I've never been one for resolutions. Not at the new year, or really any other time. The cynic in me says that if the resolution-maker (whether it's me or someone else) really has both the desire and the ability to change, they would already have done it, and not waited until January 1.
But the idea is firmly entrenched in our culture that the transition from one calendar year to the next is an ideal time to take stock of where you've been, and where you're going. 2006 and 2007 were eventful years for me, with a lot of changes that I would not have foreseen. At the beginning of 2006, I was a graduate student in Kansas, working towards a PhD in ecology, living in an apartment, with no near-term plans of buying a house or starting a family. The end of 2007 found me in Pennsylvania, employed at UPenn in a cell biology research lab, while simultaneously making gradual progress on a Master's, discovering the joys and pains of homeownership, and expecting a baby girl in April.
So, they're not exactly resolutions along the classic lines of "lose weight, quit smoking, spend more time with family." But I do hope to achieve certain goals for 2008:
- complete my Master's degree at KU
- increase my salary
- add $8000 to our savings/investments
- write to one friend or family member each month
These are the primary goals, and I figure that with a new baby that will take up much of my time and energy, that is plenty. There are numerous lesser goals or related aims that I could also list (get more organized, get parts of the thesis published, get various things fixed or improved around the house, and so forth), but I'm sticking with goals that are quantifiable, so that at the end of the year I can easily say whether or not they were achieved.
Many people that know me might be surprised to see that two of my goals are financial in nature. In the past, I was never especially interested in money. As long as there was enough to meet our immediate needs, and preferably to put some into a savings account as well, I didn't care how much we earned, or how much we spent. But owning a house and preparing for parenthood have changed my perspective. As the one who does most of the banking and bill-paying, I had become vaguely aware that since we bought the house (almost exactly a year ago), our bank account wasn't shrinking, but it also wasn't growing. It occurred to me that this was a worrisome state of affairs if our expenses were slated to increase and/or our income would decrease. I decided that a more proactive approach was needed, and that I should learn something about managing money other than "don't spend more than you have." So, I used Quicken to help me collect data on our spending, and I started borrowing books about personal finance from the local library. Together we started talking about planning for the future (farther ahead than next month's bills), about budgets and saving and strategies for investing. So far, we're only two months into our efforts to be more financially responsible, but I think we've made a lot of progress. We've set up a budget that should be workable when the baby arrives, and that includes saving up some money. We're still pondering what to do with our savings once it has been set aside; I still feel like I have a lot to learn about investing. Overall, the plan is to keep some in savings, and to invest some. The allocation to each, and the types of investments we make, have yet to be decided.
Wednesday, January 23, 2008
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4 comments:
I think quantifiable resolutions are an excellent idea!
I got on the personal finance/investing bandwagon last year. I'd started a half-hearted checkbook register spreadsheet after getting a checking account at PNC and coming to college, but I stopped updating it after the first semester or so. I did, however, save all my receipts. Over the summer, I became curious about just how much I was spending on textbooks, bowling, and so on. I downloaded Buddi and spent a few days entering two years worth of receipts and bank statements. Bowling wasn't that much, but I did realize that I'd spent $200 in cash that I couldn't account for, which was slightly disconcerting. Haircuts, late night snacks, that stuff adds up pretty quickly.
Anyways, as for investing, that's really something that can eat up as much, or as little, of your time as you're willing to put into it. In the abstract, sure, it's about predicting the future: bet money on some stocks going up, and others going down. But then you start looking on Wikipedia about options, puts, calls, pin risks, leverage, trailing stops, limit trades, no-coupon bonds, and your head will start to spin.
Personally speaking, though, I only learn some lessons the hard way. I have a $100k "paper money" account at www.thinkorswim.com that lost thirty-odd thousand dollars in the last month. It's free, and lots of fun to play around with trading stocks without the agony of actually losing money.
At the end of the day, though, I'm putting my money where my mouth is: first max out my Roth IRA, investing in index funds (last year I bought Vanguard's Target Retirement 2050 mutual fund; for 2008, I'm planning to buy lower-load ETFs). Then, when I have a full-time employer, max out 401k contributions, then split the remainder between high-yield savings accounts, CDs, and investments in index funds.
I'm sure with time and effort (and maybe a little luck), an individual investor could probably do slightly better, but -- and here's the key point -- it'd be even easier to do much, much worse.
I like your goals. I have some very similar finacial goals since my hubby and I have some differences in our spending habits and with a shared credit card - some budgeting needs to happen. My other goals include research and trying to enjoy life more and stress less.
Did my comment just disappear? Ugh. Anyway, I am pro public resolution because sometimes it takes an outside push to make desired changes.
Excellent goals, especially the financial goals. When I was a teen my Dad spent a great deal of time talking about religion and finances. At the time I did my fair share of eye-rolling and became a pro at being able to look interested while secretly planning my next drinking adventure.
Apparently some of what he said managed to seep into the brain. We're fortunate that Jace's employer offers a 401K managed by Fidelity. We max our contribution to that as well as invest an additional 5% in the stock purchase plan. For that we've patted ourselves on the back.
What we're focused on now is building the "Rainy day, oh shit the heater died, what do you mean the car was stolen while the house was on fire" account. As much as I love my ATM card, I'm still a firm believer in having cash on hand. I think it has a lot to do with my Dad's stories about growing up during the Great Depression and 9/11.
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