I promised I would determine and publish my goals for the upcoming year by the end of the week. Giving myself a deadline motivated me to think about it. Here are my regular and stretch goals for 2007. They are SMART (specific, measurable, attainable, relevant, and time-based). I’ve tried not to include variables over which I have no control.
For example, the director of my department told us several weeks ago that no one should expect a raise this year. No matter how I perform in my day job, I am limited to what the corporation provides, and financial services companies of the type I work for are notoriously cheap. It doesn’t help to be located in a “distant suburb” rather than the city. And it doesn’t help that my department generates no profit for the company.
Before I can define my financial goals for 2007, it’s nice to review the basics. What are goals? I think Etta Mae Westbrook, a “family economics” professor, explains it well [pdf]:
* Goals state what you want to do or achieve. Goals will give your life direction. Financial goals will help you to determine where your money will go.
* Goals should be an extension of your values. If the goals are not related to your beliefs about what is important and good in life, the possibility of your achieving the goals is unlikely. If you do achieve a goal not related to the values you hold, you will probably feel unrewarded and dissatisfied.
* Goals need to be specific. The goal, I want lots of money in the bank, has little meaning. Is “lots of money” $5,000 or $50,000? When will you know you have “lots of money?” Write each goal in specific terms. Write the goal in terms you can measure.
Goals can be long-term, but they don’t have to be. The goals I want to set for myself this week are for one year from now, a short time frame. They should be in line with my longer term goals, which I’ve never really outlined here before.
Many people, especially those with business degrees, have heard this before: goals should be SMART; that is, Specific, Measurable, Attainable, Relevant, and Time-bound.
Attainability, or realism, is an important piece neglected by Westbrook’s article. I could, for example, set a goal to earn $1,000,000 in income next year, but what would be the point? It is extremely unlikely that will happen, and I’m not being a pessimist. That’s just the way it is. Montana State University has a short article about setting realistic goals.
Setting realistic goals allows success, and success breeds more success. The goals shouldn’t be so realistic that they’re easy, though. I like what Jim from Blueprint for Financial Prosperity has done: define regular goals and stretch goals. This allows you to take into consideration many unpredictable variables.
I promised that I would publish my goals by the end of the week, which happens to be New Years Eve. I’m still working on them and time is running short; let’s see if I can keep the first 2007-related promise to myself.
In 2007, I plan on creating an official business entity (LLC) to handle any income not coming to me from my day-job employer. As I do more work online, I’m dealing with more expenses, so I’m going to look into getting a business credit card. Having a card with no annual fee is important to me, while interest rate is not. My business expenses should remain well below income, but as a Type B credit card user, I make the most of the grace period. So here are my best options:
Discover Business Card APR: 12.99% Introductory APR: 0% for 12 months Annual Fee: $0
This card offers 5% cash back on office supplies, 2% back on gas, and 1% back on everything else. This is probably my first choice card.
American Express Blue Cash for Business APR: 11.24% Introductory APR: 0% for 6 months Annual Fee: $0
This American Express card also offers up to 5% cash back. Purchases in AmEx’s “Open Savings” plan qualify for 5% cash back, but all other purchases receive 2.5% cash back. They do lower the cash back rate once you’ve charged over $15,000 during the year, but this is still significant. This card is a good second choice, but I don’t know if I’d be making purchases in the “Open Savings” program.
American Express Platinum Business FreedomPass APR: 14.24% Introductory APR: 0% for 12 months Annual Fee: $0
This card isn’t for me, but for small businesses that require a lot of travel, this might be a good choice. For every dollar charged to the card for purchases, the holder gains 1 point, which never expire. The rewards are good for use on any flight (regardless of airline), hotels, car rentals, and cruises. They’ll start you off with 5,000 bonus points after your first purchase.
American Express SimplyCash Business Card APR: 8.25% Introductory APR: 0% for 12 months on purchases Annual Fee: $0
American Express seems to lead the market in cash back business cards. This one offers 5% cash back on gas, office supplies, and wireless services, as well as 1% cash back on everything else. There is no need to make purchases through any network of retailers in order to qualify for the highest cash back amount, so this might be a great choice for small businesses. What’s convenient is the cash back is automatically credited to the account; there’s no need to request a check.
Here’s one more card to round out the collection.
Chase Business Rebate Visa Card APR: 14.24% Introductory APR: 0% for 12 months on purchases and balance transfers Annual Fee: $0
If you entertain clients, which I do not, this may be a good choice for your small business. Here you get 3% cash back on purchases at restaurants, gas stations, office supply stores, building supply stores, and hardware and home improvement stores. Everywhere else, the card offers 1% cash back.
In some cases, the best solution may be a combination of cards. For example, I might use the Chase card when paying for dining out and filling up the tank, the Discover Card for office supplies, and either for everyday purchases.
We’re rolling into the new year, a perfect time for gurus to repeat their favorite nuggets of advice. Suze Orman, who writes a column for Yahoo Finance, has published the five best financial moves for 2007. Here are her tips, which don’t have much relationship to 2007 specifically, but are good ideas in general.
1. Lose Your Balance. Pay your credit cards off every month to avoid interest fees and late fees. I’ve been writing about credit cards lately, and I identified two types of credit card users. Type A users pay fees and do not pay down their balance while Type B users have mastered their credit cards by beating them at their own game. Suze says Type As should become Type Bs.
2. Make sure you rate high. ING Direct is falling out of favor, even with the major voices now. Suze says get your cash in HSBC Direct or Emigrant Direct where as of now it can earn more than 5% APY.
3. Win the match game. Invest enough in your company’s 401(k) to be eligible for the full company match. This is recycled from last year’s list.
4. Face your mortality. Suze suggests a term life insurance policy for protecting those who rely on you. This is not part of my 2007 plan, and won’t be until I’m no longer a single guy whose only dependent uses a litter box.
5. Stop kidding around. Here’s something I don’t hear often in the mainstream press. Suze says parents have a responsibility to teach their young children about personal finance and the value of living within one’s means.
I’m not Suze Orman’s biggest fan. I’ve seen her call-in television show and she can be nasty to the callers. I would assume the callers are familiar with the show and know what they’re getting into when they dial, but sometimes they seem to be taken by surprise. I was also not impressed when she started appearing in GM commercials touting the value of buying or leasing cars. This seemed to go against the values she reflected on her shows. For most people, living within their means would mean not buying or leasing a new car.
Nevertheless, when I can’t detect her attitude in her writing, I don’t mind her advice. It’s solid, but not particularly special.
This is the third and final part in a short series about credit cards and the people who use them. If you haven’t yed, read Part 1: The Good and Part 2: The Bad. Keep reading for something ugly. Part 3: The Ugly Credit cards are in business to make money. The fact of the ... Continue reading this article…
Isn’t it ironic that while I’m in the middle of writing a series about good credit card use vs. bad credit card use, to be concluded later today, I came across the ninth rule for building wealth from Fortune Magazine: ditch credit card debt. Fortune is talking about the Type A credit card user, who ... Continue reading this article…
This is the second part in a short series about credit cards and the people who use them. If you missed the first part, take a look. Part 2: The Bad If you are a Type B credit card user, you are making money off the credit card companies, not the other way around. Taking ... Continue reading this article…
If you’re employing the service of others — for example, when someone manages your money (comingled with others’ money) in a mutual fund — then you should be familiar with the idiom, “Nothing in life is free.” Mutual funds, even index mutual funds, have a management fee or “expense ratio.” You may have to find ... Continue reading this article…
If you listen to gurus like Dave Ramsey, you may find yourself feeling like you’re listening to a sermon in which the evil character is the credit card rather than the devil. Perhaps the two are interchangeable. Yes, credit card companies use marketing to lure customers with the hope of making tons of money in ... Continue reading this article…
At my father’s house for dinner last night, one of the guests brought up a story on Good Morning America in which shoppers and diamond experts compared their findings from Costco with those from Tiffany & Co. The GMA shoppers visited both stores, purchased stones, and reported their findings. First, at Tiffany, Good Morning America ... Continue reading this article…
I made this half-pony half-monkey monster to please you But I get the feeling that you don’t like it What’s with all the screaming? You like monkeys, you like ponies Maybe you don’t like monsters so much Maybe I used too many monkeys Isn’t it enough to know that I ruined a pony making a ... Continue reading this article…
I’ve finally pulled the trigger. If you’ve been following along, I’ve been looking for a new computer since August, to replace a five-year-old Fujitsu laptop that has seen better days. I had a tough time with Circuit City a few months ago, so I continued looking. With the help of a former co-worker, we decided ... Continue reading this article…
I never thought I’d see the day a song by the “mostly fictional” band Spinal Tap (Gimme Some Money, their first single from “1965″) is used in a commercial for a completely non-fictional product. That day was today. I haven’t found a video online yet of this American Express commercial, but look out for this ... Continue reading this article…
I think there is a point in every person’s life at which he comes to a realization and has to make a decision that shapes the course of his life. This happened to me in the early part of the year 2002. I’ll spare most of the details, but at this time I realized I ... Continue reading this article…
Steve over on his blog, Adventure Money, tagged me, so according to the rules I must come up with five things my readers may not know about me. I’ve been avoiding this for a few days, but I think at 1:30 in the morning I might be in the right state of mind to tackle ... Continue reading this article…
If you’ve ever wanted to take a peak inside my brain, now’s your chance. Just don’t try Sylar‘s approach to brain examination. I’d like to share my favorite websites related to personal finance, not including blogs or pfblogs.org. The websites that are listed are here for different reasons. Some I visit often to get new ... Continue reading this article…
A few months ago, after using the software for some time, I came to the conclusion that Quicken 2007 Home & Business was horrible. There were too many bugs distracting me from using the software the way it was intended. Downloading transactions through Direct Connect for my 401(k) no longer works… Quicken 2007 introduced a ... Continue reading this article…
Editor’s Note: Thank you for your interest, these offers have expired and are no longer available. Almost all of my spending is done by credit card. It’s convenient and I receive cash back for every purchase. Since I pay the balance off every month, I never pay any interest charges or late fees. I don’t ... Continue reading this article…
You may have already viewed this month’s balance sheet. What follows is my income and expense report, in which I look at where my money came from and where it went. After all expenses were paid, I ended up with $2,250 of my November income remaining. That’s lower than the last several months, but I ... Continue reading this article…
Here’s my latest balance sheet, a listing of the end-of-month balances for my bank and investment accounts with a few assets and liabilities. This is used to calculate my net worth each month. Any month in which I’ve come out ahead of the previous month I consider a success, and November was good. Continue reading ... Continue reading this article…
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