This is the only way mathematically to achieve your largest “blended rate” reduction.

    Again, if the blended rate of your debt is higher than savings, and you have sufficient savings, then start attacking the debt.

    To calculate your blended rate, use a speadsheet, the first column should be the dollar ammount of each debt, the second is the rate of each debt, the third column is where you multply the two.

    Then sum the third column, and divide that by the sum of the first column. This will be your blended rate.

    Brangus Weir’s last blog post..A Visit to Fort William in Loch Lomond

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Hey! I'm Kacie, wife and mother of 3. I write about my family's finance: how we save money, improve our spending, and plan for the future.

I hope I can inspire and encourage you to improve your situation. See disclosure.

I'm adopting a much slower-paced posting schedule, and treating this as a hobby blog now.

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