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December 2006

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.

Without further blabbering, here are the financial goals. [click to continue…]

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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 also like the Setting Financial Goals series on the new blog, Personal Finance for Students and Fresh Grads.

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.

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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
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.

Here’s one more card to round out the collection.

Chase Business Rebate Visa CardChase 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.

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I plan to use my time this week to review my financial progress in 2006 and set some concrete goals for 2007. I’ve never been a fan of concrete goals because so far, unexpected surprises have had effects on my progress every year for my adult life, sometimes positive, but sometimes negative. This unpredictability has discouraged me from setting specific short-term goals, for fear of coming up short or rendering the goals irrelevant.

By the end of the week, I will have some specific goals that I will hope to attain one year from now. I’ll also use them as a measuring stick throughout 2007.

Feel free to share your own goals for 2007 in the comments, or if you’re a blogger and have published an article about your 2007 goals, feel free to add a comment with a link. I’ll add links to the main part of the post as I find them.

* Investor Trip: Investment Goals for 2007
* Wealth Junkie: My Goals For 2007 – What are yours?
* No BS Finance: 2007 Financial Goals
* Moomin Valley: 2007 Net Worth Goal
* The Financial Oracle: Goals for 2007
* Million Dollar Journey: Goals for the New Year (2007)
* General Finance: My 2007 Financial Goals
* Blueprint for Financial Prosperity: Regular and Stretch Goals for 2007
* Alpha Guy: 2007 Goals
* Save Money: Some Stuff to Look at for 2007
* Erasing My Debt: My 2007 Goals
* Many more links are listed in the comments, so take a look!

Leave some comments with your goals or with a link to a post containing the details. I’ll publish my goals by the end of the week.

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Suze Orman’s 5 Tips for 2007

by Luke Landes

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. […]

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The Good, the Bad and the Ugly of Credit Cards, Part 3: The Ugly

by Luke Landes

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 […]

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Rule for Building Wealth: Ditch Credit Card Debt

by Luke Landes

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 […]

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The Good, the Bad and the Ugly of Credit Cards, Part 2: The Bad

by Luke Landes

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 […]

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Rule for Building Wealth: Hold Down Fees

by Luke Landes

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 […]

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The Good, the Bad and the Ugly of Credit Cards, Part 1: The Good

by Luke Landes

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 […]

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